CITIC Steel(SZ:000708)2019-02-26 16:00markdown [Part I. Important Notice, Table of Contents, and Definitions](index=2&type=section&id=Part%20I.%20Important%20Notice%2C%20Table%20of%20Contents%2C%20and%20Definitions) This section provides important disclaimers, the table of contents, and definitions for the report [Important Notice](index=2&type=section&id=Important%20Notice) The company's management guarantees the annual report's accuracy and completeness, with a 2018 cash dividend of CNY 8.00 per 10 shares proposed - Company management ensures the annual report's truthfulness, accuracy, and completeness, assuming corresponding legal responsibilities[2](index=2&type=chunk) - The company's 2018 profit distribution plan proposes a cash dividend of **CNY 8.00** (tax inclusive) per 10 shares based on **449,408,480 shares**, with no bonus shares or capital reserve conversions[3](index=3&type=chunk) [Part II. Company Profile and Key Financial Indicators](index=5&type=section&id=Part%20II.%20Company%20Profile%20and%20Key%20Financial%20Indicators) This section provides an overview of the company's basic information and key financial performance metrics [Company Basic Information](index=5&type=section&id=Company%20Basic%20Information) Daye Special Steel Co., Ltd. (000708) is a Shenzhen-listed company, with Yu Yapeng as its legal representative Stock Abbreviation and Code | Item | Content | | :--- | :--- | | **Stock Abbreviation** | Daye Special Steel | | **Stock Code** | 000708 | | **Listing Exchange** | Shenzhen Stock Exchange | | **Company Name** | Daye Special Steel Co., Ltd. | | **Legal Representative** | Yu Yapeng | [Key Accounting Data and Financial Indicators](index=6&type=section&id=Key%20Accounting%20Data%20and%20Financial%20Indicators) In 2018, the company achieved significant growth, with revenue up 22.94% to CNY 12.57 billion and net profit up 29.19% 2018 Key Financial Indicators | Indicator | 2018 | 2017 | YoY Change | | :--- | :--- | :--- | :--- | | **Operating Revenue (CNY Billion)** | 12.57 | 10.23 | 22.94% | | **Net Profit Attributable to Parent (CNY Million)** | 510.18 | 394.90 | 29.19% | | **Net Profit Attributable to Parent (Excl. Non-recurring Items) (CNY Million)** | 519.58 | 433.77 | 19.78% | | **Net Cash Flow from Operating Activities (CNY Million)** | 732.32 | 355.30 | 106.11% | | **Basic EPS (CNY/share)** | 1.135 | 0.879 | 29.12% | | **Weighted Average ROE** | 12.17% | 10.23% | +1.94pp | | **Total Assets (CNY Billion)** | 7.68 | 6.58 | 16.71% | | **Net Assets Attributable to Parent (CNY Billion)** | 4.40 | 4.03 | 9.32% | [Non-recurring Gains and Losses](index=7&type=section&id=Non-recurring%20Gains%20and%20Losses) In 2018, non-recurring losses totaled CNY 9.41 million, primarily due to fixed asset disposal losses of CNY 26.22 million - In 2018, non-recurring losses were **CNY 9.41 million**, mainly from **CNY 26.22 million** in fixed asset disposal losses, partially offset by non-current asset disposal gains (**CNY 6.64 million**) and government grants (**CNY 4.33 million**)[17](index=17&type=chunk) [Part III. Business Overview](index=9&type=section&id=Part%20III.%20Business%20Overview) This section outlines the company's primary business activities, significant asset changes, and core competitive advantages [Principal Business Activities During the Reporting Period](index=9&type=section&id=Principal%20Business%20Activities%20During%20the%20Reporting%20Period) The company's main business involves special steel smelting and processing, achieving record operating metrics in 2018 despite high raw material costs and trade friction - The company is a special steel industry enterprise, producing over **1,800** specifications of special steel products like gear steel, bearing steel, and spring steel, used in critical sectors such as aerospace, automotive, and energy[20](index=20&type=chunk) - In 2018, the steel industry benefited from supply-side reform, improving supply-demand