花园生物(300401) - 2018 Q4 - 年度财报

Important Notice and Definitions Important Notice The board assures report accuracy, highlighting key risks in VD3 price, Jinxi project, and management, and proposes a 2018 cash dividend - The company faces three core risks: - Vitamin D3 Price Volatility Risk: Performance highly depends on VD3 products; unfavorable price changes will lead to performance decline[7] - Project Investment Risk: The Jinxi Science and Technology Park project has uncertainties in construction progress and implementation effects[8] - Management and Human Resources Risk: Rapid development increases demand for high-quality talent, posing challenges in acquisition, training, and retention[8] - The company's 2018 profit distribution plan proposes a cash dividend of CNY 1.30 (tax inclusive) per 10 shares to all shareholders, based on 479,288,315 shares, with no bonus shares or capital reserve conversion[11] Company Profile and Key Financial Indicators Key Financial Data and Indicators 2018 saw strong revenue and net profit growth, robust operating cash flow, and improved ROE, despite lower basic EPS | Indicator | 2018 | 2017 | YoY Change | | :--- | :--- | :--- | :--- | | Operating Revenue (CNY) | 660,216,835.24 | 419,868,699.41 | 57.24% | | Net Profit Attributable to Parent (CNY) | 307,408,646.99 | 130,403,327.65 | 135.74% | | Net Cash Flow from Operating Activities (CNY) | 252,735,039.10 | 148,043,897.35 | 70.72% | | Basic EPS (CNY/share) | 0.64 | 0.72 | -11.11% | | Weighted Average ROE | 21.70% | 16.07% | 5.63% | | Assets and Equity (Year-end) | 2018 Year-end | 2017 Year-end | YoY Change | | Total Assets (CNY) | 1,646,296,555.26 | 1,394,834,071.76 | 18.03% | | Net Assets Attributable to Parent (CNY) | 1,561,685,782.26 | 1,281,117,280.91 | 21.90% | | Quarter | Operating Revenue (CNY) | Net Profit Attributable to Parent (CNY) | | :--- | :--- | :--- | | 第一季度 | 235,500,525.62 | 121,898,566.96 | | 第二季度 | 85,305,707.18 | 31,245,331.55 | | 第三季度 | 154,981,647.10 | 71,601,524.89 | | 第四季度 | 184,428,955.34 | 82,663,223.59 | - During the reporting period, the company's total non-recurring gains and losses amounted to CNY 21,344,531.77, primarily from CNY 17,018,234.12 in income from wealth management products and CNY 6,888,633.61 in government grants[34] Business Overview Main Business and Operating Model The company focuses on a complete VD3 industrial chain, producing cholesterol, VD3, and 25-Hydroxyvitamin D3, primarily through direct sales - The company's R&D, production, and sales revolve around the Vitamin D3 industrial chain, with key products including: - Cholesterol: A primary raw material for VD3, also used in feed, medicine, and cosmetics - Vitamin D3: Widely applied in feed additives, food additives, nutritional supplements, and pharmaceuticals - 25-Hydroxyvitamin D3: An active metabolite of VD3 with stronger physiological activity, offering advantages over ordinary VD3[39] - The significant performance growth in 2018 was primarily driven by a substantial year-on-year increase in Vitamin D3 product prices and a rise in cholesterol sales[41] Analysis of Core Competencies Core competencies include full industrial chain, leading technology, cost, scale, and brand advantages, making it a global VD3 leader - The company's core competencies include: - Full Industrial Chain Advantage: Covering the entire chain from upstream raw materials (cholesterol) to downstream high-end applications (25-Hydroxyvitamin D3, full-activity VD3) - Technological Advantage: Three core production processes (VD3, NF-grade cholesterol, 25-Hydroxyvitamin D3) are at domestic or international leading levels - Cost Advantage: Self-producing NF-grade cholesterol from lanolin significantly lowers VD3 production costs compared to competitors - Scale Advantage: One of the world's leading producers of VD3 upstream and downstream products by variety, with sales volume among the highest globally - Brand Advantage: The 'Huayuan' brand enjoys high industry recognition, with long-term partnerships established with internationally renowned manufacturers[45][46] Management Discussion and Analysis Operating Overview 2018 saw record sales and profits, driven by strong cholesterol and 