星星科技(300256) - 2021 Q4 - 年度财报

Important Notice, Table of Contents, and Definitions Important Notice The Board of Directors, Supervisory Committee, and senior management guarantee the report's truthfulness, accuracy, and completeness, while the auditor issued a modified opinion with a material uncertainty related to going concern and emphasis of matter paragraphs, highlighting significant risks and no profit distribution plan for 2021 - Zhongxingcai Guanghua Certified Public Accountants issued an unmodified audit opinion with a material uncertainty related to going concern and emphasis of matter paragraphs, advising investors to pay attention to relevant risks[5] - The company faces multiple risks, including technological innovation, loss of key personnel, project construction, financing, epidemic risks, uncertainty regarding delisting risk warning removal, corporate restructuring uncertainty, investigation for alleged information disclosure violations, and additional risk warnings on its stock[6][8] - The company plans no cash dividends, bonus shares, or capital increase from capital reserves for 2021[9] Table of Contents and Definitions This section provides the report's complete directory structure and detailed explanations of professional terms and company abbreviations used, offering essential background information and definitions for understanding the report content Company Profile and Key Financial Indicators Company Information and Contact Details This section provides the company's basic business registration information, including registered name, stock code, address, and website, along with contact details for the Board Secretary and Securities Affairs Representative Key Accounting Data and Financial Indicators In 2021, the company's operating revenue decreased by 37.76% year-on-year, with net loss attributable to shareholders narrowing by 49.64% to RMB -1.385 billion, while non-recurring adjusted net loss expanded to RMB -6.938 billion, total assets significantly shrank by 55.77%, and operating cash flow improved to RMB -383.37 million Key Financial Indicators | Indicator | 2021 (RMB) | 2020 (RMB) | YoY Change | | :--- | :--- | :--- | :--- | | Operating Revenue | 3,218,351,947.70 | 5,171,009,789.84 | -37.76% | | Net Profit Attributable to Shareholders | -1,384,901,965.66 | -2,750,193,806.47 | 49.64% | | Net Profit Attributable to Shareholders (Excluding Non-Recurring Items) | -6,937,644,398.14 | -2,874,370,848.74 | -141.36% | | Net Cash Flow from Operating Activities | -383,369,666.54 | -1,873,644,247.88 | 79.54% | | Total Assets | 3,227,079,631.61 | 7,296,655,832.49 | -55.77% | | Net Assets Attributable to Shareholders | 321,048,059.06 | -2,372,153,735.33 | 113.53% | Non-Recurring Gains and Losses | Item | 2021 Amount (RMB) | 2020 Amount (RMB) | | :--- | :--- | :--- | | Gains/Losses from Disposal of Non-Current Assets | 5,479,446,282.14 | 21,245,816.01 | | Government Subsidies Included in Current Profit/Loss | 77,873,236.89 | 76,191,836.36 | | Total | 5,552,742,432.48 | 124,177,042.27 | - Non-recurring gains and losses in 2021 amounted to RMB 5.553 billion, primarily due to the derecognition of certain subsidiaries/sub-subsidiaries through restructuring and liquidation, which resulted in a RMB 5.524 billion increase in investment income at the consolidated level by reversing previously recognized undistributed profits[41] Management Discussion and Analysis Industry Overview The company operates in the computer, communication, and other electronic equipment manufacturing sector, specifically in display device manufacturing (window protection screens, touch display modules) and precision structural component manufacturing, benefiting from growing market demand and supportive national industrial policies - The company's main business falls under display device manufacturing (C3974) and other electronic device manufacturing (C3979), with products including window protection screens, touch display modules, and precision structural components[46] - The company possesses mature 2D/2.5D and leading NCVM technologies in window protection screens, with a focus on developing new technologies like 3D cover glass and AR window protection screens, while also mastering high-precision etching, bonding, nano-molding, and vacuum coating in touch display and precision structural components[50][51] - National industrial policies, such as the "Guidance Catalogue for Key Products and Services in Strategic Emerging Industries" and the "Catalogue for Guiding Industrial Structure Adjustment," encourage the development of smart terminal devices and new electronic components, providing a favorable policy environment for the industry's growth[54][55] Main Business and Operating Model The company primarily engages in R&D and manufacturing of window protection screens, touch display modules, and precision structural components for consumer electronics, utilizing a direct sales model with customized production based on customer orders and maintaining a stable supplier system for procurement - The company's business is divided into three segments: window protection screens, touch displays, and precision structural components, primarily applied in consumer electronics such as mobile phones, tablets, and wearable devices[56] - The company employs a direct sales model, producing customized products