天润工业(002283) - 2021 Q4 - 年度财报

Section 1 Important Notice, Table of Contents, and Definitions Important Notice The Board of Directors, Supervisory Committee, and senior management guarantee the truthfulness, accuracy, and completeness of the annual report and advise on risks associated with forward-looking statements - The Board of Directors, Supervisory Committee, and senior management declare that the annual report is true, accurate, and complete, and advise on risks related to forward-looking statements[5] - The company's 2021 profit distribution plan is to distribute a cash dividend of RMB 1.00 (tax included) per 10 shares based on a total of 1,118,052,790 shares, with no bonus shares or capitalization of public reserves[6] Table of Contents This section outlines the overall structure of the annual report, covering key chapters such as company profile, management discussion, corporate governance, and financial reports - The report's table of contents covers various aspects including company operations, financials, governance, social responsibility, and significant matters[9] Directory of Documents for Inspection This section specifies the list of documents available for inspection, including signed financial statements, original audit reports, and original disclosure documents - Documents for inspection include signed and sealed financial statements, original audit reports, original public disclosure documents, and the original annual report signed by the legal representative[12] - All documents for inspection are kept at the company's securities office[12] Definitions This section provides definitions for frequently used terms in the report, covering company names, shareholders, subsidiaries, and regulatory bodies to ensure clarity - "Tianrun Industry" refers to Tianrun Industrial Technology Co, Ltd, formerly known as Tianrun Crankshaft Co, Ltd[15] - The "Reporting Period" refers to the period from January 1, 2021, to December 31, 2021[15] - The report lists several wholly-owned or controlled subsidiaries, including Hengrun Forging, Tianrun Weifang Company, and Tianrun Germany Company[15] Section 2 Company Profile and Key Financial Indicators I. Company Information This section provides the company's basic registration information, including stock ticker, listing exchange, legal representative, and contact details - The company's stock ticker is "Tianrun Industry," stock code 002283, listed on the Shenzhen Stock Exchange[19] - The company's legal representative is Xing Yunbo, and its registered and office address is No 2-13 Tianrun Road, Wendeng District, Weihai City, Shandong Province[19] II. Contact Persons and Methods This section lists the contact information for the Board Secretary and the Securities Affairs Representative to facilitate investor communication - The Board Secretary is Liu Li, and the Securities Affairs Representative is Jin Jiahui, with their contact address at No 2-13 Tianrun Road, Wendeng District, Weihai City, Shandong Province[20] III. Information Disclosure and Location for Inspection This section specifies the platforms for the company's annual report disclosure, including the Shenzhen Stock Exchange website and designated media outlets - The company's annual report is disclosed on the Shenzhen Stock Exchange website (http://wwwszsecn) and CNINFO (http://wwwcninfocomcn)[21](index=21&type=chunk) - Designated disclosure media include Securities Times, China Securities Journal, Shanghai Securities News, and Securities Daily[21] IV. Registration Changes This section details changes to the company's main business scope since its listing, while noting that the controlling shareholder has remained unchanged - In 2019, the company's business scope was expanded to include road freight transport (excluding dangerous goods)[24] - In 2020, the business scope was changed to include industrial intelligent equipment technology development, mechanical engineering research, and automotive parts design and sales[24] - The company's controlling shareholder has not changed since its listing[24] V. Other Relevant Information This section discloses information about the accounting firm engaged by the company and states that no sponsor or financial advisor was hired for continuous supervision - The company engaged Tianjian Certified Public Accountants (Special General Partnership) for auditing, with signing accountants Hu Yanlong and Dai Wei[25] - The company did not engage a sponsor or financial advisor for continuous supervision duties during the reporting period[25] VI. Key Accounting Data and Financial Indicators This section presents the company's key financial data for 2021 and the past three years, showing year-over-year growth in revenue, net profit, and operating cash flow Key Accounting Data and Financial Indicators for 2021 | Indicator | 2021 (Yuan) | 2020 (Yuan) | YoY Change | 2019 (Yuan) | | :--- | :--- | :--- | :--- | :--- | | Operating Revenue | 4,720,678,518.83 | 4,428,408,580.71 | 6.60% | 3,602,563,484.43 | | Net Profit Attributable to Shareholders | 541,282,078.47 | 507,901,953.26 | 6.57% | 353,792,995.02 | | Net Profit Attributable to Shareholders (Excluding Non-recurring Items) | 512,839,279.07 | 490,383,850.16 | 4.58% | 342,063,570.25 | | Net Cash Flow from Operating Activities | 1,056,791,137.61 | 491,412,751.57 | 115.05% | 312,496,347.09 | | Basic Earnings Per Share (Yuan/share) | 0.49 | 0.45 | 8.89% | 0.31 | | Diluted Earnings Per Share (Yuan/share) | 0.49 | 0.45 | 8.89% | 0.31 | | Weighted Average Return on Equity | 10.29% | 10.61% | -0.32% | 8.04% | | Total Assets (Yuan) | 8,876,430,800.71 | 8,132,638,586.27 | 9.15% | 6,817,874,489.51 | | Net Assets Attributable to Shareholders (Yuan) | 5,531,481,163.90 | 5,021,964,849.18 | 10.15% | 4,570,714,429.25 | - The company's net cash flow from operating activities increased by 115.05%, primarily due to an increase in settlements via bank acceptance drafts in the previous year, which matured and converted to cash in the current period[116] VII. Differences in Accounting Data under Domestic and Foreign Accounting Standards This section states that there were no discrepancies in net profit or net assets between financial reports prepared under Chinese and international or foreign accounting standards - The company reports no discrepancies in net profit and net assets between financial reports disclosed under international accounting standards and Chinese accounting standards[30] - The company reports no discrepancies in net profit and net assets between financial reports disclosed under foreign accounting standards and Chinese accounting standards[31] VIII. Key Financial Indicators by Quarter This section provides a quarterly breakdown of the company's key financial indicators for 2021, including