TMSP(SH:600671)2020-08-28 16:00Financial Performance - The company's operating revenue for the first half of 2020 was ¥111,290,544.53, a decrease of 24.86% compared to ¥148,112,196.84 in the same period last year[21]. - The net profit attributable to shareholders of the listed company was -¥2,400,710.48, compared to a profit of ¥2,114,420.91 in the same period last year[21]. - Basic earnings per share for the first half of the year is -0.0197 CNY, compared to 0.0174 CNY in the same period last year[23]. - Weighted average return on equity decreased to -2.2902% from 3.6881% year-on-year[23]. - The company reported a net loss of ¥94,491,508.00, which is a decline from a loss of ¥92,090,797.61 in the previous year[46]. - The company reported a significant increase in sales expenses, which were ¥29,661,428.82, down 45% from ¥53,865,669.18 in the previous year[130]. - The company experienced a decrease in total profit, reporting a loss of ¥3,581,599.16 compared to a profit of ¥4,522,386.07 in the first half of 2019[130]. - The company reported a total of CNY 24,181,414.37 in undistributed profits at the end of the current period[145]. Cash Flow and Liquidity - The net cash flow from operating activities was ¥73,967.03, a significant decrease of 99.93% from ¥112,102,359.06 in the previous year[22]. - Cash flow from financing activities increased by 101.71%, with cash inflow rising by ¥27,450,000 compared to the previous year[44]. - The ending cash and cash equivalents balance for the first half of 2020 was CNY 12,452,734.33, down from CNY 24,131,388.54 at the end of the first half of 2019[137]. - Total cash outflow from operating activities was CNY 121,852,201.89, resulting in a net cash flow from operating activities of CNY 73,967.03[136]. - Cash inflow from sales of goods and services was CNY 102,787,051.72, a decline of 28.6% from CNY 143,997,464.99 in the first half of 2019[136]. Assets and Liabilities - Total assets decreased by 2.41% to ¥523,761,381.29 from ¥536,669,654.68 at the end of the previous year[22]. - The net assets attributable to shareholders of the listed company decreased by 2.26% to ¥103,622,963.50 from ¥106,023,673.98 at the end of the previous year[22]. - Total liabilities decreased from CNY 395,967,943.52 to CNY 386,769,946.50, a decline of about 2.8%[124]. - The company's total current assets as of June 30, 2020, amount to ¥213,238,239.73, a decrease from ¥235,623,141.87 at the end of 2019[122]. - The company's construction in progress amounted to ¥79,096,622.66, representing a 19.13% increase compared to ¥66,396,850.94 from the previous year[46]. Regulatory and Compliance Issues - The company is under investigation by the China Securities Regulatory Commission for suspected violations of information disclosure laws[7]. - The company's stock has been under risk warning since June 15, 2020, due to an audit report that could not express an opinion on the 2019 financial statements[8]. - There is a risk that the company's stock may be suspended or terminated from listing if the 2020 financial statements receive a similar audit opinion[9]. - The company is actively cooperating with the regulatory authority during the ongoing investigation and fulfill its disclosure obligations[7]. - The company has received multiple administrative penalties from the China Securities Regulatory Commission for violations related to information disclosure and has not completed all required rectifications[88][90]. Operational Developments - The company has completed hardware upgrades for two major production lines, with production expected to officially commence in late November 2020[39]. - The company has initiated the relocation and renovation of its pharmaceutical center, focusing on improving production capacity and quality control[39]. - The company is actively seeking market expansion opportunities and adjusting marketing strategies based on market research[29]. - The company is focusing on enhancing terminal market promotion capabilities and strengthening partnerships with large chain pharmacies to boost sales[29]. - The company has established long-term strategic partnerships with suppliers to ensure stable quality and reduce production costs[29]. Risk Factors - The company faces significant industry policy risks due to stringent regulations and reforms in the pharmaceutical sector, which may impact its operations[56]. - Rising raw material prices pose a risk to profit margins, as the company cannot pass on increased costs to downstream customers due to price controls[58]. - The company is exposed to safety production risks and has implemented strict safety management measures to prevent accidents[58]. - The company faces risks related to accounts receivable, implementing strategies to ensure customer creditworthiness and manage credit risk effectively[59]. - The company has a high debt ratio, facing funding risks, and plans to reduce financing costs through multiple financing channels[59]. Corporate Governance - The company committed to not engaging in any business that competes with the listed company and will supervise its controlled enterprises to ensure compliance with this commitment[67]. - The company guaranteed that its senior management personnel at Tianmu Pharmaceutical will only serve in that company and will not hold operational positions in any of its subsidiaries or controlled companies[69]. - The company has taken measures to address the issues raised in the audit report, including coordinating with relevant parties to resolve the 24.6 million yuan non-operating fund occupation[83]. - The company plans to enhance governance and improve internal control systems to ensure compliance and operational legality[84]. - The company has issued a lawyer's letter to the controlling shareholder, demanding the return of occupied funds within 30 days[83]. Environmental Impact - The pharmaceutical center is undergoing relocation and renovation, resulting in no production-related emissions during the first half of 2020[101]. - Wastewater discharge from Huangshan Tianmu was within permitted limits, with average COD at 45.6 mg/L and ammonia nitrogen at 2.06 mg/L[101]. - The company has established a wastewater treatment facility that processed a total of 4,125 tons of wastewater in the first half of 2020, all meeting discharge standards[104]. - The company completed a coal-to-natural gas project, significantly improving overall emissions[101]. - The company has implemented an environmental monitoring plan, with quarterly inspections of wastewater emissions[107].