隆华科技(300263) - 2022 Q2 - 季度财报

Important Notice, Table of Contents, and Definitions This section includes important declarations regarding the report's accuracy and completeness, along with definitions of key terms used throughout the document Important Notice The company's management ensures the truthfulness, accuracy, and completeness of this semi-annual report, with future plans not constituting substantial commitments to investors, and no profit distribution planned for the period - Company management guarantees the truthfulness, accuracy, and completeness of the report content and assumes legal responsibility[5] - The company plans no cash dividends, no bonus shares, and no capitalization of reserves into share capital[6] Definitions This section defines key terms and company abbreviations used in the report, including the company itself, major subsidiaries, and regulatory bodies, providing clear guidance for reading the report - The reporting period is defined as January 1, 2022, to June 30, 2022[16] Company Profile and Key Financial Indicators This section provides basic company information and a summary of key financial performance metrics for the reporting period Company Profile This section provides the company's basic information, including its stock abbreviation 'Longhua Technology', stock code '300263', listing exchange Shenzhen Stock Exchange, and its full Chinese and English names, along with the legal representative Company Basic Information | Item | Information | | :--- | :--- | | Stock Abbreviation | Longhua Technology | | Stock Code | 300263 | | Listing Exchange | Shenzhen Stock Exchange | | Legal Representative | Li Zhanming | Key Accounting Data and Financial Indicators During the reporting period, the company's operating revenue increased by 21.72% year-on-year, but net profit attributable to shareholders decreased by 20.87% year-on-year. Net cash flow from operating activities was CNY -181.45 million, a significant decrease of 170.98% year-on-year, indicating increased operating cash flow pressure. Total assets grew by 5.82% compared to the end of the previous year Key Financial Performance | Indicator | Current Period | Prior Period | YoY Change | | :--- | :--- | :--- | :--- | | Operating Revenue (CNY) | 1,155,939,224.00 | 949,696,913.25 | 21.72% | | Net Profit Attributable to Shareholders (CNY) | 92,602,585.95 | 117,023,597.94 | -20.87% | | Net Profit Excluding Non-recurring Items (CNY) | 76,713,673.16 | 114,924,242.02 | -33.25% | | Net Cash Flow from Operating Activities (CNY) | -181,452,407.88 | -66,961,060.25 | -170.98% | | Basic EPS (CNY/share) | 0.1013 | 0.130 | -22.08% | | Weighted Average ROE | 2.93% | 4.21% | -1.28% | | Total Assets (CNY) | 6,654,160,647.92 | 6,288,325,043.23 (End of Prior Year) | 5.82% | Non-recurring Gains and Losses and Amounts During the reporting period, the company's total non-recurring gains and losses amounted to CNY 15.89 million, primarily comprising government grants recognized in current profit or loss of CNY 14.53 million, and fair value changes and investment income from held-for-trading financial assets of CNY 4.75 million Non-recurring Items | Item | Amount (CNY) | | :--- | :--- | | Government Grants Recognized in Current Profit or Loss | 14,534,599.96 | | Gains/Losses from Held-for-Trading Financial Assets and Liabilities | 4,746,743.30 | | Gains/Losses on Disposal of Non-current Assets | -416,198.32 | | Other Non-operating Income and Expenses | 432,586.01 | | Total | 15,888,912.79 | Management Discussion and Analysis This section provides an in-depth analysis of the company's operations, financial performance, and risk factors during the reporting period Principal Businesses The company's principal businesses are divided into three segments: electronic new materials, polymer composite materials, and energy saving and environmental protection. The electronic new materials business provides high-purity sputtering targets for TFT-LCD/AMOLED and semiconductors; the polymer composite materials business covers functional materials for aerospace, marine vessels, and rail transit; and the energy saving and environmental protection business focuses on industrial heat transfer energy-saving equipment and environmental water treatment services - Electronic New Materials Business: Main products include high-purity sputtering targets for semiconductor displays and integrated circuits, such as molybdenum targets and ITO targets. During the reporting period, the company established Fenglianke Optoelectronics through asset integration to strengthen industrial development[35][36] - Polymer Composite Materials Business: Products include PMI structural foam materials for aircraft and drones, resin-based composite materials for marine vessels, and vibration damping systems and composite material products for rail transit[39][40] - Energy Saving