revenue, net profit, and operating cash flow Key Financial Indicators by Quarter for 2021 (Unit: Yuan) | Indicator | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | | :--- | :--- | :--- | :--- | :--- | | Operating Revenue | 1,573,232,689.86 | 1,450,120,883.12 | 1,001,740,234.15 | 695,584,711.70 | | Net Profit Attributable to Shareholders | 172,151,427.83 | 139,399,931.59 | 132,215,181.59 | 97,515,537.46 | | Net Profit Attributable to Shareholders (Excluding Non-recurring Items) | 165,558,012.93 | 130,736,584.38 | 132,993,219.16 | 83,551,462.60 | | Net Cash Flow from Operating Activities | 188,935,301.28 | -55,796,154.63 | 316,930,371.13 | 606,721,619.83 | - There are no significant differences between the quarterly financial indicators and the previously disclosed quarterly and semi-annual reports[32] IX. Non-recurring Profit and Loss Items and Amounts This section details the non-recurring profit and loss items for 2021 and the past three years, which primarily include government subsidies and investment income Non-recurring Profit and Loss Items and Amounts for 2021 (Unit: Yuan) | Item | 2021 Amount | 2020 Amount | 2019 Amount | | :--- | :--- | :--- | :--- | | Gains and Losses from Disposal of Non-current Assets | -9,145,968.62 | -1,460,594.13 | -24,039,984.50 | | Government Subsidies Included in Current Profit or Loss | 29,953,220.81 | 25,829,576.20 | 33,884,316.04 | | Gains and Losses from Entrusted Investments or Asset Management | 5,590,316.41 | 2,487,038.58 | 3,230,637.64 | | Fair value change gains and losses from holding trading financial assets and liabilities, and investment income from disposing of trading financial assets, liabilities, and available-for-sale financial assets, excluding effective hedging related to normal business operations | 3,537,110.16 | 0 | 3,115,287.00 | | Other non-operating income and expenses besides the above items | -935,519.24 | -6,332,652.58 | -2,707,889.71 | | Other profit and loss items that meet the definition of non-recurring profit and loss | 4,417,225.86 | 59,501.01 | 323,708.40 | | Less: Income Tax Impact | 4,973,585.98 | 3,064,765.98 | 2,076,650.10 | | Total | 28,442,799.40 | 17,518,103.10 | 11,729,424.77 | - The company has not classified any non-recurring profit and loss items listed in the "Explanatory Announcement No 1 on Information Disclosure for Companies Offering Securities to the Public — Non-recurring Profit and Loss" as recurring items[37] Section 3 Management Discussion and Analysis I. Industry Situation during the Reporting Period In 2021, China's auto market reversed a three-year decline, with new energy vehicles showing explosive growth while the commercial vehicle segment contracted - In 2021, China's auto production and sales reached 26.082 million and 26.275 million units, respectively, up 3.4% and 3.8% year-over-year, ending a three-year decline[41] - Commercial vehicle production and sales in 2021 were 4.674 million and 4.793 million units, down 10.7% and 6.6% year-over-year, with heavy-duty trucks seeing the largest decrease[41][43] - New energy vehicle production and sales in 2021 reached 3.545 million and 3.521 million units, both increasing 1.6 times year-over-year, with a market share of 13.4%[49] - Air suspension business revenue reached RMB 204 million, a year-over-year increase of 253.16%, accounting for 4.31% of the company's total revenue[51] Key Financial Indicators for 2021 | Indicator | Amount (RMB 10,000) | YoY Growth | | :--- | :--- | :--- | | Operating Revenue | 472,067.85 | 6.60% | | Operating Profit | 61,677.07 | 5.48% | | Net Profit Attributable to Shareholders | 54,128.21 | 6.57% | II. Principal Business Activities during the Reporting Period The company's main business comprises crankshafts, connecting rods, castings and forgings, and air suspension, positioning it as a leading domestic manufacturer - The company's main business includes crankshafts, connecting rods, castings and forgings, and air suspension, specializing in core internal combustion engine components[54] - The company's crankshaft products are supplied to domestic and international OEMs like Weichai, Cummins, and Daimler, with a domestic mainstream commercial vehicle engine customer matching rate exceeding 95%[54][55] - The air suspension business is operated by the subsidiary Tianrun Intelligent Control, offering products for trucks, semi-trailers, and engineering vehicles[56] - The company operates on an order-driven production model, possessing multiple flexible production lines for casting, forging, heat treatment, crankshafts, and connecting rods[60] - Air suspension production and sales volumes grew by over 200% year-over-year, driven by market expansion of new business lines initiated in 2020[64] Key Component Production and Sales Volume in 2021 | Component Category | Production Volume (units) | Production YoY Change | Sales Volume (units) | Sales YoY Change | | :--- | :--- | :--- | :--- | :--- | | Engine and Marine Crankshafts | 2,088,207 | 17.70% | 2,044,358 | 12.88% | | Connecting Rods | 6,392,129 | 6.76% | 6,074,082 | 5.75% | | Air Suspension | 675,196 | 200.02% | 664,866 | 200.77% | | Crankshaft Blanks and Castings/Forgings | 237,872 | -13.81% | 238,592 | -13.48% | III. Core Competitiveness Analysis The company's core strengths lie in its integrated industry chain, market leadership, continuous innovation, advanced equipment, and robust management systems - The company has a complete industry chain with in-house blank production capabilities, covering a wide range of engine crankshafts, connecting rods, and castings[66][69] - The company holds a 60% market share in medium and heavy-duty engine crankshafts and a 40% share in fracture-split connecting rods, making it the largest domestic producer[66] - The company possesses multiple R&D platforms, including a "National Certified Enterprise Technology Center," and holds 312 patents through industry-academia-research collaborations[70][71] - The company operates over 4,000 production units, with an automated production line coverage rate of 81%[72] - The company adheres to ISO9001 and IATF16949 quality management systems and received the Shandong Governor Quality Award in 2019[72] - The company has established a unique TRPS (TianRun Production System) to drive operational efficiency and achieve performance targets in production, quality, and cost[75] - The company has developed an innovative talent cultivation mechanism through its "PLES Blue Sky Talent" training program[76] IV. Analysis of Principal Business In 2021, the company achieved steady growth in revenue and net profit, driven by its core crankshaft and connecting rod segments and a significant surge in its air suspension business Key Financial Performance in 2021 | Indicator | Amount (RMB 10,000) | YoY Growth | | :--- | :--- | :--- | | Operating Revenue | 472,067.85 | 6.60% | | Operating Profit | 61,677.07 | 5.48% | | Net Profit Attributable to Shareholders | 54,128.21 | 6.57% | - In 2021, the company's export business revenue reached RMB 518.41 million, an increase of 85.18% year-over-year, due to the recovery of overseas markets[77][85] - The company successfully developed 11 new clients, including MAN and Guangdong Haoyun Technology, and completed trial production for 141 new crankshaft products[78][80] - By the end of 2021, the company's production line automation coverage reached 81%, leading to a 50% reduction in workforce in relevant areas[80] - The company completed 26 technological innovation projects and applied for 31 national patents[80] - Financial expenses decreased by 35.57% year-over-year, mainly due to the offset from government interest subsidies[100] - R&D investment amounted to RMB 275.80 million, accounting for 5.84% of operating revenue, a year-over-year increase of 20.74%[100][111] - Net cash flow from operating activities increased by 115.05%, primarily due to the maturation of a large volume of bank acceptance drafts from the previous year[116][117] - Net cash flow from investing activities decreased by 80.75%, mainly due to increased purchases of wealth management products that had not yet matured[116] - Net cash flow from financing activities decreased by 859.72%, primarily due to a reduction in loans compared to the previous year[116] Operating Revenue Composition by Product in 2021 | Product Category | Operating Revenue (RMB 100 million) | % of Total Revenue | YoY Change | | :--- | :--- | :--- | :--- | | Engine and Marine Crankshafts | 30.19 | 63.96% | 5.57% | | Connecting Rods | 10.42 | 22.08% | 3.49% | | Air Suspension | 2.04 | 4.31% | 253.16% | | Crankshaft Blanks and Castings/Forgings | 2.98 | 6.31% | -12.13% | | Others | 1.58 | 3.34% | -4.21% | Operating Cost Composition by Item in 2021 | Item | 2021 Amount (Yuan) | % of Total Operating Cost | YoY Change | | :--- | :--- | :--- | :--- | | Direct Materials | 1,948,404,144.09 | 56.52% | 7.71% | | Labor Costs | 472,449,823.39 | 13.70% | 14.76% | | Depreciation | 317,265,699.00 | 9.20% | 0.57% | | Power Costs | 269,367,379.23 | 7.81% | 17.28% | | Manufacturing Expenses | 360,004,662.87 | 10.44% | 7.23% | | Freight | 80,168,345.74 | 2.33% | 6.59% | 2. Revenue and Costs The company's 2021 operating revenue grew by 6.60% to RMB 4.72 billion, with the air suspension business showing remarkable growth and overseas sales rebounding strongly - Air suspension sales revenue grew by 253.16% year-over-year, driven by market expansion of new business lines initiated in 2020[82][85][64] - Overseas sales increased by 85.18% year-over-year, as international markets recovered from the pandemic's impact, leading to a rise in export volumes[85][65] - Inventory levels for connecting rods and air suspension increased by 33.83% and 258.38%, respectively, to meet market demand[90] Operating Revenue Composition in 2021 (by Product and Region) | Category | Item | 2021 Amount (Yuan) | % of Total Revenue | YoY Change | | :--- | :--- | :--- | :--- | :--- | | By Product | Engine and Marine Crankshafts | 3,019,285,448.95 | 63.96% | 5.57% | | | Connecting Rods | 1,042,095,607.17 | 22.08% | 3.49% | | | Air Suspension | 203,659,548.55 | 4.31% | 253.16% | | | Crankshaft Blanks and Castings/Forgings | 297,808,328.71 | 6.31% | -12.13% | | By Region | Domestic Sales | 4,202,264,449.64 | 89.02% | 1.30% | | | Overseas Sales | 518,414,069.19 | 10.98% | 85.18% | Operating Cost Composition in 2021 (by Item) | Item | 2021 Amount (Yuan) | % of Total Operating Cost | YoY Change | | :--- | :--- | :--- | :--- | | Direct Materials | 1,948,404,144.09 | 56.52% | 7.71% | | Labor Costs | 472,449,823.39 | 13.70% | 14.76% | | Power Costs | 269,367,379.23 | 7.81% | 17.28% | 3. Expenses In 2021, the company's sales, general, and R&D expenses increased, while financial expenses saw a significant decrease due to government interest subsidies - Financial expenses decreased sharply by 35.57%, primarily due to the offset from government interest subsidies received during the period[100] Key Expenses in 2021 (Unit: Yuan) | Item | 2021 | 2020 | YoY Change | | :--- | :--- | :--- | :--- | | Selling Expenses | 55,826,402.91 | 50,447,883.37 | 10.66% | | General & Administrative Expenses | 168,904,063.02 | 158,869,783.18 | 6.32% | | Financial Expenses | 21,827,486.47 | 33,875,685.77 | -35.57% | | R&D Expenses | 275,796,634.09 | 228,421,967.37 | 20.74% | 4. R&D Investment The company increased its R&D investment by 20.74% to RMB 276 million in 2021, focusing on automation, advanced materials, and intelligent manufacturing - Key R&D projects included automated grinding equipment, ductile iron material enhancement, and fracture-split connecting rod technology, aimed at improving efficiency and competitiveness[101][105] - The company had zero capitalized R&D expenditure, with the capitalization ratio of R&D investment being 0%[111] R&D Investment in 2021 | Indicator | 2021 | 2020 | Change | | :--- | :--- | :--- | :--- | | R&D Investment Amount (Yuan) | 275,796,634.09 | 228,421,967.37 | 20.74% | | R&D Investment as % of Revenue | 5.84% | 5.16% | 0.68% | | Number of R&D Personnel | 483 | 435 | 11.03% | | R&D Personnel as % of Total Employees | 13.10% | 12.00% | 1.10% | 5. Cash Flow In 2021, the company's operating cash flow surged by 115.05%, while investment and financing cash flows saw significant net outflows - Net cash flow from operating activities increased by 115.05%, mainly because bank acceptance drafts from the previous year matured, leading to cash inflows[116] - Net cash flow from investing activities decreased by 80.75%, primarily due to increased purchases of wealth management products that had not yet been redeemed[116] - Net cash flow from financing activities decreased by 859.72%, mainly due to a reduction in loans compared to the previous year[116] Cash Flow Statement for 2021 (Unit: Yuan) | Item | 2021 | 2020 | YoY Change | | :--- | :--- | :--- | :--- | | Cash Inflow from Operating Activities | 4,908,146,513.08 | 3,058,307,990.57 | 60.49% | | Cash Outflow from Operating Activities | 3,851,355,375.47 | 2,566,895,239.00 | 50.04% | | Net Cash Flow from Operating Activities | 1,056,791,137.61 | 491,412,751.57 | 115.05% | | Cash Inflow from Investing Activities | 1,741,400,316.41 | 1,116,656,937.86 | 55.95% | | Cash Outflow from Investing Activities | 2,604,542,208.51 | 1,594,184,495.51 | 63.38% | | Net Cash Flow from Investing Activities | -863,141,892.10 | -477,527,557.65 | -80.75% | | Cash Inflow from Financing Activities | 1,228,591,421.95 | 850,043,646.01 | 44.53% | | Cash Outflow from Financing Activities | 1,447,368,876.26 | 872,839,505.18 | 65.82% | | Net Cash Flow from Financing Activities | -218,777,454.31 | -22,795,859.17 | -859.72% | | Net Increase in Cash and Cash Equivalents | -24,835,833.76 | -9,876,418.94 | -151.47% | V. Analysis of Non-Principal Business This section states that the company had no non-principal business activities during the reporting period - The company had no non-principal business activities during the reporting period[118] VI. Analysis of Assets and Liabilities At the end of 2021, the company's total assets and net assets attributable to shareholders grew, with significant increases in cash and construction in progress - Construction in progress increased by 2.24% compared to the beginning of the year, mainly due to ongoing production line expansion and automation upgrades[121] Major Changes in Asset Composition at Year-End 2021 (Unit: Yuan) | Item | Year-End 2021 Amount | % of Total Assets | Year-End 2020 Amount | % of Total Assets | Change in % | | :--- | :--- | :--- | :--- | :--- | :--- | | Cash and Cash Equivalents | 710,111,350.02 | 8.00% | 270,781,070.24 | 3.31% | 4.69% | | Accounts Receivable | 1,012,240,831.94 | 11.40% | 1,244,973,489.52 | 15.22% | -3.82% | | Inventory | 1,530,832,673.62 | 17.25% | 1,349,001,465.13 | 16.49% | 0.76% | | Fixed Assets | 2,961,624,829.47 | 33.37% | 3,057,904,574.34 | 37.39% | -4.02% | | Construction in Progress | 314,845,691.62 | 3.55% | 106,955,684.38 | 1.31% | 2.24% | | Short-term Borrowings | 917,051,180.56 | 10.33% | 826,378,047.13 | 10.10% | 0.23% | Restricted Assets at Year-End (Unit: Yuan) | Item | Year-End Book Value | Reason for Restriction | | :--- | :--- | :--- | | Cash and Cash Equivalents | 595,397,708.84 | Note margin of RMB 595,105,904.50, Letter of credit margin of RMB 291,804.34 | | Notes Receivable | 912,783,661.56 | Pledged for issuing bank acceptance drafts | | Total | 1,508,181,370.40 | | VII. Analysis of Investment The company's total investment increased by 27.10% during the reporting period, with no major equity, non-equity, or derivative investments - The company had no major equity, non-equity, securities, or derivative investments during the reporting period[125][126] - The company did not use any raised funds during the reporting period[127] Investment Amount in 2021 | Indicator | Investment Amount in Reporting Period (Yuan) | Investment Amount in Prior Period (Yuan) | Change | | :--- | :--- | :--- | :--- | | Total Investment | 385,223,283.52 | 303,090,092.97 | 27.10% | VIII. Major Asset and Equity Sales This section states that the company did not engage in any major sales of assets or equity during the reporting period - The company did not sell any major assets during the reporting period[128] - The company did not sell any major equity during the reporting period[129] IX. Analysis of Major Holding and Associated Companies This section analyzes the performance of key subsidiaries, noting that rising material costs impacted one subsidiary's profit while another saw profit growth despite lower revenue - Wendeng Hengrun Forging Co, Ltd's net profit decreased by 46.62% year-over-year, primarily due to increased costs from rising steel prices[132] - Weifang Tianrun Crankshaft Co, Ltd's net profit increased by 23.07% year-over-year, despite a decrease in sales revenue[132] - During the reporting period, the company established a wholly-owned subsidiary, Shandong Tianrun Precision Industry Co, Ltd, to focus on precision casting and high-end casting processing[132] Financials of Major Subsidiaries (Unit: Yuan) | Company Name | Type | Main Business | Registered Capital | Total Assets | Net Assets | Operating Revenue | Operating Profit | Net Profit | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Wendeng Hengrun Forging Co, Ltd | Subsidiary | Processing and sales of various automotive component blanks | 384,596,337 | 974,159,283.34 | 857,040,467.45 | 1,406,470,165.68 | 127,948,030.96 | 114,834,203.32 | | Weifang Tianrun Crankshaft Co, Ltd | Subsidiary | Production and sales of crankshafts, connecting rods, machine tools, and mechanical parts | 200,000,000 | 646,929,095.34 | 448,539,158.45 | 609,034,452.69 | 66,781,343.94 | 59,515,492.47 | X. Structured Entities Controlled by the Company This section states that the company did not control any structured entities during the reporting period - The company did not control any structured entities during the reporting period[133] XI. Company's Future Development Outlook The company plans to strengthen its core businesses while rapidly expanding its air suspension segment, aiming to transition towards an innovation-driven technology enterprise - In 2021, domestic truck sales decreased by 8.5% year-over-year, with heavy-duty truck sales down by 13.8%, indicating downward pressure on the commercial vehicle market[133] - The company's strategy is to enhance its primary business (crankshafts, connecting rods, castings) while strengthening its secondary business (air suspension) and expanding into vehicle system components[136][137] - The 2022 operational plan focuses on technology leadership, cost breakthroughs, efficiency improvements, quality assurance, and strengthening management fundamentals[137][138] - The company faces key risks including raw material price volatility, fixed asset depreciation, heavy-duty truck industry fluctuations, exchange rate volatility, and the impact of new energy vehicles[141][142][143] - To mitigate risks, the company will adopt flexible procurement, expand its customer and product base, grow the air suspension business, and use multi-currency settlements[141][142][143] XII. Reception of Research, Communication, and Interviews during the Reporting Period During the reporting period, the company actively engaged with institutional investors through site visits and conference calls to discuss its business and strategic outlook - On May 28, 2021, institutions including CICC conducted an on-site visit to discuss the company's main business, the commercial vehicle market, and air suspension business progress[148] - On August 27, 2021, multiple institutions including CICC and Hanhe Capital participated in a conference call to discuss H1 performance, overall strategy, and industry trends[148] - The company disclosed investor relations activity records on CNINFO to ensure information transparency[148][150] Section 4 Corporate Governance I. Basic Situation of Corporate Governance The company adheres to relevant laws and regulations, continuously improving its corporate governance structure to ensure the standardized operation of its governing bodies - The company strictly follows laws such as the "Company Law" and "Securities Law" to continuously improve its corporate governance structure and internal control systems[154] - The