秦安股份(603758) - 2019 Q2 - 季度财报

Definitions Definitions of Common Terms This section defines common terms used in the report, including company names, subsidiaries, and major clients - "Qinan Mechanical & Electrical", "Qinan Investments", "the Company", and "this Company" all refer to Chongqing Qinan Mechanical & Electrical Co, Ltd[11] - Major subsidiaries listed include Chongqing Qinan Casting Co, Ltd (Qinan Casting) and Chongqing Meifeng Qinan Automotive Drive System Co, Ltd (Meifeng Qinan)[11] - Major customers specified include Changan Ford, Changan Automobile, SAIC-GM-Wuling, Geely, GAC, Beiqi Foton, FAW, and Quanchai Power[11] Company Profile and Key Financial Indicators Company Information This section provides the company's basic registration information, including its name and legal representative - The company's Chinese name is 重庆秦安机电股份有限公司, with the short name 秦安股份[14] - The legal representative is YUANMING TANG[14] Contact Person and Methods This section provides contact information for the company's Board Secretary and Securities Affairs Representative - The Board Secretary is Zhang Huaming, and the Securities Affairs Representative is Xu Rui[15] - The company's contact address is No 3, 701 Lanmei Road, Jiulongpo District, Chongqing[15] Changes in Basic Information This section discloses the company's registered address and contact details, noting no changes during the period - The company's registered and office address is No 3, 701 Lanmei Road, Jiulongpo District, Chongqing[16] - There were no changes to the company's basic information during the reporting period[16] Changes in Information Disclosure and Filing Location This section specifies the designated media for information disclosure, with no changes during the period - The designated newspapers for information disclosure are Shanghai Securities News, China Securities Journal, and Securities Times[17] - The designated website for semi-annual reports is www.sse.com.cn[17](index=17&type=chunk) Company Stock Profile This section provides information on the company's A-share stock listing, ticker, and code - The company's A-shares are listed on the Shanghai Stock Exchange under the ticker Qinan Investments and stock code 603758[18] Key Accounting Data and Financial Indicators The company's H1 2019 results show significant declines in revenue and net profit, with operating cash flow turning negative Key Accounting Data for H1 2019 | Indicator | Current Period (Jan-Jun) (CNY) | Prior Year Period (CNY) | Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 225,875,431.15 | 386,106,196.61 | -41.50 | | Net Profit Attributable to Shareholders | -56,915,169.43 | -7,380,466.92 | -671.16 | | Net Profit Attributable to Shareholders (Excluding Non-recurring Items) | -62,990,650.40 | -10,349,358.62 | -508.64 | | Net Cash Flow from Operating Activities | -47,890,321.38 | 136,418,314.73 | -135.11 | | Net Assets Attributable to Shareholders (End of Period) | 2,281,534,149.58 | 2,337,650,148.05 | -2.40 | | Total Assets (End of Period) | 2,424,039,940.20 | 2,496,392,153.11 | -2.90 | Key Financial Indicators for H1 2019 | Indicator | Current Period (Jan-Jun) | Prior Year Period | Change (%) | | :--- | :--- | :--- | :--- | | Basic Earnings Per Share (CNY/share) | -0.13 | -0.02 | -550.00 | | Diluted Earnings Per Share (CNY/share) | -0.13 | -0.02 | -550.00 | | Basic EPS (Excluding Non-recurring Items) (CNY/share) | -0.14 | -0.02 | -600.00 | | Weighted Average Return on Equity (%) | -2.46 | -0.30 | Decreased by 2.16 percentage points | | Weighted Average ROE (Excluding Non-recurring Items) (%) | -2.73 | -0.42 | Decreased by 2.31 percentage points | Non-recurring Profit and Loss Items and Amounts This section details the non-recurring profit and loss items for the reporting period, totaling CNY 6,075,480.97 Non-recurring Profit and Loss Items for H1 2019 | Item | Amount (CNY) | | :--- | :--- | | Gains/Losses on Disposal of Non-current Assets | 69,146.56 | | Government Grants Recognized in Current Profit or Loss | 4,728,245.77 | | Gains/Losses from Entrusted Investments or Asset Management | 2,373,084.57 | | Other Non-operating Income and Expenses | -22,852.23 | | Income Tax Impact | -1,072,143.70 | | Total | 6,075,480.97 | Company Business Overview Main Business, Operating Model, and Industry Overview The company specializes in core auto engine parts, operates on a build-to-order model, and faced severe auto industry downturns in H1 2019 - The company's main business is the R&D, production, and sales of core automotive engine components (cylinder blocks, cylinder heads, crankshafts, transmission housings, etc) for the OEM market[28] - The company operates on a "build-to-order" model, securing business through bidding, contracting, bulk purchasing, production, and delivery[29] - The company has entered the new energy vehicle sector through its wholly-owned subsidiary, Meifeng Qinan[28] - In the first half of 2019, China's auto sales fell by 12.4% YoY, with passenger vehicle production and sales declining by 14%, while new energy vehicle growth slowed to 49.6%[41] - The market downturn in H1 primarily affected low-end