SG(SH:600734)2023-04-28 16:00Financial Assets and Valuation - The company manages financial assets measured at fair value through other comprehensive income (FVOCI) with a business model aimed at both collecting contractual cash flows and selling, and these assets are classified as other debt investments[1] - Financial assets not classified as amortized cost or FVOCI are measured at fair value through profit or loss (FVTPL) and classified as trading financial assets[1] - Equity instruments without control, joint control, or significant influence are measured at FVTPL and classified as trading financial assets, with those expected to be held for over a year classified as other non-current financial assets[1] - Financial assets are derecognized when contractual rights to cash flows expire, risks and rewards are transferred, or control is relinquished, with differences between carrying amounts and proceeds recognized in profit or loss or retained earnings[4] Expected Credit Losses (ECL) - The company calculates expected credit losses (ECL) based on past events, current conditions, and future economic forecasts, using a probability-weighted amount of the present value of cash flow differences[2] - For financial instruments in Stage 1 (no significant increase in credit risk), ECL is measured over the next 12 months, while for Stage 2 (significant increase but no credit impairment) and Stage 3 (credit impairment), ECL is measured over the instrument's lifetime[2] - The company uses a simplified ECL model for receivables like notes and accounts receivable, measuring ECL over the entire lifetime, and groups receivables based on credit risk characteristics[3] Inventory and Fixed Assets - The company uses weighted average cost for inventory valuation and recognizes inventory at fair value in debt restructuring or non-monetary exchanges with commercial substance[7] - Fixed assets are depreciated using the straight-line method, with varying depreciation rates based on asset categories such as buildings (4.75%), machinery (9.50%-19.00%), and electronic equipment (19.00%-31.67%)[11] - Major repair costs for fixed assets are capitalized if they meet the criteria for asset recognition, otherwise, they are expensed, and depreciation continues during repair intervals[12] Borrowing Costs and R&D - Borrowing costs are capitalized if they are directly attributable to the acquisition, construction, or production of a qualifying asset, and capitalization begins when specific conditions are met, including the occurrence of asset expenditures, borrowing costs, and the commencement of necessary activities[13] - The company classifies internal R&D project expenditures into research phase and development phase, with the development phase involving the application of research findings to produce new or significantly improved materials, devices, or products[15] Impairment and Long-term Assets - Long-term assets, including long-term equity investments, right-of-use assets, and fixed assets, are tested for impairment at the balance sheet date, and impairment losses are recognized if the recoverable amount is less than the carrying amount[16] - Long-term prepaid expenses are amortized evenly over the benefit period, and if the expenses no longer provide future benefits, the unamortized balance is written off to current profit or loss[17] Revenue Recognition and Taxes - The company recognizes revenue from sales contracts at the point of delivery acceptance, considering factors such as the transfer of risks and rewards, legal ownership, and physical possession[21] - Income tax includes current tax and deferred tax, with deferred tax recognized using the balance sheet liability method based on temporary differences between the carrying amount and tax base of assets and liabilities[22] - The company reviews the carrying amount of deferred tax assets at the balance sheet date and writes down the value if it is unlikely that sufficient taxable profit will be available to utilize the deferred tax asset[23] Leases and Cash Flow - As a lessee, the company recognizes the right to use leased assets as right-of-use assets and the present value of unpaid lease payments as lease liabilities at the commencement of the lease term[24] - Cash and cash equivalents decreased to RMB 309.34 million from RMB 909.49 million, with restricted cash of RMB 4.60 million[27] - The company applies the new lease accounting standard, recognizing