dynamics and maintaining high steel prices, though the special steel sector faced challenges from high raw material costs and slower price increases compared to general steel[20](index=20&type=chunk) [Significant Changes in Major Assets](index=9&type=section&id=Significant%20Changes%20in%20Major%20Assets) Several assets changed significantly, with construction in progress up 100% due to technical upgrades and cash up 64% from increased sales collections Major Assets Significant Changes Explanation | Major Asset | YoY Change | Main Reason | | :--- | :--- | :--- | | **Construction in Progress** | +100% | Increased investment in technical upgrade projects | | **Cash and Cash Equivalents** | +64% | Increased cash received from sales of goods | | **Accounts Receivable** | +44% | Increased accounts receivable for steel products | | **Other Receivables** | +1381% | Increased accounts receivable for export tax refunds | | **Deferred Tax Assets** | +65% | Increased deductible temporary differences | | **Other Non-current Assets** | +62% | Increased prepaid engineering costs | [Analysis of Core Competencies](index=10&type=section&id=Analysis%20of%20Core%20Competencies) The company's core competence lies in its technological and brand advantages as a national high-tech enterprise, with products used in critical national projects - The company is one of China's most comprehensively equipped and largest special steel producers, with products used in major national projects like lunar exploration, large aircraft, high-speed rail, and nuclear power[23](index=23&type=chunk) - In 2018, the company achieved significant progress in product certification and new client development, with automotive steel certified by Volkswagen and Honda, and large wind power bearing roller material achieving domestic substitution for imports[23](index=23&type=chunk) - The company's R&D achievements are significant, with **13 patents** granted in 2018, multiple scientific and technological achievements recognized as internationally advanced, and national and provincial science and technology progress awards received[23](index=23&type=chunk) - The company continues equipment upgrades, investing **CNY 750 million** in 2018 to construct a high-quality mold steel production line project to meet high-end market demand[23](index=23&type=chunk) [Part IV. Management Discussion and Analysis](index=11&type=section&id=Part%20IV.%20Management%20Discussion%20and%20Analysis) This section provides a comprehensive discussion and analysis of the company's operational performance, financial condition, and future outlook [Overview](index=11&type=section&id=Overview) In 2018, the company capitalized on supply-side reform opportunities, achieving high-quality, high-speed, and high-efficiency growth, with revenue reaching CNY 12.57 billion 2018 Operating Performance Highlights | Indicator | 2018 | YoY Growth | | :--- | :--- | :--- | | **Operating Revenue** | 12.57 CNY Billion | 22.94% | | **Net Profit** | 510.18 CNY Million | 29.19% | | **Steel Production** | 2.29 Million Tons | 11.86% | | **Steel Sales** | 2.28 Million Tons | 10.13% | | **Steel Exports** | 0.43 Million Tons | 18.12% | | **Export Foreign Exchange Earned** | - | 44.00% | - High-end product market expansion yielded significant results, with automotive steel increasing by **13.4%**, bearing steel by **9.7%**, high-temperature alloy sales doubling, and tool and die steel and double-vacuum product sales growing over **30%**[24](index=24&type=chunk) - R&D innovation achievements are prominent, with over **300 thousand tons** of new products developed annually, **4** national and provincial science and technology progress awards received, and **5** national standards led or participated in revision[24](index=24&type=chunk) [Analysis of Principal Business](index=12&type=section&id=Analysis%20of%20Principal%20Business) The company's principal business revenue and costs grew steadily, with boiler