and Environmental Protection Business: Includes providing industrial heat transfer energy-saving equipment such as composite air-cooled heat exchangers for industries like petrochemical and power, and offering water treatment system solutions for industrial and municipal sectors[41][45] Core Competitiveness Analysis The company's core competitiveness lies in its clear strategic planning and rational industrial layout, continuous talent cultivation and introduction, profound technological innovation capabilities, and excellent corporate culture and brand influence. The company insists on strengthening existing businesses while actively expanding into new materials and other incremental businesses, building a diversified and synergistic industrial structure - Strategy and Layout: Adhering to the philosophy of 'people-oriented entrepreneurship, technology-driven development', the company aims to stabilize and strengthen existing businesses while actively expanding into new materials and other incremental businesses along the industry chain[59] - Talent and Innovation: The company cultivates innovative talent through 'internal training + external recruitment', increases R&D investment year by year, forms an R&D policy of 'producing one generation, researching one generation, reserving one generation', and establishes effective innovation incentive mechanisms[60][61] - Brand Influence: Subsidiaries have become industry leaders in their respective segments, accelerating import substitution for products and enhancing the group's overall market share and brand influence[62] Principal Business Analysis During the reporting period, the company's operating revenue increased by 21.72% year-on-year, primarily driven by the energy saving and environmental protection products and services business (up 41.26% year-on-year). However, operating costs increased by 30.48% year-on-year due to rising steel prices, eroding gross profit margin. Financial expenses surged by 686.06% due to interest recognition from convertible bond issuance. Net cash flow from operating activities was CNY -181.45 million, a 170.98% year-on-year deterioration, mainly due to increased raw material inventory driven by higher orders Key Financial Data by Item | Item | Current Period | Prior Period | YoY Change | Reason for Change | | :--- | :--- | :--- | :--- | :--- | | Operating Revenue | 1,155,939,224.00 | 949,696,913.25 | 21.72% | - | | Operating Cost | 866,395,507.29 | 664,006,073.11 | 30.48% | Increased steel prices, higher costs | | Financial Expenses | 27,396,320.21 | 3,485,268.07 | 686.06% | Due to issuance of convertible bonds and recognition of convertible bond interest | | Net Cash Flow from Operating Activities | -181,452,407.88 | -66,961,060.25 | -170.98% | Due to increased orders and higher inventory stocking | | Net Cash Flow from Investing Activities | -42,738,046.99 | -230,350,177.19 | 81.45% | Due to changes in wealth management scale during the reporting period | | Net Cash Flow from Financing Activities | -62,026,359.91 | 238,619,268.67 | -125.99% | Reduced financing scale, early repayment of short-term borrowings | Operating Performance by Product or Service | By Product or Service | Operating Revenue (CNY) | Operating Cost (CNY) | Gross Profit Margin | YoY Change in Operating Revenue | YoY Change in Operating Cost | YoY Change in Gross Profit Margin | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Electronic New Materials | 247,060,647.48 | 189,458,485.95 | 23.31% | 28.10% | 26.54% | 0.94% | | Polymer Composite Materials | 166,779,546.19 | 83,024,935.80 | 50.22% | -27.95% | -30.73% | 2.00% | | Energy Saving and Environmental Protection Products and Services | 742,099,030.33 | 593,912,085.54 | 19.97% | 41.26% | 50.58% | -4.95% | Analysis of Assets and Liabilities As of the end of the reporting period, the company's total assets were CNY 6.65 billion, an increase of 5.82% from the beginning of the period. Within the asset composition, accounts receivable and inventory increased, while short-term borrowings significantly decreased. As of the end of the reporting period, the total amount of assets with restricted ownership or use rights was CNY 609.87 million, primarily including bank acceptance bill deposits, pledged bank acceptance bills, mortgaged fixed assets, and purchased large-denomination certificates of deposit - As of the end of the reporting period, the total amount of assets with restricted ownership or use rights was CNY 609.87 million[71] - Restricted assets primarily include: - CNY 303 million in monetary funds (mainly bank acceptance bill deposits) - CNY 85 million in pledged notes receivable - CNY 80 million in mortgaged fixed assets or those with uncompleted property certificates - CNY 142 million in purchased large-denomination certificates of deposit and interest[71][72][73] Investment Analysis During