leases based on control of identified assets[40] - The company re-measures lease liabilities and adjusts the carrying amount of right-of-use assets when there are changes in lease payments, with any remaining amount after reducing the carrying amount to zero being recognized in current period profit or loss[41] - The company applies simplified accounting for short-term leases (less than 12 months) and low-value asset leases, recognizing lease payments on a straight-line basis over the lease term[41] Receivables and Provisions - Accounts receivable totaled RMB 96.36 million, with bad debt provisions of RMB 52.78 million, representing a 54.8% provision rate[30] - Other receivables decreased significantly to RMB 8.67 million from RMB 96.24 million[31] - Credit impairment losses totaled RMB 1.30 billion, with RMB 103.36 million newly accrued and RMB 19.68 million recovered[32] - A customer recovered RMB 12.55 million through debt transfer[33] - Bad debt provisions increased from 3,150,436.29 RMB to 5,449,295.34 RMB, with 2,298,859.05 RMB newly provisioned during the year[54] - Bad debt provision balance at the end of 2022 was RMB 1,297,064,765.75, with a total provision of RMB 103,357,648.97 during the year[71] Subsidiaries and Tax Rates - The subsidiary Zhongke Rongtong IoT Technology Wuxi Co., Ltd. enjoys a 15% preferential corporate income tax rate as a high-tech enterprise from 2020 to 2022[26] - The company's subsidiaries have varying corporate income tax rates: 16.5% for Hong Kong Shida Technology Development Co., Ltd. and LIFTINGRISELIMITED, and 20% for Zhengzhou Zhongke Rongtong IoT Technology Information Co., Ltd. and Zhengzhou Airport Zone Zhongke Xinggang Technology Co., Ltd[42] Inventory and PPP Projects - Inventory carrying value decreased from 54,998,600.01 RMB to 27,306,553.18 RMB, with significant reductions in raw materials (13,750,333.40 RMB) and finished goods (13,621,672.20 RMB)[51] - The company's PPP projects increased from 80,684,192.72 RMB to 106,413,220.06 RMB, with the Kezhou PPP project growing from 55,275,199.49 RMB to 65,321,804.11 RMB[53] Property, Plant, and Equipment - The carrying value of property, plant and equipment decreased slightly from 42,349,056.59 RMB to 42,723,241.88 RMB, with the largest component being buildings at 35,701,804.87 RMB[56] - The company's fixed assets increased by RMB 31.29 million due to lease additions, with a total fixed assets balance of RMB 33.11 million at the end of the period[57] Intangible Assets and Goodwill - The company's intangible assets increased by RMB 2.60 million, primarily due to acquisitions, with a total intangible assets balance of RMB 16.93 million at the end of the period[58] - The company's goodwill balance remained unchanged at RMB 330.79 million, with no impairment recorded during the period[60] Deferred Tax Assets and Liabilities - The company's deferred tax assets decreased by RMB 1.59 billion, primarily due to a reduction in deductible temporary differences and deductible losses[62] - The company's deductible losses decreased by RMB 961.35 million, with a total balance of RMB 141.04 million at the end of the period[64] Short-term Borrowings and Payables - The company's short-term borrowings decreased by RMB 20.03 million, with a total balance of RMB 139.08 million at the end of the period[66] - The company's short-term borrowings overdue and not repaid at the end of the period amounted to RMB 88,999,390.00[80] - Accounts payable at the end of the period were RMB 161,438,147.94, with over one-year balances of RMB 45,666,774.38[81] Employee Benefits and Share Capital - The company's short-term employee benefits, including wages and bonuses, amounted to RMB 7,484,166.87 at the end of the period[84] - The company's defined contribution plans, including basic pension and unemployment insurance, totaled RMB 82,084.87 at the end of the period[86] - The company issued 1,555,930,790 shares to restructuring investors, resulting in Fujian Shusheng holding 544,575,590 shares, or 25.00% of the total share capital[87] - The company's actual controller changed to the Fujian Provincial State-owned Assets Supervision and Administration Commission after the restructuring[89] - Total share capital increased from 622,372,316 shares to 2,178,303,106 shares due to a capital reserve transfer [104] Financial Performance and Cash Flow - Revenue in 2022 was RMB 262.31 million, a decrease of 71.54% compared to 