LK(SH:600388)2020-04-28 16:00Financial Performance - The company's operating revenue for 2019 was CNY 10,935,027,561.90, representing a 16.30% increase compared to CNY 9,402,298,371.62 in 2018[22] - The net profit attributable to shareholders for 2019 was CNY 851,029,698.37, which is a 6.22% increase from CNY 801,217,236.99 in the previous year[22] - The net profit after deducting non-recurring gains and losses was CNY 671,109,880.63, showing a decrease of 4.51% compared to CNY 702,818,593.59 in 2018[22] - The company's total assets at the end of 2019 were CNY 21,583,010,928.64, an increase of 14.47% from CNY 18,853,916,246.49 at the end of 2018[25] - The net assets attributable to shareholders increased by 13.07% to CNY 5,709,424,504.05 from CNY 5,049,294,820.96 in 2018[25] - The basic earnings per share for 2019 was CNY 0.80, up 6.67% from CNY 0.75 in 2018[26] - The weighted average return on net assets was 15.89% for 2019, a decrease of 0.77 percentage points from 16.66% in 2018[26] - The net cash flow from operating activities was CNY 16,518,521.51, a significant decrease of 96.01% compared to CNY 413,960,729.84 in 2018[22] Business Expansion and Strategy - The company expanded its business into waste-to-energy operations and hazardous waste treatment, establishing subsidiaries such as Longjing Energy and Longjing Water Environment[35] - The company aims to enhance its operational assets investment while maintaining growth in its EPC engineering business, targeting sustainable revenue and profit growth[35] - The market for flue gas treatment is shifting towards non-electric sectors, with increasing demand in industries such as steel, cement, and chemicals[44] - The company anticipates a favorable market outlook for waste incineration, with a projected investment of CNY 251.84 billion in urban waste treatment facilities by 2020[45] - The hazardous waste disposal industry is expected to remain in a high prosperity cycle over the next 3-5 years, driven by increasing production rates and stricter environmental regulations[45] - The company emphasizes innovation as a core development philosophy, focusing on technological advancements in pollution reduction and control[40] - The company has established a management model that promotes internal market-oriented management and economic responsibility among its subsidiaries[39] Contracts and Backlog - In 2019, the company achieved a record high with new contracts totaling 14.84 billion RMB, operating revenue of 10.935 billion RMB, and a net profit attributable to shareholders of 851 million RMB[50] - The company had an outstanding backlog of contracts amounting to 19.48 billion RMB at the end of 2019, providing a solid foundation for future growth and profitability[50] - The company signed new contracts worth 148.40 billion (including tax) in 2019, an increase of 14.15% compared to the previous year[104] - The company actively expanded into non-air environmental protection fields, achieving significant breakthroughs in new contracts[104] Research and Development - The company has over 1,000 authorized patents, ranking first in the environmental technology sector among A-share listed companies, reflecting its strong research and innovation capabilities[63] - The company’s dry desulfurization technology has reached an international leading level, enhancing its competitive edge in the non-electric flue gas treatment market[61] - The company reported a total of 1,514 R&D personnel, accounting for 20.31% of the total workforce[87] - The company has implemented over 200 key R&D projects and over 100 national and provincial technology innovation projects as of March 2020[64] - Research and development expenses amounted to 462 million RMB, reflecting a 5.91% increase year-on-year[68] Financial Management - The company received government subsidies that increased other income by 33.60% to 116.5 million RMB[68] - The company’s financial expenses increased by 93.68% due to a larger financing amount during the period[68] - Investment income surged by 176.14% to 87.7 million RMB, primarily due to the sale of assets and adjustments in accounting standards[68] - The gross profit margin for the environmental equipment segment was 21.98%, a decrease of 1.99 percentage points compared to the previous year[78] - The gross profit margin decreased by 1.92 percentage points to 22.24% from 24.16%[79] Shareholder Returns and Dividends - The company plans to distribute a cash dividend of CNY 2.00 per 10 shares, totaling CNY 21,381,000.00[5] - The cash dividend for the 2018 fiscal year was 1.70 RMB per 10 shares, amounting to 180.61 million RMB, which accounted for 22.54% of the net profit attributable to ordinary shareholders[154] - The company has committed to distributing at least 30% of the average distributable profit over the next three years, with specific annual distribution ratios to be proposed by the board based on annual profitability and future funding plans[160] - The company’s cash dividend policy is designed to balance operational needs, shareholder returns, and future development[150] Operational Challenges - The company faces intensified industry competition and rising costs, leading to increased pressure on project profitability[145] - The company’s operational management capabilities are being tested as ongoing projects continue to expand[148] - The company has seen an increase in contracts on hand, necessitating more human and material resources for project execution[146] Compliance and Governance - The company has committed to maintaining independence in its operations and avoiding conflicts of interest with its controlling shareholders[155] - The company will take measures to compensate for any dilution of immediate returns from the issuance of convertible bonds, ensuring the protection of shareholder interests[158] - The company has established a commitment to not engage in any competitive business activities that threaten its main operations, ensuring long-term compliance with the non-competition agreement[158] - The company’s board of directors has committed to strict compliance with regulations following a violation by a board member regarding stock trading during a blackout period[175] Future Outlook - The company aims to become a world-class ecological and environmental enterprise with international competitiveness, focusing on technological innovation and market expansion[134] - The company is focusing on core technology development in key areas such as water, solid waste, and soil remediation to support sustainable growth[138] - The company is committed to achieving a 90% safe utilization rate of polluted farmland and a 73% comprehensive utilization rate of industrial solid waste by 2020, in line with national environmental policies[129]