the reporting period, the company's investment amounted to CNY 213 million, a year-on-year increase of 147.01%. The company raised net proceeds of CNY 787 million through the issuance of convertible corporate bonds, primarily for the 'New High-Performance Structural/Functional Materials Industrialization Project' and to supplement working capital. As of the end of the reporting period, cumulative investment in the raised fund projects was CNY 93.38 million, with an investment progress of 16.97%, falling short of expectations due to the impact of the pandemic and rising raw material prices. The company utilized a portion of idle raised funds for cash management Raised Funds Investment Status | Total Raised Funds (CNY thousands) | Total Investment in Current Period (CNY thousands) | Cumulative Investment (CNY thousands) | | :--- | :--- | :--- | | 786,801.4 | 23,722.6 | 329,941.7 | - The raised fund project 'New High-Performance Structural/Functional Materials Industrialization Project' experienced delays in customer bidding due to the pandemic and rising raw material prices, affecting expansion demand, leading to project progress falling short of expectations[82] - The company utilized up to CNY 470 million of idle raised funds to temporarily supplement working capital and up to CNY 500 million of idle raised funds for cash management to improve capital utilization efficiency[84] Analysis of Major Holding and Participating Companies During the reporting period, the company's major subsidiaries operated steadily. Among them, Hunan Zhaoheng Material Technology Co., Ltd. (primarily carbon fiber composite materials) and Beijing Zhongdian Jiamei Environmental Protection Technology Co., Ltd. (primarily industrial water treatment) were major profit contributors, with net profits of CNY 25.71 million and CNY 20.84 million, respectively. During the reporting period, the company newly established Longhua Technology Group (Luoyang) Supply Chain Co., Ltd Major Subsidiaries' Performance | Company Name | Principal Business | Operating Revenue (CNY) | Net Profit (CNY) | | :--- | :--- | :--- | :--- | | Beijing Zhongdian Jiamei Environmental Protection Technology Co., Ltd. | Industrial and Municipal Water Treatment | 187,736,924.81 | 20,841,978.24 | | Xianning Haiwei Composite Material Products Co., Ltd. | R&D of Marine Composite Materials | 116,837,327.15 | 16,984,830.70 | | Luoyang Cobos New Material Technology Co., Ltd. | Non-metallic Composite Materials | 50,702,040.97 | 4,480,594.61 | | Hunan Zhaoheng Material Technology Co., Ltd. | Carbon Fiber Composite Materials | 53,766,255.86 | 25,710,346.11 | Risks Faced by the Company and Countermeasures The company faces major risks including macroeconomic environment fluctuations, management challenges from expanding operations, intensified market competition in new materials and energy saving and environmental protection sectors, and accounts receivable bad debt risk due to business growth. The company will address these risks by strengthening technological innovation, exploring new businesses, enhancing customer credit management, and improving accounts receivable collection - Macroeconomic Risks: Macro factors such as fluctuations in consumption growth, changes in investment structure, and overseas epidemics may impact the company's operations[100][101] - Management Risks: The increasing scale of the company and number of subsidiaries pose higher requirements for internal control and synergistic management[102] - Market Competition Risks: The new materials sector faces competition from international giants and domestic peers, while the energy saving and environmental protection sector experiences low-price competition and raw material price fluctuation pressures[103] - Bad Debt Risks: Business growth leads to increased accounts receivable, potentially resulting in bad debt losses and cash flow pressure[104] Corporate Governance This section outlines the company's governance structure, shareholder meetings, and profit distribution policies during the reporting period Corporate Governance Summary During the reporting period, the company held its 2021 Annual General Meeting of Shareholders, with an investor participation rate of 32.34%. One supervisor resigned due to job relocation. The company plans no cash dividends, no bonus shares, and no capitalization of reserves into share capital for the semi-annual period, and had no equity incentive plans during the reporting period - The 2021 Annual General Meeting of Shareholders was held on May 19, 2022[108] - Supervisor Zhao Guangzheng resigned on June 14, 2022, due to job relocation[109] - The company's semi-annual profit distribution plan is 'three noes': no cash dividends, no bonus shares, and no capitalization of reserves into share capital[110] Environmental and Social Responsibility This section details the