金城医药(300233) - 2019 Q4 - 年度财报

Company Profile and Key Financial Indicators Key Accounting Data and Financial Indicators In 2019, operating revenue decreased by 7.09% to RMB 2.795 billion, and net profit attributable to shareholders declined by 22.96% to RMB 203 million; net profit after non-recurring items fell 74.25%, but operating cash flow rose 64.11% to RMB 578 million Key Financial Data for 2019 | Indicator | 2019 | 2018 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Operating Revenue (RMB) | 2,794,819,332.70 | 3,007,968,049.52 | -7.09% | | Net Profit Attributable to Shareholders (RMB) | 203,285,186.73 | 263,863,408.96 | -22.96% | | Net Profit Attributable to Shareholders After Deducting Non-Recurring Gains and Losses (RMB) | 64,621,883.15 | 251,001,639.97 | -74.25% | | Net Cash Flow from Operating Activities (RMB) | 577,983,378.38 | 352,196,534.35 | 64.11% | | Basic EPS (RMB/share) | 0.52 | 0.67 | -22.39% | | Weighted Average Return on Net Assets | 5.47% | 6.54% | -1.07% | | Total Assets (RMB) | 5,592,390,582.02 | 5,286,594,879.00 | 5.78% | | Net Assets Attributable to Shareholders (RMB) | 4,064,167,519.74 | 4,009,478,306.73 | 1.36% | Quarterly Key Financial Indicators The company incurred a significant loss in Q4 2019, with net profit attributable to shareholders at negative RMB 232 million, which sharply contrasted with prior quarters and was the primary cause for the full-year net profit decline 2019 Quarterly Financial Indicators (Unit: RMB) | Indicator | Q1 | Q2 | Q3 | Q4 | | :--- | :--- | :--- | :--- | :--- | | Operating Revenue | 634,385,558.13 | 647,591,699.40 | 682,385,181.01 | 830,456,894.16 | | Net Profit Attributable to Shareholders | 98,071,895.99 | 227,173,357.29 | 109,657,473.12 | -231,617,539.67 | Non-Recurring Gains and Losses Items and Amounts Total non-recurring gains and losses for 2019 amounted to RMB 139 million, significantly higher than previous years, primarily due to RMB 164 million in performance compensation from Jincheng Taier's original shareholders, providing crucial profit support Non-Recurring Gains and Losses Items (Unit: RMB) | Item | 2019 Amount (RMB) | 2018 Amount (RMB) | Description | | :--- | :--- | :--- | :--- | | Government grants included in current profit and loss | 23,342,267.03 | 18,896,346.87 | - | | Other non-operating income and expenses | 163,730,499.81 | 180,347.69 | Primarily due to the company receiving performance compensation from the original shareholders of Jincheng Taier during the reporting period | | Total | 138,663,303.58 | 12,861,768.99 | -- | Company Business Overview Main Business, Products, and Operating Model The company's business covers pharmaceutical intermediates, biological APIs, and finished preparations, forming a complete value chain; it employs a group-level management, an 'agent + self-operated' sales model, and a multi-platform R&D system - The company's business primarily involves three major areas: pharmaceutical intermediates, biological APIs, and finished preparations, with main operations including the production, R&D, and sales of related drugs such as cephalosporin powder injections, cephalosporin side-chain intermediates, distinctive biological APIs, and finished preparations for women and children[33] - The company's main products include: - Cephalosporin side-chain intermediates: AE active ester, triazine ring, etc., used for synthesizing various cephalosporin antibiotics - Distinctive biological APIs: Glutathione, S-adenosylmethionine, etc - Specialized drugs: Nifuratel and Nystatin Vaginal Soft Capsules and other gynecological products, with several products included in the 2019 National Medical Insurance Catalog[35][36] - The company implements a group-level three-tier management structure, with finished preparations adopting an "agent + self-operated" sales model, while pharmaceutical chemicals and APIs are primarily sold through direct sales[37][41] Significant Changes in Major Assets During the reporting period, monetary capital increased by 36.93% due to performance compensation and sales collections; development expenditures surged by 119.09% from R&D and consistency evaluation investments; other assets also saw substantial increases Explanation of Significant Changes in Major Assets | Major Asset | Explanation of Significant Change | | :--- | :--- | | Monetary Capital | Increased by 36.93% from the beginning of the year, primarily due to the receipt of performance compensation from Jincheng Taier's original shareholders and increased sales collections | | Accounts Receivable Financing | Increased by 79.36% from the beginning of the year, primarily due to an increase in bank acceptance bills received from sales collections | | Development