economy models, while high-end vehicle demand remained stable or even grew[42] Main Business The company is a professional manufacturer of core automotive engine components and has expanded into the new energy sector - The company is a domestic professional manufacturer of core automotive engine components, with main products including cylinder blocks, cylinder heads, crankshafts, and transmission housings[28] - All products are supplied to the passenger vehicle OEM market, serving vehicle and engine manufacturers[28] - The company established a wholly-owned subsidiary, Meifeng Qinan, to enter the new energy vehicle sector[28] Operating Model The company's "build-to-order" model integrates procurement, production, and direct sales to OEM clients - The core operating model is "build-to-order", involving bidding, contracting, bulk purchasing, production, and supply[29] - Production models include processing self-made casting blanks, processing outsourced casting blanks, and processing customer-supplied casting blanks[31] - The sales model is primarily direct sales to vehicle and engine manufacturers, with major clients including Changan Ford, SAIC-GM-Wuling, Changan Automobile, GAC, and Geely[34] - Tooling is generally owned by the vehicle/engine manufacturer, and the company recovers tooling costs through separate purchases or amortization[35][36] Industry Situation In H1 2019, the Chinese auto market experienced a comprehensive sales decline, with the industry facing significant economic pressure - From January to June 2019, China's auto sales reached 12.323 million units, a year-on-year decrease of 12.4%[41] - Passenger vehicle production and sales declined by 14% YoY, while commercial vehicle production and sales fell by 4.1% YoY[41] - New energy vehicle production and sales grew by 49.6% YoY, a significant slowdown from the previous year's growth rate[41] - Key enterprises in the automotive industry showed a downward trend in economic indicators, with significant declines in profits and total tax payments[41] Core Competitiveness Analysis The company's core strengths lie in its advanced technology, integrated capabilities, product development, quality management, cost control, and scale - Possesses highly automated casting process technologies for ferrous and non-ferrous metals, and advanced machining processes for core engine components and transmission housings[44] - Equipped with internationally leading production equipment such as German HWS casting lines, Austrian FILL production lines, and Swiss Bühler die-casting cells, along with advanced inspection equipment like industrial CT and 3D laser scanners[45] - Features integrated casting and machining capabilities for product development and production, ensuring stable quality, short logistics, and high efficiency[47] - Employs an experienced product development team and a comprehensive development system, utilizing tools like MAGMA casting simulation software, and has received multiple "Excellent Innovation Awards" from customers[48][49] - Completed the transition from ISO/TS16949 to IATF16949 and achieved 24 consecutive months of 0 PPM for products supplied to Changan Ford, earning an "Excellent Quality Award"[50] - Demonstrates strong cost control through in-house integration of large production lines, alloy preparation capabilities, and the promotion of lean production management[51] - Holds advantages in production scale and market share, with a diverse product portfolio covering key engine and transmission components, which mitigates market risks[52] Discussion and Analysis of Operations Overview of Operations In H1 2019, the company's revenue fell sharply, resulting in a net loss due to market decline, while maintaining a solid financial position and pursuing strategic initiatives - In H1 2019, the company's operating revenue was CNY 225.88 million, a decrease of 41.5% YoY; net profit attributable to shareholders was a loss of CNY 56.92 million[55] - The loss was mainly due to the overall decline in the auto market, reduced customer demand leading to lower production and higher unit depreciation, and new products not yet reaching mass production[55] Financial Position as of June 30, 2019 | Indicator | Amount (CNY billion) | Ratio (%) | | :--- | :--- | :--- | | Total Assets | 2.424 | - | | Total Liabilities | 0.143 | - | | Total Equity | 2.282 | - | | Debt-to-Asset Ratio | 5.9 | - | | Cash Ratio | 5.27 | - | - The company is actively expanding its customer base and has established a diversified client portfolio of joint venture and domestic brands[56] - In H1, the company initiated R&D for 9 new projects, delivered OTS samples for 6 projects, and began mass production for some Geely projects and small-batch production for key Changan Ford projects[58] - Implemented a comprehensive human resources strategy, including talent acquisition, training, and compensation system revisions[59] - Launched the 2019 stock option incentive plan, granting 27.42 million stock options to 95 participants[60] - Steadily advanced its new energy vehicle business by establishing a wholly-owned subsidiary, Chongqing