宏创控股(002379) - 2021 Q4 - 年度财报

Important Notice, Table of Contents, and Definitions This section provides essential disclaimers, outlines the report structure, and defines key terms for clarity Important Notice The Board of Directors, Supervisory Committee, and senior management guarantee the report's truthfulness, accuracy, and completeness, with all directors attending the review meeting - The company's Board of Directors, Supervisory Committee, and senior management assure the report's content is true, accurate, and complete, assuming legal responsibility[4] - Company head Zhao Qianfang, chief accountant Liu Xinghai, and accounting department head Gao Cuixia guarantee the financial report's authenticity and completeness[4] - The company's 2021 profit distribution plan includes no cash dividends, no bonus shares, and no capital increase from capital reserves[6] Definitions This chapter defines key terms used throughout the report, clarifying references to the company, related parties, regulatory bodies, and the reporting period Key Definitions | Term | Definition | | :--- | :--- | | The Company/Company | Shandong Hongchuang Aluminum Industry Holding Co., Ltd | | Shandong Hongqiao | Shandong Hongqiao New Material Co., Ltd | | Reporting Period | January 1, 2021 to December 31, 2021 | Company Profile and Key Financial Indicators This section provides an overview of the company's fundamental information and presents its key financial performance metrics for the reporting period Company Information Shandong Hongchuang Aluminum Industry Holding Co., Ltd (stock code: 002379) is listed on the Shenzhen Stock Exchange, with Mr Zhao Qianfang as its legal representative Basic Company Information | Item | Content | | :--- | :--- | | Stock Abbreviation | Hongchuang Holding | | Stock Code | 002379 | | Listing Exchange | Shenzhen Stock Exchange | | Chinese Name | Shandong Hongchuang Aluminum Industry Holding Co., Ltd | | Legal Representative | Mr Zhao Qianfang | Key Accounting Data and Financial Indicators In 2021, the company achieved operating revenue of RMB 3.191 billion, a 34.79% increase, while net loss attributable to shareholders narrowed by 54.45% to RMB -75.15 million Key Financial Indicators for 2021 | Indicator | 2021 | 2020 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Operating Revenue (RMB) | 3,190,524,072.62 | 2,367,054,171.66 | 34.79% | | Net Profit Attributable to Shareholders (RMB) | -75,150,880.04 | -164,996,143.50 | 54.45% | | Net Profit Attributable to Shareholders (Excluding Non-recurring Items) (RMB) | -91,540,893.53 | -170,043,393.47 | 46.17% | | Net Cash Flow from Operating Activities (RMB) | -52,194,831.84 | 58,991,905.56 | -188.48% | | Basic Earnings Per Share (RMB/share) | -0.0811 | -0.1781 | 54.46% | | Weighted Average Return on Net Assets | -5.44% | -10.98% | 5.54% | | Total Assets (RMB) | 2,930,226,027.54 | 2,292,918,121.53 | 27.79% | | Net Assets Attributable to Shareholders (RMB) | 1,342,367,696.32 | 1,419,515,176.36 | -5.43% | Key Quarterly Financial Indicators In 2021, the company's operating revenue generally increased quarter-over-quarter, while net profit attributable to shareholders showed mixed results, with a profit in Q3 but losses in Q1, Q2, and Q4 2021 Quarterly Financial Indicators (Unit: RMB) | Indicator | Q1 | Q2 | Q3 | Q4 | | :--- | :--- | :--- | :--- | :--- | | Operating Revenue | 685,209,626.13 | 783,727,615.13 | 866,596,636.96 | 854,990,194.40 | | Net Profit Attributable to Shareholders | -36,098,116.47 | -4,437,317.52 | 7,377,727.98 | -41,993,174.03 | | Net Profit Attributable to Shareholders (Excluding Non-recurring Items) | -38,042,791.99 | -7,057,355.86 | 10,830,288.12 | -57,271,033.80 | | Net Cash Flow from Operating Activities | 30,521,366.06 | -108,183,741.18 | -18,564,713.60 | 44,032,256.88 | Non-recurring Gains and Losses and Amounts In 2021, the company's total non-recurring gains and losses amounted to RMB 16.39 million, primarily from government subsidies, partially offset by other non-operating net expenses 2021 Non-recurring Gains and Losses (Unit: RMB) | Item | 2021 Amount | | :--- | :--- | | Government subsidies recognized in current profit/loss | 21,087,803.52 | | Reversal of impairment provisions for individually assessed receivables | 1,047,670.69 | | Other non-operating