company provides online voting options at shareholder meetings and separately counts the votes of small and medium-sized investors to protect their rights[154] - The Board of Directors consists of 9 members, including 3 independent directors, and has established four specialized committees: Strategy, Audit, Nomination, and Remuneration[155] - The Supervisory Committee consists of 3 members, including 1 employee representative, and effectively supervises the company's finances and the performance of directors and senior management[155] - The company places high importance on information disclosure and investor relations, ensuring fair and equal treatment of all investors[156] II. Company's Independence from the Controlling Shareholder and Actual Controller in Assets, Personnel, Finance, Organization, and Business The company maintains full independence from its controlling shareholder in terms of business, personnel, assets, organization, and finance, possessing complete operational autonomy - The company is completely separate from its controlling shareholder in business, personnel, assets, organization, and finance, possessing independent and complete operational capabilities[160] - None of the company's senior management hold concurrent positions or receive remuneration from other enterprises[160] - The company has independent procurement, production, and sales systems, with no improper use of company funds or assets by the controlling shareholder[160] - The company has an independent finance department, dedicated financial staff, separate bank accounts, and pays taxes independently[161] III. Horizontal Competition This section states that there was no horizontal competition during the reporting period - There was no horizontal competition during the reporting period[162] IV. Annual and Extraordinary General Meetings Held during the Reporting Period During the reporting period, the company held its 2020 Annual General Meeting, with an investor participation rate of 39.35% - There were no requests from preferred shareholders with restored voting rights to convene an extraordinary general meeting[165] 2020 Annual General Meeting Details | Meeting | Type | Investor Participation Rate | Date Held | Disclosure Date | Meeting Resolution | | :--- | :--- | :--- | :--- | :--- | :--- | | 2020 Annual General Meeting | Annual General Meeting | 39.35% | May 24, 2021 | May 25, 2021 | Announcement No: 2021-026, Title: Resolution of the 2020 Annual General Meeting of Tianrun Industrial Technology Co, Ltd, CNINFO wwwcninfocomcn | V. Directors, Supervisors, and Senior Management This section provides details on the company's directors, supervisors, and senior management, including their positions, shareholdings, and remuneration - During the reporting period, Wei Anli retired as an independent director, Yao Chunde was elected as an independent director, and Wang Xiaoyi was appointed as Deputy General Manager[171] - Senior managers including Cong Jianchen, Lin Yongtao, Xia Lijun, and Hou Bo increased their shareholdings due to the exercise of stock options from the equity incentive plan[168] Shareholdings of Directors, Supervisors, and Senior Management (Partial) | Name | Position | Shares Held at Beginning of Period | Shares Held at End of Period | | :--- | :--- | :--- | :--- | | Xing Yunbo | Chairman | 135,528,925 | 135,528,925 | | Sun Haitao | Vice Chairman | 24,214,246 | 24,214,246 | | Xu Chengfei | Director, General Manager | 10,849,841 | 10,849,841 | | Liu Li | Director, Deputy GM, CFO, Board Secretary | 1,000,000 | 1,000,000 | | Cong Jianchen | Chief Engineer | 800,000 | 1,000,000 | | Lin Yongtao | Deputy General Manager | 196,250 | 396,250 | | Xia Lijun | Deputy General Manager | 33,600 | 117,600 | | Hou Bo | Deputy General Manager | 300,000 | 400,000 | | Wang Xiaoyi | Deputy General Manager | 48,800 | 0 | Remuneration of Directors, Supervisors, and Senior Management in 2021 (Unit: RMB 10,000) | Name | Position | Total Pre-tax Remuneration from the Company | | :--- | :--- | :--- | | Xing Yunbo | Chairman | 68.16 | | Sun Haitao | Vice Chairman | 57.66 | | Xu Chengfei | Director, General Manager | 80.19 | | Liu Li | Director, Deputy GM, CFO, Board Secretary | 53.86 | | Zhou Xianzhong | Director | 52.05 | | Yu Qiuming | Director | 32.13 | | Jiang Aili | Independent Director | 8 | | Qu Guoxia | Independent Director | 8 | | Yao Chunde | Independent Director | 4 | | Yu Shuming | Chairman of the Supervisory Committee | 27.19 | | Huang Zhiqiang | Supervisor | 27.9 | | Wang Jun | Supervisor | 23.62 | | Chu Zhongzhi | Executive Deputy General Manager | 51.16 | | Cong Jianchen | Chief Engineer | 52.64 | | Lin Yongtao | Deputy General Manager | 44.76 | | Xia Lijun | Deputy General Manager | 52.21 | | Hou Bo | Deputy General Manager | 51.77 | | Wang Xiaoyi | Deputy General Manager | 45.19 | | Total | | 744.49 | VI. Directors' Performance of Duties during the Reporting Period The Board of Directors convened nine meetings during the reporting period, with all directors diligently fulfilling their duties and actively participating in decision-making - During the reporting period, the Board of Directors held 9 meetings and approved several key resolutions, including the annual report, profit distribution plan, and appointment of senior management[193][196] - All directors attended the board meetings as required, with independent directors attending via telecommunication[197] - No directors raised objections to any company matters during the reporting period, and all their suggestions were adopted[200][201] VII. Work of Board Committees during the Reporting Period The board's specialized committees fulfilled their responsibilities by reviewing key matters such as financial reporting, investment decisions, and executive compensation - The Audit Committee held 4 meetings to review the annual report, financial statements, and internal control evaluation report, and assessed the performance of the accounting firm[203][204] - The Strategy and Investment Decision Committee held 2 meetings to review proposals for establishing a wholly-owned subsidiary and subscribing to a private placement of shares[206] - The Remuneration and Appraisal Committee held 1 meeting to evaluate the performance of directors and management for 2020 and review their compensation[206] - The Nomination Committee held 2 meetings to review the qualifications of independent director candidates and senior management personnel[206] VIII. Work of the Supervisory Committee This section states that the Supervisory Committee found no risks in its oversight activities during the reporting period and had no objections to the matters reviewed - The Supervisory Committee did not identify any risks during its oversight activities in the