华友钴业(603799) - 2018 Q4 - 年度财报

Definitions This section provides definitions for key terms and abbreviations used throughout the report Company Profile and Key Financial Indicators This section presents the company's fundamental information and a summary of its key financial performance metrics Company Information This chapter provides basic information about Zhejiang Huayou Cobalt Co., Ltd., including company name, stock code (603799), legal representative, registered address, and information disclosure channels - Company basic information: Zhejiang Huayou Cobalt Co., Ltd., stock abbreviation 'Huayou Cobalt', stock code 603799, listed on the Shanghai Stock Exchange[14][18] Key Accounting Data and Financial Indicators for the Past Three Years In 2018, the company's operating revenue increased by 49.70% to RMB 14.45 billion, but net profit attributable to parent company decreased by 19.38% to RMB 1.53 billion Operating cash flow turned positive, reaching RMB 1.82 billion Total assets and net assets grew by 14.69% and 26.16% respectively Key Accounting Data 2016-2018 | Main Accounting Data | 2018 | 2017 | YoY Change (%) | 2016 | | :--- | :--- | :--- | :--- | :--- | | Operating Revenue (RMB) | 14,450,762,951.95 | 9,653,222,710.89 | 49.70 | 4,889,385,103.39 | | Net Profit Attributable to Shareholders of Listed Company (RMB) | 1,528,098,517.04 | 1,895,512,962.11 | -19.38 | 69,237,474.68 | | Net Profit Attributable to Shareholders of Listed Company After Non-recurring Gains and Losses (RMB) | 1,452,896,933.34 | 1,896,951,428.43 | -23.41 | 73,800,178.37 | | Net Cash Flow from Operating Activities (RMB) | 1,822,550,039.12 | -1,761,977,182.53 | N/A | 972,520,586.08 | | Asset Status (Year-end) | 2018 Year-end | 2017 Year-end | YoY Change (Year-end %) | 2016 Year-end | | Net Assets Attributable to Shareholders of Listed Company (RMB) | 7,600,754,136.52 | 6,024,572,237.00 | 26.16 | 4,349,515,578.14 | | Total Assets (RMB) | 19,059,803,347.12 | 16,618,033,248.49 | 14.69 | 10,605,306,217.77 | Key Financial Indicators 2016-2018 | Main Financial Indicators | 2018 | 2017 | YoY Change (%) | 2016 | | :--- | :--- | :--- | :--- | :--- | | Basic Earnings Per Share (RMB/share) | 1.84 | 2.28 | -19.30 | 0.09 | | Weighted Average Return on Net Assets (%) | 22.68 | 36.50 | Decrease by 13.82 percentage points | 2.80 | | Weighted Average Return on Net Assets After Non-recurring Gains and Losses (%) | 21.57 | 36.52 | Decrease by 14.95 percentage points | 2.99 | Key Quarterly Financial Data for 2018 The company's 2018 performance showed a trend of higher in the first half and lower in the second half, with continuous profitability in the first three quarters but a loss in the fourth quarter Net profit attributable to the parent company declined quarter by quarter from RMB 850 million in Q1 to a loss of RMB 380 million in Q4 Operating cash flow improved sequentially, with a net inflow of RMB 1.36 billion in Q4 Key Quarterly Financial Data for 2018 (RMB) | Indicator | Q1 | Q2 | Q3 | Q4 | | :--- | :--- | :--- | :--- | :--- | | Operating Revenue | 3,430,715,938.03 | 3,352,487,621.85 | 3,290,426,320.49 | 4,377,133,071.58 | | Net Profit Attributable to Shareholders of Listed Company | 850,522,240.13 | 657,086,120.71 | 404,238,550.00 | -383,748,393.80 | | Net Cash Flow from Operating Activities | -161,036,338.93 | 275,608,459.14 | 347,706,865.62 | 1,360,271,053.29 | Non-recurring Gains and Losses Items and Amounts In 2018, the company's total non-recurring gains and losses amounted to RMB 75.2 million, primarily from government grants (RMB 40.62 million) and fair value changes and disposal gains of financial assets (RMB 43.44 million) - Total non-recurring gains and losses in 2018 amounted to RMB 75,201,583.70, primarily comprising: - Government grants: RMB 40,619,123.32 - Financial asset-related gains and losses: RMB 43,440,695.80 - Disposal gains and losses of non-current assets: RMB 15,522,430.90[24][25] Company Business Overview This section outlines the company's core businesses, operational models, and the overall industry landscape Main Business, Operating Model, and Industry Situation The company's core businesses include new energy lithium battery material manufacturing and deep processing of new cobalt materials, along with mining, beneficiation, and smelting of non-ferrous metals like