Expenditures | Increased by 119.09% from the beginning of the year, primarily due to increased investment in new product R&D and consistency evaluations for finished preparations | | Long-term Deferred Expenses | Increased by 144.05% from the beginning of the year, primarily due to increased environmental protection investment to enhance wastewater treatment capacity | Core Competitiveness Analysis The company's core competitiveness lies in its technology, talent, and brand advantages, supported by national-level R&D platforms, strategic university collaborations, a multi-disciplinary R&D team, and a strong brand reputation with stable clients - The company possesses multiple high-level R&D platforms, including a national-level enterprise technology center and a postdoctoral workstation, and engages in long-term technical cooperation with universities such as Tsinghua University and Shandong University, demonstrating strong R&D capabilities[49] - The company emphasizes talent team building, with an R&D team covering multiple fields such as chemical engineering, biology, and pharmaceutical preparations[50][52] - The company boasts strong brand influence with both international clients like Cavallent and Aurobindo, and renowned domestic clients such as Qilu Antibiotics and Guangxi Kelun. In 2019, it was recognized as a "Benchmark Enterprise in the Pharmaceutical Industry for the 70th Anniversary of the Founding of New China"[53] Management Discussion and Analysis Annual Operating Overview In 2019, operating revenue reached RMB 2.795 billion and net profit RMB 203 million, significantly impacted by subsidiary Jincheng Taier's underperformance and a RMB 289 million goodwill impairment; the company focused on R&D, marketing, quality, and key projects - In 2019, the company achieved operating revenue of RMB 2.795 billion and net profit attributable to the parent company of RMB 203 million. Performance was impacted by subsidiary Jincheng Taier's failure to meet targets, leading to a goodwill impairment provision of RMB 289 million[56] - During the reporting period, the company increased R&D investment by over 10% year-on-year, completing four drug consistency evaluation applications, with Montmorillonite Powder being the first product to pass[57] - The company completed the equity acquisition of Zhejiang Panggu Yaoyuan, increasing its shareholding in Jincheng Jinsu to 84% to enhance management efficiency and resource allocation[66] Main Business Analysis In 2019, finished preparations and biological pharmaceuticals & distinctive API series products grew by 16.14% and 13.11% respectively, while cephalosporin side-chain active ester products declined by 7.22%; finished preparations, with an 88.77% gross margin, were the main profit driver, despite a 9.22% drop in domestic sales 2019 Operating Revenue Composition (by Product) | Product | Operating Revenue (RMB) | Proportion of Total Revenue | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Cephalosporin Side-Chain Active Ester Series Products | 874,339,528.52 | 31.28% | -7.22% | | Biological Pharmaceuticals and Distinctive API Series Products | 335,202,351.68 | 11.99% | 13.11% | | Finished Preparations | 977,506,369.34 | 34.98% | 16.14% | | Other Pharmaceutical Chemical Products | 607,771,083.16 | 21.75% | 5.07% | Performance of Major Product Segments | Product Segment | Operating Revenue (RMB) | Operating Cost (RMB) | Gross Margin | Revenue YoY Change | Cost YoY Change | Gross Margin YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Cephalosporin Side-Chain Active Ester Series Products | 874,339,528.52 | 586,764,860.42 | 32.89% | -7.22% | -3.92% | -2.31% | | Biological Pharmaceuticals and Distinctive API Series Products | 335,202,351.68 | 137,357,741.60 | 59.02% | 13.11% | 0.15% | 5.30% | | Finished Preparations | 977,506,369.34 | 109,783,839.86 | 88.77% | 16.14% | 9.38% | 0.69% | - During the reporting period, the company acquired 67.35% equity in Zhejiang Panggu Yaoyuan Co., Ltd. and established Guangdong Cephalosporin Pharmaceutical Co., Ltd., leading to changes in the scope of consolidation[95] Expense Analysis In 2019, selling expenses rose 28.28%, R&D expenses grew 21.00%, and financial expenses surged 255.09% due to reduced exchange gains; asset impairment losses increased 81.66% from goodwill impairment, while non-operating income dramatically increased 1984.03% from performance compensation 2019 Major Expense Changes (Unit: RMB) | Expense Item | 2019 | 2018 | Year-on-Year Change | Explanation of Significant Change | | :--- | :--- | :--- | :--- | :--- | | Selling Expenses | 575,949,865.56 | 448,970,732.21 | 28.28% | - | | Financial Expenses | 6,158,151.15 | -3,970,626.54 | 255.09% | Primarily