company's environmental compliance, pollution control measures, and social welfare initiatives Environmental and Social Responsibility Summary The company and its subsidiaries are not classified as key pollutant-discharging entities and received no environmental administrative penalties during the reporting period. The company has established a professional environmental protection team, built and stably operates pollution prevention and control facilities, and formulated emergency plans for environmental incidents. In terms of social responsibility, the company continuously carries out public welfare activities such as assisting employees in need and donating to education - The company is not listed as a key pollutant-discharging entity by environmental protection authorities and received no environmental administrative penalties during the reporting period[114] - The company actively fulfills its social responsibilities, continuously carrying out public welfare activities such as assisting employees in need and donating to education, contributing to rural revitalization[115] Significant Matters This section covers major contracts, guarantees, and significant events concerning the company's subsidiaries Significant Contracts and Their Performance During the reporting period, the company had multiple ongoing lease contracts as both lessee and lessor. Additionally, the company provided significant guarantees for its subsidiaries and one associate. As of the end of the reporting period, the total approved guarantee limit was CNY 1.02 billion, with an actual guarantee balance of CNY 437.69 million, representing 13.77% of the company's net assets Guarantee Status | Guarantee Status | Approved Limit as of Period End (CNY thousands) | Actual Guarantee Balance as of Period End (CNY thousands) | | :--- | :--- | :--- | | External Guarantees | 25,131.4 | 25,131.4 | | Guarantees for Subsidiaries | 990,000 | 412,559.2 | | Total | 1,015,131.4 | 437,690.6 | - The proportion of total actual guarantees to the company's net assets is 13.77%[145] Significant Matters of Company Subsidiaries To promote the development of the electronic new materials industrial segment, subsidiary Fenglianke Optoelectronics completed asset integration and shareholding system reform with Jinglian Optoelectronics, which has been approved by the general meeting of shareholders, and plans to apply for listing on the National Equities Exchange and Quotations (New Third Board) - Subsidiary Fenglianke Optoelectronics completed asset integration and shareholding system reform, and agreed to apply for listing on the New Third Board[148] Share Changes and Shareholder Information This section details changes in the company's share capital and the composition of its shareholders Share Change Status During the reporting period, the company's total share capital slightly increased by 54,432 shares due to convertible bond conversion, from 914,221,304 shares to 914,275,736 shares. Restricted shares decreased by 3.52 million shares, with a corresponding increase in unrestricted shares Share Capital Changes | Share Class | Before Change (shares) | Change (shares) | After Change (shares) | | :--- | :--- | :--- | :--- | | Restricted Shares | 146,521,671 | -3,521,112 | 143,000,559 | | Unrestricted Shares | 767,699,633 | +3,575,544 | 771,275,177 | | Total Shares | 914,221,304 | +54,432 | 914,275,736 | - The increase in total shares is due to the conversion of convertible corporate bonds[153] Shareholder Numbers and Shareholding Status As of the end of the reporting period, the company had 42,382 common shareholders. The top two shareholders were Li Zhanming, one of the company's co-actual controllers (10.45% stake), and China General Technology Group Investment Management Co., Ltd., a state-owned legal entity (9.47% stake). The actual controllers Li Zhanming, Li Zhanqiang, Li Mingqiang, and Li Mingwei are acting in concert - As of the end of the reporting period, the total number of common shareholders was 42,382[160] Top Shareholders | Shareholder Name | Shareholder Nature | Shareholding Percentage | Number of Shares Held | | :--- | :--- | :--- | :--- | | Li Zhanming | Domestic Natural Person | 10.45% | 95,501,092 | | China General Technology Group Investment Management Co., Ltd. | State-owned Legal Entity | 9.47% | 86,600,000 | | Li Mingqiang | Domestic Natural Person | 4.36% | 39,841,600 | | Li Zhanqiang | Domestic Natural Person | 4.16% | 37,988,400 | | Li Mingwei | Domestic Natural Person | 2.55% | 23,300,000 | Preferred Share Information This section confirms the absence of preferred shares during the reporting period Preferred Share Summary During the reporting period, the company had no preferred shares - The company had no preferred shares during the reporting period[171] Bond-Related Information This section provides details on the company's