Section I Important Notice, Table of Contents, and Definitions [Important Notice](index=2&type=section&id=重要提示) The Board of Directors, Supervisory Committee, and senior management guarantee the truthfulness, accuracy, and completeness of the semi-annual report, which highlights risks including customer concentration, supply chain, technological upgrades, economic downturns, internal management, cybersecurity, and exchange rate fluctuations - The company's Board of Directors, Supervisory Committee, and senior management guarantee the truthfulness, accuracy, and completeness of the semi-annual report[3](index=3&type=chunk) - The company faces multiple risks including customer concentration, supply chain, technological upgrades, economic downturns, internal management, cybersecurity, and exchange rate fluctuations[3](index=3&type=chunk)[4](index=4&type=chunk)[6](index=6&type=chunk) - The company plans not to distribute cash dividends, bonus shares, or convert capital reserves into share capital for this half-year period[7](index=7&type=chunk) [Table of Contents](index=4&type=section&id=目录) The report's clear table of contents is divided into eight sections, covering important notices, company profile, management discussion and analysis, corporate governance, significant events, share changes, bond information, and financial reports - The report is structured into eight clear sections for easy reference[9](index=9&type=chunk) [Definitions](index=6&type=section&id=释义) This section defines common terms used in the report, including company names, subsidiaries, currency units, laws, reporting periods, and technical terms like RJ45, IP67, BNC, PCS, IP Camera, IATF, USB, PVC, SATA, 5G, AI, IRIS, CCD, SAP, VMI, ISO9001, ISO14001, and UL certification, ensuring accurate understanding - The report clearly defines basic information such as the company, subsidiaries, currency units, laws and regulations, and the reporting period[12](index=12&type=chunk) - Detailed explanations are provided for professional technical and management terms including RJ45, IP67, BNC, IP Camera, IATF, USB, PVC, SATA, 5G, AI, IRIS, CCD, SAP, VMI, ISO9001, ISO14001, and UL certification[12](index=12&type=chunk)[14](index=14&type=chunk) Section II Company Profile and Key Financial Indicators [I. Company Profile](index=8&type=section&id=一、公司简介) Henan Kaiwang Electronic Technology Co Ltd (stock code: 301182) is listed on the Shenzhen Stock Exchange, with Chen Haigang serving as its legal representative Company Basic Information | Indicator | Content | | :--- | :--- | | Stock Abbreviation | Kaiwang Technology | | Stock Code | 301182 | | Listed Stock Exchange | Shenzhen Stock Exchange | | Chinese Name | Henan Kaiwang Electronic Technology Co Ltd | | Legal Representative | Chen Haigang | [II. Contact Persons and Information](index=8&type=section&id=二、联系人和联系方式) Shao Zhenkang, the Board Secretary, and Wei Jing, the Securities Affairs Representative, manage investor relations from Shenqiu County Shanan Industrial Cluster, Henan Province, with contact details provided Contact Information | Position | Name | Contact Address | Phone | Fax | Email | | :--- | :--- | :--- | :--- | :--- | :--- | | Board Secretary | Shao Zhenkang | Shanan Industrial Cluster, Shenqiu County, Henan Province | 0394-5289029 | 0394-5289029 | dshcarve@carve.com.cn | | Securities Affairs Representative | Wei Jing | Shanan Industrial Cluster, Shenqiu County, Henan Province | 0394-5289029 | 0394-5289029 | dshcarve@carve.com.cn | [III. Other Information](index=8&type=section&id=三、其他情况) The company's registered address, office address, website, email, information disclosure, and filing locations, as well as registration status, remained unchanged during the reporting period - The company's contact information, information disclosure and filing locations, and registration status remained unchanged during the reporting period[18](index=18&type=chunk)[19](index=19&type=chunk)[20](index=20&type=chunk) [IV. Key Accounting Data and Financial Indicators](index=9&type=section&id=四、主要会计数据和财务指标) During the reporting period, the company's operating revenue increased by 10.70%, but net profit attributable to shareholders and non-recurring net profit significantly declined, operating cash flow turned negative, and basic and diluted earnings per share worsened Key Accounting Data and Financial Indicators (Year-on-Year) | Indicator | Current Reporting Period (yuan) | Prior Year Period (yuan) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Operating Revenue | 319,578,539.76 | 288,701,660.69 | 10.70% | | Net Profit Attributable to Shareholders | -36,187,995.89 | -20,827,092.81 | -73.75% | | Net Profit Attributable to Shareholders Excluding Non-Recurring Items | -38,182,708.62 | -29,653,764.81 | -28.76% | | Net Cash Flow from Operating Activities | -44,226,199.96 | 1,828,657.90 | -2,518.51% | | Basic Earnings Per Share (yuan/share) | -0.3777 | -0.2174 | -73.74% | | Diluted Earnings Per Share (yuan/share) | -0.3777 | -0.2174 | -73.74% | | Weighted Average Return on Net Assets | -4.55% | -2.42% | -452.82% | Key Accounting Data and Financial Indicators (Period-End) | Indicator | Current Period-End (yuan) | Prior Year-End (yuan) | Period-End Change from Prior Year-End | | :--- | :--- | :--- | :--- | | Total Assets | 1,816,605,386.99 | 1,807,119,923.36 | 0.52% | | Net Assets Attributable to Shareholders | 776,811,574.75 | 813,041,519.12 | -4.46% | [V. Differences in Accounting Data under Domestic and International Accounting Standards](index=9&type=section&id=五、境内外会计准则下会计数据差异) The company reported no differences in net profit and net assets between financial statements prepared under international or overseas accounting standards and Chinese accounting standards during the reporting period - The company reported no differences in accounting data under domestic and international accounting standards during the reporting period[22](index=22&type=chunk)[23](index=23&type=chunk) [VI. Non-Recurring Gains and Losses Items and Amounts](index=9&type=section&id=六、非经常性损益项目及金额) The company's total non-recurring gains and losses amounted to **1,994,712.73 yuan**, primarily from government subsidies and wealth management income from idle raised funds, after deducting non-current asset disposal losses, non-operating income/expenses, income tax impact, and minority interest impact Non-Recurring Gains and Losses Items and Amounts | Item | Amount (yuan) | Explanation | | :--- | :--- | :--- | | Non-current asset disposal gains and losses | -129,307.97 | | | Government grants recognized in current profit or loss | 1,821,833.70 | Government project subsidies received | | Fair value changes and disposal gains/losses from financial assets and liabilities held by non-financial enterprises, excluding effective hedging activities related to normal business operations | 729,394.93 | Wealth management income from idle raised funds | | Other non-operating income and expenses apart from the above | -663.99 | | | Less: Income tax impact | 414,052.90 | | | Minority interest impact (after tax) | 12,491.04 | | | Total | 1,994,712.73 | | Section III Management Discussion and Analysis [I. Main Business Activities During the Reporting Period](index=11&type=section&id=一、报告期内公司从事的主要业务) The company's core business involves R&D, production, and sales of electronic precision cable connection components for security, communication, and consumer electronics, expanding into automotive, rail transit, new energy, and robotics, while also achieving scaled production of new businesses like precision molds and metal parts - The company's main business is the R&D, production, and sales of electronic precision cable connection components, primarily used in security equipment, communication equipment, and consumer electronics[28](index=28&type=chunk) - The company has expanded into precision interconnection solutions for emerging fields such as automotive electronics, rail transit, new energy, and robotics, achieving mass delivery[28](index=28&type=chunk) - The company's operating model is primarily "production based on sales, procurement based on production," with continuous R&D investment to expand its product chain and application areas[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk) [(I) Main Business Overview](index=11&type=section&id=(一)主营业务情况) The company is a high-tech enterprise specializing in R&D, production, and sales of electronic precision cable connection components, widely used in security, communication, and consumer electronics, with successful expansion into emerging sectors and scaled delivery of new products like metal parts and injection molded components - The company's main business is the R&D, production, and sales of electronic precision cable connection components, operating as a high-tech enterprise[28](index=28&type=chunk) - Products are primarily applied in security, communication, and consumer electronics, with expansion into automotive electronics, rail transit, new energy, and robotics[28](index=28&type=chunk) - New businesses, including various metal parts, injection molded parts, and product assembly, have achieved scaled production and mass delivery[28](index=28&type=chunk) [(II) Main Products Overview](index=11&type=section&id=(二)主要产品情况) The company's products are categorized by application into security, communication, consumer, and other precision cable connection components, alongside integrated precision metal structural parts, molds, and high-current connectors - Security precision cable connection components are primarily used in security monitoring systems, including IPC network port power cables, composite cables, terminal cables, dome camera cables, video power cables, and custom cables[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk) - Communication precision cable connection components are used in communication room power supplies, data communication, and other equipment, including communication signal transmission cables and communication power cables[31](index=31&type=chunk)[33](index=33&type=chunk) - Consumer and other precision cable connection components are applied in computers, digital cameras, tablet PCs, and rail transit, including USB data cables and rail transit harnesses[32](index=32&type=chunk) - Horizontally and vertically integrated products include high-current connectors, aviation plugs, soft and hard copper CCS, precision metal structural parts, and precision molds, applied in energy storage, power batteries, and precision machinery[34](index=34&type=chunk)[35](index=35&type=chunk) [(III) Business Model Overview](index=16&type=section&id=(三)经营模式情况) The company's business model focuses on profitability through electronic precision cable connection components, precision molds, and machined metal parts, supported by continuous R&D, a "production based on sales, procurement based on production" approach, and a combination of in-house manufacturing and outsourcing - Profitability model: Achieved by providing electronic precision cable connection components, precision molds, machined metal parts, and continuously developing new products[36](index=36&type=chunk) - R&D model: Emphasizes new product development and manufacturing process innovation, establishing a technology center to define R&D projects based on industry trends and customer needs, followed by product design, development, verification, and validation[36](index=36&type=chunk)[37](index=37&type=chunk)[38](index=38&type=chunk) - Procurement model: Adopts "production based on sales, procurement based on production," with main raw materials including copper, steel, aluminum, and rubber, supported by stable procurement channels and a qualified supplier management system[39](index=39&type=chunk) - Production model: Primarily "production based on customer orders," with in-house manufacturing as the main approach and some processes outsourced[40](index=40&type=chunk) [(IV) Market Position of Company Products](index=17&type=section&id=(四)公司产品的市场地位) The company holds a significant market position in the electronic precision cable connection component industry, particularly in security applications, by supplying leading enterprises in domestic security, communication, and consumer sectors, while actively expanding its product chain into new materials, rail transit, medical devices, new energy, and automotive electronics - The company holds a certain market position in the security application sector of the electronic precision cable connection component industry, with major clients being leading enterprises in domestic security, communication, and consumer fields[40](index=40&type=chunk) - Through technological innovation and product chain extension, the company has secured orders for surveillance equipment structural parts and is actively expanding into new application areas such as new materials, rail transit, medical devices, new energy, and automotive electronics[41](index=41&type=chunk) [II. Analysis of Core Competencies](index=18&type=section&id=二、核心竞争力分析) The company's core competencies encompass technological R&D and innovation, manufacturing and process capabilities, deep customer relationships, talent and management, and quality and cost control, enabling it to maintain a competitive edge in the security sector and meet high-end, customized market demands - **Technological R&D and Innovation Advantage**: Possesses an experienced R&D team and multiple provincial-level technology center certifications, mastering core technologies such as IP67 waterproofing and blocking waterproofing, resulting in **147 patents** and scaled application[42](index=42&type=chunk) - **Manufacturing and Process Advantage**: Features flexible production capabilities, optimizing efficiency through process standardization and automation upgrades, establishing closed-loop quality control from raw materials to finished products[42](index=42&type=chunk)[43](index=43&type=chunk) - **Customer Resources and Depth of Cooperation**: Serves industry-leading clients like Hikvision and Dahua Technology, establishing R&D collaboration mechanisms and providing localized services, leading to high customer loyalty[43](index=43&type=chunk) - **Talent and Management Advantage**: Boasts a multidisciplinary talent team, aligning core employee interests through an employee stock ownership platform, and building an integrated production, supply, and sales management system for efficient operations[43](index=43&type=chunk)[44](index=44&type=chunk) - **Quality and Cost Control Advantage**: Implements standardized quality management and refined cost control across all business segments, reducing defect rates and material waste[44](index=44&type=chunk) [III. Main Business Analysis](index=19&type=section&id=三、主营业务分析) In the first half of 2025, the company achieved **319 million yuan** in operating revenue, a 10.7% increase, but reported a net loss of **36.19 million yuan** attributable to the parent company, a 73.75% decrease, while implementing strategies for capacity integration, talent optimization, cost