and machinery manufacturing revenue increasing fastest at 28.89%, and foreign market revenue surging by 42.21% [Revenue and Cost Analysis](index=12&type=section&id=Revenue%20and%20Cost%20Analysis) In 2018, operating revenue reached CNY 12.57 billion, up 22.94%, with spring alloy and structural steel as the main revenue source 2018 Operating Revenue Composition (by Product) | Product Category | Revenue (CNY Billion) | % of Total Revenue | YoY Growth | | :--- | :--- | :--- | :--- | | **Spring Alloy and Structural Steel** | 8.00 | 63.66% | 27.41% | | **Bearing Steel** | 2.64 | 20.96% | 19.11% | | **Carbon Structural and Carbon Tool Steel** | 1.07 | 8.53% | 14.33% | | **Punching Die Stainless Steel** | 0.36 | 2.83% | 16.60% | 2018 Operating Revenue Composition (by Region) | Region | Revenue (CNY Billion) | YoY Growth | Gross Margin | Gross Margin YoY Change (pp) | | :--- | :--- | :--- | :--- | :--- | | **Central-South** | 4.62 | 24.20% | 13.71% | +0.02% | | **East China** | 3.21 | 15.44% | 12.68% | +0.03% | | **Foreign** | 2.26 | 42.21% | 13.59% | +6.78% | | **North China** | 1.64 | 20.55% | 10.09% | +0.01% | 2018 Operating Cost Composition | Cost Item | Amount (CNY Billion) | % of Operating Cost | YoY Growth | | :--- | :--- | :--- | :--- | | **Raw Materials** | 6.54 | 62.19% | 13.51% | | **Fuel and Power** | 2.01 | 19.08% | 52.57% | | **Staff Remuneration** | 0.37 | 3.48% | 9.27% | | **Depreciation** | 0.16 | 1.50% | -14.86% | [Expense Analysis](index=16&type=section&id=Expense%20Analysis) In 2018, period expense control was effective, with sales and R&D expenses increasing, while financial expenses significantly decreased by 416.01% 2018 Period Expense Changes | Expense Item | 2018 Amount (CNY Million) | YoY Change | Key Change Explanation | | :--- | :--- | :--- | :--- | | **Selling Expenses** | 192.64 | 52.93% | Due to increased operating expenses | | **Administrative Expenses** | 70.47 | 28.55% | Due to increased salaries and remuneration | | **Financial Expenses** | -48.06 | -416.01% | Due to increased interest income and exchange gains | | **R&D Expenses** | 562.93 | 57.47% | Due to increased direct investment in research and development | [R&D Investment](index=17&type=section&id=R%26D%20Investment) The company continuously increased R&D investment, with CNY 563 million invested in 2018, boosting R&D intensity to 4.48% and driving new product development 2018 R&D Investment Overview | Indicator | 2018 | 2017 | Change | | :--- | :--- | :--- | :--- | | **R&D Investment Amount (CNY Million)** | 562.93 | 357.49 | +57.47% | | **R&D Investment as % of Revenue** | 4.48% | 3.50% | +0.98pp | | **Number of R&D Personnel (persons)** | 459 | 454 | +1.10% | - High R&D investment promoted product premiumization, with over **300 thousand tons** of new products developed and **960 thousand tons** of high-grade varieties, filling domestic gaps and serving major national projects[38](index=38&type=chunk) [Cash Flow Analysis](index=17&type=section&id=Cash%20Flow%20Analysis) In 2018, cash flow significantly improved, with net cash from operating activities increasing by 106.11% to CNY 732.32 million 2018 Cash Flow Statement Summary | Item | 2018 (CNY Million) | 2017 (CNY Million) | YoY Change | | :--- | :--- | :--- | :--- | | **Net Cash Flow from Operating Activities** | 732.32 | 355.30 | 106.11% | | **Net Cash Flow from Investing Activities** | -38.03 | -49.06 | 22.47% | | **Net Cash Flow from Financing Activities** | 60.25 | -305.14 | 119.74% | | **Net Increase in Cash and Cash Equivalents** | 759.82 | -7.02 | 10930.73% | [Assets and Liabilities](index=18&type=section&id=Assets%20and%20Liabilities) As of year-end 2018, total assets were CNY 7.678 billion, up 16.71%, with increased liquidity and a rise in the asset-liability ratio to 42.65% Key Assets and Liabilities as of Year-End 2018 | Item | Year-End 2018 (CNY Billion) | % of Total Assets | Change from Year-Start | | :--- | :--- | :--- | :--- | | **Cash