2021[143] - Net profit attributable to shareholders in 2022 was RMB -97.58 million, a decrease of 114.14% compared to 2021[143] - Operating cash flow in 2022 was RMB 84.99 million, an increase of 325.31% compared to 2021[143] - Total assets at the end of 2022 were RMB 927.57 million, a decrease of 42.98% compared to 2021[144] - Basic earnings per share in 2022 was RMB -0.0509, a decrease of 104.59% compared to 2021[145] - Revenue in Q4 2022 was RMB 79.18 million, with a net loss attributable to shareholders of RMB -9.69 million[147] - The company's weighted average return on equity in 2022 was -24.14%[145] - The company's operating cash flow in Q4 2022 was RMB 77.02 million[148] - The company's net profit attributable to shareholders in Q3 2022 was RMB 25.72 million[147] Business Segments and Revenue - Main business revenue for 2022 was 255.2024 million yuan, primarily from big data and IoT perimeter security businesses[115] - Newly added big data business generated revenue of RMB 180.40 million and a gross profit of RMB 53.52 million in 2022[154] - IoT perimeter security business, operated by subsidiary Zhongke Rongtong, generated revenue of RMB 74.21 million and a gross profit of RMB 4.67 million in 2022[155] - The company's big data business generated revenue of 180,401,754.59 RMB with a gross margin of 29.67%[177] - The IoT perimeter security system business achieved revenue of 74,800,669.30 RMB, a year-on-year increase of 40.71%, with a gross margin increase of 14.59 percentage points[177] - Total revenue for the company was 255,202,423.89 RMB, a year-on-year decrease of 71.15%, but with a gross margin increase of 14.50 percentage points[177] - The company's revenue in mainland China was 255,202,423.89 RMB, accounting for 100% of total revenue, with a gross margin increase of 14.67 percentage points[177] Technology and Innovation - The company has developed advanced technologies in IoT perimeter security, including radio reverse engineering, AI analysis, and multi-sensor fusion, achieving decimeter-level target positioning and intelligent detection[174] - The company's Smart-UBI 3D intrusion prevention system integrates air, space, ground, and sea capabilities, enabling intelligent detection, behavior analysis, and precise decision-making[174] - The company is focusing on AIoT research, building a cloud-edge computing architecture, and breaking through multi-level fusion technology for electromagnetic, photoelectric, visual, and location information[174] - The company's IoT perimeter security business has achieved breakthroughs in micro-vibration and fiber grating multi-sensor fusion technology, effectively solving high false alarm rates in complex outdoor environments[174] - The company has developed core technologies including MEMS acceleration, fiber grating, radar sensing, thermal image enhancement algorithms, and dynamic scene target tracking algorithms[174] - The company's IoT application integration platform architecture features high scalability based on rule engines, supporting the development of emerging service models[174] Investments and Subsidiaries - The company invested RMB 5,000,000 in Beijing Shida Digital Intelligence Technology Research Institute Co., Ltd., holding a 100% stake[196] - The company invested RMB 3,000,000 in Fuzhou Zhisheng Commercial Management Co., Ltd., holding a 100% stake[196] - Other non-current financial assets decreased from RMB 2,879,458.42 at the beginning of the period to RMB 2,093,216.10 at the end of the period[198] - Zhongke Rongtong IoT Technology Wuxi Co., Ltd., a wholly-owned subsidiary, reported total assets of RMB 499,702,346.51 and a net loss of RMB 5,258,310.61[198] Industry Trends and Market Data - The scale of China's big data industry reached RMB 1.57 trillion in 2022, a year-on-year increase of 18%[170] - The total number of big data market entities in China exceeded 180,000 in 2021[170] - The total investment and financing amount for big data-related enterprises in China exceeded RMB 80 billion in 2021[170] - Global big data volume is growing rapidly, with 2020's new data volume reaching 64ZB, a 400% increase from 2016, and is projected to reach 2140ZB by 2035[200] - The company highlights three major trends in the big data industry: infrastructure growth, rapid development in big data analytics, and accelerated legislation related to big data[200] Contracts and Liabilities - The total contract amount for the dual-carbon