convertible bonds, including conversion price adjustments and credit ratings Convertible Corporate Bonds The company's 'Longhua Convertible Bond' conversion price was adjusted from CNY 7.76/share to CNY 7.73/share during the reporting period due to the implementation of the 2021 profit distribution. As of the end of the reporting period, a cumulative CNY 0.42 million of bonds had been converted into 54,432 company shares, representing 0.05% of the total issuance. The company's main credit rating remained AA-, with a stable outlook - Due to the implementation of the 2021 profit distribution plan, the conversion price of 'Longhua Convertible Bond' was adjusted from CNY 7.76/share to CNY 7.73/share[177] Convertible Bond Conversion Status | Convertible Bond Abbreviation | Total Issuance Amount (CNY) | Cumulative Conversion Amount (CNY) | Cumulative Converted Shares (shares) | Proportion of Unconverted Amount to Total Issuance | | :--- | :--- | :--- | :--- | :--- | | Longhua Convertible Bond | 798,928,300 | 422,700 | 54,432 | 99.95% | - The company's main credit rating remained AA-, with a stable outlook[183] Financial Report This section presents the company's unaudited financial statements, including balance sheets, income statements, and cash flow statements, along with key accounting policies and detailed notes Financial Statements This section provides the company's unaudited consolidated and parent company financial statements, including the balance sheet, income statement, cash flow statement, and statement of changes in owners' equity. These statements comprehensively reflect the company's financial position at the end of the reporting period, as well as its operating results and cash flow during the reporting period - The company's semi-annual financial report is unaudited[192] Company Basic Information Longhua Technology was established in 1995 and listed on the ChiNext board in 2011. The company's principal businesses cover R&D, production, and sales of heat transfer energy saving, environmental water treatment, electronic new materials, and polymer composite materials. The company has no controlling parent company, and its actual controllers are the four brothers Li Zhanming, Li Mingwei, Li Mingqiang, and Li Zhanqiang - The company was listed on the ChiNext board on September 16, 2011, with stock code 300263[259] - During the reporting period, due to the conversion of convertible corporate bonds, the company's total share capital increased to 914,275,736 shares[281] Significant Accounting Policies and Estimates The company's financial statements are prepared on a going concern basis, in accordance with enterprise accounting standards. Significant accounting policies include: financial instruments are classified based on business model and contractual cash flow characteristics, with impairment provisions made using the expected credit loss model; inventories are valued using the weighted average method at month-end and measured at the lower of cost and net realizable value; revenue is recognized when the customer obtains control of the goods or services; and long-term assets are tested for impairment when impairment indicators arise - Revenue Recognition: Revenue is recognized when the customer obtains control of the related goods or services[388] - Financial Asset Impairment: The expected credit loss model is used to estimate expected credit losses for financial assets measured at amortized cost and debt instruments measured at fair value through other comprehensive income[321] - R&D Expenditures: Research phase expenditures are recognized in current profit or loss, while development phase expenditures are capitalized when specific conditions are met[363][364][365] Notes to Consolidated Financial Statement Items This section provides detailed explanations of key items in the consolidated financial statements. As of the end of the period, the company's monetary funds were CNY 860 million, of which CNY 303 million were restricted. Accounts receivable had a carrying value of CNY 1.14 billion, with a bad debt provision of CNY 211 million. Goodwill had an original carrying amount of CNY 677 million, with an impairment provision of CNY 28.53 million. Due to the issuance of convertible bonds, the company's bonds payable on the liability side had a significant balance - Accounts receivable had an ending book balance of CNY 1.35 billion, with a bad debt provision of CNY 211 million, resulting in a carrying value of CNY 1.14 billion[444] - Goodwill had an original carrying amount of CNY 677 million, primarily from the acquisitions of subsidiaries such as Beijing Zhongdian Jiamei and Xianning Haiwei Composite Materials. An impairment provision of CNY 28.53 million has been made[527][530] - The ending balance of bonds payable was CNY 692 million, primarily consisting of convertible corporate bonds[571]