due to exchange rate fluctuations and reduced exchange gains during the reporting period | | R&D Expenses | 263,916,394.24 | 218,107,100.36 | 21.00% | - | | Asset Impairment Losses | -303,288,943.77 | -166,950,210.98 | 81.66% | Primarily due to increased goodwill impairment provisions during the reporting period | | Non-Operating Income | 169,920,641.69 | 8,153,469.13 | 1,984.03% | Primarily due to the receipt of performance compensation from Jincheng Taier's original shareholders during the reporting period | R&D Investment The company continuously increased R&D investment, with total R&D expenditure reaching RMB 387 million in 2019, raising its proportion of operating revenue from 10.01% to 13.84%; capitalized R&D expenditure amounted to RMB 137 million, accounting for 35.50% of total R&D investment R&D Investment Over the Past Three Years | Indicator | 2019 | 2018 | 2017 | | :--- | :--- | :--- | :--- | | R&D Investment Amount (RMB) | 386,884,819.71 | 301,244,556.04 | 143,544,173.03 | | R&D Investment to Operating Revenue Ratio | 13.84% | 10.01% | 5.15% | | Capitalized R&D Expenditure (RMB) | 137,358,171.73 | 83,137,455.68 | 4,245,194.57 | | Capitalized R&D Expenditure to Total R&D Investment Ratio | 35.50% | 27.60% | 2.96% | Cash Flow Analysis In 2019, cash flow significantly improved, with net cash flow from operating activities increasing by 64.11% due to increased sales collections; net cash outflow from investing activities narrowed by 77.16% from performance compensation, while net cash flow from financing activities turned negative, decreasing by 355.48% due to an equity acquisition 2019 Cash Flow Statement Major Items (Unit: RMB) | Item | 2019 | 2018 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | 577,983,378.38 | 352,196,534.35 | 64.11% | | Net Cash Flow from Investing Activities | -93,445,215.15 | -409,172,021.91 | 77.16% | | Net Cash Flow from Financing Activities | -220,550,178.98 | 86,329,273.31 | -355.48% | | Net Increase in Cash and Cash Equivalents | 264,987,727.24 | 29,292,250.92 | 804.63% | Company's Future Development Outlook and Risks The company anticipates continued growth in the pharmaceutical and API markets, focusing its strategy on high-end medical chemical products, high-quality antibiotics, and full-lifecycle gynecological products; it also faces risks from policy changes, market competition, product quality, goodwill impairment, R&D, and management challenges from expansion - The company's development strategy will focus on four major areas: high-end pharmaceutical chemical products, high-end bioactive products, high-quality antibiotics, and full-lifecycle gynecological products, aiming to build a distinctive, specialized, and branded development path[223] - The company's main risks include: - Policy Risk: Policies such as consistency evaluations, volume-based procurement, and medical insurance cost control introduce uncertainties - Market Risk: Fluctuations in raw material prices and drug prices are influenced by market competition - Quality, Safety, and Environmental Risk: Potential risks in quality, safety, and environmental protection may exist in the production process - Goodwill Impairment Risk: Goodwill formed from the acquisition of Langyi Pharmaceutical (now Jincheng Taier) still carries impairment risk - R&D Risk: New drug R&D involves high investment, long cycles, and significant uncertainties - Management Risk: Expansion of business scale demands higher management capabilities[231][232][234][235][236] Significant Matters Profit Distribution The company's 2019 profit distribution plan proposes a cash dividend of RMB 2.00 per 10 shares, with no bonus shares or capitalization of capital reserves; total cash dividends (including share repurchases) accounted for 40.67% of net profit attributable to the parent company, continuing its stable cash dividend policy 2019 Profit Distribution Plan | Item | Amount/Quantity | | :--- | :--- | | Dividend per 10 shares (RMB) (tax inclusive) | 2 | | Share Capital Base for Distribution Plan (shares) | 388,671,487 | | Cash Dividend Amount (RMB) (tax inclusive) | 77,734,297.40 | | Cash Dividend by Other Means (e.g., share repurchase) (RMB) | 4,944,049.00 | | Proportion of Total Cash Dividends (incl. other means) to Total Profit Distribution | 100.00% | Cash Dividends Over the Past Three Years | Dividend Year | Total Cash Dividends (incl. other means) (RMB) | Ratio to Net Profit Attributable to Ordinary Shareholders of Listed Company in Consolidated Financial Statements | | :--- | :--- | :--- | | 2019 | 82,678,346.40 | 40.67% | | 2018 | 137,569,902.38 | 52.14% | | 2017 | 78,630,447.60 | 27.46% | Fulfillment of Commitments During the reporting period, commitments