25-Hydroxyvitamin D3 demand, advancing the Jinxi project and securing R&D awards | Indicator | 2018 Annual | YoY Growth | | :--- | :--- | :--- | | Operating Revenue (CNY million) | 660.22 million | 57.24% | | Total Profit (CNY million) | 356.54 million | 135.37% | | Net Profit Attributable to Shareholders (CNY million) | 307.41 million | 135.74% | - The company initiated the Jinxi Science and Technology Park project to accommodate relocation and future projects, acquiring 771 mu of land and commencing full-scale construction[52][53] - The company achieved significant R&D results, with its collaboration with Zhejiang University on 'Molecular Recognition and Separation Technology and Application of Natural Active Homologs' winning the 2018 National Technology Invention Award Second Prize[53] Main Business Analysis 2018 main business excelled: revenue up 57.24%, gross margin up 10.38 percentage points to 67.75%, driven by VD3 prices and cholesterol sales, with strong operating cash flow 2. Revenue and Costs 2018 revenue reached CNY 660 million (+57.24% YoY), driven by VD3 and lanolin derivatives, with international sales growing 66.69%; high VD3 prices boosted gross margin to 84.01% | Revenue Composition | 2018 Amount (CNY) | Proportion | YoY Change | | :--- | :--- | :--- | :--- | | By Product | | | | | Vitamin D3 and D3 Analogs | 448,808,003.96 | 67.98% | 54.29% | | Lanolin and its Derivatives | 205,680,128.45 | 31.15% | 61.81% | | By Region | | | | | Domestic Sales | 157,704,775.35 | 23.89% | 33.19% | | International Sales | 502,512,059.89 | 76.11% | 66.69% | | Main Product/Region | Operating Revenue (CNY) | Operating Cost (CNY) | Gross Margin | Gross Margin YoY Change | | :--- | :--- | :--- | :--- | :--- | | Vitamin D3 and D3 Analogs | 448,808,003.96 | 71,744,884.52 | 84.01% | +15.41% | | Lanolin and its Derivatives | 205,680,128.45 | 137,727,089.70 | 33.04% | +1.23% | | International Sales | 502,512,059.89 | 156,300,755.30 | 68.90% | +9.53% | - In 2018, inventory volume increased by 36.77% YoY, primarily due to a significant rise in cholesterol production and sales, leading to a corresponding increase in related derivative output[63][66] 3. Expenses 2018 period expenses were well-controlled: selling expenses up 44.85%, financial expenses down 127.27% due to exchange gains, and R&D expenses up 38.05% for future projects | Expense Item | 2018 (CNY) | 2017 (CNY) | YoY Change | Key Change Explanation | | :--- | :--- | :--- | :--- | :--- | | Selling Expenses | 18,725,651.62 | 12,927,663.65 | 44.85% | Increase in commission fees and product insurance premiums | | Financial Expenses | -2,157,808.98 | 7,912,021.08 | -127.27% | Increase in exchange gains and interest income | | R&D Expenses | 30,511,965.76 | 22,102,535.26 | 38.05% | Increased R&D investment for new project technology reserves | 4. R&D Investment The company increased R&D investment by 38.05% to CNY 30.51 million in 2018, growing R&D personnel to 90, focusing on product and process optimization and technology reserves | Indicator | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | | R&D Investment Amount (CNY) | 30,511,965.76 | 22,102,535.26 | 16,434,638.64 | | R&D Investment as % of Revenue | 4.62% | 5.26% | 4.99% | | Number of R&D Personnel (Persons) | 90 | 78 | 60 | | R&D Personnel as % of Total | 18.25% | 16.63% | 12.96% | 5. Cash Flow 2018 cash flow was healthy: operating cash flow up 70.72% to CNY 253 million, investing cash outflow expanded to CNY 432 million for wealth management and assets, and financing cash flow turned negative | Cash Flow Item | 2018 (CNY) | 2017 (CNY) | YoY Change | | :--- | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | 252,735,039.10 | 148,043,897.35 | 70.72% | | Net Cash Flow from Investing Activities | -431,619,127.69 | -159,889,386.47 | 172.16% (Outflow Increase) | | Net Cash Flow from Financing Activities | -77,292,106.43 | 403,610,421.33 | -119.15% | - Key reasons for cash flow changes include: - Increased Operating Net Cash Flow: Driven by higher sales revenue, improved product gross margin, and increased cash receipts from sales - Expanded Investing Net Cash Outflow: Due to increased balances of wealth management products and higher expenditures