and Cash Equivalents** | 1.94 | 25.24% | +7.33pp | | **Accounts Receivable** | 0.50 | 6.48% | +1.21pp | | **Inventories** | 0.90 | 11.75% | -3.85pp | | **Fixed Assets** | 2.18 | 28.38% | -8.92pp | | **Short-term Borrowings** | 0.50 | 6.51% | +6.51pp | - As of the end of the reporting period, the company had no restricted assets[45](index=45&type=chunk) [Investment Status](index=19&type=section&id=Investment%20Status) During the reporting period, investments focused on major non-equity projects, notably the 'High-Quality Mold Steel Production Line,' with CNY 325 million invested - The company is undertaking multiple significant non-equity investments to upgrade production equipment and enhance product quality[46](index=46&type=chunk) Major Projects Under Construction (CNY Million) | Project Name | Investment in Current Period (CNY Million) | Cumulative Investment (CNY Million) | Project Progress | Estimated Return | | :--- | :--- | :--- | :--- | :--- | | **High-Quality Mold Steel Production Line Project** | 325.49 | 325.49 | 29.62% | IRR (after tax)14.0% | | **Special Smelting Plant 20-ton ESR Furnace Project** | 12.29 | 28.36 | Completed | 5.00 CNY Million/year | | **Small Bar Mill Supporting Facilities Renovation Project** | 6.35 | 22.94 | Completed | 8.47 CNY Million/year | [Outlook for Future Development](index=21&type=section&id=Outlook%20for%20Future%20Development) Looking ahead, the company sees both opportunities and challenges in the special steel industry, planning to produce 2.37 million tons of steel and achieve CNY 12.3 billion in sales revenue in 2019 - Opportunities for the company include: national high-quality development strategies, robust demand from downstream industries (infrastructure, automotive, energy), and the company's comprehensive product portfolio[50](index=50&type=chunk)[51](index=51&type=chunk) - Risks faced by the company include: market operating risks (price volatility, intensified competition), raw material price fluctuation risks, and foreign trade risks due to international trade friction[55](index=55&type=chunk) 2019 Operating Plan Targets | Indicator | Target | | :--- | :--- | | **Steel Production (Million Tons)** | 1.27 | | **Steel Product Production (Million Tons)** | 2.37 | | **Total Steel Product Sales (Million Tons)** | 2.37 | | **Sales Revenue (CNY Billion)** | 12.30 | - 2019 strategic priorities include implementing 'quality enhancement projects' to develop high-end products, increasing R&D to expand market share in emerging sectors, focusing on 'cost reduction and efficiency improvement,' and advancing the 'High-Quality Mold Steel Production Line' project[52](index=52&type=chunk)[53](index=53&type=chunk) [Part V. Significant Matters](index=25&type=section&id=Part%20V.%20Significant%20Matters) This section details significant corporate events, including profit distribution, related party transactions, and major asset restructuring [Profit Distribution of Ordinary Shares and Capital Reserve Conversion to Share Capital](index=25&type=section&id=Profit%20Distribution%20of%20Ordinary%20Shares%20and%20Capital%20Reserve%20Conversion%20to%20Share%20Capital) The company prioritizes investor returns, proposing a 2018 cash dividend of CNY 8.00 per 10 shares, representing a high 70.47% payout ratio Cash Dividend History for the Past Three Years | Dividend Year | Dividend per 10 Shares (CNY) | Cash Dividend Amount (CNY Million) | Payout Ratio to Net Profit Attributable to Parent | | :--- | :--- | :--- | :--- | | **2018** | 8.00 | 359.53 | 70.47% | | **2017** | 3.00 | 134.82 | 34.14% | | **2016** | 2.00 | 89.88 | 30.71% | [Significant Related Party Transactions](index=28&type=section&id=Significant%20Related%20Party%20Transactions) In 2018, the company engaged in significant related party transactions totaling CNY 6.886 billion, primarily for operational needs - Total related party transactions for daily operations amounted to **CNY 6.886 billion**, with pricing based on market principles and execution within approved estimates[69](index=69&type=chunk)[70](index=70&type=chunk)[71](index=71&type=chunk) Major Related Party Purchases (CNY Million) | Related Party | Transaction Content | Transaction Amount (CNY Million) | | :--- | :--- | :--- | | **Hubei Zhongte Xinhuaneng Technology Co., Ltd.