Meifeng Qinan Automotive Drive System Co, Ltd, and investing in R&D[62][63] Analysis of Main Business The company's revenue and costs fell significantly, while cash flows from operations turned negative and investing cash flows increased sharply Analysis of Financial Statement Item Changes in H1 2019 | Item | Current Period (CNY) | Prior Year Period (CNY) | Change (%) | Reason for Change | | :--- | :--- | :--- | :--- | :--- | | Operating Revenue | 225,875,431.15 | 386,106,196.61 | -41.50 | Weak market sales and reduced demand from major customers | | Operating Costs | 239,214,761.20 | 354,817,745.77 | -32.58 | Decrease in costs corresponding to lower revenue | | Selling Expenses | 5,889,533.27 | 8,346,281.16 | -29.44 | Reduction in warranty claim expenses | | Administrative Expenses | 43,329,677.14 | 24,581,774.26 | 76.27 | Increase in equipment depreciation and mold amortization | | Finance Costs | -10,871,030.89 | -7,780,174.40 | -39.73 | Increase in interest income from deposits | | R&D Expenses | 13,237,193.65 | 12,338,386.85 | 7.28 | Increase in R&D expenses for new projects | | Net Cash Flow from Operating Activities | -47,890,321.38 | 136,418,314.73 | -135.11 | Decreased sales revenue; shift from cash to bill settlements | | Net Cash Flow from Investing Activities | 155,177,192.37 | -279,593,060.40 | 155.50 | Recovery of investment funds and reduced investment in wealth management products | | Net Cash Flow from Financing Activities | 3.91 | -87,017,085.75 | 100.00 | No loan repayments or dividend distributions | Analysis of Assets and Liabilities The company's asset and liability structure changed due to accounting policy updates, increased bill settlements, and lower production volumes Changes in Assets and Liabilities as of June 30, 2019 | Item | Current Period-End (CNY) | % of Total Assets | Prior Period-End (CNY) | % of Total Assets | Change (%) | Explanation | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Trading Financial Assets | 90,636,880.92 | 3.74 | 0.00 | 0.00 | - | Reclassification of wealth management products due to accounting policy change | | Notes Receivable | 113,851,446.87 | 4.70 | 33,315,898.05 | 1.33 | 241.73 | Increased sales settled with notes | | Prepayments | 9,410,949.27 | 0.39 | 5,415,704.42 | 0.22 | 73.77 | Increased prepayments for molds to be sold | | Other Receivables | 976,472.01 | 0.04 | 2,015,640.94 | 0.08 | -51.56 | Collection of CNY 0.97 million in interest receivable | | Other Current Assets | 2,201,064.84 | 0.09 | 100,857,244.01 | 4.04 | -97.82 | Reclassification of wealth management products due to accounting policy change | | Deferred Tax Assets | 23,951,390.28 | 0.99 | 13,844,753.54 | 0.55 | 73.00 | Increase in un-remedied losses | | Other Non-current Assets | 13,220,122.86 | 0.55 | 5,573,557.07 | 0.22 | 137.19 | Increased prepayments for equipment and self-use molds | | Employee Benefits Payable | 6,042,758.51 | 0.25 | 10,632,192.56 | 0.43 | -43.17 | Lower production and payment of 2018 year-end bonuses | | Taxes Payable | 2,824,438.84 | 0.12 | 9,172,638.60 | 0.37 | -69.21 | Decrease in VAT payable | | Other Payables | 1,422,907.64 | 0.06 | 2,746,363.25 | 0.11 | -48.19 | Decrease in payables for垫款 | | Provisions | 190,351.82 | 0.01 | 382,453.03 | 0.02 | -50.23 | Settlement of accrued warranty expenses | Major Restricted Assets as of June 30, 2019 | Item | Period-End Book Value (CNY) | Reason for Restriction | | :--- | :--- | :--- | | Cash and Cash Equivalents | 1,462,716.61 | Letter of credit deposits, litigation freeze | | Notes Receivable | 4,522,000.00 | Pledged for bank acceptance bills | | Total | 5,984,716.61 | - | Investment Analysis The company invested CNY 459.85 million of idle funds in principal-protected and non-principal-protected wealth management products Outstanding Wealth Management Products as of June 30, 2019 | Trustee | Product Name | Product Type | Amount (CNY 10k) | Term | Start Date | End Date | Funding Source | Expected Annualized Return | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | China Guangfa Bank | "Wuhua Tianbao" Structured Deposit | Principal-Protected Floating Return | 10,000 | 182 days | 2019/3/29 | 2019/9/27 | Own Funds | 2.6% or 4.25% | | China Construction Bank | Qian Yuan-Xin (7-day) Fixed Income Net Value Product | Non-Principal-Protected Floating Return | 5,000 | Non-fixed | 2019/4/3 | Redeemable | Own Funds | Per CCB announcement | | China Merchants Bank | Tian Tian Jin 9250 | Non-Principal-Protected Floating Return | 3,984.72 | Non-fixed | 2019/4/2 | Redeemable | Own Funds | Per CMB announcement | | China Guangfa Bank | "Wuhua Tianbao" Structured Deposit | Principal-Protected Floating Return | 16,000 | 183 days | 2019/6/26 | 2019/12/26 | Own Funds | 2.6% or 4.05% | | Bank of Communications | Yuntong Wealth Fixed-Term Structured Deposit | Principal-Protected Floating Return | 11,000 | 182 days | 2019/6/28 | 2019/12/27 | Own Funds | 4.00%-4.10% | | Total | - | - | 45,984.72 | - | - | - | - | - | Analysis of Major Subsidiaries The subsidiary Qinan Casting's net profit fell by 87.01% to a loss of CNY 32.41 million due to weak customer demand Financial