LFBC(SZ:002513)2022-04-15 16:00Business Focus and Strategy - The company reported a significant shift in its main business focus from "pharmaceutical health + agrochemical" to solely agrochemical products after the divestiture of Ark Pharmaceutical in 2020[19]. - The company plans not to distribute cash dividends or issue bonus shares, indicating a focus on reinvestment[5]. - The company experienced a change in controlling shareholder from Suhua Group to Hainan Jinsui in May 2021, following a series of equity transfer agreements[19]. - The company has committed to ensuring the accuracy and completeness of its financial reports, with key executives affirming the integrity of the annual report[3]. - The company’s main business includes the production, research, and sales of pesticides and fine chemical products, reflecting its expertise in the agrochemical sector[19]. - The new management team has adjusted the company's development strategy, increasing investments in safety and environmental protection to address previous shortcomings[33]. - The company aims to enhance production efficiency and product quality through continuous process improvements and DCS automation[34]. - The company plans to extend its industrial chain around new materials and establish a new materials industry cluster, supported by setting up industry and merger funds[35]. - The company is committed to a strategic shift towards high-end new materials and green chemical sectors, emphasizing innovation and ecological sustainability[98]. - The company’s future development strategy includes leveraging its expertise in phosgene products and agricultural technology to become a leading enterprise in its field[98]. Financial Performance - The company's operating revenue for 2021 was ¥1,443,932,144.80, representing a 7.60% increase compared to ¥1,341,970,891.91 in 2020[21]. - The net profit attributable to shareholders was -¥491,191,923.36, a significant decrease of 3,413.59% from ¥14,823,557.29 in 2020[21]. - The net cash flow from operating activities was ¥11,796,557.54, down 90.81% from ¥128,305,653.14 in the previous year[21]. - The total assets at the end of 2021 were ¥1,727,949,962.51, a decrease of 25.23% from ¥2,311,049,219.02 at the end of 2020[21]. - The net assets attributable to shareholders decreased by 42.53% to ¥666,636,974.20 from ¥1,159,910,073.71 in 2020[21]. - The company reported a basic and diluted earnings per share of -¥1.44, compared to ¥0.04 in 2020, reflecting a decrease of 3,700.00%[21]. - The weighted average return on equity was -53.78%, down 55.08% from 1.30% in 2020[21]. - The company experienced a significant decline in quarterly net profit, with the fourth quarter showing a loss of -¥448,962,605.45[25]. - The company reported a significant decrease in cash inflows from investment activities, primarily due to the previous year's asset disposals[79]. - The company reported a total revenue of 228.76 million CNY for the year 2021, reflecting a year-on-year increase of 15%[130]. Market and Competition - The global pesticide market is projected to reach $66.703 billion in 2023, with a compound annual growth rate of 3% from 2018 to 2023[32]. - The company is committed to expanding its market presence both domestically and internationally, utilizing a mix of direct sales and partnerships with distributors[44]. - The company's main products include high-efficiency, low-toxicity pesticides, with a market share of approximately 30% for both Difenoconazole and Methyl Thiophanate[52]. - The company is focused on developing proprietary technologies, achieving over 98% purity in products like Cyhalofop-butyl through advanced synthesis methods[49]. - The company recognizes the competitive risk in the pesticide industry due to the presence of numerous small manufacturers and intends to accelerate technological upgrades to enhance market competitiveness[101]. Production and Operations - The company experienced a significant increase in production costs due to rising prices of upstream raw materials, with a negative gross margin reported for the period[33]. - The company shifted from self-manufacturing to external procurement for key intermediates like methyl chloroformate and ethyl chloroformate, leading to a substantial increase in production costs[33]. - The company faced temporary production halts in September 2021 due to local government mandates, adversely affecting overall operational performance[33]. - The production capacity utilization rates for key products are as follows: Methyl Thiophanate at 60%, Difenoconazole at 32%, and Benzene-1,4-diamine at 44%[49]. - The company has a production capacity of 400,000 tons/year for sulfuric acid, with a utilization rate of 41%[50]. Research and Development - Research and development expenses decreased by 18.71% to approximately ¥12.92 million in 2021, representing 0.89% of total revenue[76]. - The number of R&D personnel decreased by 2.11% to 93, with R&D personnel accounting for 6.62% of the total workforce[76]. - The company plans to maintain its commitment to research and development, aiming to introduce new products in the next fiscal period[121]. - The company is investing 50 million yuan in R&D for new technologies aimed at improving production efficiency by 25%[126]. Environmental and Safety Management - The company has established a wastewater treatment capacity of 3,000 tons per day, utilizing a multi-step treatment process to ensure compliance with discharge standards[159]. - The company has implemented a comprehensive air pollution control strategy, achieving stable compliance with emission standards through advanced treatment technologies[160]. - The company has invested in technology upgrades and equipment improvements to reduce pollutant emissions, aligning with its commitment to environmental protection[158]. - The company has a total of 487 safety production responsibility items and 39 safety management systems in place to enhance workplace safety[172]. - The company emphasizes the importance of safety training, with all special operation personnel receiving certification from the local labor bureau[172]. Corporate Governance - The company has established an independent financial department with a dedicated accounting system, ensuring independent financial decision-making[116]. - The company has a structured board of directors and supervisory board, ensuring compliance with corporate governance standards[116]. - The company is actively pursuing internal control management and enhancing corporate governance structures[139]. - The board has adopted a strict compliance approach to corporate governance and decision-making processes[138]. - The company has made a long-term commitment to ensure compliance with the regulations governing related party transactions and to maintain fair pricing practices[177]. Shareholder Relations - The company held its annual general meeting on May 13, 2021, with a participation rate of 40.42%[118]. - The company plans not to distribute cash dividends for the 2021 fiscal year and will not increase capital through public reserves or issue bonus shares[147]. - The company reported a positive profit available for distribution to shareholders but did not propose a cash dividend distribution plan[148]. - The company has a cash dividend policy ensuring that at least 20% of the distributable profits from the consolidated financial statements are distributed in cash annually, provided conditions are met[167]. Challenges and Risks - The company faced challenges due to the ongoing impact of the COVID-19 pandemic, rising international shipping costs, and inflationary pressures on raw material prices[31]. - The company is focused on addressing potential risks associated with safety and environmental compliance in its production processes[101]. - The company's agricultural chemical business revenue is nearly two-thirds from exports, primarily settled in USD, making it sensitive to RMB/USD exchange rate fluctuations[102]. - The company faces risks from raw material price fluctuations, with key materials including liquid chlorine, coke, methanol, and sulfur, which are influenced by energy and transportation costs[103].