based on customer orders to avoid inventory buildup, and evaluates suppliers comprehensively and regularly to ensure raw material quality and timely supply[58][59][64] Core Competitiveness Analysis The company's core competitiveness stems from its advanced process technology, integrated one-stop solution capabilities, stable high-quality customer base, talent pool, and lean-intelligent factory management, enabling it to provide comprehensive supply services to leading clients like Huawei, Xiaomi, Apple, and Tesla - The company offers "one-stop" supply and service capabilities, with product lines covering a full range of structural components and touch display parts for smart mobile terminals, providing comprehensive production services to clients[70] - The company boasts a high-quality and stable customer base, including well-known domestic and international brands such as Huawei, Lenovo, Xiaomi, Apple, Tesla, and Motorola[71] - The company possesses multiple industry-leading technologies in window protection screens, touch displays, and precision structural components, including AG/AR/AF composite technology, ultra-fine metal mesh touch technology, and nano-molding technology[69] Main Business Analysis In 2021, the company faced significant challenges, with total operating revenue decreasing by 37.76% and net loss attributable to shareholders narrowing to RMB -1.385 billion due to cost control and cessation of low-margin orders, though non-recurring adjusted net loss expanded to RMB -6.938 billion primarily due to accounting treatments related to subsidiary restructuring and asset impairment losses, prompting plans for product transformation, cost reduction, and technological innovation Key Financial Performance | Indicator | 2021 | 2020 | YoY Change | | :--- | :--- | :--- | :--- | | Total Operating Revenue (RMB 10,000) | 321,835.19 | 517,100.98 | -37.76% | | Net Profit Attributable to Shareholders (RMB 10,000) | -138,490.20 | -275,019.38 | 49.64% | | Net Profit Attributable to Shareholders (Excluding Non-Recurring Items) (RMB 10,000) | -693,764.44 | -287,437.08 | -141.36% | - The significant disparity between net profit and non-recurring adjusted net profit is primarily due to: the derecognition of certain subsidiaries/sub-subsidiaries through restructuring and liquidation, which resulted in RMB 5.524 billion in investment income recognized as non-recurring gains and losses; and the recognition of RMB 6.096 billion in asset and credit impairment losses as recurring expenses[77] - The company plans to implement multiple measures to improve profitability, including: deepening product transformation and upgrading, focusing on high-margin products like wearables, laptops, and automotive displays; accelerating resource integration to reduce operating costs such as factory rent; comprehensively promoting lean production to improve yield and efficiency; restructuring procurement models to enhance cost reduction efforts[77][78] Revenue and Cost In 2021, the company's three main product categories experienced revenue declines, with structural components decreasing by 52.71% and touch displays by 23.07%, while window protection screens remained stable, and overall gross margin significantly improved to -4.42% from -15.50%, with all product segments showing improved gross margins, and inventory volume sharply decreased by 95.34% due to changes in consolidation scope Revenue and Gross Margin by Product Category | Product Category | Operating Revenue (RMB) | YoY Change | Gross Margin | Gross Margin YoY Change | | :--- | :--- | :--- | :--- | :--- | | Touch Display | 888,464,691.64 | -23.07% | 1.84% | +8.97pp | | Window Protection Screen | 807,471,802.12 | +0.17% | -5.10% | +8.30pp | | Structural Components | 1,422,771,407.17 | -52.71% | -10.79% | +9.25pp | | Total | 3,218,351,947.70 | -37.76% | -4.42% | +11.08pp | - Inventory volume decreased by 95.34% year-on-year, primarily because the consolidation scope changed due to the restructuring of subsidiaries Xingxing Touch and Xingxing Precision, and the bankruptcy liquidation of Dongguan Precision and Xingxing Glass, resulting in the exclusion of these companies' data from year-end inventory[85] - During the reporting period, the consolidation scope changed, with 6 new subsidiaries added and 4 subsidiaries reduced due to consolidated restructuring, bankruptcy liquidation, and deregistration[87] Expenses In 2021, the company's selling and R&D expenses significantly decreased by 34.68% and 38.79% respectively, due to team optimization and reduced R&D activities, while financial expenses declined by 14.73% due to reduced loan sizes, but administrative expenses increased by 31.59% primarily due to higher consulting fees and the inclusion of depreciation and rent from idled companies Expense Breakdown | Expense Item | 2021 (RMB) | 2020 (RMB) | YoY Change | Main Reason for Change | | :--- | :--- | :--- | :--- | :--- | | Selling Expenses | 26,837,124.54 | 41,084,373.72 | -34.68% | Optimization and integration of sales team | | Administrative Expenses | 475,582,672.11 | 361,418,534.39 | 31.59% | Increase in consulting fees and inclusion of depreciation and rent from idled companies | | Financial Expenses | 205,244,976.49 | 240,706,597.88 | -14.73% | Reduction in loan size | | R&D Expenses | 185,747,431.00 | 303,480,800.20 | -38.79% | Decrease in