regarding asset restructuring, share restrictions, and non-compete clauses were all being fulfilled; specifically, the performance commitment for Beijing Langyi Pharmaceutical (now Jincheng Taier) has been fulfilled, and the company received the corresponding performance compensation - Regarding the performance commitment for Beijing Langyi Pharmaceutical (now Jincheng Taier) for 2015-2018, as targets were not met, the promising party has paid cash compensation to the company, and this commitment has been fulfilled[260] Significant Related Party Transactions During the reporting period, the company did not engage in significant related party transactions related to its daily operations, but it did undertake related party transactions involving asset acquisition, specifically the cash acquisition of equity in Zhejiang Panggu Yaoyuan Co., Ltd. held by company executive Fu Miaoqing and others - During the reporting period, the company did not engage in significant related party transactions related to its daily operations, nor did it engage in related party transactions involving asset or equity acquisition or disposal[282][283] Social Responsibility and Environmental Protection The company actively fulfilled its social responsibilities, donating RMB 5 million to typhoon-stricken areas; in terms of environmental protection, the company and several subsidiaries are listed as key pollutant-discharging units, with detailed disclosures showing compliance with all discharge standards - The company donated RMB 5 million to people affected by Typhoon Lekima to support disaster reconstruction[303] - Several of the company's subsidiaries (Jincheng Medical Chemical, Jincheng Kerry, Huihai Pharmaceutical, Jincheng Bio, etc.) are listed as key pollutant-discharging units and have constructed and operated wastewater, exhaust gas, and hazardous waste treatment facilities as required[307][318][321] Share Changes and Shareholder Information Share Change Status During the reporting period, the company's total share capital remained unchanged; changes in share structure primarily resulted from Deputy General Manager Fu Miaoqing acquiring 6,048,332 shares, with 75% locked as restricted shares for executives; the company also implemented two share repurchase programs - Company Deputy General Manager Fu Miaoqing acquired 6,048,332 shares of the company through block trading, with 75% (4,536,249 shares) locked as restricted shares for executives, leading to an increase in restricted shares[370][371] - The company implemented two share repurchase programs. The first phase was completed in January 2019, with a cumulative repurchase of 2,878,351 shares. The second phase started in June 2019, with 248,000 shares repurchased during the reporting period[374][375] Shareholders and Actual Controllers As of the end of 2019, the company had 9,690 shareholders; the controlling shareholder is Zibo Jincheng Industrial Investment Co., Ltd., holding 20.50% of shares, with Zhao Hongfu and Zhao Yeqing as actual controllers; Beijing Jinsheng Investment Center (Limited Partnership) is the largest shareholder, holding 25.05% Top Ten Shareholders' Shareholding | Shareholder Name | Shareholding Percentage | Number of Shares Held at End of Reporting Period | | :--- | :--- | :--- | | Beijing Jinsheng Investment Center (Limited Partnership) | 25.05% | 98,493,778 | | Zibo Jincheng Industrial Investment Co., Ltd. | 20.50% | 80,582,154 | | Haitong Securities Asset Management - ICBC - Haitong Tourongbao No. 1 | 4.51% | 17,747,856 | | Zhao Hongfu | 3.25% | 12,776,000 | - The company's controlling shareholder is Zibo Jincheng Industrial Investment Co., Ltd., and the actual controllers are Zhao Hongfu and Zhao Yeqing[388][392] Directors, Supervisors, Senior Management, and Employees Changes in Shareholdings of Directors, Supervisors, and Senior Management During the reporting period, changes in shareholdings of directors, supervisors, and senior management occurred, primarily due to Deputy General Manager Fu Miaoqing increasing her holdings by 6,048,332 shares, while other directors, supervisors, and senior management's shareholdings remained unchanged Changes in Shareholdings of Directors, Supervisors, and Senior Management (Unit: shares) | Name | Position | Shares Held at Beginning of Period (shares) | Shares Increased During Current Period (shares) | Shares Held at End of Period (shares) | | :--- | :--- | :--- | :--- | :--- | | Zhao Hongfu | Director | 12,776,000 | 0 | 12,776,000 | | Zhao Yeqing | Chairman | 4,720,000 | 0 | 4,720,000 | | Zhang Xuebo | Vice Chairman/General Manager | 6,420,000 | 0 | 6,420,000 | | Fu Miaoqing | Deputy General Manager | 0 | 6,048,332 | 6,048,332 | Employee Information