FEIDA ENVIRO(SH:600526)2019-05-31 16:00Financial Performance - The company reported a net profit attributable to shareholders of -421,673,080.29 yuan for 2018, following a net profit of -166,739,576.66 yuan in 2017, indicating a significant decline in profitability [7]. - The company's operating revenue for 2018 was approximately ¥3.52 billion, a decrease of 7.47% compared to ¥3.81 billion in 2017 [24]. - The net profit attributable to shareholders was a loss of approximately ¥421.67 million, representing a decline of 152.89% from a loss of ¥166.74 million in 2017 [24]. - The basic earnings per share for 2018 was -¥0.77, down 156.67% from -¥0.30 in 2017 [25]. - The weighted average return on equity decreased to -19.80%, a drop of 12.97 percentage points from -6.83% in 2017 [25]. - The net cash flow from operating activities improved by 85.24%, reaching approximately -¥30.79 million compared to -¥208.62 million in 2017 [25]. - The total assets at the end of 2018 were approximately ¥8.09 billion, a decrease of 2.85% from ¥8.33 billion at the end of 2017 [24]. - The net assets attributable to shareholders decreased by 18.02%, amounting to approximately ¥1.92 billion at the end of 2018 compared to ¥2.34 billion at the end of 2017 [24]. - The company reported a net loss of ¥427,060,997.22, a 115.36% increase in loss compared to the previous year [36]. - The company reported a total of 11 projects that were either suspended or delayed due to various external factors, impacting revenue recognition [53]. Operational Challenges - The company has been warned of potential delisting due to consecutive years of negative net profit, as per the Shanghai Stock Exchange regulations [7]. - The company is experiencing tight liquidity due to long execution cycles and significant upfront investments in EPC and PPP projects, exacerbated by a tightening of bank financing channels [99]. - The company faces increased competition in the environmental protection equipment market, leading to declining profit margins due to lower entry barriers and rising costs [68]. - The company is undergoing institutional reforms to implement a profit center and cost center model, along with a new incentive mechanism [98]. - The company has been involved in designing and bidding for flue gas desulfurization projects, which have received user recognition, indicating potential growth in this business area [111]. Strategic Initiatives - The company plans to enhance capital management and improve fund utilization efficiency in the future [25]. - The company aims to transition from equipment manufacturing to a comprehensive environmental service provider, covering air, water, and solid waste management [71]. - The company plans to focus on expanding its market presence and enhancing product offerings in response to competitive pressures in the environmental protection sector [54]. - The company is actively seeking strategic partners to reduce reliance on its own funds and expand financing channels [99]. - The company plans to enhance project cost control and improve financing security while strengthening fund recovery management [98]. Research and Development - The company was awarded 40 new patents during the reporting period, including 3 invention patents and 35 utility patents [41]. - Research and development expenses increased by 36.05% to ¥40,176,017.82, reflecting a focus on innovation [47]. - The company has established several national-level research and development centers, enhancing its competitive advantage in the industry [94]. - The company is investing 50 million in R&D for new technologies aimed at enhancing operational efficiency [160]. Environmental Compliance - The company’s wastewater treatment process achieves compliance with the GB8978-1996 standard [139]. - The company’s air emissions comply with the GB4915-2013 standard for cement plants [140]. - The company has no reported incidents of exceeding pollution discharge standards during the reporting period [141]. - The company has established an emergency response plan for environmental incidents [138]. Shareholder and Governance Issues - The company has not proposed any profit distribution or capital reserve transfer to increase share capital for the reporting period [5]. - The company has not proposed any cash dividend distribution plan for 2018, reflecting its ongoing financial challenges [102]. - The company has faced significant governance issues, including undisclosed major losses and inadequate control over subsidiaries, leading to regulatory penalties [176]. - The company received a corrective measure from the China Securities Regulatory Commission for failing to disclose performance forecasts and misusing raised funds [176]. - The company’s governance structure includes a mix of executive and non-executive directors, enhancing oversight and strategic direction [161][162]. Financial Transactions and Investments - The company plans to transfer 100% equity of Jiangsu Feida Baokai Electric Co., Ltd. for an assessed value of 262.55 million yuan, with the transaction expected to impact the 2019 financial statements [10]. - The company transferred a 16% stake in Juhua Financial Co., Ltd. for an assessed value of RMB 184.112 million, generating a gain of RMB 9.3234 million [86]. - The company completed the transfer of 100% equity of Jiangsu Fida Baokai Gas Co., Ltd. for 262.55 million RMB, with full payment received by March 2019 [124]. - The company has invested 4,360.68 million RMB in equity investment projects during the reporting period, a decrease of 86.15% compared to the previous year [77]. Market Outlook - The environmental protection industry is experiencing significant growth opportunities due to stricter national regulations and increased public awareness [32]. - The company provided a positive outlook for 2019, projecting a revenue growth of 10% to 12% [160]. - The environmental protection industry is expected to achieve an annual growth rate of over 20% during the 13th Five-Year Plan, with total investment projected to exceed 17 trillion RMB [71]. - The market for desulfurization wastewater treatment is estimated to be around 100 billion RMB during the 13th Five-Year Plan period, indicating significant future market potential [71].