income and expenses | -6,214,215.36 | | Less: Income tax impact | -468,754.64 | | Total | 16,390,013.49 | - The company classifies RMB 16.57 million in VAT refunds for comprehensive resource utilization products as recurring gains, given their close relation to production and operations and eligibility for immediate VAT refund policies[28] Management Discussion and Analysis This section provides a comprehensive analysis of the company's operating performance, financial condition, and future outlook, including industry trends and risk factors Industry Overview During the Reporting Period In 2021, global economic recovery and supply chain issues drove aluminum prices to multi-year highs, with strong demand for Chinese aluminum products and a shift towards regional industry concentration - In 2021, the average LME spot aluminum price was USD 2,480/ton, a 45.5% year-on-year increase; the average SHFE spot monthly price was RMB 18,953/ton, up 34.2% year-on-year[31] - China's aluminum product exports reached 5.431 million tons in 2021, an 18.0% year-on-year increase, with aluminum plate and strip exports growing by 26.5%, indicating strong overseas demand[32] - National policies like the "Plastic Ban Order" and the "14th Five-Year Plan for Circular Economy Development" (targeting 11.5 million tons of recycled aluminum production by 2025) present development opportunities for the aluminum packaging and recycled aluminum industries[33][34] Principal Business and Operations During the Reporting Period The company's core business is R&D, production, and sales of aluminum plates, strips, and foils, operating on a "production-to-order" model, with 2021 revenue reaching RMB 3.191 billion 2021 Operating Performance Overview | Indicator | 2021 | Year-on-Year Change | | :--- | :--- | :--- | | Total Operating Revenue | RMB 3.191 billion | 34.79% | | Operating Profit | RMB -67.56 million | 60.67% | | Net Profit Attributable to Shareholders | RMB -75.15 million | 54.45% | Gross Margin by Product | Product | 2021 Gross Margin | 2020 Gross Margin | Change | | :--- | :--- | :--- | :--- | | Cast Rolls | 2.39% | -0.09% | +2.48pp | | Cold Rolled Coils | 3.68% | 2.58% | +1.10pp | | Aluminum Foil | 0.94% | -1.59% | +2.53pp | | Total Principal Business | 1.91% | -0.56% | +2.47pp | - The company adjusted its product structure, increasing sales of plate and strip products while reducing aluminum foil sales, leading to a 55.28% increase in cold rolled coil sales volume and a 100.69% increase in revenue, while aluminum foil sales volume decreased by 15.11% year-on-year[42][43] - Construction of the second phase of the company's 200,000-ton recycled aluminum project is nearing completion, with major equipment installation underway, aiming to further reduce production costs[46] Analysis of Core Competencies The company's core competencies encompass technology, quality, brand, marketing network, a circular economy industrial chain, industrial cluster advantages, and corporate culture - Technology Advantage: As of the end of 2021, the company held 3 invention patents, 29 utility model patents, and 5 software copyrights[47] - Circular Economy Industrial Chain Advantage: The company has established a complete circular economy industrial chain for direct production from molten aluminum and recycling waste aluminum, contributing to cost reduction and green development[48] - Industrial Cluster Advantage: Located in Binzhou City, Shandong Province, the company leverages the policy, resource, and geographical advantages of a world-class high-end aluminum industrial cluster to accelerate its development[48] Analysis of Principal Business In 2021, the company's principal business revenue reached RMB 3.165 billion, a 36.87% increase, with significant growth in domestic sales and a positive shift in gross margin 2021 Operating Revenue Composition (Unit: RMB) | Category | 2021 Amount | Proportion of Operating Revenue | Year-on-Year Change | | :--- | :--- | :--- | :--- | | By Product | | | | | Cast Rolls | 560,722,883.49 | 17.57% | 68.11% | | Cold Rolled Coils | 896,486,313.29 | 28.10% | 100.69% | | Aluminum Foil | 1,658,919,460.95 | 52.00% | 8.59% | | By Region | | | | | Domestic Sales | 2,271,589,199.05 | 71.20% | 67.02% | | International Sales | 918,934,873.57 | 28.80% | -8.74% | 