reduction, and governance improvement 2025 H1 Operating Performance | Indicator | Amount | Year-on-Year Change | | :--- | :--- | :--- | | Sales Revenue | 319 million yuan | Increased by 10.7% | | Net Profit Attributable to Parent Company Shareholders | -36.19 million yuan | Decreased by 73.75% | - The company established five product business units (Wire Harness, Wire and Cable, Parts, Electrical, and Vietnam Kaiwang) to advance capacity and industrial chain integration, achieving horizontal product expansion and vertical integration[47](index=47&type=chunk)[48](index=48&type=chunk)[49](index=49&type=chunk)[50](index=50&type=chunk) - Continued focus on technological innovation, with R&D investment of **21.54 million yuan** in H1 2025, a 0.96% year-on-year increase, and a cumulative total of **147 R&D patents** obtained[52](index=52&type=chunk) - Adhering to a "cost-saving and efficiency-boosting" operating strategy, optimizing inventory management and strengthening customer credit, thereby improving operational indicators such as inventory turnover and accounts receivable turnover[54](index=54&type=chunk) - Continuously strengthening data informatization, optimizing the MES system, and gradually improving SRM, smart logistics systems, and logistics robots to build a comprehensive full-process informatization management platform[56](index=56&type=chunk) [Overview](index=19&type=section&id=概述) In the first half of 2025, Henan Kaiwang Electronic Technology Co Ltd achieved **319 million yuan** in sales revenue, a 10.7% increase, but reported a net loss of **36.19 million yuan** attributable to the parent company, a 73.75% decrease, amidst a complex economic environment [Review of Key Company Initiatives](index=19&type=section&id=公司主要工作回顾) The company's key initiatives in the first half included integrating capacity and supply chains through five business units, optimizing talent and R&D investment, maintaining stable operations, implementing cost reduction and efficiency improvement strategies, fostering harmonious labor relations, enhancing data informatization, and improving corporate governance [(I) Capacity and Industrial Chain Integration](index=19&type=section&id=(一)产能与产业链整合) The company integrated its capacity and industrial chain by establishing five business units—Wire Harness, Wire and Cable, Parts, Electrical, and Vietnam Kaiwang—to expand product lines, enhance R&D, and achieve scaled production and overseas market expansion - Established five product business units: Wire Harness, Wire and Cable, Parts, Electrical, and Vietnam Kaiwang, to optimize capacity layout[47](index=47&type=chunk) - The Wire and Cable Business Unit added over **60 UL758 series certified models** and more than **40 3C certified models**, expanding into high-end products such as silicone cables, composite cables, and robot cables[48](index=48&type=chunk) - The Parts Business Unit achieved mass shipment of various precision injection molded parts and made breakthroughs in high-current connectors, high-speed connectors, circular connectors, rectangular connectors, and soft/hard copper-aluminum busbars for new energy batteries[49](index=49&type=chunk) - The Vietnam Kaiwang Business Unit established a multi-functional R&D, production, and sales base integrating molds, metal parts, die-cast parts, injection molded parts, precision cable connection component production, and finished product assembly, laying the foundation for overseas market expansion[50](index=50&type=chunk) [(II) Talent Reserve and Optimization](index=20&type=section&id=(二)人才储备与优化) The company prioritizes talent development and optimization, building a professional team of experienced technical and management experts, investing **21.54 million yuan** in R&D in H1 2025, and accumulating **147 patents** to strengthen its interconnection solutions - The company has assembled a professional team of senior technical experts and management talent, with core personnel possessing over a decade of industry R&D experience[51](index=51&type=chunk) - R&D investment in the first half of 2025 was **21.54 million yuan**, a year-on-year increase of **0.96%**[52](index=52&type=chunk) - As of the end of the reporting period, the company had cumulatively obtained **147 R&D patents** (including **101 utility model patents**, **35 design patents**, and **11 invention patents**)[52](index=52&type=chunk) [(III) Stable Operations in Response to Challenges](index=21&type=section&id=(三)稳健经营应对挑战) Facing market downturns, the company diligently overcame difficulties by rapidly responding to market demands and maintaining reasonable strategic inventory levels to ensure stable business operations - The company actively responded to domestic and international market downturn challenges by rapidly responding to market demand and maintaining reasonable strategic inventory levels to ensure business stability[53](index=53&type=chunk) [(IV) Cost Reduction, Efficiency Improvement, and Operational Optimization](index=21&type=section&id=(四)降本增效与运营优化) The company implemented a "cost-saving and efficiency-boosting" strategy, optimizing inventory and customer credit management, enhancing operational indicators, and improving management through technological innovation, equipment upgrades, and process reforms - The company implemented a "cost-saving and efficiency-boosting" strategy, optimizing inventory and customer credit management to improve inventory turnover and accounts receivable turnover rates[54](index=54&type=chunk) - Management levels were enhanced through technological innovation, equipment upgrades, and optimized plant layout, while process reforms were advanced to boost organizational efficiency[54](index=54&type=chunk) [(V) People-Oriented Approach and Harmonious Development](index=21&type=section&id=(五)以人为本与和谐发展) Adhering to a "people-oriented" philosophy, the company fosters harmonious labor relations, offers competitive compensation, integrates corporate social responsibility with long-term strategy, and contributes to local economic development and poverty alleviation - The company adheres to a "people-oriented" philosophy, building harmonious labor relations and establishing a market-competitive compensation and benefits system[55](index=55&type=chunk) - The company has been honored as a National "Little Giant" Enterprise specializing in niche sectors and a National Intellectual Property Demonstration Enterprise, actively contributing to society through industrial and employment poverty alleviation[55](index=55&type=chunk) [(VI) Informatization Construction Empowering Business](index=22&type=section&id=(六)信息化建设赋能业务) The company continuously strengthens data informatization, optimizing its MES system for full-process visibility and integrating SAP, SRM, smart logistics, and robotics to build a comprehensive management platform that enhances quality, capacity, and efficiency - The company continuously strengthens data informatization, optimizing its MES system to achieve full-process informatization and visualization for some product manufacturing processes[56](index=56&type=chunk) - Building upon the SAP system, the company is enhancing MES, SRM, smart logistics systems, and logistics robots to create a comprehensive full-process informatization management platform, improving operational management and efficiency[56](index=56&type=chunk) [(VII) Enhancing Governance and Protecting Investor Interests](index=22&type=section&id=(七)提升治理与保护投资者利益) The company actively adapts to regulatory requirements, enhances transparency and information disclosure quality, strengthens internal control systems, and maintains robust communication with the capital market to protect the legitimate rights and interests of small and medium investors - The company strengthens its awareness of standardized operations, enhancing transparency and information disclosure quality for listed companies, and ensuring legal and compliant information disclosure[57](index=57&type=chunk) - A robust communication mechanism with the capital market is established through the Shenzhen Stock Exchange's interactive platform and investor site visits, safeguarding the legitimate rights and interests of small and medium investors[57](index=57&type=chunk) [Year-on-Year Changes in Key Financial Data](index=22&type=section&id=主要财务数据同比变动情况) During the reporting period, operating revenue increased by 10.70%, but sales, administrative, and financial expenses significantly rose, income tax expense shifted from negative to positive, operating cash flow sharply declined by 2,518.51%, while investment cash flow improved by 91.91%, and net cash from financing activities decreased by 29.37% Year-on-Year Changes in Key Financial Data | Item | Current Reporting Period (yuan) | Prior Year Period (yuan) | Year-on-Year Change | Reason for Change | | :--- | :--- | :--- | :--- | :--- | | Operating Revenue | 319,578,539.76 | 288,701,660.69 | 10.70% | | | Operating Cost | 297,999,587.98 | 277,227,626.74 | 7.49% | | | Selling Expenses | 7,586,866.01 | 6,307,731.56 | 20.28% | Primarily due to an increase in sales personnel | | Administrative Expenses | 25,480,064.71 | 19,399,974.21 | 31.34% | Primarily due to an increase in administrative personnel | | Financial Expenses | 5,258,391.68 | -2,098,389.68 | 350.59% | Primarily due to increased bank borrowings and acceptance bill discounting | | Income Tax Expense | -8,947,603.57 | -1,085,861.75 | -724.01% | Primarily due to deferred income tax preferential policies | | R&D Investment | 21,541,933.82 | 21,336,092.46 | 0.96% | | | Net Cash Flow from Operating Activities | -44,226,199.96 | 1,828,657.90 | -2,518.51% | Primarily due to payments for beginning-of-period payables and maturing acceptance bills | | Net Cash Flow from Investing Activities | -8,693,191.36 | -107,403,003.87 | 91.91% | Primarily due to reduced new machinery and equipment purchases and the redemption cycle of wealth management products | | Net Cash Flow from Financing Activities | 77,967,678.79 | 110,389,933.97 | -29.37% | Primarily influenced by the borrowing and repayment cycle of bank loans | | Net Increase in Cash and Cash Equivalents | 24,003,497.19 | 5,453,724.93 | 340.13% | Primarily due to increased customer repayments and bank borrowings | [IV. Non-Core Business Analysis](index=23&type=section&id=四、非主营业务分析) Non-core business activities impacted total profit, with credit impairment losses accounting for 11.35% due to increased accounts receivable, investment income from idle funds at -1.66%, asset impairment (inventory write-downs) at 3.68%, and other income (government grants) at -4.02% Impact of Non-Core Business on Total Profit | Item | Amount (yuan) | Percentage of Total Profit | Reason for Formation | Sustainability | | :--- | :--- | :--- | :--- | :--- | | Investment income | 729,394.93 | -1.66% | Wealth management income from idle raised funds | No | | Asset impairment | -1,614,083.48 | 3.68% | Provision for inventory write-down | No | | Non-operating income | 198,229.61 | -0.45% | | No | | Non-operating expenses | 154,472.67 | -0.35% | | No | | Credit impairment losses | -4,978,050.47 | 11.35% | Primarily due to increased accounts receivable in the reporting period and corresponding increase in credit impairment losses according to relevant policies | No | | Other income | 1,762,518.80 | -4.02% | Primarily government grants related to income | No | [V. Analysis of Assets and Liabilities](index=23&type=section&id=五、资产及负债状况分析) At the end of the reporting period, total assets slightly increased by 0.52% year-on-year, with accounts receivable significantly rising by 4.19% due to increased shipments, while inventory decreased by 6.54% as initial stock was shipped, and short-term borrowings increased by 5.13% Significant Changes in Asset Composition | Item | Current Period-End Amount (yuan) | Percentage of Total Assets | Prior Year-End Amount (yuan) | Percentage of Total Assets | Change in Proportion | Explanation of Significant Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Monetary Funds | 98,964,055.13 | 5.45% | 71,284,852.51 | 3.94% | 1.51% | | | Accounts Receivable | 389,811,938.53 | 21.46% | 312,028,404.37 | 17.27% | 4.19% | Primarily due to increased shipments leading to higher accounts receivable | | Inventory | 395,227,417.84 | 21.76% | 511,349,614.70 | 28.30% | -6.54% | Primarily due to the shipment of some initial stock in the first half of the year | | Short-term Borrowings | 233,133,200.92 | 12.83% | 139,164,083.89 | 7.70% | 5.13% | Primarily due to increased short-term borrowings | - At the end of the reporting period, the company's total assets were **1,816,605,386.99 yuan**, an increase of **0.52%** from the end of the previous year[21](index=21&type=chunk) [1. Significant Changes in Asset Composition](index=23&type=section&id=1、资产构成重大变动情况) At the end of the reporting period, monetary funds, accounts receivable, and right-of-use assets increased, with accounts receivable rising by 4.19% due to increased shipments, while inventory decreased by 6.54% as initial stock was shipped, and short-term borrowings increased by 5.13% [3. Assets and Liabilities Measured at Fair Value](index=24&type=section&id=3、以公允价值计量的资产和负债) At the end of the reporting period, the company's financial assets measured at fair value primarily consisted of accounts receivable financing, with a period-end balance of **70,947,623.20 yuan**, a slight decrease from the beginning of the period, and no financial liabilities measured at fair value Assets and Liabilities Measured at Fair Value | Item | Beginning Balance (yuan) | Period-End Balance (yuan) | | :--- | :--- | :--- | | Financial Assets: Accounts Receivable Financing | 78,956,278.67 | 70,947,623.20 | | Financial Liabilities | 0.00 | 0.00 | [4. Asset Rights Restriction Status as of the End of the Reporting Period](index=24&type=section&id=4、截至报告期末的资产权利受限情况) As of the end of the reporting period, the company's total restricted assets amounted to **66,117,298.76 yuan**, primarily comprising other monetary funds restricted as margin, notes receivable and accounts receivable financing restricted for financing pledges, and fixed assets restricted due to uncompleted property deeds Asset Rights Restriction Status | Item | Year-End Book Value (yuan) | Reason for Restriction | | :--- | :--- | :--- | | Other Monetary Funds | 31,045,403.88 | Margin | | Notes Receivable | 4,279,116.79 | Financing pledge | | Fixed Assets | 15,388,050.31 | Property nature is public rental housing with uncompleted property deeds | | Accounts Receivable Financing | 15,404,727.78 | Financing pledge | | Total | 66,117,298.76 | / | [VI. Investment Analysis](index=25&type=section&id=六、投资状况分析) The company had no significant equity or non-equity investments during the reporting period, with a total raised funds utilization rate of 87.34%, including **50.495 million yuan** reallocated to the "Electronic Intelligent Equipment Parts Technology Upgrade Project" and **165.2264 million yuan** of over-raised funds permanently used to supplement working capital, while **90 million yuan** in wealth management products remained outstanding - The company had no significant equity or non-equity investments during the reporting period[67](index=67&type=chunk) Overall Use of Raised Funds | Indicator | Amount (million yuan) | | :--- | :--- | | Total Raised Funds | 649.7952 | | Net Raised Funds | 580.3314 | | Total Raised Funds Cumulatively Used | 506.846 | | Raised Funds Utilization Rate at Period-End | 87.34% | | Total Raised Funds with Changed Use Cumulatively | 50.495 | | Percentage of Total Raised Funds with Changed Use Cumulatively | 8.70% | | Total Unused Raised Funds | 90 | | Amount of Idle Raised Funds for Over Two Years | 90 | - The company used **165.2264 million yuan** of over-raised funds to permanently supplement working capital and managed idle raised funds up to **100 million yuan** for cash management[70](index=70&type=chunk)[71](index=71&type=chunk) [5. Use of Raised Funds](index=25&type=section&id=5、募集资金使用情况) The company's net raised funds totaled **580.3314 million yuan**, with **506.846 million yuan** utilized, representing an 87.34% usage rate, including **50.495 million yuan** reallocated to the "Electronic Intelligent Equipment Parts Technology Upgrade Project" and **165.2264 million yuan** of over-raised funds permanently supplementing working capital - The company used **165.2264 million yuan** of over-raised funds to permanently supplement working capital to meet daily operational needs[70](index=70&type=chunk) - The company used idle raised funds up to **100 million yuan** for cash management, investing in highly secure, liquid, and principal-guaranteed investment products[71](index=71&type=chunk) [(1) Overall Use of Raised Funds](index=25&type=section&id=(1)%20募集资金总体使用情况) The company's net raised funds amounted to **580.3314 million yuan**, with **506.846 million yuan** cumulatively used, representing an 87.34% utilization rate, including the return of **50 million yuan** temporarily used to supplement working capital and **165.2264 million yuan** permanently used for working capital - As of June 30, 2025, the company had returned **50 million yuan** of over-raised funds temporarily used to supplement working capital[69](index=69&type=chunk) - The company has used **165.2264 million yuan** of over-raised funds to permanently supplement working capital[70](index=70&type=chunk) [(3) Changes in Raised Funds Investment Projects](index=26&type=section&id=(3)%20募集资金变更项目情况) The company reallocated **50.495 million yuan** from the "R&D Center Construction Project" to the "Electronic Intelligent Equipment Parts Technology Upgrade Project," which has seen **53.3387 million yuan** invested, reaching 105.63% of its planned investment, primarily for internal production support Changes in Raised Funds Investment Projects | Financing Project Name | Changed Project | Proposed Investment Amount of Changed Project (1) (million yuan) | Actual Cumulative Investment Amount as of Period-End (2) (million yuan) | Investment Progress as of Period-End (3)=(2)/(1) | Has the Feasibility of the Changed Project Significantly Changed | | :--- | :--- | :--- | :--- | :--- | :--- | | R&D Center Construction Project | Electronic Intelligent Equipment Parts Technology Upgrade Project | 50.495 | 53.3387 | 105.63% | No | - The "Electronic Intelligent Equipment Parts Technology Upgrade Project" primarily involves the procurement and installation of precision structural component equipment, providing various molds and fixtures for the company's internal production departments, making it impossible to accurately calculate its individual returns[75](index=75&type=chunk) [6. Wealth Management, Derivative Investments, and Entrusted Loans](index=27&type=section&id=6、委托理财、衍生品投资和委托贷款情况) During the reporting period, the company's wealth management transactions totaled **268 million yuan**, with **90 million yuan** outstanding at period-end, all invested in bank wealth management products using raised funds, and no overdue amounts or derivative investments or entrusted loans were reported Overview of Wealth Management | Specific Type | Source of Wealth Management Funds | Amount of Wealth Management Transactions (million yuan) | Unexpired Balance (million yuan) | Overdue Unrecovered Amount (million yuan) | | :--- | :--- | :--- | :--- | :--- | | Bank Wealth Management Products | Raised Funds | 268 | 90 | 0 | - The company reported no derivative investments or entrusted loans during the period[78](index=78&type=chunk) [VIII. Analysis of Major Holding and Associate Companies](index=28&type=section&id=八、主要控股参股公司分析) The company's major subsidiaries include Shenzhen Kaiwang Electronics, Zhoukou Kaiwang Precision Industry, Zhoukou Haixin Precision Industry, Henan Kaiwang New Material Research Institute, Chongqing Hangda Electronics, Chuzhou Lihong Precision Plastic Mold, and Dongguan Lihong Precision Technology, with the recent establishment of Ji'an Kaiwang Precision Industry Co Ltd as a wholly-owned subsidiary with **30 million yuan** registered capital Financial Performance of Major Subsidiaries | Company Name | Company Type | Registered Capital (yuan) | Total Assets (yuan) | Net Assets (yuan) | Operating Revenue (yuan) | Net Profit (yuan) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Shenzhen Kaiwang Electronics Co Ltd | Subsidiary | 36,630,000.00 | 740,288,867.41 | 54,493,631.04 | 45,524,230.18 | 42,862,683.16 | | Zhoukou Kaiwang Precision Industry Co Ltd | Subsidiary | 5,000,000.00 | 22,481,927.53 | 10,727,396.91 | 13,190,960.53 | 3,948,369.56 | | Zhoukou Haixin Precision Industry Co Ltd | Subsidiary | 10,000,000.00 | 220,529,523.56 | 34,959,983.09 | 91,495,554.36 | 697,829.60 | | Henan Kaiwang New Material Research Institute Co Ltd | Subsidiary | 50,000,000.00 | 54,321,911.39 | 41,340,625.13 | 9,967,860.34 | 1,137,365.63 | | Chongqing Hangda Electronics Co Ltd | Subsidiary | 10,000,000.00 | 6,666,441.38 | 6,632,705.38 | 0 | 243,785.92 | | Chuzhou Lihong Precision Plastic Mold Co Ltd | Subsidiary | 10,000,000.00 | 40,509,981.39 | 28,670,679.51 | 20,796,502.90 | 2,622,507.58 | | Dongguan Lihong Precision Technology Co Ltd | Subsidiary | 20,000,000.00 | 26,306,397.95 | 5,168,408.34 | 6,720,544.86 | 2,313,100.88 | - Ji'an Kaiwang Precision Industry Co Ltd was registered on June 11, 2025, with a registered capital of **30 million yuan**, as a 100% wholly-owned subsidiary[82](index=82&type=chunk) [X. Risks Faced by the Company and Countermeasures](index=28&type=section&id=十、公司面临的风险和应对措施) The company faces risks from customer concentration, supply chain disruptions, technological obsolescence, internal management complexities due to expansion, and cybersecurity threats, requiring continuous monitoring and proactive mitigation strategies - **Customer Concentration and Major Customer Dependence Risk**: The company has a high customer concentration, and adverse operating conditions or decreased demand from major customers could significantly impact operating performance[83](index=83&type=chunk) - **Supply Chain Risk**: The global supply system is vulnerable to fluctuations in commodity prices and restrictions on production and logistics, which could adversely affect the company's operating performance[84](index=84&type=chunk) - **Technological Obsolescence Risk**: Failure to closely track cutting-edge technological updates and rapid innovation could lead to a decline in market competitiveness[84](index=84&type=chunk) - **Internal Management Risk**: Expanding business scale, new products, and increased employees lead to higher management complexity, posing risks if management capabilities do not keep pace[84](index=84&type=chunk) - **Cybersecurity Risk**: In an internet application environment, there may be security issues such as computer viruses, malicious software, and hacker attacks[84](index=84&type=chunk) Section IV Corporate Governance, Environment, and Society [II. Profit Distribution and Capital Reserve Conversion to Share Capital for the Reporting Period](index=30&type=section&id=二、本报告期利润分配及资本公积金转增股本情况) The company plans not to distribute cash dividends, bonus shares, or convert capital reserves into share capital for this half-year period - The company plans not to distribute cash dividends, bonus shares, or convert capital reserves into share capital for the half-year period[88](index=88&type=chunk) [V. Social Responsibility](index=31&type=section&id=五、社会责任情况) The company actively fulfills its social responsibilities by enhancing corporate governance, safeguarding stakeholder rights, adopting a "people-oriented" approach for employee welfare, fostering strategic partnerships with suppliers and customers, promoting green manufacturing, and contributing to local poverty alleviation and rural revitalization - The company strictly adheres to laws and regulations, improves corporate governance, protects the rights and interests of shareholders and creditors, and communicates with investors through various channels to ensure truthful, accurate, complete, timely, and fair information disclosure[90](index=90&type=chunk) - The company upholds a "people-oriented" philosophy, establishing a market-competitive compensation and benefits system, focusing on employee career development, providing training, and fostering a positive work environment[91](index=91&type=chunk) - The company emphasizes strategic win-win cooperation with suppliers and customers, providing high-quality products and services, establishing effective communication mechanisms, and complying with anti-commercial bribery and unfair competition regulations[92](index=92&type=chunk) - The company adheres to an environmental philosophy of "reducing consumption, saving energy, and increasing efficiency," promoting green manufacturing, and actively contributing to poverty alleviation and rural revitalization in Shenqiu County, Zhoukou City, through industrial and employment support[93](index=93&type=chunk) Section V Significant Matters [XII. Major Contracts and Their Performance](index=35&type=section&id=十二、重大合同及其履行情况) During the reporting period, the company had multiple leasing contracts for offices, warehouses, and factories in various locations, with areas ranging from 236 sqm to 88,831.98 sqm, noting that some leased properties lacked completed property deeds, though this was not deemed to have a significant adverse impact on operations Major Lease Contracts | No | Lessee | Lease Location | Lease Area (sqm) | Purpose | Contract Period | | :--- | :--- | :--- | :--- | :--- | :--- | | 1 | Kaiwang Technology | Binjiang District, Hangzhou City | 236 | Office | 2025.06.20 - 2027.06.19 | | 2 | Shenzhen Kaiwang | Wuyi Industrial Zone, Chenjiang, Huizhou City | 1350 | Warehouse | 2024.04.01 - 2026.03.01 | | 3 | Haixin Precision | Xihua County Economic and Technological Development Zone | 41592 | Factory, dormitory, office building, etc | 2021.01.01 - 2026.12.31 | | 4 | Kaiwang Technology | Shanan Industrial Zone, Shenqiu County | 11561 | Factory | 2025.01.01 - 2025.12.31 | | 5 | Chuzhou Lihong | National Economic Development Zone, Chuzhou City, Anhui Province | 3600 | Factory | 2025.06.01 - 2026.05.31 | | 6 | Shenzhen Kaiwang Dongguan Branch | Xinwei Village, Humen Town, Dongguan City | 6183 | Factory, dormitory | 2022.12.01 - 2026.01.31 | | 7 | Dongguan Lihong | Yuliangwei Industrial Zone | 3130 | Factory | 2023.07.01 - 2028.06.30 | | 8 | Vietnam Kaiwang | Binh Duong Province, Vietnam | 26438 | Factory, office building, etc | 2023.09.01 - 2028.08.31 | | 9 | Kaiwang Technology | North Section of Xihuan Road, Shenqiu County | 88831.98 | Factory | 2025.01.01 - 2027.12.31 | | 10 | Ji'an Kaiwang | Fenghuang Park, Ji'an High-tech Zone | 18021 | Factory, dormitory | 2025.07.01 - 2030.07.01 | - Some leased properties lack completed property deeds, but the company assesses this will not have a significant adverse impact on production and operations[112](index=112&type=chunk)[113](index=113&type=chunk) - The company reported no significant guarantees or major ordinary course of business contracts during the period[120](index=120&type=chunk)[121](index=121&type=chunk) Section VI Changes in Shares and Shareholder Information [I. Changes in Share Capital](index=39&type=section&id=一、股份变动情况) During the reporting period, all restricted shares were released, increasing the number of unrestricted shares while the total share capital remained unchanged, with major shareholders like Shenzhen Kaiwang Investment Co Ltd, Chen Haigang, Zhoukou Dingbang Management Consulting Partnership (Limited Partnership), and Liu Zhongyi having their restricted shares lifted Changes in Share Capital | Item | Number of Shares Before This Change (shares) | Proportion | Increase/Decrease in This Change (＋, －) | Number of Shares After This Change (shares) | Proportion | | :--- | :--- | :--- | :--- | :--- | :--- | | I. Restricted Shares | 57,570,000 | 60.08% | -57,570,000 | 0 | 0% | | II. Unrestricted Shares | 38,251,700 | 39.92% | +57,570,000 | 95,821,700 | 100.00% | | III. Total Shares | 95,821,700 | 100.00% | 0 | 95,821,700 | 100.00% | - The main reason for the share capital change was the release of pre-IPO restricted shares[127](index=127&type=chunk) Changes in Restricted Shares | Shareholder Name | Restricted Shares at Beginning of Period (shares) | Restricted Shares Released in Current Period (shares) | Restricted Shares at End of Period (shares) | Reason for Restriction | Proposed Release Date | | :--- | :--- | :--- | :--- | :--- | :--- | | Shenzhen Kaiwang Investment Co Ltd | 38,750,000 | 38,750,000 | 0 | Release of pre-IPO restricted shares | June 23, 2025 | | Chen Haigang | 7,875,000 | 7,875,000 | 0 | Release of pre-IPO restricted shares | June 23, 2025 | | Zhoukou Dingbang Management Consulting Partnership (Limited Partnership) | 7,570,000 | 7,570,000 | 0 | Release of pre-IPO restricted shares | June 23, 2025 | | Liu Zhongyi | 3,375,000 | 3,375,000 | 0 | Release of pre-IPO restricted shares | June 23, 2025 | | Total | 57,570,000 | 57,570,000 | 0 | -- | -- | [III. Number of Shareholders and Shareholding Status](index=41&type=section&id=三、公司股东数量及持股情况) At the end of the reporting period, the company had **15,957** common shareholders, with Shenzhen Kaiwang Investment Co Ltd being the largest shareholder at **40.44%** (partially pledged), and Chen Haigang and Han Liucai as the ultimate controlling parties - The total number of common shareholders at the end of the reporting period was **15,957**[130](index=130&type=chunk) Top 10 Shareholders' Shareholding Status | Shareholder Name | Shareholder Nature | Shareholding Percentage | Number of Shares Held at Period-End (shares) | Number of Unrestricted Shares Held (shares) | Pledged, Marked, or Frozen Status (Share Status/Quantity) | | :--- | :--- | :--- | :--- | :--- | :--- | | Shenzhen Kaiwang Investment Co Ltd | Domestic Non-State-Owned Legal Person | 40.44% | 38,750,000.00 | 38,750,000.00 | Pledged 2,900,000.00 | | Chen Haigang | Domestic Natural Person | 8.22% | 7,875,000.00 | 7,875,000.00 | Not applicable 0 | | Zhoukou Dingbang Management Consulting