reporting period[207] - The Supervisory Committee had no objections to the matters under its supervision during the reporting period[207] IX. Employee Information As of the end of the reporting period, the company had 3,687 employees and continued to enhance its talent development and compensation systems - The company's compensation policy is based on principles of distribution according to work, efficiency, fairness, and sustainability, featuring various salary structures[212] - In 2021, the company launched over 50 training programs under its "Blue Sky Talent Development Plan" to cultivate talent across all levels, including management, technical staff, and skilled workers[213][216][217] Employee Count and Composition at Year-End 2021 | Category | Number of Employees | | :--- | :--- | | Total Employees at Year-End | 3,687 | | Production Personnel | 2,866 | | Sales Personnel | 86 | | Technical Personnel | 483 | | Finance Personnel | 53 | | Administrative Personnel | 199 | Employee Education Level at Year-End 2021 | Education Level | Number of Employees | | :--- | :--- | | Graduate Degree or Higher | 63 | | University (Bachelor's, Associate) | 1,103 | | Other | 2,521 | X. Profit Distribution and Capitalization of Capital Reserve The company maintains a stable profit distribution policy and has proposed a cash dividend of RMB 1.00 per 10 shares for the 2021 fiscal year - The company implements a consistent and stable profit distribution policy and approved the "Shareholder Return Plan for the Next Three Years (2021-2023)" in 2021[218] - The 2020 profit distribution plan, a cash dividend of RMB 0.50 per 10 shares (tax included), was completed in June 2021[219] - The proposed profit distribution for 2021 is a cash dividend of RMB 1.00 per 10 shares (tax included), with no bonus shares or capitalization of capital reserve[224] Proposed Profit Distribution for 2021 | Indicator | Amount | | :--- | :--- | | Dividend per 10 Shares (Yuan) (tax included) | 1.00 | | Share Capital Base for Distribution (shares) | 1,118,052,790 | | Cash Dividend Amount (Yuan) (tax included) | 111,805,279.00 | | Cash Dividend via Other Means (e.g., share repurchase) (Yuan) | 25,641,747.80 | | Total Cash Dividend (including other means) (Yuan) | 137,447,026.80 | | Distributable Profit (Yuan) | 2,174,329,922.03 | | Total Cash Dividend as a Percentage of Total Profit Distribution | 100% | XI. Implementation of Equity Incentive Plans, Employee Stock Ownership Plans, or Other Employee Incentives The company continued its stock option incentive plan, adjusting exercise prices and canceling expired options, while some executives exercised their options - On January 5, 2021, the company canceled 650,400 expired unexercised stock options from the initial grant and 1,018,000 expired unexercised options from the reserved grant[225] - On June 29, 2021, following the 2020 annual equity distribution, the exercise price for the initial grant was adjusted from RMB 3.905 to RMB 3.856, and for the reserved grant from RMB 10.217 to RMB 10.168[228] - The company's senior management appraisal mechanism is linked to their remuneration, with the Remuneration and Appraisal Committee conducting year-end evaluations[230] Equity Incentive Exercise by Directors and Senior Management in 2021 (Unit: shares) | Name | Position | Exercisable Shares in Reporting Period | Exercised Shares in Reporting Period | Exercise Price of Exercised Shares (Yuan/share) | | :--- | :--- | :--- | :--- | :--- | | Sun Haitao | Vice Chairman | 277,000 | 0 | 0 | | Xu Chengfei | Director, General Manager | 1,000,000 | 0 | 0 | | Cong Jianchen | Chief Engineer | 200,000 | 200,000 | 3.856 | | Lin Yongtao | Deputy General Manager | 200,000 | 151,800 | 3.905 | | Xia Lijun | Deputy General Manager | 84,000 | 84,000 | 3.856 | | Hou Bo | Deputy General Manager | 100,000 | 100,000 | 3.905 | | Total | | 1,861,000 | 584,000 | | XII. Construction and Implementation of Internal Control System during the Reporting Period The company continuously improved its internal control system in accordance with relevant regulations, effectively managing operational risks - The company updates and refines its internal control system based on the "Basic Standard for Enterprise Internal Control" and its supporting guidelines[233] - The internal audit department and the Audit Committee form the risk and internal control management structure, responsible for implementation, supervision, and evaluation[233] - No material weaknesses in internal control were identified during the reporting period[234] XIII. Management and Control of Subsidiaries during the Reporting Period This section states that the company's management and control over its subsidiaries were effective, with no integration plans or issues to disclose - The company's management and control over its subsidiaries were effective during the reporting period, with no integration plans, progress, or issues to disclose[234] XIV. Self-assessment Report or Audit Report on Internal Control The company's 2021 internal control self-assessment report concluded that its internal control system was effective, with no material or significant deficiencies found - The full internal control evaluation report was disclosed on March 15, 2022, on CNINFO[235] - The scope of the evaluation covered 100% of the total assets and operating revenue in the company's consolidated financial statements[235] - No material or significant deficiencies were found in either financial reporting or non-financial reporting internal controls[239] - The company did not have an internal control audit report for the reporting period[240] XV. Rectification of Issues Found in the Special Self-inspection of Corporate Governance A self-inspection confirmed the company's governance structure is sound, with plans for continuous improvement in internal controls and information disclosure - A self-assessment concluded that the company's governance complies with relevant laws and regulations, with a sound structure and no major issues[240] - The company plans to further refine its internal control systems by revising and supplementing relevant policies[240] - The company will continue to enhance the role of its specialized board committees in strategic planning, operational management, and risk control[243] - The company is committed to ensuring that information disclosure is true, accurate, complete, timely, and fair, presented in a clear and understandable manner[243] - The company will organize training for directors, supervisors, and senior management on the latest securities market regulations and guidelines[243] Section 5 Environment and Social Responsibility I. Major Environmental Issues The company is not classified as a key pollutant-discharging unit and has implemented