R&D personnel and material consumption | R&D Investment The company continues to invest in R&D, focusing on cutting-edge areas such as 3D wearable cover glass, automotive screen technology, flexible foldable display modules, Metal Mesh touchscreens, and automation equipment development, with total R&D investment of RMB 185.75 million in the reporting period, representing 5.77% of operating revenue, despite a 68.47% reduction in R&D personnel due to streamlining, equity transfers, and subsidiary restructuring - The company's R&D projects focus on multiple areas, including 3D wearables, automotive applications, flexible folding, e-paper displays, Mini LED, and automated production, aiming to enhance technological advantages and explore new markets[97][100][103] R&D Investment Metrics | Indicator | 2021 | 2020 | Change | | :--- | :--- | :--- | :--- | | R&D Investment Amount (RMB) | 185,747,431.00 | 303,480,800.20 | -38.79% | | R&D Investment as % of Revenue | 5.77% | 5.87% | -0.10pp | | Number of R&D Personnel | 426 | 1,351 | -68.47% | - The significant reduction in R&D personnel is primarily due to company streamlining (240 fewer people), transfer of subsidiary equity (174 fewer people), and the restructuring and liquidation of subsidiaries/sub-subsidiaries (511 fewer people)[106] Cash Flow During the reporting period, net cash flow from operating activities was RMB -383.37 million, a 79.54% improvement year-on-year due to increased sales collections, while net cash flow from investing activities was RMB -286.42 million, a 77.72% improvement due to reduced asset purchases and investment expenditures, and net cash flow from financing activities was RMB 638.30 million, a 78.15% decrease due to reduced borrowings and external financing Cash Flow Summary | Item | 2021 (RMB) | 2020 (RMB) | YoY Change | | :--- | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | -383,369,666.54 | -1,873,644,247.88 | 79.54% | | Net Cash Flow from Investing Activities | -286,423,318.38 | -1,285,616,563.57 | 77.72% | | Net Cash Flow from Financing Activities | 638,297,848.02 | 2,921,650,240.44 | -78.15% | | Net Increase in Cash and Cash Equivalents | -38,416,989.96 | -239,703,020.87 | 83.97% | - The significant discrepancy between net cash flow from operating activities and net profit is primarily due to RMB 5.523 billion in non-cash investment income from subsidiary restructuring and derecognition, and RMB 6.096 billion in non-cash asset and credit impairment losses[110] Future Development Outlook The company anticipates future growth in window protection screens towards 3D curved, flexible foldable (UTG), and automotive applications, with significant potential in touch displays for medium-to-large and flexible foldable segments, strategically positioning itself as a "one-stop solution provider for smart terminal components" through industrial layout optimization, intelligent manufacturing, R&D innovation, and customer expansion, while acknowledging significant risks including technological innovation, talent loss, financing difficulties, restructuring uncertainties, and potential delisting due to ongoing investigations - The company's strategic positioning is a "one-stop solution provider for smart terminal components," focusing on optimizing product structure and leveraging vertical industry chain advantages around this "one-stop" strategy[143][145] - The 2022 operating plan includes: adapting to 5G trends to improve industrial layout, promoting intelligent manufacturing for quality and efficiency enhancement, strengthening R&D innovation, actively expanding "large and strong" customer relationships, and reinforcing internal system construction and appraisal mechanisms[146][147][149][154] - The company faces significant risks, including: technological innovation risk, risk of core technical personnel loss, financing risk, uncertainty regarding the application for delisting risk warning removal, corporate restructuring uncertainty, and the risk of mandatory delisting due to investigation for alleged information disclosure violations[155][160][163][165] Corporate Governance Overview of Corporate Governance During the reporting period, the company operated in strict compliance with relevant laws and regulations, continuously improving its corporate governance structure and internal control system, maintaining independence from its controlling shareholder in business, assets, finance, personnel, and organization, with no significant discrepancies between its actual governance status and CSRC regulations - The company's corporate governance structure complies with relevant laws and regulations, maintaining independence from its controlling shareholder and actual controller in business, personnel, assets, organization, and finance[171][172][181] Information on Directors, Supervisors, and Senior Management This section details the basic information, shareholding changes, professional experience, and remuneration of the company's directors, supervisors, and senior management during the reporting period, noting frequent personnel changes and regulatory warnings or criticisms for some current and former executives regarding information disclosure issues - During the reporting period, there were frequent changes in the company's directors, supervisors, and senior management, including changes in key positions