cobalt and copper The company has formed an integrated 'resources-non-ferrous-new energy' industrial chain, controlling upstream resources in Congo (DRC) and other regions, conducting midstream smelting of cobalt, copper, and nickel products, and producing downstream lithium battery materials such as ternary precursors In 2018, driven by the rapid development of the new energy vehicle industry, demand for ternary materials was strong, but cobalt prices experienced significant fluctuations, rising first and then falling - The company's main business covers new energy lithium battery material manufacturing, deep processing of new cobalt materials, and mining, beneficiation, and smelting of cobalt and copper non-ferrous metals Leading products include cobalt products such as cobalt tetroxide, cobalt hydroxide, cobalt sulfate, and ternary precursors for lithium battery cathode materials[37] - The company adopts an integrated operating model: - Production Model: Customer-centric, flexibly adjusting product output based on market supply and demand Subsidiaries in Congo (DRC) are responsible for mining and preliminary smelting, while domestic companies conduct deep processing - Procurement Model: Raw materials primarily sourced from international procurement and self-supply by Congo (DRC) subsidiaries, with pricing linked to international metal prices - Sales Model: Primarily direct sales domestically, with a combination of direct and distribution sales in overseas markets based on regional characteristics[39][41][43] - In 2018, new energy vehicle production and sales boomed (over 60% YoY growth), driving demand for ternary materials Cobalt prices showed a trend of rising first then falling throughout the year, continuing to rise at the beginning of the year, reaching a peak in April, then declining due to oversupply expectations, and accelerating its decline in Q4[44][45] - During the reporting period, the company's ternary precursor sales increased by 57.39% YoY, and cobalt product sales increased by 5.45% YoY, solidifying its leading position in the industry[46] Analysis of Core Competencies The company's core competencies are reflected in five aspects: industrial integration advantage, technological advantage, industry position, resource advantage, and advanced management system The company has built a full industrial chain from upstream resources to downstream new energy materials, consolidating its industry-leading position through technological innovation and global layout In 2018, the company initiated its Indonesian nickel resource layout and promoted a group-based organizational structure and digital transformation in management - Industrial Integration Advantage: Formed a synergistic industrial chain across resources, non-ferrous metals, and new energy sectors, from cobalt ore raw materials to cathode materials, and laid out resource recycling and utilization, building a new energy lithium battery industrial ecosystem[48][49] - Technological Advantage: As a national high-tech enterprise, it possesses a provincial-level key enterprise research institute, achieving breakthroughs in high-end ternary precursor product R&D, with some products entering the supply chains of internationally renowned automotive brands[50][51] - Industry Position: The company is China's largest cobalt product supplier, with production and sales scale ranking among the world's top, and also a significant supplier of domestic lithium battery ternary precursor products[52] - Resource Advantage: Established an integrated mining, beneficiation, and smelting system for cobalt and copper resources in Congo (DRC), ensuring raw material supply During the reporting period, initiated Indonesian nickel resource development layout, launching a hydrometallurgical project with an annual output of 60,000 tons of nickel metal[53][54] - Management System: Established a comprehensive group-based operating mechanism, and introduced advanced management tools and systems such as IPD and ERP (SAP), promoting management transformation and digital upgrading[55][56] Management Discussion and Analysis This section provides an in-depth discussion of the company's operational performance, financial results, and future development strategies Management Discussion and Analysis In 2018, the company's operating revenue