comprehensive environmental management systems to ensure compliance and minimize its environmental impact - The company is not listed as a key pollutant-discharging unit by environmental protection authorities and received no environmental penalties during the reporting period[247] - The company has a dedicated department for environmental protection, strictly adheres to national laws, and has established pollution prevention management processes[247] - The company implements a complete separation of rainwater and sewage, with treated wastewater meeting Grade B standards of GB/T31962-2015[248] - Air pollutants are treated by dust removal systems to meet emission standards, and solid waste, including hazardous materials, is managed and disposed of in compliance with regulations[249] - In 2021, the company built new steel scrap yards, waste sorting points, and a hazardous waste warehouse, and replaced cupola furnaces with frequency conversion melting furnaces to reduce pollution[249] II. Social Responsibility The company is committed to fulfilling its social responsibilities by protecting stakeholder interests, promoting environmental sustainability, and engaging in community welfare - The company protects shareholder rights, especially those of small and medium-sized investors, by ensuring their right to information, participation, and voting[252] - The company values its relationships with suppliers, ensuring timely payments and extending social responsibility requirements throughout its supply chain[253] - The company provides 24-hour after-sales service to customers and plans to enhance its overseas service network to improve customer satisfaction[254] - The company actively invests in environmental protection, including energy conservation, emission reduction, and new waste management facilities[255] - The company protects employee rights through an optimized compensation system, collective wage negotiations, and various employee welfare programs[255](index=255&type=chunk][256] - During the reporting period, the company donated RMB 62,000 for scholarships, awarded RMB 71,000 in scholarships to employees' children, and organized charitable donations of approximately RMB 150,000[258] III. Consolidating and Expanding Poverty Alleviation Achievements and Rural Revitalization This section states that the company had no activities related to poverty alleviation or rural revitalization during the reporting period - The company had no activities related to consolidating poverty alleviation achievements or rural revitalization during the reporting period[259] Section 6 Significant Matters I. Fulfillment of Commitments The company's actual controller and controlling shareholder have strictly fulfilled their commitments regarding company independence, non-competition, and related-party transactions - The actual controller, Xing Yunbo, has committed to maintaining the company's independence in assets, personnel, finance, organization, and business[263] - The controlling shareholder, Tianrun United Group Co, Ltd, has committed to avoiding competition by not investing in businesses with similar products[263] - Both the controlling shareholder and actual controller have committed to minimizing and regulating related-party transactions, adhering to principles of fairness and arm's-length pricing[266] - All commitments were fulfilled on time, with no outstanding unfulfilled commitments[266] II. Non-operating Fund Occupation by Controlling Shareholder and Other Related Parties This section states that there was no non-operating occupation of the company's funds by its controlling shareholder or other related parties - There was no non-operating occupation of the company's funds by its controlling shareholder or other related parties during the reporting period[269] III. Irregular External Guarantees This section states that the company had no irregular external guarantees during the reporting period - The company had no irregular external guarantees during the reporting period[270] IV. Board's Explanation on the Latest "Non-standard Audit Report" This section states that there was no non-standard audit report for the reporting period - There was no non-standard audit report for the reporting period[271] V. Explanation from the Board, Supervisory Committee, and Independent Directors on the "Non-standard Audit Report" for the Reporting Period This section states that there was no non-standard audit report for the reporting period - There was no non-standard audit report for the reporting period[271] VI. Explanation of Changes in Accounting Policies, Estimates, or Correction of Major Accounting Errors Compared to the Previous Year's Financial Report The company adopted the new lease accounting standard from January 1, 2021, recognizing right-of-use assets and lease liabilities, which adjusted the opening balances of relevant financial statement items - Effective January 1, 2021, the company adopted the revised "Accounting Standard for Business Enterprises No 21 - Leases," adjusting the opening balance of retained earnings and other related financial statement items without restating comparative period information[271] - The company applied simplified treatment for operating leases existing before the initial application date, including exemptions for short-term leases and the use of a single discount rate[276] - The company also implemented "Interpretation No 14" and "Interpretation No 15" of the Accounting Standards for Business Enterprises, which had no significant impact on its financial statements[277] Main Impact of Adopting the New Lease Standard on the Jan 1, 2021 Financial Statements (Unit: Yuan) | Item | Dec 31, 2020 | New Lease Standard Adjustment | Jan 1, 2021 | | :--- | :--- | :--- | :--- | | Right-of-use Assets | 0 | 46,349,192.15 | 46,349,192.15 | | Non-current Liabilities Due within One Year | 97,643,011.92 | 5,638,639.00 | 103,281,650.92 | | Lease Liabilities | 0 | 40,710,553.15 | 40,710,553.15 | VII. Explanation of Changes in the Scope of Consolidation Compared to the Previous Year's Financial Report The scope of consolidation changed during the reporting period with the establishment of a new wholly-owned subsidiary, Shandong Tianrun Precision Industry Co, Ltd - Shandong Tianrun Precision Industry Co, Ltd was established by the company in June 2021 with a registered capital of RMB 120 million, in which the company holds a 100% stake[278] Increase in Consolidation Scope (Unit: Yuan) | Company Name | Method of Acquisition | Date of Acquisition | Capital Contribution | Ownership Percentage | | :--- | :--- | :--- | :--- | :--- | | Shandong Tianrun Precision Industry Co, Ltd | New Establishment | June 2021 | 103,711,883.74 | 100% | VIII. Appointment and Dismissal of