2021 Key Expense Overview (Unit: RMB) | Expense Item | 2021 | 2020 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Selling Expenses | 11,784,726.98 | 12,398,621.09 | -4.95% | | Administrative Expenses | 39,938,825.24 | 39,533,916.88 | 1.02% | | Financial Expenses | 20,190,274.86 | 17,128,544.17 | 17.88% | | Research and Development Expenses | 51,063,705.45 | 47,385,340.03 | 7.76% | 2021 Cash Flow Statement Key Items (Unit: RMB) | Item | 2021 | 2020 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | -52,194,831.84 | 58,991,905.56 | -188.48% | | Net Cash Flow from Investing Activities | -1,768,254.15 | -69,838,250.48 | 97.47% | | Net Cash Flow from Financing Activities | 181,418,992.83 | -2,834,850.00 | 6,499.60% | Analysis of Assets and Liabilities As of year-end 2021, total assets reached RMB 2.93 billion, a 27.79% increase, driven by significant changes in cash and short-term borrowings, while restricted assets totaled RMB 536 million Key Balance Sheet Item Changes | Item | 2021 Year-End Amount (RMB) | Proportion of Total Assets | Change from Beginning of Year | | :--- | :--- | :--- | :--- | | Cash and Bank Balances | 323,088,469.97 | 11.03% | +6.21pp | | Accounts Receivable | 117,529,533.19 | 4.01% | -3.99pp | | Fixed Assets | 862,437,200.30 | 29.43% | -10.91pp | | Short-term Borrowings | 250,263,083.34 | 8.54% | +6.42pp | - As of the reporting period end, the company had RMB 536 million in restricted assets, primarily comprising cash (RMB 136 million), notes receivable (RMB 333 million), and receivables financing (RMB 67 million) pledged for bills[80] Analysis of Major Holding and Participating Companies The company's key subsidiaries, Hongbo Aluminum, Hongcheng Aluminum, and Hongzhuo Aluminum, showed mixed performance in 2021, with Hongcheng Aluminum profitable while the others incurred losses 2021 Major Subsidiary Operating Performance (Unit: RMB) | Company Name | Total Assets | Net Assets | Operating Revenue | Operating Profit | Net Profit | | :--- | :--- | :--- | :--- | :--- | :--- | | Hongbo Aluminum | 1,665,703,723.05 | 137,212,368.21 | 4,856,352,349.46 | -95,798,590.43 | -95,308,387.09 | | Hongcheng Aluminum | 1,156,829,266.82 | 492,298,619.93 | 3,566,110,248.77 | 27,456,878.09 | 20,729,428.08 | | Hongzhuo Aluminum | 146,505,246.28 | 54,292,991.86 | 786,352,453.77 | -14,520,924.46 | -14,690,700.81 | - During the reporting period, the company established a new wholly-owned subsidiary, "Hongshuo Aluminum," aiming to positively impact its overall production, operations, and performance[98] Company's Future Development Outlook The company's 2022 focus is "refined management and innovative breakthroughs," aiming to enhance cost efficiency through benchmarking and advance its recycled aluminum project, while navigating macroeconomic and market risks - 2022 Strategic Priorities: - Management Innovation: Deepen benchmarking activities, explore energy-saving potential, and advance digital transformation - Market Expansion: Optimize market layout, enhance marketing capabilities, and explore diversified business models - Project Leadership: Steadily advance the second phase of the recycled aluminum project to reduce costs and achieve green, sustainable development - Safety and Environmental Protection: Strengthen safety and environmental governance to prevent environmental risks - Team Building: Focus on talent acquisition and development to build a high-quality team[100][101][102] - Key Risks Faced: - Macroeconomic Risk: Global economic recovery remains unstable, with geopolitical uncertainties - Price Volatility Risk: Raw material (aluminum ingot) price fluctuations, addressed by "production-to-order" and hedging strategies - Price Spread Risk: Domestic and international aluminum price differences may impact export business profitability - Operational Risk: Inventory and accounts receivable management are crucial for mitigating operational risks - Exchange Rate Risk: RMB exchange rate fluctuations pose a risk to export operations[103][104][105] Corporate Governance This section details the company's adherence to corporate governance principles, the structure and operation of its governing bodies, and the compensation of its key personnel Basic Corporate Governance Status During the reporting period, the company consistently