Data of Major Subsidiaries | Company Name | Ownership (%) | Total Assets (CNY 10k) | Net Assets (CNY 10k) | Net Profit (CNY 10k) | | :--- | :--- | :--- | :--- | :--- | | Chongqing Qinan Casting Co, Ltd | 100% | 92,660.42 | 73,348.40 | -3,240.77 | | Chongqing Meifeng Qinan Automotive Drive System Co, Ltd | 100% | 22.83 | 14.13 | -35.87 | - Chongqing Qinan Casting Co, Ltd's net profit decreased by 87.01% YoY, primarily due to weak market sales from its customers, leading to lower revenue[79] Warning of Potential Cumulative Net Loss The company anticipates a cumulative net loss from the beginning of the year to the end of the third quarter - The company's net profit attributable to the parent company for H1 2019 was -CNY 56.92 million, a decrease of 671.16% YoY[80] - Based on demand forecasts from major customers, a cumulative net loss is expected from the beginning of the year to the end of the third quarter[80] Potential Risks The company faces risks from economic fluctuations, policy changes, new business ventures, customer concentration, and price pressures - Increasing downward pressure on the macroeconomy could significantly impact the company's operating performance[82] - Potential adjustments to automotive industry policies, including those aimed at curbing overcapacity, could affect the auto parts sector[83] - Entering the new energy vehicle sector will present new challenges and market competition risks[83] - High concentration of major customers means that any order shift or adverse performance from key clients would directly impact profitability[84] - The company faces pressure from annual price reductions or initial pricing that factors in future price cuts for auto parts[85][86] - Fluctuations in the prices of major raw materials (aluminum ingots, carbon steel) will directly affect production costs and operating results[87] Important Matters Shareholders' Meetings The 2018 Annual General Meeting was held on May 24, 2019, with resolutions disclosed the following day - The 2018 Annual General Meeting was held on May 24, 2019, and the resolutions were disclosed on the Shanghai Stock Exchange website on May 25, 2019[90] Profit Distribution or Capitalization of Capital Reserves Plan The company will not distribute profits or capitalize capital reserves for the current reporting period - No profit distribution or capitalization of capital reserves will be conducted for this reporting period[91] Performance of Commitments All IPO-related commitments made by the company and its stakeholders were strictly fulfilled during the reporting period - The actual controller, YUANMING TANG, fulfilled commitments regarding non-competition, avoidance of related-party transactions, and share lock-ups[93][95] - Shareholders Xianghe Hong'an, Shanghai Hongcheng, and Xianghe Yong'an fulfilled commitments on non-competition and share lock-ups[95][97] - The company fulfilled its commitments to implement share price stabilization measures when triggered and to follow a differentiated cash dividend policy[100][102] - All committing parties timely and strictly fulfilled their respective commitments during the reporting period[93][95][97][99][100][102][103] Appointment and Dismissal of Accounting Firm The company re-appointed Tianjian Certified Public Accountants as its auditor for the 2019 fiscal year - The company re-appointed Tianjian Certified Public Accountants (Special General Partnership) as its audit firm for the 2019 fiscal year[104] Material Litigation and Arbitration The company had no material litigation or arbitration matters during the reporting period - The company had no material litigation or arbitration matters during this reporting period[105] Integrity Status The company and its controlling shareholders maintained a good integrity record with no major defaults - During the reporting period, the company, its controlling shareholder, and actual controller had no adverse integrity issues such as unfulfilled court judgments or significant overdue debts[105] Equity Incentive Plan The company has disclosed its 2019 stock option incentive plan, with no subsequent changes in implementation - The company has disclosed the summary of its 2019 stock option incentive plan (draft) and the announcement of the grant[106] - There have been no further developments or changes in the implementation of the equity incentive plan[106] Material Contracts and Their Performance The company provided a CNY 70 million guarantee for its subsidiary and invested CNY 459.85 million in wealth management products - The company had no external guarantees during the reporting period (excluding guarantees for subsidiaries)[110] - The company provided a CNY 70 million comprehensive credit guarantee for its subsidiary Qinan Casting, representing 3.07% of the company's net assets[110][111] Wealth Management Contracts in Effect as of June 30, 2019 | Trustee | Product Name | Product Type | Amount (CNY 10k) | Term | Start Date | End Date | Funding Source | Expected Annualized Return | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | China Guangfa Bank | "Wuhua Tianbao" Structured Deposit | Principal-Protected Floating Return | 10,000 | 182 days | 2019/3/29 | 2019/9/27 | Own Funds | 2.6% or 4.25% | | China Construction Bank | Qian Yuan Anxin (7-day) Fixed Income Net Value Product | Non-Principal-Protected Floating Return | 5,000 | Non-fixed | 2019/4/3 | Redeemable | Own Funds | Per CCB announcement | | China Merchants Bank | Tian Tian Jin 9250 | Non-Principal-Protected Floating Return | 3,984.72 | Non-fixed | 2019/4/2 | Redeemable | Own Funds | Per CMB announcement | | China Guangfa Bank | "Wuhua Tianbao" Structured Deposit | Principal-Protected Floating Return | 16,000 | 183 days | 2019/6/26 | 2019/12/26 | Own Funds | 2.6% or 4.05% | | Bank of Communications | Yuntong Wealth Fixed-Term Structured Deposit | Principal-Protected Floating Return | 11,000 | 182 days | 2019/6/28 | 2019/12/27 | Own Funds | 4.00%-4.10% | | Total | - | - | 45,984.72 | - | - | - | - | - | Environmental Information The company and its subsidiary comply with environmental regulations and have passed ISO14001:2015 recertification - The company and its subsidiary Qinan Casting strictly adhere to environmental regulations, promote clean production, and strengthen pollution control[114] - Environmental protection facilities at both the company and its subsidiary are operating normally, with major pollutants (waste gas, wastewater, solid waste, noise) consistently meeting discharge standards[114][120] - Both the company and its subsidiary have passed the recertification for the ISO14001:2015 environmental management system standard[114] - Qinan Casting treats waste gas with baghouse dust collectors and wastewater through biochemical tanks and treatment stations, with an online monitoring system installed[116][118] - Solid waste is sorted for disposal, with general industrial waste being recycled and hazardous waste handled by qualified third parties[119] Other Important Matters The company implemented accounting policy changes by revising financial statement formats and adopting new financial instrument standards - The company revised its 2019 general corporate financial statement format in accordance with the Ministry of Finance's "Caikuai [2019] No 6" document[122][253] - The company adopted new financial instrument standards and made retrospective adjustments to the opening balance of retained earnings[122][253][259][264] Changes in Common Stock and Shareholder Information Changes in Share Capital The company's share structure changed as 17.3 million restricted shares became unrestricted, while total share capital remained constant Share Capital Change Table | Item | Pre-Change Quantity (shares) | Pre-Change Ratio (%) | Change (+/- shares) | Post-Change Quantity (shares) | Post-Change Ratio (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | I. Restricted Shares | 305,298,169 | 69.58 | -17,300,000 | 287,998,169 | 65.64 | | 3. Other Domestic Holdings | 17,300,000 | 3.94 | -17,300,000 | 0 | 0 | | Domestic Individual Holdings | 17,300,000 | 3.94 | -17,300,000 | 0 | 0 | | 4. Foreign Holdings | 287,998,169 | 65.64 | 0 | 287,998,169 | 65.64 | | II. Unrestricted Circulating Shares | 133,498,880 | 30.42 | 17,300,000 | 150,798,880 | 34.36 | | 1. RMB Ordinary Shares | 133,498,880 | 30.42 | 17,300,000 | 150,798,880 | 34.36 | | III. Total Shares | 438,797,049 | 100 | 0 | 438,797,049 | 100 | - The change in share capital was primarily due to the lifting of restrictions on shares from the initial public offering[126] Changes in Restricted Shares A total of 17,300,000 IPO-restricted shares held by 10 shareholders were released from lock-up on May 17, 2019 Details of Restricted Share Changes | Shareholder Name | Opening Restricted Shares | Restricted Shares Released | Restricted Shares Added | Closing Restricted Shares | Reason for Restriction | Release Date | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Tang Zizhang | 3,450,000 | 3,450,000 | - | - | IPO Lock-up | 2019/5/17 | | Yang Li | 3,400,000 | 3,400,000 | - | - | IPO Lock-up | 2019/5/17 | | Zhang Huaming | 3,200,000 | 3,200,000 | - | - | IPO Lock-up | 2019/5/17 | | Tang Yadong | 3,500,000 | 3,500,000 | - | - | IPO Lock-up | 2019/5/17 | | Luo Xiaochuan | 650,000 | 650,000 | - | - | IPO Lock-up | 2019/5/17 | | Zhou Bin | 1,700,000 | 1,700,000 | - | - | IPO Lock-up | 2019/5/17 | | Liu Jing | 600,000 | 600,000 | - | - | IPO Lock-up | 2019/5/17 | | Xu Zheng | 100,000 | 100,000 | - | - | IPO Lock-up | 2019/5/17 | | Yao Liguo | 400,000 | 400,000 | - | - | IPO Lock-up | 2019/5/17 | | Tang Xudong | 300,000 | 300,000 | - | - | IPO Lock-up | 2019/5/17 | | Total | 17,300,000 | 17,300,000 | 0 | 0 | - | - | Shareholder Information The company had 17,783 shareholders, with YUANMING TANG being the largest, holding 65.63% as restricted shares - As of the end of the reporting period, the total number of common stock shareholders was 17,783[128] Top Ten Shareholders as of the End of the Reporting Period | Shareholder Name | Period-End Holdings (shares) | Percentage (%) | Restricted Shares Held (shares) | Share Status | Pledged or Frozen Shares | Shareholder Type | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | YUANMING TANG | 287,998,169 | 65.63 | 287,998,169 | None | - | Foreign Individual | | Xianghe Hong'an | 14,409,200 | 3.28 | - | None | - | Domestic Non-State-Owned Legal Entity | | Shanghai Hongcheng | 9,626,000 | 2.19 | - | None | - | Domestic Non-State-Owned Legal Entity | | Xianghe Yong'an | 9,221,385 | 2.10 | - | None | - | Domestic Non-State-Owned Legal Entity | | Tang Zizhang | 6,850,000 | 1.56 | - | Pledged | 3,580,000 | Domestic Individual | | Zhang Yushu | 4,176,397 | 0.95 | - | None | - | Domestic Individual | | Yang Li | 4,150,000 | 0.95 | - | None | - | Domestic Individual | | Lancheng Qinan | 4,060,934 | 0.93 | - | None | - | Domestic Non-State-Owned Legal Entity | | Zhang Huaming | 3,600,000 | 0.82 | - | Pledged | 2,150,000 | Domestic Individual | | Tang Yadong | 3,502,000 | 0.80 | - | None | - | Domestic Individual | - The 287,998,169 restricted shares held by YUANMING TANG will become tradable on May 17, 2020[133] Preferred Stock Information Preferred Stock Information The company had no preferred stock during the reporting period - The company has no preferred stock-related matters[136] Directors, Supervisors, and Senior Management Changes in Shareholdings There were no changes in the shareholdings of the company's directors, supervisors, and senior management during the period Shareholding Changes of Directors, Supervisors, and Senior Management | Name | Position | Opening Holdings (shares) | Closing Holdings (shares) | Change during Period (shares) | Reason for Change | | :--- | :--- | :--- | :--- | :--- | :--- | | YUANMING TANG | Director | 287,998,169 | 287,998,169 | 0 | N/A | | Tang Zizhang | Director | 6,850,000 | 6,850,000 | 0 | N/A | | Zhang Huaming | Director | 3,600,000 | 3,600,000 | 0 | N/A | | Luo Xiaochuan | Director | 2,450,000 | 2,450,000 | 0 | N/A | | Zhou Bin | Director | 2,100,000 | 2,100,000 | 0 | N/A | | Liu Hongqing | Director | 150,000 | 150,000 | 0 | N/A | | Yang Ying | Supervisor | 528,300 | 528,300 | 0 | N/A | | Yan Zhenggang | Supervisor | 284,100 | 284,100 | 0 | N/A | | Zhang Maoliang | Supervisor | 100,000 | 100,000 | 0 | N/A | | Tang Yadong | Senior Management | 3,502,000 | 3,502,000 | 0 | N/A | | Xu Zheng | Senior Management | 500,000 | 500,000 | 0 | N/A | Corporate Bonds Information Corporate Bonds Information The company had no corporate bonds during the reporting period - The company has no corporate bond-related matters[141] Financial Report Audit Report This semi-annual report has not been audited - This semi-annual report has not been audited[5] Financial Statements This section presents the company's consolidated and parent company financial statements for H1 2019 - Includes Consolidated Balance Sheet, Parent Company Balance Sheet, Consolidated Income Statement, Parent Company Income Statement, Consolidated Cash Flow Statement, Parent Company Cash Flow Statement, Consolidated Statement of Changes in Equity, and Parent Company Statement of Changes in Equity[143][147][151][156][159][162][166][172] Company Basic Information This section details the company's history, capital structure, industry, business scope, and consolidation scope - The company, formerly Chongqing Qinan Mechanical & Electrical Manufacturing Co, Ltd, was restructured into a joint-stock company in 2011 and listed on the Shanghai Stock Exchange on May 17, 2017[176] - The registered capital is CNY 438,797,049.00, and the company operates in the automotive parts manufacturing industry[176][177] - The business scope includes the design, development, manufacturing, and sales of auto parts, transmissions, and yacht accessories[177] - The scope of consolidated financial statements includes Chongqing Qinan Casting Co, Ltd and Chongqing Meifeng Qinan Automotive Drive System Co, Ltd[179] Basis of Preparation for Financial Statements The financial statements are prepared on a going concern basis, with no material uncertainties identified - The financial statements are prepared on a going concern basis[180] - No events or conditions have been identified that cast significant doubt on the company's ability to continue as a going concern for the next 12 months[181] Significant Accounting Policies and Estimates This section outlines the company's key accounting policies, estimates, and recent policy changes - The company's financial statements comply with Business Accounting Standards, presenting a true and fair view of its financial position[183] - Detailed policies are provided for the classification, recognition, measurement, and derecognition of financial instruments, as well as methods for calculating impairment provisions[193][194][195][196][197][198][199][200][201][202][203][204] - The company provides for bad debts on notes and accounts receivable based on an expected credit loss model[205][207] - Inventories are measured at the lower of cost and net realizable value, with cost determined using the weighted average method at the end of the month[209][210] - Fixed assets are depreciated using the straight-line method, and construction in progress is measured at actual cost[222][224] - Intangible assets, including land use rights and software, are initially measured at cost