such as Chairman, Director, Supervisor, General Manager, Deputy General Manager, and Chief Financial Officer[197][200] - Several current and former senior executives, including Pan Qingshou, Liu Jianxun, and Liu Langwen, received public criticisms from the Shenzhen Stock Exchange or warning letters from the Zhejiang Securities Regulatory Bureau within the past three years for information disclosure violations such as inaccurate performance forecasts and untimely disclosure of related party transactions[212] Internal Control During the reporting period, the company focused on improving its internal control system, enacting 2 new policies and revising 10 existing ones, yet identified a material weakness in financial reporting internal control related to accounting errors in the 2020 financial statements, necessitating restatements for 2019, 2020, and Q1 2021, with corrective measures including appointing a new auditor, enhancing the internal control system, and strengthening internal supervision, which were completed by the end of the reporting period - A material weakness in financial reporting internal control was identified during the reporting period, involving accounting errors in the 2020 financial statements, leading to error corrections for the 2019, 2020, and Q1 2021 financial statements[245][248] - To address the material weakness in internal control, the company implemented corrective measures, including appointing Zhongxingcai Guanghua Certified Public Accountants for a comprehensive audit and disclosing correction announcements, while also improving the internal control system, strengthening supervision, and conducting internal training, with the defect rectified by the end of the reporting period[248] Environmental and Social Responsibility Significant Environmental Issues The company and several subsidiaries are designated as key pollutant discharge units, primarily for COD and ammonia nitrogen in wastewater, and VOCs, benzene, and toluene in exhaust gas, with treatment facilities and discharge permits in place, though two Shenzhen subsidiaries received administrative penalties for exceeding exhaust gas standards and failing to complete clean production audits on time - The company and its subsidiaries Jiangxi Xingxing, Taizhou Optoelectronics, Pingxiang Xingzhu, and Xingxing Precision (Shenzhen) are designated as key pollutant discharge units, with main pollutants being wastewater (COD, ammonia nitrogen) and exhaust gas (VOCs, benzene compounds)[260][264] Environmental Penalties | Company/Subsidiary Name | Reason for Penalty | Violation | Penalty Result | | :--- | :--- | :--- | :--- | | Xingxing Precision Technology (Shenzhen) Co., Ltd. Pingshan Branch | B-class atmospheric pollutant exhaust gas exceedance | Exceedance of spraying exhaust gas standards | Fine of RMB 200,000 | | Xingxing Precision Technology (Shenzhen) Co., Ltd. Jinlong Branch | Failure to complete mandatory clean production audit on time | Failure to pass clean production | Fine of RMB 50,000 | Significant Matters Fulfillment of Commitments During the reporting period, commitments made by the controlling shareholder Pingxiang Fantike, the actual controller Pingxiang Economic Development Zone Management Committee, and other related parties regarding ensuring the listed company's independence, avoiding horizontal competition, and regulating related party transactions were being fulfilled, with some commitments by senior management regarding tenure and non-compete clauses already completed Explanation of Non-Standard Audit Report Regarding the auditor's unmodified opinion with "material uncertainty related to going concern" and "emphasis of matter paragraphs," the company's Board of Directors, Supervisory Committee, and independent directors acknowledge that it objectively reflects the company's situation and risks due to pre-restructuring and CSRC investigation, and the company will cooperate with the court and CSRC to mitigate adverse effects - The "material uncertainty related to going concern" paragraph in the audit report indicates that the company initiated pre-restructuring by court decision in August 2021, suggesting significant doubts about its ability to continue as a going concern[297] - The "emphasis of matter paragraph" in the audit report notes that the company was investigated by the China Securities Regulatory Commission in September 2021 for alleged information disclosure violations, with the investigation ongoing and results uncertain as of the report date[297] - The company's Board of Directors believes the audit opinion aligns with the company's actual situation and states that it will actively take measures, cooperating with the court's pre-restructuring work and the CSRC's investigation, to mitigate adverse effects as soon as possible, though the timeline for mitigation cannot yet be estimated[298][299] Correction of Major Accounting Errors The company made significant accounting error corrections to its 2019, 2020, and Q1 2021 financial statements, including adjustments to revenue and costs, increases in other payables, additional goodwill impairment provisions, and corrections to the consolidation scope, with these restatements having a material impact on prior period financial data - The company retrospectively restated its 2019 and 2020 financial statements, with key