** | Purchase of coke, sintered ore, power, etc | 1,719.59 | | **Hubei Xinye Steel Special Steel Pipe Co., Ltd.** | Purchase of steel billets, molten iron, scrap steel, etc | 1,612.04 | | **Hubei Xinye Steel Co., Ltd.** | Purchase of coke, steel billets, raw materials, etc | 689.77 | Major Related Party Sales (CNY Million) | Related Party | Transaction Content | Transaction Amount (CNY Million) | | :--- | :--- | :--- | | **Hubei Xinye Steel Co., Ltd.** | Sale of continuous casting billets, steel products, provision of labor, etc | 816.81 | | **Hubei Xinye Steel Special Materials Co., Ltd.** | Sale of raw materials, continuous casting billets, power, etc | 515.08 | | **Hubei Xinye Steel Special Steel Pipe Co., Ltd.** | Sale of pipe billets, steel products, provision of labor, etc | 276.23 | [Explanation of Other Significant Matters](index=36&type=section&id=Explanation%20of%20Other%20Significant%20Matters) On December 25, 2018, the company initiated a major asset restructuring to acquire 86.50% of Xingcheng Special Steel for an estimated CNY 23.182 billion - The company plans to acquire **86.50%** equity in Xingcheng Special Steel via share issuance, with an estimated value of **CNY 23.182 billion** and an issue price of **CNY 10.00/share**[84](index=84&type=chunk) - This restructuring is part of CITIC Group's overall steel segment listing plan, which will not result in a change of control for the listed company, with CITIC Group remaining the ultimate controller[84](index=84&type=chunk) [Social Responsibility](index=33&type=section&id=Social%20Responsibility) The company actively fulfills its social responsibilities, with 2018 pollutant emissions below national standards and no environmental incidents - As a key polluting entity, the company has established comprehensive pollution control facilities, including sintering desulfurization, multi-stage dust removal, and wastewater recycling systems, ensuring no external discharge[80](index=80&type=chunk) - In 2018, the company's total emissions of major pollutants like particulate matter and sulfur dioxide were within approved limits, with no instances of exceeding standards[79](index=79&type=chunk)[80](index=80&type=chunk) [Part VI. Share Changes and Shareholder Information](index=37&type=section&id=Part%20VI.%20Share%20Changes%20and%20Shareholder%20Information) This section details changes in the company's share capital and provides an overview of its shareholders and ultimate controller [Share Capital Changes](index=37&type=section&id=Share%20Capital%20Changes) During the reporting period, the company's total share capital remained unchanged at 449,408,480 shares - As of year-end 2018, the company's total share capital was **449,408,480 shares**, with no changes during the reporting period[87](index=87&type=chunk) [Shareholders and Ultimate Controller](index=38&type=section&id=Shareholders%20and%20Ultimate%20Controller) As of year-end 2018, the company had 23,426 shareholders, with the top two controlled by CITIC Group Top Two Shareholders' Holdings | Shareholder Name | Shareholder Type | Shareholding % | Number of Shares Held | | :--- | :--- | :--- | :--- | | **Hubei Xinye Steel Co., Ltd.** | Domestic Non-State-Owned Legal Person | 29.95% | 134,620,000 | | **CITIC Pacific (China) Investment Co., Ltd.** | Domestic Non-State-Owned Legal Person | 28.18% | 126,618,480 | - The controlling shareholder is Hubei Xinye Steel Co., Ltd., and the ultimate controller is CITIC Group Corporation[95](index=95&type=chunk)[96](index=96&type=chunk) - The top two shareholders, Hubei Xinye Steel Co., Ltd. and CITIC Pacific (China) Investment Co., Ltd., are both subsidiaries of CITIC Pacific Ltd., forming a concerted action relationship[92](index=92&type=chunk) [Part VIII. Directors, Supervisors, Senior Management, and Employees](index=44&type=section&id=Part%20VIII.