Accounting Firm The company continued to engage Tianjian Certified Public Accountants as its auditor for the 15th consecutive year, with an audit fee of RMB 750,000 - The company did not change its accounting firm during the reporting period and did not engage an internal control auditor, financial advisor, or sponsor[280] Currently Engaged Accounting Firm | Item | Details | | :--- | :--- | | Accounting Firm Name | Tianjian Certified Public Accountants (Special General Partnership) | | Audit Fee (RMB 10,000) | 75 | | Consecutive Years of Audit Service | 15 | | Certified Public Accountants | Hu Yanlong, Dai Wei | | Consecutive Years of Audit Service by CPAs | Hu Yanlong 3 years, Dai Wei 1 year | IX. Delisting Risk after Annual Report Disclosure This section states that the company faces no delisting risk following the disclosure of its annual report - The company faces no delisting risk following the disclosure of its annual report[282] X. Bankruptcy and Reorganization Matters This section states that no bankruptcy or reorganization matters occurred during the reporting period - No bankruptcy or reorganization matters occurred during the reporting period[282] XI. Major Litigation and Arbitration This section states that there were no major litigation or arbitration matters during the reporting period - The company had no major litigation or arbitration matters during the reporting period[283] XII. Penalties and Rectifications This section states that there were no penalties or rectifications during the reporting period - There were no penalties or rectifications during the reporting period[284] XIII. Integrity Status of the Company, its Controlling Shareholder, and Actual Controller The company, its controlling shareholder, and actual controller maintained a good integrity record with no unfulfilled court judgments or overdue major debts - During the reporting period, the company, its controlling shareholder, and actual controller had no unfulfilled effective court judgments or large overdue debts[285] XIV. Major Related-party Transactions The company did not engage in any major related-party transactions related to daily operations, asset acquisitions, or joint investments during the reporting period - The company had no related-party transactions related to daily operations during the reporting period[286] - The company had no related-party transactions involving the acquisition or sale of assets or equity[287] - The company had no joint investments with related parties[290] - The company had no related-party credit or debt transactions[291] - The company had no deposits, loans, credit lines, or other financial business with related financial companies[292] XV. Major Contracts and Their Performance The company had no major custody, contracting, or leasing agreements, but engaged in wealth management with an outstanding balance of RMB 400 million at year-end - The company had no custody, contracting, or leasing arrangements during the reporting period[295] - The company had no major guarantees during the reporting period[299] - The company had no entrusted loans or other major contracts during the reporting period[302][303] Overview of Entrusted Wealth Management during the Reporting Period (Unit: RMB 10,000) | Type | Source of Funds | Amount Transacted | Outstanding Balance | Overdue Unrecovered Amount | | :--- | :--- | :--- | :--- | :--- | | Bank Wealth Management Products | Own Funds | 40,000 | 40,000 | 0 | XVI. Explanation of Other Significant Matters During the period, the company completed its share repurchase plan, established a new subsidiary, and participated in a private placement, while the controlling shareholder reduced its share pledge ratio - The company completed its share repurchase plan initiated in February 2020, repurchasing 21,404,388 shares for a total of RMB 95.38 million[307] - The controlling shareholder, Tianrun United Group, released pledges on a total of 60,500,000 shares[308] - At the end of the reporting period, Tianrun United Group had a cumulative pledge of 72,500,000 shares, representing 41.43% of its holdings and 6.36% of the company's total share capital[309] - The company purchased real estate assets from its controlling shareholder for RMB 75.32 million, constituting a related-party transaction[309] - The company established a wholly-owned subsidiary, Shandong Tianrun Precision Industry Co, Ltd, with a registered capital of RMB 120 million to expand its precision casting business[310] - The company subscribed to the private placement of SAIC Motor, acquiring 6,674,082 shares for a total of RMB 60.00 million[311] XVII. Significant Matters of Subsidiaries This section states that there were no significant matters concerning the company's subsidiaries during the reporting period - There were no significant matters concerning the company's subsidiaries during the reporting period[314] Section 7 Changes in Share Capital and Shareholders I. Changes in Share Capital The company's total share capital increased by 4.81 million shares due to the exercise of stock options by employees under the incentive plan - The company's total share capital increased by 4,806,800 shares, primarily due to the exercise of options by participants in the stock option incentive plan[319] - Senior executives exercised a total of 584,000 options, with 75% of the newly acquired shares (438,000 shares) subject to lock-up restrictions[319] - The change in share capital had no impact on the basic and diluted earnings per share or net assets per share for the latest year and period[323] Share Capital Changes in 2021 (Unit: shares) | Category | Pre-change Quantity | Proportion | Change (+, -) | Post-change Quantity | Proportion | | :--- | :--- | :--- | :--- | :--- | :--- | | I. Shares with Selling Restrictions | 143,696,352 | 12.66% | 438,000 | 144,134,352 | 12.65% | | II. Shares without Selling Restrictions | 990,954,026 | 87.34% | 4,368,800 | 995,322,826 | 87.35% | | III. Total Shares | 1,134,650,378 | 100.00% | 4,806,800 | 1,139,457,178 | 100.00% | Changes in Restricted Shares at Year-End 2021 (Unit: shares) | Shareholder Name | Restricted Shares at Start of Period | Increase in Restricted Shares | Decrease in Restricted Shares | Restricted Shares at End of Period | Reason for Restriction | | :--- | :--- | :--- | :--- | :--- | :--- | | Xing Yunbo | 101,646,694 | 0 | 0 | 101,646,694 | Executive Lock-up | | Sun Haitao | 18,160,684 | 0 | 0 | 18,160,684 | Executive Lock-up | | Xu Chengfei | 8,137,381 | 0 | 0 | 8,137,381 | Executive Lock-up | | Liu Li | 750,000 | 0 | 0 | 750,000 | Executive Lock-up | | Zhou Xianzhong | 900,000 | 0 | 0 | 900,000 | Executive Lock-up | | Yu Qiuming | 6,177,103 | 0 | 0 | 6,177,103 | Executive Lock-up | | Yu Shuming | 6,177,103 | 0 | 0 | 6,177