for land and fixed asset acquisitions - Financing Net Cash Flow Turning Negative: Resulting from the previous period's non-public offering proceeds and current period's repayment of short-term borrowings and dividend distribution[77][78] Assets and Liabilities As of year-end 2018, total assets reached CNY 1.646 billion (+18.03% YoY), with cash decreasing due to wealth management, and intangible assets/construction in progress increasing due to the Jinxi project, while all short-term borrowings were repaid - Cash and cash equivalents decreased by 20.36 percentage points from the beginning of the period, primarily due to the use of idle raised funds to purchase bank wealth management products[80] - Intangible assets increased by 81.66% from the beginning of the period, mainly because subsidiary Huayuan Nutrition acquired land use rights through auction for the Jinxi Science and Technology Park project construction[44] - Construction in progress increased by 114.02% from the beginning of the period, primarily due to the commencement of the Jinxi Science and Technology Park project construction[44] Analysis of Major Holding and Participating Companies Major subsidiaries operate well, with Hangzhou Xiasha Bio contributing CNY 58.94 million and Hangzhou Luoshen Technology CNY 14.77 million in net profit; new subsidiary Zhejiang Huayuan Nutrition is under construction for the Jinxi project | Subsidiary Name | Main Business | Operating Revenue (CNY) | Net Profit (CNY) | | :--- | :--- | :--- | :--- | | Hangzhou Xiasha Bio-Technology Co., Ltd. | Pharmaceutical intermediate manufacturing, sales | 153,128,729.07 | 58,941,951.59 | | Hangzhou Luoshen Technology Co., Ltd. | Lanolin production, sales | 124,203,053.83 | 14,774,723.54 | | Zhejiang Huayuan Nutrition Technology Co., Ltd. | Feed/food additive R&D and production, etc. | 2,883,691.13 | -1,753,793.98 | - During the reporting period, the company established the wholly-owned subsidiary 'Zhejiang Huayuan Nutrition Technology Co., Ltd.' through new investment; this company is still in its construction phase and had minimal impact on the overall production, operations, and performance for the current period[93] Future Development Outlook The company will continue its VD3 industrial chain strategy, aiming to be a world leader, with 2019 goals focused on stable operations, expanding market share, accelerating the Jinxi project, and pursuing M&A for scale - The company's development strategy consistently focuses on 'building a complete Vitamin D3 upstream and downstream industrial chain,' aiming to become a 'world-leading manufacturer of Vitamin D3 upstream and downstream products'[96] - 2019 operating objectives include: - Stabilizing Existing Business: Expanding cholesterol market share and increasing sales of food and pharmaceutical-grade VD3 - Accelerating Project Construction: The Jinxi Science and Technology Park project is a key focus for 2019, aiming for Phase I production by year-end - External Expansion: Seeking suitable market targets, accelerating mergers and acquisitions, and promoting multi-product development[97] Significant Matters Profit Distribution The company maintained a stable cash dividend policy, with payout ratios above 20%; 2017 saw a CNY 1.4 cash dividend and 15 bonus shares per 10 shares, while 2018 proposes CNY 1.3 cash dividend per 10 shares, totaling CNY 62.3075 million | Dividend Year | Cash Dividend Amount (Tax Incl., CNY) | % of Consolidated Net Profit Attributable to Parent | | :--- | :--- | :--- | | 2018 (Proposed) | 62,307,480.95 | 20.27% | | 2017 | 26,840,145.64 | 20.58% | | 2016 | 9,070,000.00 | 20.72% | - On May 4, 2018, the company completed its 2017 profit distribution, implementing a 15 bonus shares per 10 shares plan, increasing total share capital from 192 million shares to 479 million shares[104] Significant Related Party Transactions The company engaged in two significant related party transactions: procuring construction services for CNY 59.776 million from Zhejiang Huayuan Construction, and transferring idle land use rights to Zhejiang Huayuan New Energy at appraised value - The company procured civil engineering construction services from 'Zhejiang Huayuan