Partnership (Limited Partnership) | Domestic Non-State-Owned Legal Person | 7.90% | 7,570,000.00 | 7,570,000.00 | Not applicable 0 | | Liu Zhongyi | Domestic Natural Person | 3.52% | 3,375,000.00 | 3,375,000.00 | Not applicable 0 | | Zhoukou Industrial Cluster Development Investment Co Ltd | State-Owned Legal Person | 3.00% | 2,874,567.00 | 2,874,567.00 | Not applicable 0 | | Zhoukou Jubang Management Consulting Partnership (Limited Partnership) | Domestic Non-State-Owned Legal Person | 2.38% | 2,280,000.00 | 2,280,000.00 | Not applicable 0 | | Henan Hongbo Capital Management Co Ltd - Henan Returned Entrepreneur Equity Investment Fund (Limited Partnership) | Other | 0.87% | 836,200.00 | 836,200.00 | Not applicable 0 | | Bu Ruihua | Domestic Natural Person | 0.24% | 226,200.00 | 226,200.00 | Not applicable 0 | | Fan Xin | Domestic Natural Person | 0.19% | 182,000.00 | 182,000.00 | Not applicable 0 | | Li Dawei | Domestic Natural Person | 0.18% | 172,200.00 | 172,200.00 | Not applicable 0 | - Shenzhen Kaiwang Investment Co Ltd, 50% owned by Chen Haigang and 50% by Han Liucai, is the controlling shareholder of the company; Liu Zhongyi, Chen Haigang's brother-in-law, also serves as the executive partner of Zhoukou Dingbang[131](index=131&type=chunk) Section VIII Financial Report [I. Audit Report](index=46&type=section&id=一、审计报告) The company's 2025 semi-annual financial report is unaudited - The company's semi-annual financial report is unaudited[139](index=139&type=chunk) [II. Financial Statements](index=46&type=section&id=二、财务报表) This section presents the company's 2025 semi-annual consolidated and parent company balance sheets, income statements, cash flow statements, and statements of changes in owners' equity, showing total consolidated assets of **1.817 billion yuan**, total liabilities of **1.026 billion yuan**, and net assets attributable to the parent company of **777 million yuan** Key Data from Consolidated Balance Sheet (Period-End) | Item | Period-End Balance (yuan) | | :--- | :--- | | Total Assets | 1,816,605,386.99 | | Total Liabilities | 1,025,745,179.28 | | Total Equity Attributable to Parent Company Owners | 776,811,574.75 | Key Data from Consolidated Income Statement (Current Period) | Item | 2025 Half-Year (yuan) | | :--- | :--- | | Total Operating Revenue | 319,578,539.76 | | Total Profit | -43,850,570.75 | | Net Profit | -34,902,967.18 | | Net Profit Attributable to Parent Company Shareholders | -36,187,995.89 | Key Data from Consolidated Cash Flow Statement (Current Period) | Item | 2025 Half-Year (yuan) | | :--- | :--- | | Net Cash Flow from Operating Activities | -44,226,199.96 | | Net Cash Flow from Investing Activities | -8,693,191.36 | | Net Cash Flow from Financing Activities | 77,967,678.79 | | Net Increase in Cash and Cash Equivalents | 24,003,497.19 | [III. Company Basic Information](index=63&type=section&id=三、公司基本情况) Henan Kaiwang Electronic Technology Co Ltd, headquartered in Shenqiu County Shanan Industrial Cluster, operates in electronic component manufacturing, specializing in R&D, production, and sales of precision cable electronic connection components, with its financial statements approved on August 25, 2025, and eight subsidiaries included in the consolidated scope as of June 30, 2025 - Company's registered address and headquarters: Shenqiu County Shanan Industrial Cluster[174](index=174&type=chunk) - The company's industry is electronic components and modules manufacturing, with its main business scope being the R&D, production, and sales of precision cable electronic connection components[174](index=174&type=chunk) - These financial statements were approved for issuance by the company's Board of Directors on August 25, 2025[174](index=174&type=chunk) - As of June 30, 2025, the company had a total of **8 subsidiaries** included in its consolidated scope[175](index=175&type=chunk) [IV. Basis of Financial Statement Preparation](index=64&type=section&id=四、财务报表的编制基础) The company's financial statements are prepared on a going concern basis, in accordance with Chinese Accounting Standards and the CSRC's "Information Disclosure Rules for Companies Issuing Securities No. 15 – General Provisions for Financial Reports (Revised 2023)," using the accrual basis of accounting and historical cost measurement, with no significant doubts about its ability to continue as a going concern for the next 12 months - The company's financial statements are prepared on a going concern basis, in accordance with Chinese Accounting Standards and relevant CSRC regulations[176](index=176&type=chunk) - Accounting is based on the accrual method, and all items, except financial instruments, are measured at historical cost[176](index=176&type=chunk) - The company evaluated its ability to continue as a going concern for 12 months from the end of the reporting period and found no significant doubts[177](index=177&type=chunk) [V. Significant Accounting Policies and Estimates](index=64&type=section&id=五、重要会计政策及会计估计) This section details the company's significant accounting policies and estimates, covering accounting period, operating cycle, functional currency, business combinations, consolidated financial statements, financial instrument classification and measurement, impairment, inventory, fixed assets, intangible assets, long-term asset impairment, revenue recognition, government grants, deferred tax assets/liabilities, and leases, along with key judgments and estimates made - The company's accounting period is the calendar year, its operating cycle is **12 months**, and its functional currency is RMB[178](index=178&type=chunk)[179](index=179&type=chunk)[180](index=180&type=chunk) - Financial assets are classified into three categories based on business model and contractual cash flow characteristics: measured at amortized cost, measured at fair value with changes recognized in other comprehensive income, and measured at fair value with changes recognized in profit or loss[208](index=208&type=chunk) - The company recognizes impairment provisions for financial assets (including notes receivable, accounts receivable, and accounts receivable financing) based on expected credit losses[218](index=218&type=chunk) - Revenue recognition principles involve recognizing revenue when customers obtain control of the related goods and determining the progress of performance obligations using either the input or output method based on the nature of the obligation[268](index=268&type=chunk)[269](index=269&type=chunk) - Significant accounting judgments and estimates involve revenue recognition, leases, financial asset impairment, inventory write-down provisions, fair value of financial instruments, long-term asset impairment provisions, depreciation and amortization, deferred tax assets, and income tax[283](index=283&type=chunk)[284](index=284&type=chunk)[285](index=285&type=chunk)[286](index=286&type=chunk)[287](index=287&type=chunk)[288](index=288&type=chunk)[289](index=289&type=chunk) [VI. Taxation](index=94&type=section&id=六、税项) The company's main taxes include VAT (13%, 9%, 6%), urban maintenance and construction tax (7%, 5%), corporate income tax (15%, 25%), education surcharges, local education surcharges, property tax, and stamp duty, with several subsidiaries enjoying a 15% corporate income tax rate as high-tech enterprises Major Tax Categories and Rates | Tax Type | Tax Basis | Tax Rate | | :--- | :--- | :--- | | Value-Added Tax | Taxable sales revenue | 13.00%, 9.00%, 6.00% | | Urban Maintenance and Construction Tax | Actual turnover tax paid | 7.00%, 5.00% | | Corporate Income Tax | Taxable income | 15.00%, 25.00% | | Education Surcharge | Actual turnover tax paid | 3.00% | | Local Education Surcharge | Actual turnover tax paid | 2.00% | | Property Tax | Based on value, 1.2% of the remaining value after a one-time deduction of 10% to 30% from the original value; based on rent, 12% of rental income | 1.2%, 12% | - Henan Kaiwang Electronic Technology Co Ltd, Henan Kaiwang New Material Research Institute Co Ltd, Chuzhou Lihong Precision Plastic Mold Co Ltd, and Dongguan Lihong Precision Technology Co Ltd enjoy high-tech enterprise tax incentives, with a corporate income tax rate of **15%**[291](index=291&type=chunk)[292](index=292&type=chunk) [VII. Notes to Consolidated Financial Statement Items](index=95&type=section&id=七、合并财务报表项目注释) This section details the specific conditions and changes of each consolidated financial statement item, noting significant period-end variations in monetary funds, accounts receivable, other receivables, short-term borrowings, employee compensation payable, taxes payable, and non-current liabilities due within one year, with accounts receivable at **390 million yuan**, inventory at **395 million yuan**, and short-term borrowings at **233 million yuan** Period-End Balances of Major Consolidated Financial Statement Items | Item | Period-End Balance (yuan) | | :--- | :--- | | Monetary Funds | 98,964,055.13 | | Accounts Receivable | 389,811,938.53 | | Inventory | 395,227,417.84 | | Short-term Borrowings | 233,133,200.92 | | Operating Revenue | 319,578,539.76 | | Net Profit | -34,902,967.18 | - Accounts receivable period-end balance was **390 million yuan**, an increase from the beginning of the period, primarily due to increased shipments[98](index=98&type=chunk)[62](index=62&type=chunk) - Inventory period-end balance was **395 million yuan**, a decrease from the beginning of the period, primarily due to the shipment of some initial stock in the first half of the year[108](index=108&type=chunk)[62](index=62&type=chunk) - Short-term borrowings period-end balance was **233 million yuan**, an increase from the beginning of the period, primarily due to increased bank borrowings[125](index=125&type=chunk)[63](index=63&type=chunk) - At the end of the reporting period, the company's total assets with restricted ownership or use rights amounted to **66,117,298.76 yuan**, primarily for margin deposits and financing pledges[66](index=66&type=chunk)[461](index=461&type=chunk) [VIII. Research and Development Expenses](index=149&type=section&id=八、研发支出) The company's total R&D expenditure for the current period was **21,541,933.82 yuan**, consistent with the prior year, primarily comprising personnel costs and direct material inputs, with all R&D expenses recognized as period costs and no capitalized R&D projects R&D Expenditure Details | Item | Current Period Amount (yuan) | Prior Period Amount (yuan) | | :--- | :--- | :--- | | Direct Material Input Costs | 5,674,809.65 | 5,838,393.90 | | Personnel Labor Costs | 11,707,415.14 | 12,018,918.53 | | Depreciation Expenses | 2,505,424.08 | 2,501,124.46 | | Intangible Asset Amortization | 17,395.23 | 17,395.23 | | Technical Service Fees | 965,482.34 | 245,562.90 | | Other Expenses Directly Related to R&D Activities | 671,407.38 | 714,697.44 | | Total | 21,541,933.82 | 21,336,092.46 | | Of which: Expensed R&D Expenditures | 21,541,933.82 | 21,336,092.46 | - All R&D expenditures for the current period were expensed, with no R&D projects meeting capitalization criteria[580](index=580&type=chunk)[581](index=581&type=chunk) [IX. Changes in Consolidation Scope](index=149&type=section&id=九、合并范围的变更) The company's consolidation scope changed during the reporting period due to the establishment of Ji'an Kaiwang Precision Industry Co Ltd on June 11, 2025, which was subsequently included in the consolidated financial statements, with no non-same-control or same-control business combinations or loss of control over subsidiaries occurring - Ji'an Kaiwang Precision Industry Co Ltd was newly established on June 11, 2025, and included in the company's consolidated financial statements from that date[594](index=594&type=chunk) - The company did not experience any non-same-control business combinations, same-control business combinations, or disposal of subsidiaries leading to loss of control during the current period[584](index=584&type=chunk)[590](index=590&type=chunk)[594](index=594&type=chunk) [X. Interests in Other Entities](index=153&type=section&id=十、在其他主体中的权益) The company's enterprise group comprises eight subsidiaries, including Shenzhen Kaiwang Electronics, Zhoukou Kaiwang Precision Industry, Zhoukou Haixin Precision Industry, Henan Kaiwang New Material Research Institute, Chongqing Hangda Electronics, Chuzhou Lihong Precision Plastic Mold, Dongguan Lihong Precision Technology, and the newly established Ji'an Kaiwang Precision Industry, with Chuzhou Lihong Precision Plastic Mold being a significant non-wholly-owned subsidiary Composition of Enterprise Group | Subsidiary Name | Registered Capital (yuan) | Shareholding Percentage (Direct) | Acquisition Method | | :--- | :--- | :--- | :--- | | Shenzhen Kaiwang Electronics Co Ltd | 36,630,000.00 | 100.00% | Business combination under common control | | Zhoukou Kaiwang Precision Industry Co Ltd | 5,000,000.00 | 100.00% | Newly established | | Zhoukou Haixin Precision Industry Co Ltd | 10,000,000.00 | 100.00% | Newly established | | Henan Kaiwang New Material Research Institute Co Ltd | 50,000,000.00 | 100.00% | Newly established | | Chongqing Hangda Electronics Co Ltd | 10,000,000.00 | 100.00% | Newly established | | Chuzhou Lihong Precision Plastic Mold Co Ltd | 10,000,000.00 | 51.00% | Acquisition | | Dongguan Lihong Precision Technology Co Ltd | 20,000,000.00 | 100.00% | Acquisition | | Ji'an Kaiwang Precision Industry Co Ltd | 30,000,000.00 | 100.00% | Newly established | Financial Information of Significant Non-Wholly-Owned Subsidiaries | Subsidiary Name | Minority Shareholding Percentage | Net Profit Attributable to Minority Shareholders in Current Period (yuan) | Minority Interest Balance at Period-End (yuan) | | :--- | :--- | :--- | :--- | | Chuzhou Lihong Precision Plastic Mold Co Ltd | 49.00% | 1,285,028.71 | 14,048,632.96 | [XI. Government Grants](index=158&type=section&id=十一、政府补助) During the reporting period, the company recognized **1,835,786.96 yuan** in government grants in profit or loss, primarily from export credit insurance subsidies, talent living allowances, intern subsidies, individual income tax handling fee refunds, and tax incentives, while deferred income included **5,186,157.28 yuan** in asset-related investment promotion support funds Government Grants Recognized in Profit or Loss | Accounting Account | Current Period Amount (yuan) | Prior Period Amount (yuan) | | :--- | :--- | :--- | | Other Income | 1,762,518.80 | 10,621,236.41 | | Non-Operating Income | 73,268.16 | 73,268.16 | Liabilities Related to Government Grants | Accounting Account | Beginning Balance (yuan) | Current Period Decrease (yuan) | Period-End Balance (yuan) | Related to Asset/Income | | :--- | :--- | :--- | :--- | :--- | | Deferred Income | 5,259,425.44 | 73,268.16 | 5,186,157.28 | Related to assets | [XII. Risks Related to Financial Instruments](index=159&type=section&id=十二、与金融工具相关的风险) The company's financial instruments, including fair value measured financial assets/liabilities, receivables, and payables, expose it to credit, liquidity, and market risks (interest rate and foreign exchange), which are managed through credit assessments, cash flow forecasting, and monitoring exchange rate fluctuations - The company's main financial instruments include financial assets and liabilities measured at fair value with changes recognized in profit or loss, receivables, and payables[612](index=612&type=chunk) - The company faces credit risk, liquidity risk, and market risk (interest rate risk and foreign exchange risk)[612](index=612&type=chunk)[616](index=616&type=chunk)[617](index=617&type=chunk) - Credit risk is primarily concentrated in monetary funds and receivables, with the top five accounts receivable customers accounting for **72.16%**[613](index=613&type=chunk) - Liquidity risk is managed through various financing methods such as shareholder loans, bank loans, equity financing, and cash flow forecasting[616](index=616&type=chunk) - Interest rate risk is minimal, and foreign exchange risk is managed by closely monitoring exchange rate fluctuations and considering hedging policies[617](index=617&type=chunk) [XIII. Disclosure of Fair Value](index=161&type=section&id=十三、公允价值的披露) At the end of the reporting period, the company's recurring fair value measurement items primarily consisted of accounts receivable financing, with a fair value of **70,947,623.20 yuan**, classified as Level 3 fair value measurement, where the book value approximates fair value due to short remaining maturities Period-End Fair Value of Assets and Liabilities Measured at Fair Value | Item | Level 3 Fair Value Measurement (yuan) | Total (yuan) | | :--- | :--- | :--- | | Accounts Receivable Financing | 70,947,623.20 | 70,947,623.20 | - Accounts receivable financing consists of bank acceptance bills and CCB Rongtong bills with short remaining maturities, where the book value approximates fair value, thus the book value is used as fair value[622](index=622&type=chunk) [XIV. Related Parties and Related Party Transactions](index=162&type=section&id=十四、关联方及关联交易) Shenzhen Kaiwang Investment Co Ltd is the company's parent, with Chen Haigang and Han Liucai as ultimate controlling parties, and other related parties include directors, supervisors, senior management, and their controlled entities; during the period, the company engaged in related party leases as a lessor and received related party guarantees, with accounts receivable from Henan Dongyuan Metallurgical Materials Co Ltd being a key related party receivable - The company's parent company is Shenzhen Kaiwang Investment Co Ltd, with Chen Haigang and Han Liucai as the ultimate controlling parties[623](index=623&type=chunk) - Other related parties include the company's directors, supervisors, senior management, and their controlled enterprises, such as Henan Dongyuan Metallurgical Materials Co Ltd and Henan Hengwei Environmental Technology Co Ltd[625](index=625&type=chunk) Related Party Lease Information (as Lessor) | Lessee Name | Type of Leased Asset | Lease Income Recognized in Current Period (yuan) | Lease Income Recognized in Prior Period (yuan) | | :--- | :--- | :--- | :--- | | Shenzhen Kaiwang Investment Co Ltd | Property | 15,000.00 | 15,

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[Important Notice, Table of Contents, and Definitions](index=2&type=section&id=%E7%AC%AC%E4%B8%80%E8%8A%82%20%E9%87%8D%E8%A6%81%E6%8F%90%E7%A4%BA%E3%80%81%E7%9B%AE%E5%BD%95%E5%92%8C%E9%87%8A%E4%B9%89) This section provides the important notice, table of contents, and definitions of key terms used throughout the report [Important Notice](index=2&type=section&id=%E9%87%8D%E8%A6%81%E6%8F%90%E7%A4%BA) The Board of Directors, directors, and senior management guarantee the truthfulness, accuracy, and completeness of the semi-annual report content, assuming legal responsibility - The company's Board of Directors, directors, and senior management guarantee the truthfulness, accuracy, and completeness of the semi-annual report content, assuming legal responsibility[4](index=4&type=chunk) - Company head Liao Tingjun, chief accountant Wang Bin, and head of accounting department Li Chun declare the financial report is true, accurate, and complete[4](index=4&type=chunk) - The company plans not to distribute cash dividends, bonus shares, or convert capital reserves into share capital[4](index=4&type=chunk) [Catalogue of Reference Documents](index=4&type=section&id=%E5%A4%87%E6%9F%A5%E6%96%87%E4%BB%B6%E7%9B%AE%E5%BD%95) Reference documents for this reporting period include signed and sealed financial statements and original announcements disclosed on the CSRC-designated website - Reference documents include financial statements signed and sealed by the company's head, chief accountant, and head of the accounting department[8](index=8&type=chunk) - Reference documents also include the originals and announcements of all company documents publicly disclosed on the CSRC-designated website during the reporting period[8](index=8&type=chunk) [Definitions](index=5&type=section&id=%E9%87%8A%E4%B9%89) This section defines common terms used in the report, such as Company, Lutianhua Group, Luzhou Development, Reporting Period, SZSE, CSRC, Hening Chemical, Jiuhe Shares, Import & Export Company, Agricultural Company, Hongtu Company, and Yicheng Company Major Definitions | Term | Definition | | :--- | :--- | | Company, The Company | Sichuan Lutianhua Co., Ltd | | Lutianhua Group | Lutianhua (Group) Co., Ltd | | Luzhou Development | Luzhou Industrial Development Investment Group Co., Ltd | | Reporting Period | First half of 2025 | | SZSE | Shenzhen Stock Exchange | | CSRC | China Securities Regulatory Commission | | Hening Chemical | Ningxia Hening Chemical Co., Ltd | | Jiuhe Shares | Jiuhe Co., Ltd | | Import & Export Company | Sichuan Lutianhua Import & Export Trading Co., Ltd | | Agricultural Company | Sichuan Lutianhua Agricultural Technology Service Co., Ltd | | Hongtu Company | Sichuan Lutianhua Hongtu Engineering Design Co., Ltd | | Yicheng Company | Luzhou Yicheng Automobile Trade Co., Ltd | [Company Profile and Key Financial Indicators](index=6&type=section&id=%E7%AC%AC%E4%BA%8C%E8%8A%82%20%E5%85%AC%E5%8F%B8%E7%AE%80%E4%BB%8B%E5%92%8C%E4%B8%BB%E8%A6%81%E8%B4%A2%E5%8A%A1%E6%8C%87%E6%A0%87) This section provides an overview of the company, its contact information, and key financial performance metrics for the reporting period [Company Profile](index=6&type=section&id=%E4%B8%80%E3%80%81%E5%85%AC%E5%8F%B8%E7%AE%80%E4%BB%8B) Sichuan Lutianhua Co., Ltd., with stock abbreviation "Lutianhua" and code 000912, is listed on the Shenzhen Stock Exchange, with Liao Tingjun as its legal representative Company Basic Information | Indicator | Content | | :--- | :--- | | Stock Abbreviation | Lutianhua | | Stock Code | 000912 | | Listed Stock Exchange | Shenzhen Stock Exchange | | Chinese Name | 四川泸天化股份有限公司 | | Legal Representative | Liao Tingjun | [Contact Person and Contact Information](index=6&type=section&id=%E4%BA%8C%E3%80%81%E8%81%94%E7%B3%BB%E4%BA%BA%E5%92%8C%E8%81%94%E7%B3%BB%E6%96%B9%E5%BC%8F) The company's Board Secretary is Wang Bin and Securities Affairs Representative is Li Chun, both located at Sichuan Lutianhua Co., Ltd., Luzhou City, Sichuan Province, with provided contact numbers and email addresses Contact Information | Position | Name | Contact Address | Phone | Email | | :--- | :--- | :--- | :--- | :--- | | Board Secretary | Wang Bin | Sichuan Lutianhua Co., Ltd., Luzhou City, Sichuan Province | 0830-4122575 | lthwbb@126.com | | Securities Affairs Representative | Li Chun | Sichuan Lutianhua Co., Ltd., Luzhou City, Sichuan Province | 0830-4120687 | 329761709@qq.com | [Other Information](index=6&type=section&id=%E4%B8%89%E3%80%81%E5%85%B6%E4%BB%96%E6%83%85%E5%86%B5) During the reporting period, there were no changes in the company's contact information, information disclosure, or other relevant materials - The company's registered address, office address, postal code, website, and email address remained unchanged during the reporting period[14](index=14&type=chunk) - Information disclosure and storage locations remained unchanged during the reporting period[14](index=14&type=chunk) - Other relevant information remained unchanged during the reporting period[14](index=14&type=chunk) [Key Accounting Data and Financial Indicators](index=6&type=section&id=%E5%9B%9B%E3%80%81%E4%B8%BB%E8%A6%81%E4%BC%9A%E8%AE%A1%E6%95%B0%E6%8D%AE%E5%92%8C%E8%B4%A2%E5%8A%A1%E6%8C%87%E6%A0%87) In the first half of 2025, the company's operating revenue decreased by **13.45%** year-on-year, net profit attributable to shareholders significantly dropped by **65.55%**, and net cash flow from operating activities sharply declined by **98.51%** Key Accounting Data and Financial Indicators for H1 2025 | Indicator | Current Period (RMB) | Prior Year Period (RMB) | YoY Change | | :--- | :--- | :--- | :--- | | Operating Revenue | 2,378,804,908.52 | 2,748,552,231.75 | -13.45% | | Net Profit Attributable to Shareholders of Listed Company | 46,102,567.96 | 133,842,477.11 | -65.55% | | Net Profit Attributable to Shareholders of Listed Company (Excluding Non-recurring Gains/Losses) | 10,358,470.42 | 63,098,589.19 | -83.58% | | Net Cash Flow from Operating Activities | 4,871,847.14 | 327,444,444.91 | -98.51% | | Basic Earnings Per Share (RMB/share) | 0.03 | 0.09 | -66.67% | | Diluted Earnings Per Share (RMB/share) | 0.03 | 0.09 | -66.67% | | Weighted Average Return on Net Assets | 0.71% | 2.05% | -1.34% | | **Period-End Indicators** | **Current Period-End (RMB)** | **Prior Year-End (RMB)** | **Period-End vs. Prior Year-End Change** | | Total Assets | 9,260,429,068.88 | 10,219,298,716.97 | -9.38% | | Net Assets Attributable to Shareholders of Listed Company | 6,423,743,139.33 | 6,373,725,760.72 | 0.78% | [Differences in Accounting Data under Domestic and Overseas Accounting Standards](index=7&type=section&id=%E4%BA%94%E3%80%81%E5%A2%83%E5%86%85%E5%A4%96%E4%BC%9A%E8%AE%A1%E5%87%86%E5%88%99%E4%B8%8B%E4%BC%9A%E8%AE%A1%E6%95%B0%E6%8D%AE%E5%B7%AE%E5%BC%82) The company reports no differences in net profit and net assets between financial statements prepared under international or overseas accounting standards and Chinese accounting standards - The company reports no differences in net profit and net assets between financial statements disclosed under international accounting standards and Chinese accounting standards[16](index=16&type=chunk) - The company reports no differences in net profit and net assets between financial statements disclosed under overseas accounting standards and Chinese accounting standards[16](index=16&type=chunk) [Non-recurring Gains and Losses and Amounts](index=7&type=section&id=%E5%85%AD%E3%80%81%E9%9D%9E%E7%BB%8F%E5%B8%B8%E6%80%A7%E6%8D%9F%E7%9B%8A%E9%A1%B9%E7%9B%AE%E5%8F%8A%E9%87%91%E9%A2%9D) During the reporting period, the company's total non-recurring gains and losses amounted to **35.74 million RMB**, primarily from disposal of non-current assets, government grants, fair value changes of financial assets/liabilities, and other non-operating income/expenses Non-recurring Gains and Losses and Amounts | Item | Amount (RMB) | | :--- | :--- | | Gains or losses from disposal of non-current assets | 356,994.08 | | Government grants recognized in current profit or loss | 15,585,646.05 | | Gains or losses from changes in fair value of financial assets and liabilities, and investment income from disposal of financial assets and liabilities, excluding effective hedging activities related to normal business operations | 13,758,965.91 | | Other non-operating income and expenses apart from the above | 14,269,467.07 | | Less: Income tax impact | 8,219,695.60 | | Less: Impact on minority interests (after tax) | 7,279.97 | | Total | 35,744,097.54 | [Management Discussion and Analysis](index=8&type=section&id=%E7%AC%AC%E4%B8%89%E8%8A%82%20%E7%AE%A1%E7%90%86%E5%B1%82%E8%AE%A8%E8%AE%BA%E4%B8%8E%E5%88%86%E6%9E%90) This section provides an in-depth analysis of the company's main business operations, core competencies, financial performance, and risk management strategies [Company's Main Business Activities During the Reporting Period](index=8&type=section&id=%E4%B8%80%E3%80%81%E6%8A%A5%E5%91%8A%E6%9C%9F%E5%86%85%E5%85%AC%E5%8F%B8%E4%BB%8E%E4%BA%8B%E7%9A%84%E4%B8%BB%E8%A6%81%E4%B8%9A%E5%8A%A1) The company's main business encompasses the production and sale of fertilizers like urea and compound fertilizers, as well as chemical products such as liquid ammonia, methanol, and nitric acid, maintaining strong market presence in Southwest China - The company's main business includes the production and sale of fertilizer products such as urea and compound fertilizers, as well as chemical products such as liquid ammonia, methanol, liquid ammonium nitrate, concentrated nitric acid, dilute nitric acid, dinitrogen tetroxide, and automotive urea[24](index=24&type=chunk) - The fertilizer industry is undergoing product transformation and upgrading, characterized by differentiated competition, green and low-carbon products, and enhanced industrial chain advantages[19](index=19&type=chunk) - The non-fertilizer chemical industry is in a development stage of product transformation and upgrading, shifting from basic chemicals to fine chemicals, with increasing refinement[19](index=19&type=chunk) - The company maintains a high market share and product influence in its traditional advantageous markets in Southwest China, with products like synthetic ammonia, ammonium nitrate, and nitric acid serving as price benchmarks for surrounding regional markets[30](index=30&type=chunk) [(I) Industry Development During the Reporting Period](index=8&type=section&id=(%E4%B8%80)%E6%8A%A5%E5%91%8A%E6%9C%9F%E5%86%85%E5%85%AC%E5%8F%B8%E6%89%80%E5%B1%9E%E8%A1%8C%E4%B8%9A%E5%8F%91%E5%B1%95%E6%83%85%E5%86%B5) The fertilizer industry is undergoing product transformation and differentiated competition, emphasizing green and low-carbon practices, while the non-fertilizer chemical sector is moving towards fine chemicals with improved quality and processes - The fertilizer industry is in a stage of product transformation and upgrading, with differentiated competition, where green and low-carbon environmental products are widely recognized, and forward-integrated companies' industrial chain advantages are further highlighted[19](index=19&type=chunk) - The non-fertilizer chemical industry is shifting towards fine chemicals, with strict quality requirements for front-end semi-finished products from end consumers, prompting enterprises to transform, upgrade, improve processes, and reduce costs[19](index=19&type=chunk) - In the first half of 2025, the urea industry experienced a tight supply-demand balance, with prices initially rising then falling, coal-based enterprises improving profitability, gas-based enterprises expanding losses, and exports being restricted[20](index=20&type=chunk) - In the first half of 2025, the compound fertilizer industry saw capacity expansion, but utilization rates were only **34.49%** (a **3.51%** year-on-year decrease), and export volumes decreased by **69.18%** year-on-year, with the industry shifting towards precision fertilization and environmentally friendly products[21](index=21&type=chunk) - In the first half of 2025, the methanol industry accelerated domestic substitution, with production increasing by **12%** year-on-year, but downstream demand for olefins slowed, and policies promoted the industry's green and intensive transformation[23](index=23&type=chunk) [(II) Company's Main Business During the Reporting Period](index=9&type=section&id=(%E4%BA%8C)%E6%8A%A5%E5%91%8A%E6%9C%9F%E5%86%85%E5%85%AC%E5%8F%B8%E4%B8%BB%E8%A6%81%E4%B8%9A%E5%8A%A1) The company's main business involves the production and sale of various fertilizer products, including urea and compound fertilizers, and chemical products such as liquid ammonia, methanol, and nitric acid - The company's main business includes the production and sale of fertilizer products such as urea and compound fertilizers, as well as chemical products such as liquid ammonia, methanol, liquid ammonium nitrate, concentrated nitric acid, dilute nitric acid, dinitrogen tetroxide, and automotive urea[24](index=24&type=chunk) [(III) Company's Main Products and Their Uses During the Reporting Period](index=9&type=section&id=(%E4%B8%89)%E6%8A%A5%E5%91%8A%E6%9C%9F%E5%86%85%E5%85%AC%E5%8F%B8%E4%B8%BB%E8%A6%81%E4%BA%A7%E5%93%81%E5%8F%8A%E5%85%B6%E7%94%A8%E9%80%94) The company's key products include urea for agriculture and industry, compound fertilizers for agricultural use, and methanol as a vital organic chemical raw material and fuel - Urea is primarily used as agricultural fertilizer and industrial raw material, mainly for direct application in agriculture and compound fertilizer production, and industrially for melamine and urea-formaldehyde glue production[25](index=25&type=chunk) - Compound fertilizers are mainly for direct agricultural use, aiming to balance crop nutrient demand with soil supply, improving fertilizer utilization and crop yield[25](index=25&type=chunk) - Methanol is an important organic chemical raw material, widely used in the production of olefins, formaldehyde, dimethyl ether, and also serves as an excellent energy source and automotive fuel[26](index=26&type=chunk) [(IV) Company's Business Model During the Reporting Period](index=10&type=section&id=(%E5%9B%9B)%E6%8A%A5%E5%91%8A%E6%9C%9F%E5%86%85%E5%85%AC%E5%8F%B8%E7%BB%8F%E8%90%A5%E6%A8%A1%E5%BC%8F) The company operates with independent procurement, production, and marketing systems, maintaining continuous fertilizer and chemical production, guided by a market- and customer-centric approach, supported by robust R&D platforms and collaborations - The company possesses independent and complete procurement, production, and marketing systems, with continuous and uninterrupted operation for fertilizer and chemical production[29](index=29&type=chunk) - The company has established a comprehensive sales, logistics, and after-sales service system and procedures, providing pre-sales, in-sales, and after-sales services[29](index=29&type=chunk) - The company owns national-level technology centers, postdoctoral research workstations, and other R&D platforms, and has signed strategic cooperation agreements with multiple domestic research institutes and universities to promote knowledge sharing and technology transfer[29](index=29&type=chunk) [(V) Company's Market Position During the Reporting Period](index=10&type=section&id=(%E4%BA%94)%E6%8A%A5%E5%91%8A%E6%9C%9F%E5%86%85%E5%85%AC%E5%8F%B8%E5%B8%82%E5%9C%BA%E5%9C%B0%E4%BD%8D) The company aims to build a nationally renowned brand, leveraging its complete chemical product value chain and professional marketing team to maintain a high market share and influence in Southwest China - The company is committed to building a well-known brand in Southwest China and nationwide, strengthening brand influence through brand strategy, internal management system construction, and high-quality agricultural technical services[30](index=30&type=chunk) - The company has passed environmental and ecological product certification for "Lutianhua" and "Gongnong Brand Urea," enjoying a high reputation in Southwest China and across the country[30](index=30&type=chunk) - The company's chemical product industrial chain is complete, with a professional marketing management team capable of flexibly adjusting production based on market conditions, maintaining a high market share and product influence in traditional advantageous markets in Southwest China[30](index=30&type=chunk) [(VI) Company's Main Performance Drivers During the Reporting Period](index=10&type=section&id=(%E5%85%AD)%E6%8A%A5%E5%91%8A%E6%9C%9F%E5%86%85%E5%85%AC%E5%8F%B8%E4%B8%BB%E8%A6%81%E7%9A%84%E4%B8%9A%E7%BB%A9%E9%A9%B1%E5%8A%A8%E5%9B%A0%E7%B4%A0) The company's performance is primarily driven by cost, output, sales volume, selling price, and safety production status, with management focusing on employee incentives, quality control, market trends, and execution to enhance results - The main variables determining the company's performance are cost, output, sales volume, selling price, and safety production status[31](index=31&type=chunk) - The process technology and production management level of production facilities determine the direct cost and output of the company's products; internal energy saving, consumption reduction, and cost control determine management costs[31](index=31&type=chunk) - The company's management relies on employee incentives, strict product quality control, accurate grasp of upstream and downstream market trends to hedge price risks, and improved institutional execution to drive cost reduction, increased output and sales, stable selling prices, and excellent safety production, indirectly driving company performance[31](index=31&type=chunk) [Core Competitiveness Analysis](index=10&type=section&id=%E4%BA%8C%E3%80%81%E6%A0%B8%E5%BF%83%E7%AB%9E%E4%BA%89%E5%8A%9B%E5%88%86%E6%9E%90) The company's core competitiveness stems from its strong brand, integrated industrial chain, extensive marketing network and services, and continuous innovation capabilities - The company is recognized as the "cradle of modern urea industry in China" and owns the "Gongnong" brand urea, a "China Famous Brand," leveraging its integrated "ammonia, acid, alcohol, fertilizer, hydrogen" industrial chain for optimized production and resource efficiency[32](index=32&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk) - Its wholly-owned subsidiary, Jiuhe, has established a dense marketing network across major fertilizer-consuming regions and is transforming into a comprehensive agricultural service provider, integrating R&D, production, sales, technical services, and cultivation[36](index=36&type=chunk) - The company has established the "Lutianhua Green Low-Carbon Technology R&D Center" and collaborates with domestic and international research institutions to build a "high-end full industrial chain green circular chemical enterprise," continuously advancing innovation[37](index=37&type=chunk) [(I) Brand Competitiveness](index=10&type=section&id=(%E4%B8%80)%E5%93%81%E7%89%8C%E7%AB%9E%E4%BA%89%E5%8A%9B) As the cradle of China's modern urea industry, the company boasts renowned brands like "Gongnong" urea, enjoying a strong reputation and market foundation nationwide - The company is China's first enterprise to use Western technology to produce synthetic ammonia and urea from natural gas, earning the title "cradle of China's modern urea industry"[32](index=32&type=chunk) - Its core brand, "Gongnong" brand urea, has been recognized as a "China Famous Brand Product" and "China Well-known Trademark," enjoying a good reputation and market foundation across 31 provinces, autonomous regions, and municipalities nationwide[34](index=34&type=chunk) [(II) Industrial Chain Competitiveness](index=11&type=section&id=(%E4%BA%8C)%E4%BA%A7%E4%B8%9A%E9%93%BE%E7%AB%9E%E4%BA%89%E5%8A%9B) The company optimizes its "ammonia, acid, alcohol, fertilizer, hydrogen" elements to enhance production, achieve energy savings, reduce emissions, and improve overall efficiency through deep integration with surrounding chemical enterprises - The company fully leverages its five key elements: ammonia (synthetic ammonia), acid (nitric acid), alcohol (methanol), fertilizer (urea, new high-efficiency compound fertilizers), and hydrogen (hydrogen gas) to optimize production scheduling[35](index=35&type=chunk) - Through deep integration in natural gas chemicals and deep processing of raw and auxiliary materials and products with surrounding chemical enterprises, the company maximizes raw material and energy utilization efficiency, comprehensively enhancing overall benefits[35](index=35&type=chunk) [(III) Marketing Network and Service Competitiveness](index=11&type=section&id=(%E4%B8%89)%E8%90%A5%E9%94%80%E7%BD%91%E7%BB%9C%E5%8F%8A%E6%9C%8D%E5%8A%A1%E7%AB%9E%E4%BA%89%E5%8A%9B) The company's wholly-owned subsidiary, Jiuhe, has established an extensive marketing network and is transforming towards comprehensive agricultural services, integrating R&D, production, sales, technical services, and cultivation - Jiuhe, a wholly-owned subsidiary of the company, has established a dense marketing network with sales and after-sales service outlets across major fertilizer-consuming regions nationwide, comprising ten departments, one institute, three bases, four battle zones, and thirteen marketing teams[36](index=36&type=chunk) - The company focuses on building five major platforms: "New Agricultural Chemical R&D Platform," "Specialty Fertilizer Business Platform," "Agricultural Technology Service Platform," "New Agricultural Chemical Business + E-commerce Platform," and "Agricultural Planting Demonstration Platform"[36](index=36&type=chunk) - This initiative promotes the company's transformation from fertilizer production and sales to a comprehensive agricultural chemical service model that integrates R&D, production, sales, technical services, and cultivation for circular development[36](index=36&type=chunk) [(IV) Innovation Competitiveness](index=11&type=section&id=(%E5%9B%9B)%E5%88%9B%E6%96%B0%E7%AB%9E%E4%BA%89%E5%8A%9B) The company actively collaborates with domestic and international research institutions, establishing the "Lutianhua Green Low-Carbon Technology R&D Center" to foster innovation and build a high-end green circular chemical enterprise - While strengthening its talent team, the company actively collaborates with domestic and international research institutes to establish R&D platforms and conduct scientific research and development[37](index=37&type=chunk) - It has established the "Lutianhua Green Low-Carbon Technology R&D Center" and invited experts from research institutes to serve as external experts, focusing on building a "high-end full industrial chain green circular chemical enterprise"[37](index=37&type=chunk) [Main Business Analysis](index=11&type=section&id=%E4%B8%89%E3%80%81%E4%B8%BB%E8%90%A5%E4%B8%9A%E5%8A%A1%E5%88%86%E6%9E%90) During the reporting period, the company's operating revenue decreased by **13.45%** due to lower product prices, leading to a **65.55%** decline in net profit attributable to the parent company and a **98.51%** drop in net cash flow from operating activities Major Financial Data Year-on-Year Changes | Indicator | Current Period (RMB) | Prior Year Period (RMB) | YoY Change | Reason for Change | | :--- | :--- | :--- | :--- | :--- | | Operating Revenue | 2,378,804,908.52 | 2,748,552,231.75 | -13.45% | | | Operating Cost | 2,179,502,745.80 | 2,388,379,296.05 | -8.75% | | | Administrative Expenses | 109,305,810.04 | 218,725,512.72 | -50.03% | Primarily due to the reclassification of some routine equipment repair costs to manufacturing costs and enhanced expense control | | Financial Expenses | -14,764,372.34 | -30,333,191.72 | -51.33% | Primarily due to a decrease in interest income | | Net Cash Flow from Operating Activities | 4,871,847.14 | 327,444,444.91 | -98.51% | Primarily due to a decrease in product prices, leading to reduced operating cash inflows | | Net Cash Flow from Investing Activities | 544,667,621.06 | -342,760,806.67 | 258.91% | Primarily due to the recovery of wealth management product investments and a reduction in such investments during the reporting period | Operating Revenue Composition (by Industry, by Product) | Category | Current Period Amount (RMB) | Proportion of Operating Revenue | Prior Year Period Amount (RMB) | Proportion of Operating Revenue | | :--- | :--- | :--- | :--- | :--- | | **By Industry** | | | | | | Fertilizer Industry | 1,683,114,129.54 | 70.75% | 1,839,632,330.75 | 66.93% | | Chemical Industry | 682,905,402.14 | 28.71% | 855,869,599.86 | 31.14% | | **By Product** | | | | | | Fertilizer Products | 1,683,114,129.54 | 70.75% | 1,839,632,330.75 | 66.93% | | Chemical Products | 682,905,402.14 | 28.71% | 855,869,599.86 | 31.14% | Industries, Products, or Regions Accounting for Over 10% of Company's Operating Revenue or Operating Profit | Category | Operating Revenue (RMB) | Operating Cost (RMB) | Gross Margin | YoY Change in Operating Revenue | YoY Change in Operating Cost | YoY Change in Gross Margin | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **By Industry** | | | | | | | | Fertilizer Industry | 1,683,114,129.54 | 1,546,068,967.12 | 8.14% | -8.51% | 2.15% | -9.58% | | Chemical Industry | 682,905,402.14 | 626,537,821.77 | 8.25% | -20.21% | -25.00% | 5.87% | | **By Product** | | | | | | | | Fertilizer Products | 1,683,114,129.54 | 1,546,068,967.12 | 8.14% | -8.51% | 2.15% | -9.58% | | Chemical Products | 682,905,402.14 | 626,537,821.77 | 8.25% | -20.21% | -25.00% | 5.87% | | **By Region** | | | | | | | | Domestic Sales | 2,378,804,908.52 | 2,179,502,745.80 | 8.38% | -13.45% | -8.75% | -4.14% | [Non-Main Business Analysis](index=12&type=section&id=%E5%9B%9B%E3%80%81%E9%9D%9E%E4%B8%BB%E8%90%A5%E4%B8%9A%E5%88%86%E6%9E%90) During the reporting period, the company had no non-main business analysis content [Analysis of Assets and Liabilities](index=13&type=section&id=%E4%BA%94%E3%80%81%E8%B5%84%E4%BA%A7%E5%8F%8A%E8%B4%9F%E5%80%BA%E7%8A%B6%E5%86%B5%E5%88%86%E6%9E%90) At the end of the reporting period, the company's total assets were **9.26 billion RMB**, a **9.38%** decrease from the previous year-end, with significant changes in various asset and liability categories Major Changes in Asset Composition | Item | Current Period-End Amount (RMB) | Proportion of Total Assets | Prior Year-End Amount (RMB) | Proportion of Total Assets | Change in Proportion | | :--- | :--- | :--- | :--- | :--- | :--- | | Cash and Bank Balances | 1,991,281,697.61 | 21.50% | 2,191,758,926.98 | 21.45% | 0.05% | | Inventories | 716,773,771.38 | 7.74% | 665,719,723.72 | 6.51% | 1.23% | | Fixed Assets | 3,669,669,235.00 | 39.63% | 3,772,614,024.12 | 36.92% | 2.71% | | Construction in Progress | 730,279,779.91 | 7.89% | 601,436,047.18 | 5.89% | 2.00% | | Long-term Borrowings | 85,693,174.08 | 0.93% | 186,660,206.82 | 1.83% | -0.90% | Assets and Liabilities Measured at Fair Value | Item | Beginning