SG(SH:600734)2019-04-29 16:00Financial Performance - The company's operating revenue for 2018 was ¥6,759,565,820.36, representing a 4.40% increase compared to ¥6,474,445,474.46 in 2017[19] - The net profit attributable to shareholders for 2018 was -¥267,155,730.38, a decrease of 243.09% from ¥186,708,521.64 in 2017[19] - The net profit attributable to shareholders after deducting non-recurring gains and losses was -¥331,011,786.89, down 295.72% from ¥169,124,572.07 in 2017[19] - The net cash flow from operating activities was -¥246,111,066.37, an improvement of 16.13% compared to -¥293,443,461.95 in 2017[19] - The total distributable profit for the year was -¥339,913,616.86, leading to no profit distribution or capital reserve transfer to share capital[4] - The net profit attributable to ordinary shareholders was -26.72 million yuan, primarily due to a goodwill impairment provision of about 472 million yuan[41] - The company reported a net profit attributable to shareholders of -391,621,871.87 RMB in Q4 2018, following a profit of 129,175,431.11 RMB in Q2 2018[23] - The company reported a significant increase in inventory, which rose by 80.19% to ¥775,275,984.23, indicating a buildup of raw materials and finished goods[73] - The company’s goodwill decreased by 31.47% to ¥1,028,261,563.32, reflecting impairment provisions for subsidiaries[73] - In 2018, the company reported a net profit of -66,637,626.79 RMB, leading to no profit distribution or capital reserve increase for the year[153] Assets and Liabilities - The net assets attributable to shareholders decreased by 9.20% from the end of 2017 to 2,610,191,478.94 RMB[22] - Total assets decreased by 10.80% from the end of 2017 to 7,336,587,239.50 RMB[22] - The total assets decreased by 74.42% in cash and cash equivalents, down to ¥299,366,263.53, primarily due to repayments of loans and payments to suppliers[73] - The company’s total liabilities included a significant increase in current non-current liabilities, which rose by 579.56% to ¥595,970,703.59, due to reclassification of bonds payable[76] - The total accounts payable increased from ¥2,132,420,529.08 to ¥2,777,428,154.19 after adjustments for notes and accounts payable[197] Revenue Segments - The company’s main business segments include mobile smart terminals, battery power supply, and IoT perimeter security solutions[29] - The total revenue for the mobile internet terminals and accessories reached ¥5,815,176,953.10, accounting for 97.63% of total sales, with a year-on-year growth of 4.91%[66] - The IoT perimeter security business generated revenue of 226,610.87 million RMB, with a gross margin of 37.75%, showing an increase of 2.59 percentage points compared to the previous year[56] - Shenzhen Xingfei, a wholly-owned subsidiary, generated sales revenue of approximately 6.515 billion yuan in 2018, a 4.36% increase from 6.243 billion yuan in the previous year[44] - The battery power supply business, operated by Ruide Electronics, achieved sales revenue of about 903 million yuan in 2018, a 19.60% increase from 755 million yuan in the previous year[46] Research and Development - The company invested 124,449.92 million RMB in R&D expenses, a slight decrease of 1.87% from the previous year[55] - Research and development expenses amounted to ¥124,449,915.89, which is 1.84% of total operating revenue, with 388 R&D personnel making up 15.68% of the total workforce[70] - The company is focusing on expanding its R&D capabilities in new generation mobile terminal products and multi-camera systems[104] - The company plans to increase R&D investment in new industries, leveraging existing ODM resources to develop IoT products and explore new market opportunities[131] Strategic Initiatives - The company plans to focus on future operational strategies, although specific projections for 2019 are subject to change based on internal and external conditions[4] - The company has initiated strategic partnerships with high-security enterprises and law enforcement systems to enhance its market position in the IoT security sector[44] - The company plans to enhance its competitive edge through core technology innovation and downstream sales promotion in the smartphone market[81] - The company aims to optimize its overseas market structure, targeting high-end markets in Japan and the United States while consolidating its presence in Southeast Asia and Latin America[125] - The company plans to actively participate in government PPP projects and strengthen investments in key regions such as Xinjiang[126] Market Conditions - The smartphone market in China saw a total shipment of 398 million units, a decline of 10.50% year-on-year, with Huawei leading the market with a 26.40% share[80] - The security industry in China is projected to reach a market size of nearly 1 trillion RMB by 2022, driven by the rapid development of civil security products[86] - The overall growth rate of the security industry is expected to exceed 10% annually during the 13th Five-Year Plan period, with total revenue reaching around 800 billion RMB by 2020[86] - The lithium battery market is expected to see stable growth as it matures, with future demand primarily driven by power and storage battery sectors[82] Challenges and Risks - The company faces risks related to business integration, industry policy changes, and market competition, necessitating strategic adjustments and enhanced R&D capabilities[140][144] - The company has faced liquidity challenges due to macroeconomic factors and reduced lending from financial institutions[148] - Due to tight liquidity and potential litigation risks, the company cannot accurately predict 2019 revenue figures, prioritizing liquidity improvement and debt risk mitigation[130] Corporate Governance - The company has engaged Lixin Zhonglian Accounting Firm for auditing, which issued a standard unqualified audit report[4] - The company has established a KPI management system and project reward system to enhance employee motivation and efficiency[148] - The company emphasizes the importance of retaining core personnel to maintain competitive advantage and is implementing various incentive mechanisms[148] Investment and Divestment - The company has approved a total of approximately 59.995 million RMB for external equity investments during the reporting period[90] - The company transferred 45% of its stake in Huizhou Xunde Technology Co., Ltd. for 2.25 million RMB as part of its strategy to divest from loss-making businesses[109] - The company is exploring opportunities for market expansion and new product development[186]