As of the end of the reporting period, the company had a total of 3,023 employees, with production personnel accounting for the largest proportion at 1,684 persons; approximately 50% of employees held college degrees or above, with a total of 124 doctoral and master's degree holders Employee Professional Composition | Professional Category | Number of Persons | | :--- | :--- | | Production Personnel | 1,684 | | Sales Personnel | 64 | | Technical Personnel | 221 | | Financial Personnel | 70 | | Administrative Personnel | 172 | | Professional Management Personnel | 812 | | Total | 3,023 | Corporate Governance Overview of Corporate Governance During the reporting period, the company operated strictly in accordance with relevant laws and regulations, and its corporate governance status complied with regulatory requirements; the company is independent of its controlling shareholder in terms of business, personnel, assets, organization, and finance, possessing independent and complete business operations and autonomous operating capabilities - The actual status of the company's corporate governance complies with the requirements of the "Guidelines for Corporate Governance of Listed Companies" and the "Guidelines for Standardized Operation of Companies Listed on the ChiNext Board of Shenzhen Stock Exchange"[439] - The company is completely independent of its controlling shareholder in terms of business, personnel, assets, organization, and finance, possessing independent and complete business operations and autonomous operating capabilities[447] Financial Report Audit Report Daxin Certified Public Accountants issued a standard unqualified audit opinion on the company's 2019 financial report, highlighting goodwill impairment and revenue recognition as key audit matters, indicating focus on acquisition-related risks and revenue compliance - The auditing firm, Daxin Certified Public Accountants, issued a standard unqualified opinion (Daxin Audit [2020] No. 3-00475)[472][474] - Key audit matters are: 1. Goodwill Impairment: As of the end of 2019, the book balance of goodwill was RMB 1.153 billion, with an impairment provision of RMB 289 million for the current period. Due to its significant amount and the substantial management judgment involved in impairment testing, it was listed as a key audit matter 2. Revenue Recognition: Operating revenue for 2019 was RMB 2.795 billion. As it is a key performance indicator and of significant scale, the appropriateness of its recognition has a material impact on operating results[475][478] Financial Statements The financial statements show total assets increased from RMB 5.287 billion to RMB 5.592 billion, and total liabilities rose from RMB 1.199 billion to RMB 1.508 billion, increasing the asset-liability ratio; operating profit significantly declined due to higher operating costs and substantial asset impairment losses, while owners' equity saw increased treasury stock from repurchases and growing undistributed profits Consolidated Balance Sheet Summary (Unit: RMB) | Item | 2019年12月31日 | 2018年12月31日 | | :--- | :--- | :--- | | Total Assets | 5,592,390,582.02 | 5,286,594,879.00 | | Total Liabilities | 1,507,551,708.18 | 1,198,549,679.89 | | Total Owners' Equity Attributable to Parent Company | 4,064,167,519.74 | 4,009,478,306.73 | Consolidated Income Statement Summary (Unit: RMB) | Item | 2019年度 | 2018年度 | | :--- | :--- | :--- | | Total Operating Revenue | 2,794,819,332.70 | 3,007,968,049.52 | | Total Operating Costs | 2,346,621,620.04 | 2,489,266,639.34 | | Asset Impairment Losses | -303,288,943.77 | -166,950,210.98 | | Operating Profit | 155,327,555.14 | 367,917,292.48 | | Total Profit | 315,159,059.44 | 370,097,638.66 | | Net Profit | 214,009,704.05 | 282,313,799.31 | Notes to Consolidated Financial Statement Items The notes provide detailed information on key accounts, with goodwill impairment primarily from Jincheng Taier, totaling RMB 289 million; R&D expenses increased 21%, mainly for project development; non-operating income included RMB 166 million in performance compensation, crucial for profit; the company's shareholding in Jincheng Jinsu increased from 51% to 84% through acquisition Goodwill Impairment Provision (Unit: RMB) | Name of Investee | Beginning Balance (RMB) | Increase (Provision) for Current Period (RMB) | Ending Balance (RMB) | | :--- | :--- | :--- | :--- | | Beijing Jincheng Taier Pharmaceutical Co., Ltd. | 121,699,163.93 | 289,382,027.82 | 411,081,191.75 | - The company indirectly increased its equity in subsidiary Guangdong Jincheng Jinsu Pharmaceutical Co., Ltd. by acquiring 67.35% equity of Zhejiang Panggu Yaoyuan Co., Ltd. through cash, raising its shareholding from 51% to 84%[917]