%20Directors%2C%20Supervisors%2C%20Senior%20Management%2C%20and%20Employees) This section provides information on the compensation of directors, supervisors, and senior management, as well as details on the company's employee structure [Compensation of Directors, Supervisors, and Senior Management](index=47&type=section&id=Compensation%20of%20Directors%2C%20Supervisors%2C%20and%20Senior%20Management) Compensation for directors, supervisors, and senior management is performance-based, totaling CNY 3.9225 million pre-tax in 2018 - In 2018, the total pre-tax remuneration paid to directors, supervisors, and senior management was **CNY 3.9225 million**[111](index=111&type=chunk) Compensation of Selected Senior Executives (CNY Million) | Name | Position | Total Pre-tax Remuneration (CNY Million) | Remuneration from Related Parties | | :--- | :--- | :--- | :--- | | **Jiang Qiao** | Director, General Manager | 1.08 | No | | **Feng Yuanqing** | Chief Accountant | 0.95 | No | | **Guo Peifeng** | Director, Board Secretary | 0.69 | No | | **Yu Yapeng** | Chairman | - | Yes | | **Qian Gang** | Director | - | Yes | [Employee Information](index=48&type=section&id=Employee%20Information) As of year-end 2018, the company had 3,736 employees, with production personnel at 78.96% and over 38% holding college degrees or higher Employee Composition | Category | Number (persons) | % | | :--- | :--- | :--- | | **Professional Composition** | | | | Production Personnel | 2,950 | 78.96% | | Technical Personnel | 385 | 10.31% | | Administrative Personnel | 260 | 6.96% | | **Education Level** | | | | Master's or Above | 52 | 1.39% | | University | 604 | 16.17% | | College | 801 | 21.44% | | **Total Employees** | **3,736** | **100%** | - The company's compensation policy is 'salary based on position, adjusted with position changes,' linked to economic performance indicators, with employee salary standards adjusted in 2018 based on profitability[113](index=113&type=chunk) [Part IX. Corporate Governance](index=50&type=section&id=Part%20IX.%20Corporate%20Governance) This section outlines the company's corporate governance structure, its independence from the controlling shareholder, and internal control effectiveness [Overview of Corporate Governance](index=50&type=section&id=Overview%20of%20Corporate%20Governance) The company has established a standardized governance structure in strict accordance with laws and regulations, with no significant discrepancies from CSRC requirements - The company's corporate governance structure is sound and operates in compliance with relevant laws and regulations, with no significant discrepancies found compared to regulatory documents[116](index=116&type=chunk)[117](index=117&type=chunk) [Company Independence from Controlling Shareholder in Business, Personnel, Assets, Organization, and Finance](index=50&type=section&id=Company%20Independence%20from%20Controlling%20Shareholder%20in%20Business%2C%20Personnel%2C%20Assets%2C%20Organization%2C%20and%20Finance) The company maintains complete independence from its controlling shareholder in business, personnel, assets, organization, and finance, possessing an independent and complete business system - The company maintains independence in business, personnel, assets, organization, and finance, possessing autonomous operational capabilities[118](index=118&type=chunk) [Internal Control Status](index=53&type=section&id=Internal%20Control%20Status) The company maintained effective internal controls over financial reporting, with PwC Zhongtian issuing an unqualified internal control audit opinion - The company's board self-assessed that as of December 31, 2018, its internal controls were effective, with no material weaknesses in financial or non-financial reporting[128](index=128&type=chunk)[129](index=129&type=chunk) - PwC Zhongtian, the accounting firm, issued an unqualified audit opinion on the effectiveness of the company's internal controls over financial reporting as of December 31, 2018[130](index=130&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk) [Part XI. Financial Report](index=57&type=section&id=Part%20XI.