SG(SH:600734)2019-08-30 16:00Financial Performance - The company's operating revenue for the first half of 2019 was ¥1,823,691,816.54, a decrease of 34.29% compared to ¥2,775,321,967.43 in the same period last year[18]. - The net profit attributable to shareholders of the listed company was -¥178,567,191.62, representing a decline of 281.12% from ¥98,591,901.46 in the previous year[18]. - The net cash flow from operating activities was -¥131,083,478.97, an improvement of 70.81% compared to -¥449,099,323.38 in the same period last year[18]. - The total assets decreased by 24.92% to ¥5,508,569,753.99 from ¥7,336,587,239.50 at the end of the previous year[18]. - The net assets attributable to shareholders of the listed company decreased by 6.75% to ¥2,433,902,671.50 from ¥2,610,191,478.94 at the end of the previous year[18]. - Basic earnings per share for the first half of 2019 were -¥0.2864, a decrease of 281.15% from ¥0.1581 in the same period last year[19]. - Operating revenue decreased by 34.29% to ¥1,823,691,816.54 compared to ¥2,775,321,967.43 in the same period last year[61]. - Operating costs decreased by 29.20% to ¥1,758,489,095.78 from ¥2,483,758,460.48 year-on-year[61]. - Research and development expenses increased by 6.19% to ¥68,145,087.34 from ¥64,174,975.89 year-on-year[61]. Business Operations and Strategy - The company attributed the decline in revenue and net profit primarily to reduced orders and revenue scale from its subsidiary, Shenzhen Xingfei, due to the overall macroeconomic environment and decreased demand for smartphone products[22]. - The company continues to develop its mobile smart terminal business, which includes smartphones and industry terminals, and has expanded into smart security monitoring solutions[25]. - The mobile smart terminal business is operated by Shenzhen Xingfei and its subsidiaries, which have nearly 60,000 square meters of R&D and production bases to meet domestic and international market demands[32]. - The company aims to enhance its 5G product line and integrate diverse product demands from various operators and terminal clients[53]. - The company is focusing on optimizing its organizational structure and production capacity to improve cost efficiency and reduce idle capacity losses[43]. - The company aims to expand its logistics data collection smart terminal market and develop new products such as AI measurement tools and Bluetooth headsets[56]. - The company plans to enhance its sales model in the micro-projection industry, focusing on 1080P, 720P, and 480P projection terminal products[56]. - The company is committed to maintaining technological leadership in the drone defense sector and developing a fourth-generation perimeter protection system[58]. - Shenzhen Xingfei plans to expand its customer base by introducing new clients and e-commerce resources in the second half of 2019[53]. Research and Development - The company has maintained its R&D investment to ensure product planning for 2019 and 2020 despite the decline in sales revenue and profit[46]. - Shenzhen Xingfei focuses on R&D investment in IoT and other smart terminals to drive market sales and enhance product value[80]. - The company is preparing to launch new products in fast charging and wireless charging, targeting future market trends in mobile devices[37]. - The battery and power supply business is conducted by Ruide Electronics, which has advanced production capabilities and has passed multiple international certifications, ensuring product quality and cost advantages[37]. - The IoT perimeter security business is managed by Zhongke Rongtong, which focuses on high-security applications and has developed multiple core technologies and products, including intelligent alarm systems and surveillance equipment[38]. - Zhongke Rongtong has applied for 17 invention patents and has received 6 authorizations, demonstrating its commitment to innovation in the security sector[38]. Legal and Compliance Issues - The company has been involved in multiple legal disputes, with some cases resulting in arbitration decisions favoring Shenzhen Xingfei[125]. - Shenzhen Xingfei faced multiple lawsuits in 2019, with claims totaling approximately 1.1 billion CNY across various cases[136]. - The company has ongoing litigation against Shenzhen Jizhi United Technology Co., Ltd. for RMB 165.01 million due to unpaid debts, currently in pre-litigation mediation[148]. - The company has submitted jurisdiction objections in multiple cases, indicating a proactive legal strategy[141]. - The company aims to mitigate risks associated with these legal disputes while continuing its business operations[142]. Financial Obligations and Investments - The company completed a total investment of RMB 120 million in major non-equity investments, with a cumulative input of RMB 117.99 million, achieving an investment progress of 98.33%[68]. - The company has permanently supplemented its working capital with RMB 178 million from surplus funds of investment projects, which will be used for daily operations[68]. - The company has obligations related to major asset restructuring, including compensation commitments based on net profit forecasts and share lock-up agreements[99]. - The company has not reported any asset impairment provisions during the reporting period[94]. - The company has engaged in discussions with strategic investors and state-owned enterprises to enhance its financial position[198]. Shareholder and Management Changes - The company experienced significant changes in its board and management, with multiple resignations and appointments throughout the reporting period[5]. - The company appointed Huang Kai as the new President on May 8, 2019, following the resignation of Wang Yikun due to personal reasons[6]. - The company held two shareholder meetings in the first half of 2019, including the first extraordinary meeting on March 4, 2019, and the annual meeting on May 21, 2019[94]. Market and Economic Conditions - The company anticipates continued net losses for the first nine months of 2019, primarily due to reduced demand for smartphone products and a decrease in orders[78]. - The company is facing liquidity issues due to macroeconomic factors and is actively seeking strategic investors and financial institution support to improve cash flow[92]. - The mobile communication terminal industry has a low overall gross margin, and competition among ODM manufacturers is intensifying, potentially impacting Shenzhen Xingfei's profitability[84]. - The security industry is supported by national policies, but potential regulatory changes could adversely affect the company's future development if it fails to obtain necessary qualifications[83]. - Shenzhen Xingfei aims to mitigate risks from US-China trade tensions by developing different business transaction models and planning overseas production resources[89].