Construction Co., Ltd.', controlled by the ultimate controlling party, with CNY 59.776 million incurred this period, which is below the approved limit of CNY 210 million[131] - The company transferred some idle land use rights to the related party 'Zhejiang Huayuan New Energy Co., Ltd.', with the transfer price determined based on a third-party appraisal report[135] Social Responsibility and Environmental Protection The company actively fulfills social responsibilities, prioritizing investor returns, employee rights, and legal compliance; environmental efforts include compliant waste treatment and responsible hazardous waste disposal, with no incidents or penalties - Subsidiary Hangzhou Xiasha Bio-Technology Co., Ltd. is listed as a key polluting unit by environmental protection authorities[147] - The company has built and effectively operates exhaust gas absorption devices and wastewater online monitoring facilities, strictly implements the transfer manifest system for hazardous waste, and had no environmental pollution incidents during the reporting period[150] Share Changes and Shareholder Information Share Changes Total share capital increased by 150% from 191.7 million to 479.3 million shares due to the 2017 profit distribution plan, which converted capital reserves into 15 bonus shares per 10 shares | Item | Quantity Before Change | Change in This Period | Quantity After Change | | :--- | :--- | :--- | :--- | | I. Restricted Shares | 21,221,826 | +24,845,129 | 46,066,955 | | II. Unrestricted Shares | 170,493,500 | +262,727,860 | 433,221,360 | | III. Total Shares | 191,715,326 | +287,572,989 | 479,288,315 | - The increase in total share capital was primarily due to the implementation of the 2017 profit distribution plan, which involved converting capital reserves into 15 bonus shares per 10 shares for all shareholders[161] Shareholders and Actual Controller Information As of year-end 2018, the company had 21,698 shareholders; Zhejiang Xiangyun Technology Co., Ltd. is the controlling shareholder (36.10% equity), with Shao Qinxing as actual controller, and 96.5 million shares pledged | Shareholder Name | Shareholder Nature | Shareholding Percentage | Shares Held at Period-end | Pledge or Freeze Status | | :--- | :--- | :--- | :--- | :--- | | Zhejiang Xiangyun Technology Co., Ltd. | Domestic Non-State-Owned Legal Person | 36.10% | 172,999,527 | Pledged 96,500,000 | | Shao Junfang | Domestic Natural Person | 3.70% | 17,745,437 | - | | Gong Jinqing | Domestic Natural Person | 3.21% | 15,399,658 | - | | Zhang Zhijian | Domestic Natural Person | 2.17% | 10,407,000 | - | | Jiutai Fund...Trust Plan | Other | 2.17% | 10,388,657 | - | - The company's controlling shareholder is Zhejiang Xiangyun Technology Co., Ltd., and the actual controller is Shao Qinxing[173][176] Directors, Supervisors, Senior Management, and Employees Overview of Senior Management and Employees The company's stable management team has diverse backgrounds; in 2018, key management received CNY 3.4643 million in compensation, while 493 employees, including 294 production staff and 114 with bachelor's degrees or higher, are supported by performance-linked pay and training | Name | Position | Total Pre-tax Compensation from Company (CNY '000) | | :--- | :--- | :--- | | Shao Junfang | Chairman | 577.10 | | Ma Huanzheng | Vice Chairman, General Manager | 501.80 | | Liu Jiangang | Director, Executive Vice General Manager | 402.10 | | Yu Quanheng | Director, Vice General Manager, Board Secretary | 350.00 | | Qian Guoping | Vice General Manager | 353.10 | | Professional Composition | Number of People | Education Level | Number of People | | :--- | :--- | :--- | :--- | | Production Personnel | 294 | Bachelor's Degree or Above | 114 | | Sales Personnel | 19 | Associate Degree | 64 | | Technical Personnel | 81 | Associate Degree or Below | 315 | | Financial Personnel | 30 | | | | Administrative Personnel | 69 | | | | Total | 493 | Total | 493 | Corporate Governance Governance and Internal Control The company operates strictly under relevant laws, maintaining sound corporate governance and independence from its controlling shareholder, with no horizontal competition; internal control reports