surpassed RMB 10 billion for the first time, but full-year net profit declined due to a significant drop in cobalt prices in Q4 The company accelerated its transformation and upgrading in new energy lithium battery materials, establishing joint ventures with POSCO and LG Chem Simultaneously, the company fully advanced its 'Trinity' project construction, achieving significant progress in upstream resources, midstream manufacturing capabilities, and downstream markets R&D investment continued to increase, research capabilities significantly strengthened, and the management system was enhanced through a group-based structure and digitalization projects - The company's 2018 revenue surpassed RMB 10 billion, with the new energy industrial segment establishing 4 joint ventures with POSCO and LG Chem, leading the industry in strategic layout Ternary precursor production reached 12,834 tons (+20.24% YoY), and sales reached 13,111 tons (+57.39% YoY)[58] - The company's 'Trinity' transformation and development path projects are fully advancing, including joint ventures with POSCO and LG Chem, the Indonesian hydrometallurgical project with an annual output of 60,000 tons of nickel metal, and mining development projects in Congo (DRC)[60] - R&D capabilities significantly strengthened, with 28 patent applications and 15 new authorizations throughout the year Multiple 6-series ternary precursor products entered the supply chains of renowned battery companies like LGC and BYD, and 811B high-nickel products achieved mass supply[61][62] - Management level steadily improved, implementing a group-based structure, establishing three major industrial groups for resources, non-ferrous metals, and new energy, and advancing informatization projects such as ERP (SAP)[63] Key Operating Performance During the Reporting Period In 2018, the company achieved operating revenue of RMB 14.45 billion, a 49.7% YoY increase, but net profit attributable to the parent company decreased by 19.38% to RMB 1.53 billion, primarily due to inventory impairment losses and weakened product profitability caused by the rapid decline in cobalt prices in Q4 In its main businesses, new energy lithium battery materials revenue doubled, with gross margin increasing by 7.4 percentage points; non-ferrous metals industry revenue grew by 37.47%, but gross margin decreased by 5.14 percentage points The company's R&D expenses increased by 116.22% YoY, and asset impairment losses significantly increased by 444.45% Key Income Statement and Cash Flow Statement Item Changes in 2018 | Item | Current Period Amount (RMB) | Prior Period Amount (RMB) | Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 14,450,762,951.95 | 9,653,222,710.89 | 49.70 | | Operating Cost | 10,337,003,721.20 | 6,333,330,464.18 | 63.22 | | R&D Expenses | 380,223,495.69 | 175,848,823.61 | 116.22 | | Asset Impairment Losses | 704,036,971.60 | 129,312,221.70 | 444.45 | | Net Cash Flow from Operating Activities | 1,822,550,039.12 | -1,761,977,182.53 | N/A | Main Business by Industry Segment | Industry Segment | Operating Revenue (RMB) | Operating Cost (RMB) | Gross Margin (%) | YoY Change in Operating Revenue (%) | YoY Change in Operating Cost (%) | YoY Change in Gross Margin | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Non-ferrous Metals Industry | 12,108,161,840.44 | 8,351,056,288.29 | 31.03 | 37.47 | 48.53 | Decrease by 5.14 percentage points | | New Energy Lithium Battery Materials | 1,394,721,314.63 | 1,089,051,016.04 | 21.92 | 103.95 | 86.31 | Increase by 7.40 percentage points | Production and Sales Volume of Main Products (Unit: Metal Ton/Physical Ton) | Main Product | Production Volume | Sales Volume | Inventory Volume | YoY Change in Production Volume (%) | YoY Change in Sales Volume (%) | YoY Change in Inventory Volume (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Cobalt Products | 24,353.77 | 21,788.01 | 2,053.30 | -1.82 | 5.45 | 33.36 | | Copper Products | 38,846.16 | 37,741.67 | 1,890.20 | 28.12 | 21.44 | 148.57 | | Ternary Precursors | 12,834.45 | 13,110.65 | 1,877.28 | 20.24 | 57.39 | -27.01 | - Sales to the top five customers accounted for 37.61% of total annual sales, and purchases from the top five suppliers accounted for 22.00% of total annual purchases[73] Discussion and Analysis of Future Development The company