correction items including: - Revenue and Cost Adjustments: Decreased 2019 and 2020 revenue by RMB 1.439 billion and RMB 3.127 billion respectively - Increase in Other Payables: Increased 2019 and 2020 other payables by RMB 182 million and RMB 1.157 billion respectively - Additional Goodwill Impairment: Provided additional goodwill impairment of RMB 147 million and RMB 729 million for 2019 and 2020 respectively[306] Bankruptcy Reorganization and Major Lawsuits The company itself initiated pre-restructuring in August 2021, while several subsidiaries also entered bankruptcy reorganization or liquidation, including Dongguan Precision (liquidation), Xingxing Glass (liquidation), and Xingxing Touch and Xingxing Precision (substantive consolidated reorganization), in addition to facing multiple significant lawsuits with substantial amounts involved, primarily related to equity transfer contract disputes and financial loan contract disputes - The company initiated pre-restructuring by court decision in August 2021 following a creditor's application, with the pre-restructuring period extended until May 22, 2022[318][886] - Multiple subsidiaries entered judicial proceedings: subsidiaries Dongguan Precision and sub-subsidiary Xingxing Glass were ruled to undergo bankruptcy liquidation; subsidiaries Xingxing Touch and Xingxing Precision were ruled by the court to undergo substantive consolidated reorganization[318][321] - The company is involved in multiple significant lawsuits, including an equity transfer dispute with Lite-On Mobile Pte. Ltd. (RMB 336 million involved) and financial loan contract disputes with several banks[325] Share Changes and Shareholder Information Share Changes and Shareholder Information As of the end of the reporting period, the company's total share capital was 957,936,396 shares, with no significant changes in share structure and a total of 41,920 shareholders, where Pingxiang Fantike Network Technology Co., Ltd. is the controlling shareholder with a 15.04% stake, and Pingxiang Economic and Technological Development Zone Management Committee is the actual controller, with Pingxiang Zhongzhou Xinan Commercial Management Center and Shenzhen Demao Investment Development Co., Ltd. among the top ten shareholders having pledged and frozen shares Top Ten Shareholders | Shareholder Name | Shareholder Type | Shareholding Percentage | Shares Held at Period End | Share Status | | :--- | :--- | :--- | :--- | :--- | | Pingxiang Fantike Network Technology Co., Ltd. | Domestic Non-State-Owned Legal Person | 15.04% | 144,056,026 | - | | Pingxiang Zhongzhou Xinan Commercial Management Center (Limited Partnership) | Domestic Non-State-Owned Legal Person | 3.00% | 28,742,337 | Pledged/Frozen | | Shenzhen Demao Investment Development Co., Ltd. | Domestic Non-State-Owned Legal Person | 2.58% | 24,718,728 | Pledged | | Xingxing Group Co., Ltd. | Domestic Non-State-Owned Legal Person | 1.45% | 13,890,026 | - | | Ye Xianyu | Domestic Natural Person | 1.27% | 12,197,017 | - | - The company's controlling shareholder is Pingxiang Fantike Network Technology Co., Ltd., and the actual controller is Pingxiang Economic and Technological Development Zone Management Committee[400][404] Preferred Shares Information Preferred Shares Information During the reporting period, the company had no preferred shares - The company had no preferred shares during the reporting period[410] Bond Information Bond Information During the reporting period, the company had no bond-related information - The company had no bond-related information during the reporting period[414] Financial Report Audit Report Zhongxingcai Guanghua Certified Public Accountants issued an unmodified audit opinion with a material uncertainty related to going concern and emphasis of matter paragraphs for the company's 2021 financial statements, primarily due to the company's pre-restructuring initiation and ongoing CSRC investigation for alleged information disclosure violations, with key audit matters including significant non-routine transactions and revenue recognition - The audit opinion type is "unmodified opinion with a material uncertainty related to going concern paragraph and emphasis of matter paragraph"[417] - Material uncertainty related to going concern: The company initiated pre-restructuring by court decision in August 2021, which may raise significant doubts about its ability to continue as a going concern[419] - Emphasis of matter: The company was investigated by the China Securities Regulatory Commission in September 2021 for alleged information disclosure violations, with the investigation ongoing as of the report date[420] - Key audit matters include: 1. Significant non-routine transactions: including the receipt of equity donations from related parties, related party debt forgiveness, and the bankruptcy reorganization of some subsidiaries 2. Revenue recognition: due to its significance as a financial indicator and the inherent risk of management override[424][428] Financial Statements This section presents the company's consolidated and parent company financial statements for 2021, including the balance sheet, income statement, cash flow statement, and statement of changes in owners' equity, accompanied by detailed notes on financial statement items, related party transaction disclosures, and other significant matters