and amortized using the straight-line method over their useful lives[227] - Revenue is recognized when the significant risks and rewards of ownership have been transferred, the amount is reliably measurable, economic benefits are probable, and costs can be reliably measured[243] - Accounting policy changes were made to revise the financial statement format and adopt new financial instrument standards, resulting in a retrospective adjustment to opening retained earnings[253][254][259][264] Taxes The company benefits from a reduced corporate income tax rate of 15% under the Western Development Strategy Major Taxes and Tax Rates | Tax Type | Tax Basis | Tax Rate | | :--- | :--- | :--- | | Value-Added Tax (VAT) | Sales of goods or provision of taxable services | 16%, 13% | | Urban Maintenance and Construction Tax | Payable turnover tax amount | 7% | | Corporate Income Tax | Taxable income | 15%, 25% | | Education Surcharge | Payable turnover tax amount | 3% | | Local Education Surcharge | Payable turnover tax amount | 2% | | Property Tax | 1.2% of the residual value after a 30% deduction from the original property value | 1.2% | | Land Use Tax | Taxable area | 12.00 CNY/㎡ | - The company and its subsidiary Chongqing Qinan Casting Co, Ltd are eligible for tax incentives under the Western Development Strategy, with a reduced corporate income tax rate of 15%[266][267] - Chongqing Meifeng Qinan Automotive Drive System Co, Ltd is subject to a corporate income tax rate of 25%[265] Notes to Consolidated Financial Statement Items This section provides detailed notes on key items within the consolidated financial statements - Cash and cash equivalents include restricted funds of CNY 1,462,716.61 for letter of credit deposits, structured deposits, and litigation freezes[268][376] - Trading financial assets at period-end were CNY 90,636,880.92, primarily wealth management products, with the change from the opening balance of CNY 100,799,170.96 due to reclassification under new accounting policies[269] - Notes receivable at period-end totaled CNY 113,851,446.87, of which CNY 4,522,000.00 was pledged and CNY 91,196,482.77 was endorsed or discounted but not yet matured[271][273][275] - The carrying amount of accounts receivable at period-end was CNY 90,112,263.82, with a bad debt provision of CNY 810,951.96, showing high customer concentration[280][286] - The carrying amount of inventories at period-end was CNY 277,148,651.64, with an inventory write-down provision of CNY 21,638,932.57[303][304] - The carrying amount of fixed assets at period-end was CNY 865,039,227.10, with machinery and equipment having an original cost of CNY 1,356,172,158.26[309] - Construction in progress at period-end was CNY 210,342,087.14, mainly related to equipment installation projects[314] - Operating revenue for the period was CNY 225,875,431.15, and operating costs were CNY 239,214,761.20[352] - Finance costs for the period were -CNY 10,871,030.89, primarily due to an increase in interest income[356] - The company received government grants of CNY 4,728,245.77 during the period, recognized as other income[381] - Retained earnings at period-end were CNY 1,007,907,066.32, with the opening balance adjusted up by CNY 799,170.96 due to accounting policy changes[349] Changes in Consolidation Scope There were no changes in the company's consolidation scope during the reporting period - During the reporting period, there were no business combinations not under common control, business combinations under common control, reverse acquisitions, or disposals of subsidiaries leading to a loss of control[382] Interests in Other Entities The company has two wholly-owned subsidiaries acquired through business combination under common control and establishment Corporate Group Structure | Subsidiary Name | Main Place of Business | Registered Office | Business Nature | Ownership (%) (Direct) | Acquisition Method | | :--- | :--- | :--- | :--- | :--- | :--- | | Chongqing Qinan Casting Co, Ltd | Chongqing | Chongqing | Manufacturing and sales of auto parts | 100.00 | Business combination under common control | | Chongqing Meifeng Qinan Automotive Drive System Co, Ltd | Chongqing | Chongqing | Development, manufacturing, and sales of automotive drive systems | 100.00 | Establishment | Risks Related to Financial Instruments The company manages credit, liquidity, and market risks through various control measures - The company is exposed to credit risk, liquidity risk, and market risk (including interest rate and foreign exchange risk)[385] - Credit risk arises mainly from bank deposits and receivables, managed through credit assessments and monitoring of receivable balances[385] - As of June 30, 2019, 85.07% of accounts receivable were from the top five customers, indicating a certain degree of credit concentration risk[386] - Liquidity risk is managed by utilizing a mix of financing instruments like bill settlements and bank loans, and by optimizing the financing structure[388] - Interest rate risk is mainly related to borrowings, but with zero bank loans currently, the impact is not significant[389] - Foreign exchange