DAHAO TECHNOLOGY(SH:603025)2019-05-13 16:00Dividend and Profit Distribution - The company proposed a cash dividend of 3 RMB per 10 shares, totaling 276,567,213.3 RMB, subject to shareholder approval [4]. - The mid-term distribution plan included a capital reserve transfer of 4.5 shares for every 10 shares held [4]. - The company did not propose a cash profit distribution plan for the reporting period despite having positive distributable profits [149]. - The company plans to distribute at least 30% of its distributable profits as cash dividends annually from 2018 to 2020 [148]. Financial Performance - The company's operating revenue for 2018 was approximately CNY 1.07 billion, representing a 1.67% increase from 2017 [23]. - Net profit attributable to shareholders decreased by 6.79% to approximately CNY 369.57 million in 2018 [23]. - The basic earnings per share for 2018 was CNY 0.40, down 9.09% from the previous year [23]. - The weighted average return on equity decreased to 20.24% in 2018, down from 24.94% in 2017 [23]. - The total profit amounted to 426 million yuan, a decrease of approximately 7% compared to the previous year, while the net profit attributable to shareholders was 370 million yuan, down 6.79% year-on-year [64]. Audit and Compliance - The financial report was audited by Beijing Xinghua Accounting Firm, which issued a standard unqualified opinion [4]. - The company has ensured that it will not harm its interests through related party transactions [158]. - There were no significant litigation or arbitration matters reported for the year [168]. - The integrity status of the company and its major stakeholders remained good, with no significant debts or court judgments outstanding [168]. Market Position and Competition - The company holds a leading market position in the domestic sewing equipment control sector, with a market share of approximately 80% for embroidery machine control systems and around 85% for sock machine control systems [38]. - In 2018, the domestic sales of domestic embroidery machine control systems decreased by 22%, with major competitors like Dahao holding over 80% market share [44]. - The company achieved a market share of approximately 80% in the domestic embroidery machine electric control system market and around 85% in the sock machine control system market in 2018 [54]. - The company completed the acquisition of Dahao Mingde in 2017, which has led to a continuous increase in sales volume of sock machine electric control systems, further solidifying its market leader position [50]. Research and Development - The company has significantly invested in R&D, enhancing product performance and user experience, leading to high satisfaction rates among embroidery machine manufacturers and processing enterprises [44]. - The company is focusing on developing core technologies and protecting intellectual property to drive innovation in the sewing equipment manufacturing sector [139]. - Research and development expenses increased by 19.30% year-on-year to CNY 102,429,959.06, accounting for 9.53% of total revenue [81]. - The company has made significant investments in product R&D, which is a core competitive advantage, and has improved its information technology infrastructure [64]. Sales and Revenue Trends - The revenue share of the embroidery machine control system decreased from 75% to 55%, indicating a diversification in product lines and reduced reliance on a single product [60]. - The special industrial sewing machine and sock machine control systems saw significant revenue growth, contributing to the overall increase in the company's income from other product lines [60]. - The sock machine product revenue surged by 163.05%, with sales volume increasing by 159.85% year-on-year, indicating strong market demand [68]. - The company maintained a market share of 80% in embroidery machine control products and 85% in sock machine control products, indicating strong competitive positioning [71]. Operational Efficiency - The net cash flow from operating activities increased by 42.17% to approximately CNY 303.10 million [23]. - The company has implemented a dual approach of talent cultivation and recruitment to optimize its human resources and enhance employee development [64]. - The company has successfully launched the MES+WMS systems, improving production efficiency and product quality traceability [64]. - The company's total operating costs rose by 8.91% to CNY 548,812,551.35, driven by higher material and labor costs [71]. Industry Trends and Challenges - The overall economic environment for the sewing machinery industry was impacted by the US-China trade dispute and a slowdown in domestic demand, resulting in a more cautious market outlook [100]. - The industry is expected to face challenges in 2019, with a potential shift from positive to negative growth due to market saturation and external economic pressures [127]. - The company anticipates a significant shift in the garment manufacturing industry, with a trend towards automation and digitalization driven by rising labor costs and the need for industrial upgrades [132]. Investment and Financial Management - The company has invested RMB 220 million of idle raised funds in bank wealth management products, with an outstanding balance of RMB 90 million [175]. - The company has engaged in multiple entrusted financial management plans, with amounts ranging from 100 million RMB to 150 million RMB and annualized returns between 5.00% and 8.00% [184]. - The company has implemented strict risk control measures for financial product investments, including evaluating the qualifications and capabilities of trustees and tracking the investment direction and project progress [181]. - The company has established a management system for investment responsibilities to prevent blind investments and ensure the safety of investment funds [181].