SG(SH:600734)2021-04-29 16:00Financial Performance - The company's operating revenue for 2020 was ¥1,151,473,160.46, a decrease of 26.04% compared to ¥1,556,985,105.98 in 2019[20]. - The net profit attributable to shareholders for 2020 was -¥591,138,752.23, an improvement of 80.60% from -¥3,047,028,370.76 in 2019[23]. - The net cash flow from operating activities was -¥67,403,327.04, showing a 65.88% improvement compared to -¥197,522,783.38 in 2019[23]. - The total assets at the end of 2020 were ¥2,198,674,841.27, a decrease of 16.02% from ¥2,618,173,826.87 at the end of 2019[23]. - The net assets attributable to shareholders were -¥1,071,613,582.33 at the end of 2020, a decline of 128.85% from -¥468,255,418.78 at the end of 2019[23]. - The company reported a negative distributable profit of -¥2,288,249,645.06 for 2020, resulting in no profit distribution or capital reserve transfer to share capital[6]. - The company reported a total revenue of approximately CNY 1.15 billion in 2020, a decrease of 26.04% compared to CNY 1.56 billion in 2019[34]. - The net profit attributable to shareholders was approximately -CNY 59.11 million, improving from -CNY 304.70 million in the previous year, a reduction of about 80.66%[34]. - The company reported a total non-operating loss of approximately -CNY 36.85 million in 2020, compared to a gain of CNY 11.19 million in 2019[29]. - The company’s total operating costs decreased by 32.56% to approximately CNY 1.05 billion from CNY 1.55 billion in 2019[37]. - The company’s financial expenses increased by 50.96% to approximately CNY 206.80 million from CNY 136.99 million in 2019[37]. - The company reported a total revenue of 1.57 billion RMB from the sale of inventory stored in Hong Kong and India, with a sales income of 0.23 billion USD (equivalent to 1.57 billion RMB) recognized[102]. Operational Challenges - The company has indicated potential risks in its operations but reported no significant risk events affecting production and operations during the reporting period[7]. - The company aims to optimize its asset-liability structure to eliminate debt and operational difficulties, thereby mitigating risks of delisting and bankruptcy[78]. - The company faces liquidity risks due to tight cash flow, exacerbated by long payment terms from downstream clients and cash settlement requirements from upstream suppliers[80]. - The company is at risk of losing core personnel due to intense competition for talent in its industry, which could negatively impact its operational capabilities[83]. - The company has acknowledged the significant uncertainties related to its ability to continue as a going concern due to ongoing litigation and financial instability[105]. Legal Issues - The company is involved in a lawsuit with China Construction Bank regarding a financial loan contract dispute, with the claimed amount totaling RMB 66,550,016.97, including RMB 49,999,000 in factoring prepayment[117]. - In a separate case, the company was ordered to pay RMB 6,000,000 in principal and related interest and penalties to Bohai Bank due to a financial loan contract dispute, with the judgment issued on November 6, 2020[118]. - The company is also facing a lawsuit from China Everbright Bank for RMB 10,964,500 in principal related to a financial loan contract dispute, which is still under review[119]. - The company has a pending arbitration case with Shanghai Bank involving a financial loan contract dispute, with the claimed amount of RMB 3,183,640, and a judgment was made in March 2021 requiring repayment of principal and interest[125]. - The company has been involved in multiple legal disputes, including a construction contract dispute with Kai Ji Dingshi Development Co., with a claimed amount of RMB 15,640,000[123]. - The company has faced various legal challenges, including claims for unpaid debts and warranty fees, which may impact its financial position[126]. - The ongoing litigation and arbitration cases may affect the company's future financial performance and operational strategies[125]. Restructuring Efforts - The company is currently in a pre-restructuring phase, with creditors having filed for restructuring in February 2021[79]. - The company has engaged in active communication with relevant parties, including the court and creditors, to expedite the restructuring process and mitigate bankruptcy risks[84]. - The restructuring application's acceptance by the court remains uncertain, posing a significant risk of bankruptcy if the restructuring fails[84]. - The company has not proposed any cash dividend distribution in the last three years due to negative profits, ensuring compliance with regulations[89]. - The company’s profit distribution policy has been transparent and compliant with shareholder resolutions, protecting minority shareholders' rights[86]. Subsidiary Developments - The company established five new subsidiaries during the reporting period, with a total investment of ¥24 million in registered capital[61]. - The company established a wholly-owned subsidiary, Beijing Hanzhu Technology Co., Ltd., with a registered capital of RMB 100 million to enhance its strategic layout and business development[62]. - The company set up another wholly-owned subsidiary, Beijing Zhuhuang Technology Co., Ltd., also with a registered capital of RMB 100 million, focusing on technology development and consulting services[62]. - A wholly-owned subsidiary, Zhengzhou Zhongke Rongtong IoT Technology Information Co., Ltd., was established with a registered capital of RMB 10 million, aimed at software development and information technology services[62]. - The company established Zhengzhou Aviation Port Zhongke Xinggang Technology Co., Ltd. with a registered capital of RMB 10 million, focusing on software and technology services[62]. - Shenzhen Shicheng Trade Co., Ltd. was set up with a registered capital of RMB 20 million, expanding the company's business scope into electronic products and real estate services[65]. Market Outlook - The physical security market is projected to reach $171 billion by 2027, with a compound annual growth rate of 6.50%, driven by increasing security needs globally[56]. - The domestic market for 5G mobile phones reached 20.136 million units shipped by November 2020, nearly tripling since the beginning of the year[54]. - The company plans to expand into sectors such as smart wearables, smart cities, and big data, focusing on the integration of mobile internet and IoT technologies[78]. - The company is focusing on the development of new product forms in the mobile smart terminal sector, including wearable devices and smart home products, which are expected to have a broad market outlook[77]. Audit and Compliance - The audit report from Zhongxing Caiguanghua CPA indicated a reserved opinion, which the company has addressed in detail[5]. - The audit firm issued a qualified opinion due to limitations in obtaining sufficient audit evidence regarding the inventory stored overseas, which may impact the financial statements significantly but not broadly[102]. - The audit fee for the new auditor, Zhongxing Caiguanghua, is RMB 210,000, compared to RMB 120,000 for the previous auditor[111]. - The company has faced regulatory scrutiny due to delays in disclosing significant overdue guarantees and fundraising account issues, resulting in warnings and criticisms from the Shanghai Stock Exchange[200].