complied with relevant laws and regulations, continuously improving its corporate governance structure, which largely aligns with CSRC requirements - During the reporting period, the company held 5 shareholder meetings, 8 board meetings, and 4 supervisory board meetings, all conducted in compliance with regulations[110] - The company maintains independence from its controlling shareholder in business, personnel, assets, organization, and finance, possessing autonomous operational capabilities[111] Information on Directors, Supervisors, and Senior Management This chapter outlines the backgrounds, appointments, and compensation of the company's directors, supervisors, and senior management, noting the stability of the core team despite one resignation 2021 Compensation for Selected Directors, Supervisors, and Senior Management (Unit: RMB 10,000) | Name | Position | Total Pre-tax Compensation from Company | Receives Compensation from Related Parties | | :--- | :--- | :--- | :--- | | Zhao Qianfang | Chairman | 0 | Yes | | Zhang Wei | Director, General Manager | 71.96 | No | | Liu Xinghai | Director, Deputy General Manager, CFO | 44.05 | No | | Xiao Xiao | Director, Deputy General Manager, Board Secretary | 12.28 | No | | Sun Nan | Independent Director | 8 | No | | Liu Jianwen | Independent Director | 8 | No | | Deng Yan | Independent Director | 8 | No | | Xu Aizhi | Supervisor | 0 | Yes | Internal Control Self-Evaluation Report or Internal Control Audit Report The company's Board of Directors concluded that its internal control system is sound and effective, a finding corroborated by an unqualified audit opinion from Daxin Certified Public Accountants (Special General Partnership) - The scope of internal control evaluation covered 100% of the company's total assets and operating revenue[156] - Based on the company's defect identification criteria, no significant or material defects were found in either financial or non-financial reporting[157] - The auditing firm concluded that the company maintained effective internal controls over financial reporting in all material aspects as of December 31, 2021[160] Environmental and Social Responsibility This section details the company's commitment to environmental protection and its broader social responsibilities, including stakeholder engagement and sustainable development initiatives Significant Environmental Issues The company and its subsidiaries are not classified as key polluting entities by environmental protection authorities and incurred no environmental administrative penalties during the reporting period - The company and its subsidiaries are not classified as key polluting entities, and no administrative penalties for environmental issues were incurred during the reporting period[164] Social Responsibility Status The company actively fulfills its social responsibilities through diverse investor communication, robust employee rights protection, strong customer and supplier relationships, and significant environmental initiatives - The company maintains communication with investors through various channels, including investor hotlines, email, and the SZSE interactive platform[165] - The company strictly adheres to the Labor Law, ensuring full payment of all insurance contributions for employees to protect their legitimate rights and interests[165] - The company's 200,000-ton recycled aluminum project aims to develop a circular economy, reduce raw material costs, and achieve green, sustainable development[167] Significant Matters This section highlights key events and changes impacting the company, including accounting policy adjustments and significant related party transactions Explanation of Changes in Accounting Policies, Accounting Estimates, or Significant Accounting Error Corrections Compared to Prior Year's Financial Report Effective January 1, 2021, the company adopted the revised Accounting Standard for Business Enterprises No 21—Leases, which led to the recognition of right-of-use assets and lease liabilities on its consolidated balance sheet Impact of New Lease Standards on Consolidated Financial Statements as of January 1, 2021 (Unit: RMB) | Financial Statement Item | Impact Amount | | :--- | :--- | | Assets | | | Right-of-use assets | +65,292,439.46 | | Liabilities | | | Lease liabilities | +56,564,861.20 | | Non-current liabilities due within one year | +8,727,578.26 | Significant Related Party Transactions During the reporting period, the company engaged in significant daily operating related party transactions, primarily purchasing liquid aluminum and electricity from Shandong Hongqiao New Material Co., Ltd, totaling RMB 1.677 billion 2021 Major Related Party Purchases (Unit: RMB 10,000) | Related Party | Related Transaction Content | Transaction Amount | Proportion of Similar Transactions | Exceeded Approved Limit | | :--- | :--- | :--- | :--- | :--- | | Shandong Hongqiao New Material Co., Ltd | Purchase of liquid aluminum, electricity, etc | 167,741.44 | 55.23% | No | | Binzhou Green Power Thermal Power Co., Ltd | Purchase of electricity, etc | 7,017.29 | 2.31% | No | | Zouping Hongfa Aluminum Technology Co., Ltd | Purchase of hot rolled coils, etc | 10,127.91 | 3.33% | No | | Zouping Huisheng New Material Co., Ltd | Purchase of aluminum ingots, etc | 10,781.17 | 3.55% | No | | Binzhou Beihai Huihong New Material Co., Ltd | Purchase of waste aluminum busbars, etc | 10,155.08 | 3.30% | No | - The company's daily related party transactions with Shandong Hongqiao New Material Co., Ltd were approved by the General Meeting of Shareholders, with related shareholders abstaining from voting, and transactions followed fair and just market principles[65] Share Changes and Shareholder Information This section details the company's share capital structure, any changes during the reporting period, and information regarding its shareholders and actual controller Share Change Status During the reporting period, the company's total share capital remained unchanged at 926,400,000 shares, with minor shifts between restricted and unrestricted shares due to executive share lock-up Share Change Overview (Unit: Shares) | Share Type | Before This Change | After This Change | | :--- | :--- | :--- | | Restricted Shares | 0 | 3,525 | | Unrestricted Shares | 926,400,000 | 926,396,475 | | Total Shares | 926,400,000 | 926,400,000 | Shareholders and Actual Controller Information As of year-end 2021, the company had 36,412 shareholders, with Shandong Hongqiao New Material Co., Ltd as the controlling shareholder, while the actual controller's succession is still pending Top Five Shareholders' Holdings | Shareholder Name | Shareholder Nature | Shareholding Percentage | Shares Held at Period End | | :--- | :--- | :--- | :--- | | Shandong Hongqiao New Material Co., Ltd | Domestic Non-State-Owned Legal Person | 28.18% | 261,096,605 | | Yu Rongqiang | Domestic Natural Person | 2.70% | 25,000,000 | | Guo Maoqiu | Domestic Natural Person | 2.05% | 18,970,000 | | Huatai Financial Holdings (Hong Kong) Limited - Proprietary Funds | Overseas Legal Person | 0.79% | 7,313,100 | | Jing Ge | Domestic Natural Person | 0.53% | 4,895,100 | - The company's actual controller, Mr Zhang Shiping, passed away on May 23, 2019, and related matters are currently being processed, with disclosure to follow upon completion[221] Financial Report This section presents the company's audited financial statements for the reporting period, along with the independent auditor's report and key audit matters Audit Report Daxin Certified Public Accountants (Special General Partnership) issued an unqualified audit opinion on the company's 2021 financial statements, highlighting significant related party purchases and accounts receivable as key audit matters - The audit opinion is a standard unqualified opinion, indicating that the auditors believe the financial statements are free from material misstatement[230] - Key Audit Matter One: Related party purchases, due to their significant amount (RMB 2.114 billion) and risks of incomplete transaction records and non-arm's length pricing, led auditors to perform procedures including internal control testing, document inspection, confirmations, and fair price analysis[231] - Key Audit Matter Two: Recoverability of accounts receivable, given their high proportion of total assets (book value of RMB 118 million) and the significant accounting estimates involved in bad debt provision, prompted auditors to test internal controls, review impairment provision bases, perform confirmations, and examine post-period collections[232]