believes the new energy vehicle industry will maintain high growth, driving the lithium battery ternary material sector into a golden development period and creating significant demand for upstream resources like cobalt and nickel The company's development strategy focuses on new energy lithium battery materials, adhering to a transformation path of 'controlling upstream resources, expanding downstream markets, and enhancing midstream capabilities,' implementing the 'Two New, Three Transformations' strategy (new energy lithium battery materials and new cobalt materials; product high-endization, industrial integration, and internationalized operations) The 2019 operating plan revolves around structural adjustment, market expansion, R&D emphasis, project execution, and risk prevention The company also highlighted various risks including product price fluctuations, exchange rates, environmental protection, technology R&D, and management - Industry Trends: The new energy vehicle industry is expected to maintain high growth, with the lithium battery ternary material sector entering a golden period, creating significant demand for cobalt and nickel resources New consumer electronics trends like 5G and foldable smartphones will also drive demand for cobalt-containing lithium batteries[99][100][102] - Company Strategy: Centered on new energy lithium battery materials, implementing the 'Two New, Three Transformations' strategy, focusing on new energy lithium battery materials and new cobalt materials, promoting product high-endization, industrial integration, and internationalized operations, aiming to become an industry leader[103][104] - 2019 Operating Plan: - Adhere to a customer-centric approach and promote market globalization - Uphold product leadership and cost leadership strategies, enhancing integrated operational advantages - Vigorously advance joint venture projects with POSCO and LG Chem, as well as resource projects in Indonesia and Congo (DRC) - Continue to increase R&D investment, strengthening innovation drive - Enhance fundamental management capabilities to achieve high-quality operations[105][106][107] - Key Risks: - Product Price Volatility Risk: High volatility in cobalt, copper, and nickel metal prices may lead to inventory impairment losses and performance decline - Exchange Rate Risk: Raw material purchases are mostly settled in USD, and RMB depreciation may increase costs or lead to exchange losses - Environmental Protection Risk: Increasingly stringent environmental standards may increase company costs and management difficulty - Technology R&D Uncertainty Risk: New energy lithium battery material technology updates rapidly; if R&D fails to keep pace with industry developments, there is a risk of transformation falling short of expectations - Management Risk: Cross-border and cross-regional business expansion places higher demands on the operating management system[112][113][114] Changes in Ordinary Shares and Shareholder Information This section outlines the changes in the company's ordinary share capital and provides details on its shareholder structure Changes in Ordinary Share Capital During the reporting period, the company's total share capital changed due to the implementation of the 2017 profit distribution plan (4 bonus shares for every 10 shares), increasing from 593 million shares to 830 million shares Additionally, 264 million restricted shares from the initial public offering became tradable on January 29, 2018 - On July 10, 2018, the company implemented its 2017 profit distribution, converting capital reserves into 4 bonus shares for every 10 shares to all shareholders, increasing total share capital from 592,676,632 shares to 829,747,285 shares[154] - On January 29, 2018, the lock-up period for 263,918,000 restricted shares from the company's initial public offering expired, and they became tradable[154] Shareholder and Actual Controller Information As of the end of 2018, the company had a total of 138,615 shareholders The top two shareholders were Dashan Private Co., Ltd. (23.57% stake) and Zhejiang Huayou Holding Group Co., Ltd. (18.56% stake), acting in concert, with Mr. Xie Weitong and Mr. Chen Xuehua as the actual controllers Top Ten Shareholders as of the End of the Reporting Period | Shareholder Name | Shares Held at Period End | Proportion (%) | Shareholder Type | | :--- | :--- | :--- | :--- | | Dashan Private Co., Ltd. | 195,604,120 | 23.57 | Overseas Legal Person | | Zhejiang Huayou Holding Group Co., Ltd. | 154,031,933 | 18.56 | Domestic Non-State-owned Legal Person | | Hong Kong Securities Clearing Company Limited | 10,076,155 | 1.21 | Other | | Tongxiang Huaxing Trading Co., Ltd. | 7,172,480 | 0.86 | Domestic Non-State-owned Legal Person | | Agricultural Bank of China...Wanjia Quality Life... | 6,410,799 | 0.77 | Unknown | | China Huarong Asset Management Co., Ltd. | 5,690,496 | 0.69 | State-owned Legal Person | | China Life Insurance...Individual Dividend... | 4,067,142 | 0.49 | Unknown | | China Construction Bank...Wanjia Emerging Blue Chip... | 3,835,599 | 0.46 | Unknown | | Lu Zhiqiang | 3,220,000 | 0.39 | Domestic Natural Person | | China Life Insurance...Guoshou Rui'an | 3,102,897 | 0.37 | Unknown | - The company's controlling shareholders are Dashan Private Co., Ltd. and Zhejiang Huayou Holding Group Co., Ltd., with Mr. Xie Weitong and Mr. Chen Xuehua as the actual controllers[163][166] Preferred Shares Information This section provides details regarding the company's preferred shares, if any Preferred Shares Information During the reporting period, the company had no preferred shares related information - The company has no preferred shares related information during this reporting period[167] Directors, Supervisors, Senior Management, and Employees This section details information about the company's board of directors, supervisors, senior management, and overall employee structure Changes in Senior Management Shareholdings and Remuneration During the reporting period, the total remuneration for the company's directors, supervisors, and senior management was RMB 18.4874 million Chairman Mr. Chen Xuehua and General Manager Mr. Chen Hongliang received pre-tax remuneration of RMB 3.3045 million and RMB 3.1853 million respectively Except for Vice General Manager Mr. Wang Yun, whose shareholding increased due to capital reserve capitalization, other senior executives' shareholdings remained unchanged Remuneration of Selected Directors, Supervisors, and Senior Management (RMB Million) | Name | Position | Total Pre-tax Remuneration from Company During Reporting Period (RMB Million) | | :--- | :--- | :--- | | Chen Xuehua | Chairman | 3.3045 | | Chen Hongliang | Director, General Manager | 3.1853 | | Zhang Binghai | Director, Vice General Manager | 1.1799 | | Chen Yaozhong | Vice General Manager | 2.1286 | | Xu Wei | Vice General Manager | 1.9086 | | Quan Changsheng | Vice General Manager, CFO | 1.0849 | | Total | / | 18.4874 | Employee Information As of the end of the reporting period, the total number of employees at the company and its main subsidiaries was 6,199 In terms of professional composition, production personnel accounted for the largest proportion at 3,979 individuals; regarding education level, employees with high school education or below constituted the majority The company implements a salary policy based on position and performance-based bonuses, and has established a comprehensive training system Employee Composition | Category | Number of People | | :--- | :--- | | Total Employees | 6,199 | | Professional Composition | | | Production Personnel | 3,979 | | Technical Personnel | 680 | | Administrative Personnel | 568 | | Education Level | | | Master's Degree or Above | 173 | | University (including College) | 1,383 | | High School and Below | 4,643 | Corporate Governance This section details the company's corporate governance structure, compliance with regulations, and operational effectiveness of its governing bodies Overview of Corporate Governance During the reporting period, the company operated strictly in accordance with the requirements of laws and regulations such as the 'Company Law' and 'Securities Law', with the General Meeting of Shareholders, Board of Directors, Supervisory Board, and various special committees performing their duties legally The company's governance structure is sound, with no significant illegal or non-compliant activities During the reporting period, 5 shareholder meetings, 12 board meetings, and 7 supervisory board meetings were held - The company's corporate governance structure is sound, with the General Meeting of