confirmed effective controls as of December 31, 2018, and no material weaknesses - The actual status of the company's corporate governance does not materially differ from the normative documents on corporate governance for listed companies issued by the China Securities Regulatory Commission[210] - The company is completely separate from its controlling shareholder in terms of business, personnel, assets, organization, and finance, possessing independent and complete business operations and autonomous operating capabilities[211][214] - According to the internal control evaluation report and the attestation report from the accounting firm, the company found no material weaknesses or significant deficiencies in financial or non-financial reporting[227][230][231] Financial Report Audit Report Dahua Certified Public Accountants issued a standard unqualified audit opinion on the 2018 financial statements, affirming fair presentation of financial position, operating results, and cash flows, with key audit matters including revenue recognition and allowance for doubtful accounts receivable - The audit opinion type is a standard unqualified opinion[237][238] - Key audit matters include: 1. Revenue Recognition: Due to revenue being a significant financial indicator, there is a risk of material misstatement 2. Allowance for Doubtful Accounts Receivable: Due to the material balance of accounts receivable and the significant accounting estimates and judgments involved in assessing the allowance[240] Key Financial Statements As of year-end 2018, total assets were CNY 1.646 billion and total liabilities CNY 85 million, with a robust 5.14% asset-liability ratio; 2018 revenue reached CNY 660 million and net profit CNY 307 million, with operating cash flow of CNY 253 million, indicating high earnings quality Consolidated Balance Sheet Key Items (Unit: CNY) | Item | Period-end Balance | Period-start Balance | | :--- | :--- | :--- | | Cash and Cash Equivalents | 184,808,905.68 | 440,675,594.77 | | Notes and Accounts Receivable | 107,167,420.49 | 64,593,216.96 | | Inventories | 252,223,301.70 | 202,988,558.29 | | Other Current Assets | 410,271,073.01 | 146,979,485.70 | | Fixed Assets | 405,850,376.38 | 397,634,838.17 | | Total Assets | 1,646,296,555.26 | 1,394,834,071.76 | | Short-term Borrowings | 0.00 | 45,000,000.00 | | Notes and Accounts Payable | 38,851,402.58 | 34,333,968.76 | | Total Liabilities | 84,610,773.00 | 113,716,790.85 | | Total Owners' Equity | 1,561,685,782.26 | 1,281,117,280.91 | Consolidated Income Statement Key Items (Unit: CNY) | Item | Current Period Amount | Prior Period Amount | | :--- | :--- | :--- | | Operating Revenue | 660,216,835.24 | 419,868,699.41 | | Operating Cost | 212,922,430.20 | 178,999,975.30 | | R&D Expenses | 30,511,965.76 | 22,102,535.26 | | Investment Income | 17,018,234.12 | 2,422,764.31 | | Operating Profit | 355,854,964.81 | 150,535,267.26 | | Net Profit | 307,408,646.99 | 130,403,327.65 | Significant Accounting Policies and Accounting Estimates The company adheres to enterprise accounting standards, preparing financial statements on a going concern basis; key policies include revenue recognition (domestic/export), inventory valuation (moving weighted average, lower of cost/NRV), R&D expenditure (research expensed, development capitalized), and government grants (asset/income related, gross method) - Revenue Recognition Policies: - Domestic Sales: Revenue is recognized when products are delivered to the buyer and receipt is confirmed - Export Sales: Revenue is recognized when products are declared at customs and the bill of lading is delivered[437][440] - Inventory Accounting Policy: Inventories are valued using the moving weighted average method upon issuance; at period-end, inventory impairment provisions are made based on the lower of cost or net realizable value for individual inventory items[379][380] - R&D Expenditure Policy: Internal research and development project expenditures are classified into research and development phases; expenditures in the research phase are expensed as incurred; expenditures in the development phase are capitalized as intangible assets if capitalization criteria are met[428][429]