green energy center application service procurement is 457 million RMB, with 26.7 million RMB already fulfilled and 430.3 million RMB remaining to be fulfilled[179] - The company's estimated liabilities decreased by 55.52% compared to the previous period, with a total of 24.8 million RMB[193] R&D and Intellectual Property - The company's R&D investment in 2022 was 17.96 million RMB, accounting for 6.84% of the company's operating income[187] - The company submitted 42 software copyright applications and obtained 41 certificates, filed 1 invention patent application, and completed the transfer of 10 patents[189] - The company's R&D personnel accounted for 17.48% of the total number of employees, with 4 master's degree holders and 20 bachelor's degree holders[188] Strategic Transformation and Industry Position - The company has completed the strategic transformation of big data business and expanded its industrial chain layout[183] - The company's big data industry system has initially formed, with the value of the big data industry continuously increasing[194] - The domestic security industry is entering a mature phase, with market concentration expected to further consolidate towards leading companies[195] Shareholders and Ownership - The largest shareholder, Fujian Shusheng Investment Partnership (Limited Partnership), holds 544,575,590 shares, representing 25.00% of the total shares[109] - Beijing Angzhan Technology Development Co., Ltd. reduced its holdings by 311,225,000 shares, now holding 124,843,907 shares, or 5.73% of the total shares[109] - Zheng Liuying holds 108,697,300 shares, accounting for 4.99% of the total shares[109] - Fujian Weikai Investment Partnership (Limited Partnership) holds 108,697,300 shares, representing 4.99% of the total shares[109] - Lin Qiang holds 107,000,000 shares, accounting for 4.91% of the total shares[109] - Fuzhou Chiheng Chengda Investment Partnership (Limited Partnership) holds 106,043,500 shares, representing 4.87% of the total shares[109] - Jing Jiankun holds 102,087,400 shares, accounting for 4.69% of the total shares[109] - Zhou Yingzui holds 101,135,800 shares, representing 4.64% of the total shares[109] - Quzhou Dongkun Technology Service Center (Limited Partnership) holds 97,912,800 shares, accounting for 4.49% of the total shares[109] - Huang Langfeng holds 91,688,800 shares, representing 4.21% of the total shares[109] Liquidity and Guarantees - The company implemented a 200 million yuan loan from its controlling shareholder and related parties to alleviate liquidity risks, with 9 million yuan actually utilized during the reporting period[120] - Total guarantees provided by the company and its subsidiaries amounted to 50 million yuan, accounting for 14.08% of the company's net assets[122] Non-recurring Gains and Losses - Non-recurring gains and losses for 2022 amounted to RMB 39.41 million, a significant decrease from RMB 2.41 billion in 2021, mainly due to the absence of large government subsidies and debt restructuring gains[149] Industry and Market Analysis - The company successfully achieved industrial transformation and upgrading in 2022, expanding into big data and digital government businesses while maintaining its IoT perimeter security business[153] - Zhongke Rongtong, a subsidiary, has developed core technologies and launched the Ruiying low-altitude drone defense series, contributing to the company's product-level advantages in the IoT perimeter security sector[158] Financial Ratios and Metrics - Basic earnings per share and net assets per share for 2022 were -0.0509 yuan and 0.1850 yuan, respectively, after adjusting for the share capital increase [105] - The company's total number of ordinary shareholders at the end of the reporting period was 29,402 [107] Cost and Procurement - The company's total cost for the reporting period is 196.96 million RMB, a decrease of 75.71% compared to the previous year, with big data business accounting for 64.42% of the total cost[180] - The top five customers accounted for 95.72% of the total annual sales, with 59.76% of the sales coming from related parties[184] - The top five suppliers accounted for 80.78% of the total annual procurement, with no procurement from related parties[184] Other Financial Metrics - The company's inventory classification and impairment provisions are applicable, but no specific figures are provided[72] - Accounts payable over 1 year old total 21,531