Balance (RMB) | Amount Purchased in Current Period (RMB) | Amount Sold in Current Period (RMB) | Ending Balance (RMB) | | :--- | :--- | :--- | :--- | :--- | | Trading Financial Assets | 1,298,285,837.86 | 580,000,000.00 | 1,280,000,000.00 | 598,285,837.86 | | Receivables Financing | 4,964,935.73 | 51,920,448.87 | | 56,885,384.60 | | Other Equity Instrument Investments | 23,506,895.69 | | | 27,660,362.75 | | Subtotal of Financial Assets | 1,326,757,669.28 | 631,920,448.87 | 1,280,000,000.00 | 682,831,585.21 | Assets with Restricted Ownership or Use Rights (Period-End) | Item | Book Balance (RMB) | Book Value (RMB) | Restriction Type | Restriction Details | | :--- | :--- | :--- | :--- | :--- | | Cash and Bank Balances | 1,006,178,514.05 | 1,006,178,514.05 | Pledge | Bill deposit | | Cash and Bank Balances | 50,000,000.00 | 50,000,000.00 | Freeze | Judicial freeze | | Fixed Assets | 2,154,760,523.49 | 767,910,559.00 | Mortgage | Loan mortgage | | Total | 3,232,164,260.47 | 1,845,314,295.98 | | | [Investment Analysis](index=14&type=section&id=%E5%85%AD%E3%80%81%E6%8A%95%E8%B5%84%E7%8A%B6%E5%86%B5%E5%88%86%E6%9E%90) During the reporting period, the company's total investment was **154 million RMB**, a **6.08%** decrease year-on-year, with a significant ongoing green fine chemical project Overall Investment Situation | Indicator | Amount (RMB) | | :--- | :--- | | Investment Amount for the Reporting Period | 153,934,750.22 | | Investment Amount for the Prior Year Period | 163,893,484.80 | | Change Rate | -6.08% | Significant Non-Equity Investments in Progress During the Reporting Period | Project Name | Investment Method | Industry | Amount Invested in Current Period (RMB) | Cumulative Investment Amount as of Period-End (RMB) | Project Progress | | :--- | :--- | :--- | :--- | :--- | :--- | | 100,000 tons/year Green Fine Chemical Project | Self-built | Fine Chemical Industry | 30,794,095.75 | 30,794,095.75 | 5.00% | [Disposal of Major Assets and Equity](index=15&type=section&id=%E4%B8%83%E3%80%81%E9%87%8D%E5%A4%A7%E8%B5%84%E4%BA%A7%E5%92%8C%E8%82%A1%E6%9D%83%E5%87%BA%E5%94%AE) During the reporting period, the company had no significant asset or equity disposals [Analysis of Major Holding and Participating Companies](index=15&type=section&id=%E5%85%AB%E3%80%81%E4%B8%BB%E8%A6%81%E6%8E%A7%E8%82%A1%E5%8F%82%E8%82%A1%E5%85%AC%E5%8F%B8%E5%88%86%E6%9E%90) The company's key subsidiaries, Jiuhe Company and Hening Company, reported operating revenues of **2.48 billion RMB** and **760 million RMB**, with net profits of **55.89 million RMB** and **90.33 million RMB**, respectively Major Subsidiaries and Participating Companies with Over 10% Impact on Company's Net Profit | Company Name | Company Type | Main Business | Registered Capital (RMB) | Total Assets (RMB) | Net Assets (RMB) | Operating Revenue (RMB) | Operating Profit (RMB) | Net Profit (RMB) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Jiuhe Company | Subsidiary | Nitrogen fertilizer manufacturing, sales | 200,000,000.00 | 2,690,456,866.18 | 666,425,678.27 | 2,479,861,224.85 | 64,351,643.33 | 55,890,087.30 | | Hening Company | Subsidiary | Nitrogen fertilizer manufacturing | 1,910,000,000.00 | 4,038,566,288.62 | 991,622,011.53 | 759,793,210.59 | 102,312,680.27 | 90,328,304.08 | [Company's Controlled Structured Entities](index=16&type=section&id=%E4%B9%9D%E3%80%81%E5%85%AC%E5%8F%B8%E6%8E%A7%E5%88%B6%E7%9A%84%E7%BB%93%E6%9E%84%E5%8C%96%E4%B8%BB%E4%BD%93%E6%83%85%E5%86%B5) During the reporting period, the company had no controlled structured entities [Risks Faced by the Company and Countermeasures](index=16&type=section&id=%E5%8D%81%E3%80%81%E5%85%AC%E5%8F%B8%E9%9D%A2%E4%B8%B4%E7%9A%84%E9%A3%8E%E9%99%A9%E5%92%8C%E5%BA%94%E5%AF%B9%E6%8E%AA%E6%96%BD) The company addresses risks from rising costs, declining product prices, and environmental regulations through enhanced production control, optimized marketing strategies, and continuous safety and environmental standardization - The company's main raw material, natural gas, faces continuous price increase risks, impacting product costs and profit margins; the company manages this through multi-dimensional, full-process production control, reducing material consumption, strengthening internal control, and continuously cutting non-production expenses[54](index=54&type=chunk) - The domestic urea market faces significant oversupply pressure, with the company's main product market prices entering a downward cycle; the company strengthens market analysis, refines marketing strategies, adjusts market layout, and increases promotion and sales of high-value-added products to enhance market share[55](index=55&type=chunk) - The industry in which the company operates carries certain safety and environmental risks, with increasingly stringent environmental policies; the company continuously promotes safety and environmental standardization, vigorously conducts safety education and training, strictly controls safety and environmental risks, and achieves stable compliance discharge of "three wastes" through a circular economy model[56](index=56&type=chunk) [Formulation and Implementation of Market Value Management System and Valuation Enhancement Plan](index=16&type=section&id=%E5%8D%81%E4%B8%80%E3%80%81%E5%B8%82%E5%80%BC%E7%AE%A1%E7%90%86%E5%88%B6%E5%BA%A6%E5%92%8C%E4%BC%B0%E5%80%BC%E6%8F%90%E5%8D%87%E8%AE%A1%E5%88%92%E7%9A%84%E5%88%B6%E5%AE%9A%E8%90%BD%E5%AE%9E%E6%83%85%E5%86%B5) The company has not formulated a market value management system nor disclosed a valuation enhancement plan - The company has not formulated a market value management system[57](index=57&type=chunk) - The company has not disclosed a valuation enhancement plan[57](index=57&type=chunk) [Implementation of "Quality and Return Dual Improvement" Action Plan](index=17&type=section&id=%E5%8D%81%E4%BA%8C%E3%80%81%E2%80%9C%E8%B4%A8%E9%87%8F%E5%9B%9E%E6%8A%A5%E5%8F%8C%E6%8F%90%E5%8D%87%E2%80%9D%E8%A1%8C%E5%8A%A8%E6%96%B9%E6%A1%88%E8%B4%AF%E5%BD%BB%E8%90%BD%E5%AE%9E%E6%83%85%E5%86%B5) The company has not disclosed an announcement regarding the "Quality and Return Dual Improvement" action plan - The company has not disclosed an announcement regarding the "Quality and Return Dual Improvement" action plan[58](index=58&type=chunk) [Corporate Governance, Environment, and Society](index=18&type=section&id=%E7%AC%AC%E5%9B%9B%E8%8A%82%20%E5%85%AC%E5%8F%B8%E6%B2%BB%E7%90%86%E3%80%81%E7%8E%AF%E5%A2%83%E5%92%8C%E7%A4%BE%E4%BC%9A) This section details changes in the company's governance, its environmental information disclosure, and its social responsibility initiatives [Changes in Company Directors, Supervisors, and Senior Management](index=18&type=section&id=%E4%B8%80%E3%80%81%E5%85%AC%E5%8F%B8%E8%91%A3%E4%BA%8B%E3%80%81%E7%9B%91%E4%BA%8B%E3%80%81%E9%AB%98%E7%BA%A7%E7%AE%A1%E7%90%86%E4%BA%BA%E5%91%98%E5%8F%98%E5%8A%A8%E6%83%85%E5%86%B5) During the reporting period, independent director Yi Zhi resigned due to term expiration, and Ma Weimin was elected as an independent director for the eighth board of directors - Independent director Yi Zhi resigned due to serving six consecutive years as an independent director, in accordance with relevant regulations[60](index=60&type=chunk) - Ma Weimin was elected as an independent director for the company's eighth board of directors, approved at the 2024 annual general meeting[60](index=60&type=chunk) [Profit Distribution and Capital Reserve Conversion to Share Capital in Current Period](index=18&type=section&id=%E4%BA%8C%E3%80%81%E6%9C%AC%E6%8A%A5%E5%91%8A%E6%9C%9F%E5%88%A9%E6%B6%A6%E5%88%86%E9%85%8D%E5%8F%8A%E8%B5%84%E6%9C%AC%E5%85%AC%E7%A7%AF%E9%87%91%E8%BD%AC%E5%A2%9E%E8%82%A1%E6%9C%AC%E6%83%85%E5%86%B5) During the reporting period, the company had no profit distribution or capital reserve conversion to share capital [Implementation of Equity Incentive Plans, Employee Stock Ownership Plans, or Other Employee Incentive Measures](index=18&type=section&id=%E4%B8%89%E3%80%81%E5%85%AC%E5%8F%B8%E8%82%A1%E6%9D%83%E6%BF%80%E5%8A%B1%E8%AE%A1%E5%88%92%E3%80%81%E5%91%98%E5%B7%A5%E6%8C%81%E8%82%A1%E8%AE%A1%E5%88%92%E6%88%96%E5%85%B6%E4%BB%96%E5%91%98%E5%B7%A5%E6%BF%80%E5%8A%B1%E6%8E%AA%E6%96%BD%E7%9A%84%E5%AE%9E%E6%96%BD%E6%83%85%E5%86%B5) During the reporting period, the company had no implementation of equity incentive plans, employee stock ownership plans, or other employee incentive measures [Environmental Information Disclosure](index=18&type=section&id=%E5%9B%9B%E3%80%81%E7%8E%AF%E5%A2%83%E4%BF%A1%E6%81%AF%E6%8A%AB%E9%9C%B2%E6%83%85%E5%86%B5) The company and its main subsidiaries, Sichuan Lutianhua Co., Ltd. and Ningxia Hening Chemical Co., Ltd., are included in the list of enterprises required to disclose environmental information, accessible via relevant systems - The listed company and its main subsidiaries, Sichuan Lutianhua Co., Ltd. and Ningxia Hening Chemical Co., Ltd., are included in the list of enterprises required to disclose environmental information by law[61](index=61&type=chunk) - Environmental information disclosure reports can be accessed through the Enterprise Environmental Information Disclosure System (Sichuan) and (Ningxia)[61](index=61&type=chunk) [Social Responsibility Performance](index=18&type=section&id=%E4%BA%94%E3%80%81%E7%A4%BE%E4%BC%9A%E8%B4%A3%E4%BB%BB%E6%83%85%E5%86%B5) In the first half of the year, the company actively fulfilled its social responsibilities through various initiatives, including party building, industrial assistance, visits, and charitable activities - The company consistently upholds the core philosophy of "contributing to and giving back to society," integrating social responsibility into its corporate development strategy and encouraging all employees to actively participate in public welfare activities[62](index=62&type=chunk) - The company dispatched **5** first secretaries (team members) to villages for regular assistance work and specifically studied targeted assistance tasks[63](index=63&type=chunk) - The company formed agricultural technology service teams, providing over **500** on-site guidance sessions, handling over **1,000** phone consultations, conducting over **200** agricultural technology training sessions, and releasing **32** technical videos[65](index=65&type=chunk) - The company donated **21 tons** of chili fertilizer to Jiaoyuan Village in Gulin County, **12 tons** of compound fertilizer to Zhaoping Village in Naxi District, **5.5 tons** to Yunhui Village, and **30 tons** of urea to Shagou Village in Xiji County, Ningxia[65](index=65&type=chunk) - The company organized a "Charity Day Donation" event, raising a total of **208,000 RMB**, and an employee blood donation drive, collecting a total of **17,600 milliliters** of blood[67](index=67&type=chunk) - Through the Ningxia Poverty Alleviation Foundation platform, the company conducted educational support activities, donating learning supplies worth **36,000 RMB** to rural schools[67](index=67&type=chunk) [Significant Matters](index=20&type=section&id=%E7%AC%AC%E4%BA%94%E8%8A%82%20%E9%87%8D%E8%A6%81%E4%BA%8B%E9%A1%B9) This section covers significant matters including commitments, related party transactions, litigation, and major contracts [Commitments Fulfilled and Overdue Unfulfilled Commitments by Actual Controller, Shareholders, Related Parties, Acquirers, and the Company](index=20&type=section&id=%E4%B8%80%E3%80%81%E5%85%AC%E5%8F%B8%E5%AE%9E%E9%99%85%E6%8E%A7%E5%88%B6%E4%BA%BA%E3%80%81%E8%82%A1%E4%B8%9C%E3%80%81%E5%85%B3%E8%81%94%E6%96%B9%E3%80%81%E6%94%B6%E8%B4%AD%E4%BA%BA%E4%BB%A5%E5%8F%8A%E5%85%AC%E5%8F%B8%E7%AD%89%E6%89%BF%E8%AF%BA%E7%9B%B8%E5%85%B3%E6%96%B9%E5%9C%A8%E6%8A%A5%E5%91%8A%E6%9C%9F%E5%86%85%E5%B1%A5%E8%A1%8C%E5%AE%8C%E6%AF%95%E5%8F%8A%E6%88%AA%E8%87%B3%E6%8A%A5%E5%91%8A%E6%9C%9F%E6%9C%AB%E8%B6%85%E6%9C%9F%E6%9C%AA%E5%B1%A5%E8%A1%8C%E5%AE%8C%E6%AF%95%E7%9A%84%E6%89%BF%E8%AF%BA%E4%BA%8B%E9%A1%B9) During the reporting period, there were no commitments fulfilled or overdue unfulfilled commitments by the company's actual controller, shareholders, related parties, acquirers, or the company itself [Non-Operating Fund Occupation by Controlling Shareholder and Other Related Parties](index=20&type=section&id=%E4%BA%8C%E3%80%81%E6%8E%A7%E8%82%A1%E8%82%A1%E4%B8%9C%E5%8F%8A%E5%85%B6%E4%BB%96%E5%85%B3%E8%81%94%E6%96%B9%E5%AF%B9%E4%B8%8A%E5%B8%82%E5%85%AC%E5%8F%B8%E7%9A%84%E9%9D%9E%E7%BB%8F%E8%90%A5%E6%80%A7%E5%8D%A0%E7%94%A8%E8%B5%84%E9%87%91%E6%83%85%E5%86%B5) During the reporting period, there was no non-operating fund occupation by the company's controlling shareholder or other related parties [Irregular External Guarantees](index=20&type=section&id=%E4%B8%89%E3%80%81%E8%BF%9D%E8%A7%84%E5%AF%B9%E5%A4%96%E6%8B%85%E4%BF%9D%E6%83%85%E5%86%B5) During the reporting period, the company had no irregular external guarantees [Appointment and Dismissal of Accounting Firms](index=20&type=section&id=%E5%9B%9B%E3%80%81%E8%81%98%E4%BB%BB%E3%80%81%E8%A7%A3%E8%81%98%E4%BC%9A%E8%AE%A1%E5%B8%88%E4%BA%8B%E5%8A%A1%E6%89%80%E6%83%85%E5%86%B5) The company's semi-annual financial report was not audited - The company's semi-annual financial report was not audited[70](index=70&type=chunk) [Board of Directors' and Supervisory Board's Explanations on "Non-Standard Audit Report" for the Current Period](index=20&type=section&id=%E4%BA%94%E3%80%81%E8%91%A3%E4%BA%8B%E4%BC%9A%E3%80%81%E7%9B%91%E4%BA%8B%E4%BC%9A%E5%AF%B9%E4%BC%9A%E8%AE%A1%E5%B8%88%E4%BA%8B%E5%8A%A1%E6%89%80%E6%9C%AC%E6%8A%A5%E5%91%8A%E6%9C%9F%E2%80%9C%E9%9D%9E%E6%A0%87%E5%87%86%E5%AE%A1%E8%AE%A1%E6%8A%A5%E5%91%8A%E2%80%9D%E7%9A%84%E8%AF%B4%E6%98%8E) During the reporting period, the company had no non-standard audit report, thus no explanations from the Board of Directors or Supervisory Board [Board of Directors' Explanations on "Non-Standard Audit Report" for the Previous Year](index=20&type=section&id=%E5%85%AD%E3%80%81%E8%91%A3%E4%BA%8B%E4%BC%9A%E5%AF%B9%E4%B8%8A%E5%B9%B4%E5%BA%A6%E2%80%9C%E9%9D%9E%E6%A0%87%E5%87%86%E5%AE%A1%E8%AE%A1%E6%8A%A5%E5%91%8A%E2%80%9D%E7%9B%B8%E5%85%B3%E6%83%85%E5%86%B5%E7%9A%84%E8%AF%B4%E6%98%8E) During the reporting period, the company had no non-standard audit report for the previous year, thus no explanations from the Board of Directors [Bankruptcy and Reorganization Matters](index=20&type=section&id=%E4%B8%83%E3%80%81%E7%A0%B4%E4%BA%A7%E9%87%8D%E6%95%B4%E7%9B%B8%E5%85%B3%E4%BA%8B%E9%A1%B9) During the reporting period, the company had no bankruptcy and reorganization matters [Litigation Matters](index=20&type=section&id=%E5%85%AB%E3%80%81%E8%AF%89%E8%AE%BC%E4%BA%8B%E9%A1%B9) During the reporting period, the company had no significant litigation or arbitration matters, nor other litigation matters [Penalties and Rectification Status](index=20&type=section&id=%E4%B9%9D%E3%80%81%E7%BD%9A%E7%BD%9A%E5%8F%8A%E6%95%B4%E6%94%B9%E6%83%85%E5%86%B5) During the reporting period, the company had no penalties or rectification situations [Integrity Status of the Company, its Controlling Shareholder, and Actual