%20Financial%20Report) This section presents the company's audited financial statements, including the auditor's report, key financial data, and significant accounting policies [Audit Report](index=57&type=section&id=Audit%20Report) PwC Zhongtian issued an unqualified audit opinion on the company's 2018 financial statements, confirming fair presentation and identifying 'fixed asset impairment' as a key audit matter - The auditing firm, PwC Zhongtian, issued a standard unqualified audit opinion[134](index=134&type=chunk)[135](index=135&type=chunk) - A key audit matter was 'fixed asset impairment,' where management recognized approximately **CNY 80.34 million** in impairment provisions due to low capacity utilization and idle equipment, which auditors reviewed and accepted[138](index=138&type=chunk)[139](index=139&type=chunk)[233](index=233&type=chunk)[234](index=234&type=chunk) [Financial Statement Summary](index=60&type=section&id=Financial%20Statement%20Summary) In 2018, the company demonstrated a healthy financial position and strong performance growth, with total assets reaching CNY 7.678 billion 2018 Core Financial Statement Data (CNY Billion) | Item | 2018 | 2017 | | :--- | :--- | :--- | | **Balance Sheet** | | | | Total Assets | 7.68 | 6.58 | | Total Liabilities | 3.27 | 2.55 | | Equity Attributable to Parent | 4.40 | 4.03 | | **Income Statement** | | | | Operating Revenue | 12.57 | 10.23 | | Total Profit | 0.60 | 0.46 | | Net Profit | 0.51 | 0.40 | | **Cash Flow Statement** | | | | Net Cash Flow from Operating Activities | 0.73 | 0.36 | | Net Cash Flow from Investing Activities | -0.04 | -0.05 | | Net Cash Flow from Financing Activities | 0.06 | -0.31 | [Significant Accounting Policies and Estimates](index=72&type=section&id=Significant%20Accounting%20Policies%20and%20Estimates) The company's financial statements are prepared under the going concern basis, with format revisions in 2018 for combined receivables/payables and separate R&D expense presentation - The company implemented Ministry of Finance Document [2018] No. 15, changing financial statement formats to combine notes and accounts receivable/payable and separately present R&D expenses, with 2017 data retrospectively adjusted[194](index=194&type=chunk)[195](index=195&type=chunk)[196](index=196&type=chunk) - Allowance for doubtful accounts on accounts receivable is calculated on a portfolio basis, with domestic trade receivables provisioned by aging analysis (**3% for within 1 year**), while foreign trade receivables and bank acceptance bills are deemed to have extremely low credit risk and are not provisioned[170](index=170&type=chunk)[171](index=171&type=chunk)[172](index=172&type=chunk)[173](index=173&type=chunk) - As a high-tech enterprise, the company enjoyed a preferential corporate income tax rate of **15%** in 2018[200](index=200&type=chunk) [Part XII. Documents Available for Inspection](index=117&type=section&id=Part%20XII.%20Documents%20Available%20for%20Inspection) This section lists all documents available for inspection, including audited financial statements and public announcements [Documents Available for Inspection](index=117&type=section&id=Documents%20Available%20for%20Inspection) Documents available for inspection include financial statements signed by senior management, original audit reports, and all official disclosure documents - Documents available for inspection include audited financial statements, original audit reports, and all disclosed announcement documents[337](index=337&type=chunk)