risk is primarily associated with foreign currency deposits, but the amounts are small, and the market risk is not significant[390] Fair Value Disclosures The company's trading financial assets had a fair value of CNY 90.64 million, measured using market-based valuation techniques Assets and Liabilities Measured at Fair Value as of June 30, 2019 | Item | Period-End Fair Value (CNY) | Level 1 Fair Value (CNY) | Level 2 Fair Value (CNY) | Level 3 Fair Value (CNY) | | :--- | :--- | :--- | :--- | :--- | | I. Continuous Fair Value Measurement | | | | | | (I) Trading Financial Assets | 90,636,880.92 | - | 90,636,880.92 | - | | 1. Financial assets at FVTPL | 90,636,880.92 | - | 90,636,880.92 | - | | (1) Debt instrument investments | 90,636,880.92 | - | 90,636,880.92 | - | | Total Assets at Continuous Fair Value | 90,636,880.92 | - | 90,636,880.92 | - | - Trading financial assets (entrusted wealth management) are valued using the market approach, with inputs based on the market value of the products[395] Related Parties and Transactions This section discloses subsidiary information and key management personnel compensation, with no other major related-party transactions - Information on subsidiaries is detailed in Note IX, Interests in Other Entities, of these financial statements[396] Key Management Personnel Compensation | Item | Current Period Amount (CNY 10k) | Prior Period Amount (CNY 10k) | | :--- | :--- | :--- | | Key Management Personnel Compensation | 407.15 | 283.19 | - There were no related-party transactions involving the purchase or sale of goods, entrusted management, leasing, guarantees, fund lending, asset transfers, or debt restructuring during the reporting period[398][399] Commitments and Contingencies The company had outstanding letters of credit totaling CNY 10.62 million and no other significant contingencies to disclose - As of June 30, 2019, the company had outstanding letters of credit amounting to CNY 10,617,786.44[403] - As of the balance sheet date, the company had no other significant contingencies to disclose[404][405] Other Important Matters The company's operations are segmented into machining, casting, and Meifeng divisions, with financial data provided for each - The company determines its reportable segments based on its business operations, which include the Machining, Casting, and Meifeng segments[407] Reportable Segment Financial Information | Item | Machining Segment (CNY) | Casting Segment (CNY) | Meifeng Segment (CNY) | Inter-segment Elimination (CNY) | Total (CNY) | | :--- | :--- | :--- | :--- | :--- | :--- | | Main Business Revenue | 212,199,270.33 | 140,968,547.60 | - | 129,901,636.19 | 223,266,181.74 | | Main Business Costs | 219,621,036.68 | 153,502,046.04 | - | 134,924,680.77 | 238,198,401.95 | | Total Assets | 2,129,821,191.04 | 926,604,158.67 | 228,307.13 | 632,613,716.64 | 2,424,039,940.20 | | Total Liabilities | 75,311,908.54 | 193,120,133.46 | 87,053.50 | 126,013,304.88 | 142,505,790.62 | Notes to Parent Company Financial Statement Items This section provides detailed notes on key items within the parent company's financial statements - The parent company's accounts receivable had a carrying amount of CNY 80,036,524.01 at period-end, with a bad debt provision of CNY 532,549.88[416] - The parent company's long-term equity investments had a carrying amount of CNY 508,531,349.49 at period-end, primarily consisting of investments in subsidiaries[433][435] - The parent company's operating revenue for the period was CNY 214,933,978.82, and operating costs were CNY 220,667,688.48[437] - The parent company's investment income for the period was CNY 893,403.65, mainly from financial assets held at fair value through profit or loss[438][439] Supplementary Information This section provides details on non-recurring profit and loss, return on equity, and earnings per share Details of Non-recurring Profit and Loss for H1 2019 | Item | Amount (CNY) | | :--- | :--- | | Gains/Losses on Disposal of Non-current Assets | 69,146.56 | | Government Grants Recognized in Current Profit or Loss | 4,728,245.77 | | Gains/Losses from Entrusted Investments or Asset Management | 2,373,084.57 | | Other Non-operating Income and Expenses | -22,852.23 | | Income Tax Impact | -1,072,143.70 | | Total | 6,075,480.97 | Return on Equity and Earnings Per Share for H1 2019 | Profit for the Period | Weighted Average ROE (%) | Earnings Per Share (CNY) | | :--- | :--- | :--- | | Net profit attributable to common shareholders | -2.46 | -0.13 | | Net profit attributable to common shareholders (excluding non-recurring items) | -2.73 | -0.14 | List of Documents for Inspection List of Documents for Inspection This section lists the original documents available for inspection, including signed financial statements and the semi-annual report - Documents available for inspection include the financial statements signed and sealed by the company's legal representative, chief financial officer, and head of the accounting department[446] - Documents available for inspection include the original 2019 semi-annual report signed by the company's legal representative[446]