SHKK(SH:900943)2019-03-28 16:00Financial Performance - The company's operating revenue for 2018 was RMB 877,569,053.04, a decrease of 8.79% compared to RMB 962,101,572.83 in 2017[21] - The net profit attributable to shareholders for 2018 was RMB 35,234,314.21, down 9.03% from RMB 38,730,491.74 in 2017[21] - The net profit after deducting non-recurring gains and losses was RMB 19,147,152.63, a decrease of 16.11% from RMB 22,823,206.33 in 2017[21] - The net cash flow from operating activities was RMB 32,074,937.54, down 55.85% from RMB 72,647,254.77 in 2017[21] - The total assets at the end of 2018 were RMB 1,017,293,358.10, a decrease of 2.36% from RMB 1,041,907,254.63 at the end of 2017[21] - The net assets attributable to shareholders at the end of 2018 were RMB 495,377,328.47, a slight decrease of 0.20% from RMB 496,383,321.32 at the end of 2017[21] - Basic earnings per share for 2018 were RMB 0.14, down 12.50% from RMB 0.16 in 2017[22] - The weighted average return on net assets for 2018 was 6.94%, a decrease of 0.75 percentage points from 7.69% in 2017[22] Revenue Breakdown - The company achieved a total revenue of 1,279.898 million RMB from its main business in the apparel sector during the reporting period[31] - The company reported a total revenue of 708.8267 million RMB from its pharmaceutical business, which includes wholesale and retail of traditional Chinese and Western medicines[31] - The garment segment generated revenue of CNY 137.15 million, down 10.28% year-over-year, while the pharmaceutical segment reported revenue of CNY 735.65 million, a decline of 8.55%[47] - The company’s main business revenue was CNY 841.66 million, down 9.62% year-over-year, with a gross margin of 21.59%, an increase of 2.18 percentage points[50] Strategic Initiatives - The company is actively exploring a strategic transformation towards the health industry to expand market share and improve operational performance[22] - The company is strategically transforming from a "pharmaceutical distribution enterprise" to a "healthcare industry" model, aiming for steady and healthy growth[40] - The company is focusing on expanding its marketing strategies, including group customization and e-commerce channels, to enhance sales performance[32] - The company is committed to enhancing its brand by focusing on customer needs and improving product quality, which is expected to drive sales growth[88] - The company plans to explore mergers and acquisitions, particularly focusing on the acquisition of "North City Clinic" to expand its healthcare service capabilities[90] Market Trends - The retail market in China saw a steady growth of 9.0% in 2018, with total retail sales reaching 38,098.7 billion RMB[33] - The overall retail market in China showed a growth of 9.0% year-on-year, indicating a stable upward trend in domestic consumption[68] - The company recognizes the increasing competition in the apparel industry due to the rise of international fast fashion brands and aims to adapt by enhancing its operational quality and brand image[86] Cash Dividend Policy - The company plans to distribute a cash dividend of RMB 0.45 per 10 shares, totaling RMB 10,935,000, subject to shareholder approval[5] - The cash dividend policy has been consistent, with a distribution ratio exceeding 30% of the net profit for the past six years[96] - The company established a stable cash dividend mechanism, emphasizing shareholder returns and maintaining a continuous dividend policy[96] Internal Control and Governance - The company has implemented a comprehensive internal control system to enhance governance and operational efficiency[41] - The audit report confirmed that the financial statements fairly reflect the company's financial position and performance in accordance with accounting standards[167] - The company has maintained a governance structure that complies with the Company Law and relevant regulations, ensuring effective internal controls[151] Employee Management - The total number of employees in the parent company and major subsidiaries is 955, with 654 in sales and 186 in production[146] - The company has implemented a performance-based salary system, linking employee compensation to job performance and company profitability[147] - The company has established a training and re-education mechanism to enhance employee capabilities and professional skills[148] Investment and Financial Assets - The company has adopted flexible investment strategies, achieving returns significantly higher than bank deposit rates through low-risk financial products[44] - The company has invested a total of 14,000,000 RMB in structured deposits, with an outstanding balance of 11,000,000 RMB and no overdue amounts[114] - The company has engaged in multiple structured deposit agreements with various banks, with annualized returns ranging from 4.00% to 4.70%[116] Risks and Challenges - The company faced significant risks from macroeconomic fluctuations, which could suppress consumer demand and impact sales growth and gross margins[92] - Increased competition in the retail sector due to e-commerce and technological advancements is expected to challenge the company's market share and profitability[92] - The company is accelerating its external expansion, which may require a cultivation period for resource management and market integration, potentially affecting operational performance[92]