Shareholders, Board of Directors, and Supervisory Board operating in a standardized manner, and information disclosure being true, accurate, timely, and complete[181] Corporate Bonds Information This section provides an overview of the company's corporate bonds, including issuance details, use of proceeds, and credit ratings Basic Information on Corporate Bonds During the reporting period, the company issued two tranches of bonds, with a total outstanding balance of RMB 720 million Among these, '18 Huayou 01' was a RMB 100 million corporate bond with an interest rate of 7.8%, and 'G18 Huayou 1' was a RMB 620 million green corporate bond with an interest rate of 7.76% The proceeds were primarily used to repay bank loans and for green project construction The company's main credit rating is AA, with a stable outlook Basic Information on Corporate Bonds in 2018 | Abbreviation | Code | Issue Date | Maturity Date | Bond Balance (RMB) | Interest Rate (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | 18 Huayou 01 | 150099.SH | 2018-01-19 | 2020-01-19 | 100,000,000 | 7.8% | | G18 Huayou 1 | 150230.SH | 2018-03-27 | 2021-03-27 | 620,000,000 | 7.76% | - Bond proceeds were used as planned, with RMB 100 million for bank loan repayment and RMB 620 million for the construction and operation of multiple green projects, including waste battery resource recycling[191][192] - United Credit Ratings Co., Ltd. assigned the company an AA corporate credit rating with a stable outlook[193] Financial Report This section presents the company's audited financial statements, including the balance sheet, income statement, and cash flow statement Audit Report Tianjian Certified Public Accountants (Special General Partnership) issued a standard unqualified audit opinion on the company's 2018 financial statements The auditors believe that the financial statements fairly reflect the company's financial position and operating results in all material respects Key audit matters include 'revenue recognition' and the determination of 'net realizable value of inventory', as they involve significant management judgment and have a material impact on performance indicators - The audit opinion is a standard unqualified opinion, stating that the financial statements fairly reflect the company's financial position and operating results[198] - Key audit matters include: - Revenue Recognition: Due to operating revenue being a key performance indicator, there is an inherent risk of management inappropriately recognizing revenue to achieve specific targets - Net Realizable Value of Inventory: Due to the material amount of inventory, and the determination of its net realizable value involving significant management judgment[200][201] Consolidated Financial Statements This section provides the company's 2018 consolidated balance sheet, consolidated income statement, consolidated cash flow statement, and consolidated statement of changes in owners' equity Data shows total assets grew to RMB 19.06 billion, total liabilities were RMB 10.65 billion, and the asset-liability ratio was 55.87% Full-year operating revenue reached RMB 14.45 billion, with net profit of RMB 1.52 billion Key Consolidated Income Statement Data (2018) | Item | Amount (RMB) | | :--- | :--- | | Total Operating Revenue | 14,450,762,951.95 | | Total Operating Cost | 12,715,812,052.71 | | Operating Profit | 1,777,007,064.96 | | Total Profit | 1,765,046,495.81 | | Net Profit | 1,524,665,501.53 | | Net Profit Attributable to Parent Company Shareholders | 1,528,098,517.04 | Key Consolidated Balance Sheet Data (December 31, 2018) | Item | Amount (RMB) | | :--- | :--- | | Total Assets | 19,059,803,347.12 | | Total Liabilities | 10,649,505,092.23 | | Total Owners' Equity | 8,410,298,254.89 | | Total Owners' Equity Attributable to Parent Company | 7,600,754,136.52 | Key Consolidated Cash Flow Statement Data (2018) | Item | Amount (RMB) | | :--- | :--- | | Net Cash Flow from Operating Activities | 1,822,550,039.12 | | Net Cash Flow from Investing Activities | -1,692,411,709.50 | | Net Cash Flow from Financing Activities | 273,242,999.99 | | Net Increase in Cash and Cash Equivalents | 345,763,558.90 | Catalogue of Reference Documents This section lists all supplementary documents available for review, ensuring transparency and comprehensive information access