Controller](index=20&type=section&id=%E5%8D%81%E3%80%81%E5%85%AC%E5%8F%B8%E5%8F%8A%E5%85%B6%E6%8E%A7%E8%82%A1%E8%82%A1%E4%B8%9C%E3%80%81%E5%AE%9E%E9%99%85%E6%8E%A7%E5%88%B6%E4%BA%BA%E7%9A%84%E8%AF%9A%E4%BF%A1%E7%8A%B6%E5%86%B5) During the reporting period, the company, its controlling shareholder, and actual controller had no integrity issues [Significant Related Party Transactions](index=21&type=section&id=%E5%8D%81%E4%B8%80%E3%80%81%E9%87%8D%E5%A4%A7%E5%85%B3%E8%81%94%E4%BA%A4%E6%98%93) During the reporting period, the company had no significant related party transactions, including those related to daily operations, asset/equity acquisitions/disposals, joint external investments, related party debts, or transactions with affiliated financial companies [Major Contracts and Their Performance](index=21&type=section&id=%E5%8D%81%E4%BA%8C%E3%80%81%E9%87%8D%E5%A4%A7%E5%90%88%E5%90%8C%E5%8F%8A%E5%85%B6%E5%B1%A5%E8%A1%8C%E6%83%85%E5%86%B5) The company recognized right-of-use assets for leases of production facilities, land, and buildings, with significant external guarantees totaling **855.09 million RMB**, representing **13.31%** of net assets, and holds **18.29 million RMB** in wealth management products Leased Asset Right-of-Use Status | Item | Original Book Value (RMB) | Accumulated Depreciation (RMB) | Book Value (RMB) | | :--- | :--- | :--- | :--- | | Production Facilities | 323,520,313.71 | 145,800,280.80 | 177,720,032.91 | | Land | 5,890,630.33 | 2,208,986.40 | 3,681,643.93 | | Buildings and Structures | 24,158,010.00 | 1,207,900.56 | 22,950,109.44 | Company and its Subsidiaries' External Guarantees (Excluding Guarantees to Subsidiaries) | Guarantor Name | Guarantee Limit (10,000 RMB) | Actual Guarantee Amount (10,000 RMB) | Guarantee Type | Guarantee Period | Fulfilled | | :--- | :--- | :--- | :--- | :--- | :--- | | Sichuan Chemical Holdings (Group) Co., Ltd | 102,205.88 | 102,205.88 | Joint and several liability guarantee | 8 years | No | Company's Guarantees to Subsidiaries (Partial) | Guarantor Name | Guarantee Limit (10,000 RMB) | Actual Guarantee Amount (10,000 RMB) | Guarantee Type | Guarantee Period | Fulfilled | | :--- | :--- | :--- | :--- | :--- | | Ningxia Hening Chemical Co., Ltd | 111,314.18 | 64,989.75 | Joint and several liability guarantee | 8 years | No | | Sichuan Lutianhua Import & Export Trading Co., Ltd | 150,000 | 8,000 | Joint and several liability guarantee | 6 months | No | | Jiuhe Co., Ltd | 30,000 | 1,400 | Joint and several liability guarantee | 6 months | No | - As of the end of the reporting period, the total approved guarantee limit was **3.94 billion RMB**, with an actual guarantee balance of **855.09 million RMB**, accounting for **13.31%** of the company's net assets[75](index=75&type=chunk) - The debt guarantee balance provided for guaranteed parties with an asset-liability ratio exceeding **70%** was **601.54 million RMB**[75](index=75&type=chunk) Entrusted Wealth Management The company holds broker wealth management products with an outstanding balance of **18.29 million RMB** at period-end, funded by its own capital, and no overdue unrecovered amounts Entrusted Wealth Management Status | Specific Type | Source of Entrusted Wealth Management Funds | Outstanding Balance (10,000 RMB) | | :--- | :--- | :--- | | Broker Wealth Management Products | Own funds | 1,828.58 | | Total | | 1,828.58 | - The company has no high-risk entrusted wealth management products with significant individual amounts or low safety and poor liquidity[78](index=78&type=chunk) - No situations have arisen where entrusted wealth management is expected to be unrecoverable or where other impairment may occur[78](index=78&type=chunk) Other Major Contracts During the reporting period, the company had no other major contracts [Explanation of Other Significant Matters](index=24&type=section&id=%E5%8D%81%E4%B8%89%E3%80%81%E5%85%B6%E4%BB%96%E9%87%8D%E5%A4%A7%E4%BA%8B%E9%A1%B9%E7%9A%84%E8%AF%B4%E6%98%8E) During the reporting period, the company had no other significant matters to explain [Significant Matters of Company Subsidiaries](index=24&type=section&id=%E5%8D%81%E5%9B%9B%E3%80%81%E5%85%AC%E5%8F%B8%E5%AD%90%E5%85%AC%E5%8F%B8%E9%87%8D%E5%A4%A7%E4%BA%8B%E9%A1%B9) During the reporting period, the company's subsidiaries had no significant matters [Share Changes and Shareholder Information](index=25&type=section&id=%E7%AC%AC%E5%85%AD%E8%8A%82%20%E8%82%A1%E4%BB%BD%E5%8F%98%E5%8A%A8%E5%8F%8A%E8%82%A1%E4%B8%9C%E6%83%85%E5%86%B5) This section details changes in the company's share capital, shareholder structure, and related information [Share Change Status](index=25&type=section&id=%E4%B8%80%E3%80%81%E8%82%A1%E4%BB%BD%E5%8F%98%E5%8A%A8%E6%83%85%E5%86%B5) During the reporting period, the company's total share capital remained unchanged at **1.568 billion** unrestricted shares, with a completed share repurchase plan for equity incentives Share Change Status | Item | Number of Shares Before Change (shares) | Proportion Before Change | Net Increase/Decrease in Current Change (shares) | Number of Shares After Change (shares) | Proportion After Change | | :--- | :--- | :--- | :--- | :--- | :--- | | II. Unrestricted Shares | 1,568,000,000 | 100.00% | 0 | 1,568,000,000 | 100.00% | | III. Total Shares | 1,568,000,000 | 100.00% | 0 | 1,568,000,000 | 100.00% | - The company completed its share repurchase plan on June 19, 2025, having repurchased a total of **23,595,637 shares**, representing **1.505%** of the current total share capital, with a total transaction amount of **89.05 million RMB**[81](index=81&type=chunk) - These repurchased shares will be used for equity incentives[81](index=81&type=chunk) [Securities Issuance and Listing Status](index=26&type=section&id=%E4%BA%8C%E3%80%81%E8%AF%81%E5%88%B8%E5%8F%91%E8%A1%8C%E4%B8%8E%E4%B8%8A%E5%B8%82%E6%83%85%E5%86%B5) During the reporting period, the company had no securities issuance or listing activities [Company Shareholder Numbers and Shareholding Status](index=26&type=section&id=%E4%B8%89%E3%80%81%E5%85%AC%E5%8F%B8%E8%82%A1%E4%B8%9C%E6%95%B0%E9%87%8F%E5%8F%8A%E6%8C%81%E8%82%A1%E6%83%85%E5%86%B5) At the end of the reporting period, the company had **41,760** common shareholders, with Lutianhua (Group) Co., Ltd. and Luzhou Industrial Development Investment Group Co., Ltd. being major shareholders with **15.09%** and **14.84%** stakes, respectively - At the end of the reporting period, the total number of common shareholders was **41,760**[84](index=84&type=chunk) Shareholding of Shareholders Holding 5% or More or Top 10 Shareholders | Shareholder Name | Shareholder Nature | Shareholding Ratio | Number of Shares Held at Period-End (shares) | Change in Current Period (shares) | Number of Unrestricted Shares Held (shares) | | :--- | :--- | :--- | :--- | :--- | :--- | | Lutianhua (Group) Co., Ltd | State-owned Legal Person | 15.09% | 236,550,393 | 0 | 236,550,393 | | Luzhou Industrial Development Investment Group Co., Ltd | State-owned Legal Person | 14.84% | 232,664,610 | 39,200,000 | 232,664,610 | | Bank of China Co., Ltd. Luzhou Branch | Domestic Non-state-owned Legal Person | 9.11% | 142,847,727 | -9,032,700 | 142,847,727 | | Sichuan Lutianhua Co., Ltd. Bankruptcy Enterprise Property Disposal Special Account | Domestic Non-state-owned Legal Person | 5.83% | 91,363,464 | -1,109,250 | 91,363,464 | | Agricultural Bank of China Co., Ltd. Sichuan Branch | State-owned Legal Person | 5.00% | 78,402,297 | 0 | 78,402,297 | - Among the top 10 shareholders, Lutianhua (Group) Co., Ltd. and Luzhou Industrial Development Investment Group Co., Ltd. are parties acting in concert[84](index=84&type=chunk) [Changes in Shareholdings of Directors, Supervisors, and Senior Management](index=27&type=section&id=%E5%9B%9B%E3%80%81%E8%91%A3%E4%BA%8B%E3%80%81%E7%9B%91%E4%BA%8B%E5%92%8C%E9%AB%98%E7%BA%A7%E7%AE%A1%E7%90%86%E4%BA%BA%E5%91%98%E6%8C%81%E8%82%A1%E5%8F%98%E5%8A%A8) During the reporting period, there were no changes in the shareholdings of the company's directors, supervisors, and senior management [Changes in Controlling Shareholder or Actual Controller](index=27&type=section&id=%E4%BA%94%E3%80%81%E6%8E%A7%E8%82%A1%E8%82%A1%E4%B8%9C%E6%88%96%E5%AE%9E%E9%99%85%E6%8E%A7%E5%88%B6%E4%BA%BA%E5%8F%98%E6%9B%B4%E6%83%85%E5%86%B5) During the reporting period, there were no changes in the company's controlling shareholder or actual controller [Preferred Share Related Information](index=28&type=section&id=%E5%85%AD%E3%80%81%E4%BC%98%E5%85%88%E8%82%A1%E7%9B%B8%E5%85%B3%E6%83%85%E5%86%B5) During the reporting period, the company had no preferred share related information [Bond-Related Information](index=29&type=section&id=%E7%AC%AC%E4%B8%83%E8%8A%82%20%E5%80%BA%E5%88%B8%E7%9B%B8%E5%85%B3%E6%83%85%E5%86%B5) This section provides information regarding the company's bonds [Bond-Related Information](index=29&type=section&id=%E5%80%BA%E5%88%B8%E7%9B%B8%E5%85%B3%E6%83%85%E5%86%B5) During the reporting period, the company had no bond-related information [Financial Report](index=30&type=section&id=%E7%AC%AC%E5%85%AB%E8%8A%82%20%E8%B4%A2%E5%8A%A1%E6%8A%A5%E5%91%8A) This section presents the company's financial statements, including the audit report, balance sheets, income statements, cash flow statements, and statements of changes in owners' equity [Audit Report](index=30&type=section&id=%E4%B8%80%E3%80%81%E5%AE%A1%E8%AE%A1%E6%8A%A5%E5%91%8A) The company's semi-annual report was not audited - The company's semi-annual report was not audited[91](index=91&type=chunk) [Financial Statements](index=30&type=section&id=%E4%BA%8C%E3%80%81%E8%B4%A2%E5%8A%A1%E6%8A%A5%E8%A1%A8) This section presents the company's consolidated and parent company balance sheets, income statements, cash flow statements, and statements of changes in owners' equity for the first half of 2025, providing a comprehensive view of its financial position, operating results, and cash flows at the end of the reporting period [1. Consolidated Balance Sheet](index=30&type=section&id=1%E3%80%81%E5%90%88%E5%B9%B6%E8%B5%84%E4%BA%A7%E8%B4%9F%E5%80%BA%E8%A1%A8) As of June 30, 2025, the company's consolidated total assets were **9.26 billion RMB**, a **9.38%** decrease from the beginning of the period, with total liabilities at **2.83 billion RMB** and total owners' equity at **6.43 billion RMB** Consolidated Balance Sheet Key Data (Period-End) | Item | Period-End Balance (RMB) | Beginning Balance (RMB) | | :--- | :--- | :--- | | Total Assets | 9,260,429,068.88 | 10,219,298,716.97 | | Total Current Assets | 4,344,681,129.38 | 5,300,497,742.79 | | Total Non-current Assets | 4,915,747,939.50 | 4,918,800,974.18 | | Total Liabilities | 2,831,431,497.15 | 3,839,987,631.29 | | Total Owners' Equity | 6,428,997,571.73 | 6,379,311,085.68 | [2. Parent Company Balance Sheet](index=32&type=section&id=2%E3%80%81%E6%AF%8D%E5%85%AC%E5%8F%B8%E8%B5%84%E4%BA%A7%E8%B4%9F%E5%80%BA%E8%A1%A8) As of June 30, 2025, the parent company's total assets were **7.07 billion RMB**, a **1.25%** decrease from the beginning of the period, with total liabilities at **1.13 billion RMB** and total owners' equity at **5.94 billion RMB** Parent Company Balance Sheet Key Data (Period-End) | Item | Period-End Balance (RMB) | Beginning Balance (RMB) | | :--- | :--- | :--- | | Total Assets | 7,070,054,065.16 | 7,159,925,533.30 | | Total Current Assets | 4,507,664,534.00 | 4,830,365,531.01 | | Total Non-current Assets | 2,562,389,531.16 | 2,329,560,002.29 | | Total Liabilities | 1,133,801,085.39 | 834,025,164.72 | | Total Owners' Equity | 5,936,252,979.77 | 6,325,900,368.58 | [3. Consolidated Income Statement](index=35&type=section&id=3%E3%80%81%E5%90%88%E5%B9%B6%E5%88%A9%E6%B6%A6%E8%A1%A8) In the first half of 2025, the company's consolidated total operating revenue was **2.38 billion RMB**, a **13.45%** year-on-year decrease, resulting in a net profit of **45.77 million RMB** and basic earnings per share of **0.03 RMB** Consolidated Income Statement Key Data | Item | H1 2025 (RMB) | H1 2024 (RMB) | | :--- | :--- | :--- | | Total Operating Revenue | 2,378,804,908.52 | 2,748,552,231.75 | | Operating Profit | 48,145,003.56 | 121,200,325.47 | | Total Profit | 62,415,494.53 | 159,256,388.18 | | Net Profit | 45,771,675.40 | 133,795,585.30 | | Net Profit Attributable to Parent Company Shareholders | 46,102,567.96 | 133,842,477.11 | | Basic Earnings Per Share | 0.03 | 0.09 | | Diluted Earnings Per Share | 0.03 | 0.09 | [4. Parent Company Income Statement](index=37&type=section&id=4%E3%80%81%E6%AF%8D%E5%85%AC%E5%8F%B8%E5%88%A9%E6%B6%A6%E8%A1%A8) In the first half of 2025, the parent company's operating revenue increased by **31.30%** to **1.41 billion RMB**, but it incurred a net loss of **90.01 million RMB**, a significant reversal from the prior year's profit Parent Company Income Statement Key Data | Item | H1 2025 (RMB) | H1 2024 (RMB) | | :--- | :--- | :--- | | Operating Revenue | 1,414,410,263.31 | 1,077,204,895.03 | | Operating Profit | -94,227,019.19 | 1,618,750.46 | | Total Profit | -94,206,748.73 | 1,196,293.33 | | Net Profit | -90,006,894.75 | 4,306,611.31 | | Basic Earnings Per Share | -0.06 | 0.00 | | Diluted Earnings Per Share | -0.06 | 0.00 | [5. Consolidated Cash Flow Statement](index=38&type=section&id=5%E3%80%81%E5%90%88%E5%B9%B6%E7%8E%B0%E9%87%91%E6%B5%81%E9%87%8F%E8%A1%A8) In the first half of 2025, the company's net cash flow from operating activities significantly decreased by **98.51%** to **4.87 million RMB**, while net cash flow from investing activities substantially increased by **258.91%** to **545 million RMB** Consolidated Cash Flow Statement Key Data | Item | H1 2025 (RMB) | H1 2024 (RMB) | | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | 4,871,847.14 | 327,444,444.91 | | Net Cash Flow from Investing Activities | 544,667,621.06 | -342,760,806.67 | | Net Cash Flow from Financing Activities | -236,916,594.43 | -299,113,875.63 | | Net Increase in Cash and Cash Equivalents | 312,618,846.34 | -314,430,237.37 | [6. Parent Company Cash Flow Statement](index=40&type=section&id=6%E3%80%81%E6%AF%8D%E5%85%AC%E5%8F%B8%E7%8E%B0%E9%87%91%E6%B5%81%E9%87%8F%E8%A1%A8) In the first half of 2025, the parent company's net cash flow from operating activities improved to **-45.39 million RMB**, while net cash flow from investing activities significantly increased to **446 million RMB** Parent Company Cash Flow Statement Key Data | Item | H1 2025 (RMB) | H1 2024 (RMB) | | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | -45,387,107.32 | -267,471,771.18 | | Net Cash Flow from Investing Activities | 445,631,074.16 | 7,488,714.01 | | Net Cash Flow from Financing Activities | -120,029,075.14 | -50,029,075.13 | | Net Increase in Cash and Cash Equivalents | 280,214,891.70 | -310,012,132.30 | [7. Consolidated Statement of Changes in Owners' Equity](index=41&type=section&id=7%E3%80%81%E5%90%88%E5%B9%B6%E6%89%80%E6%9C%89%E8%80%85%E6%9D%83%E7%9B%8A%E5%8F%98%E5%8A%A8%E8%A1%A8) In the first half of 2025, the company's consolidated owners' equity totaled **6.43 billion RMB**, an increase of **0.78%** from the beginning of the period, primarily driven by comprehensive income and changes in other capital reserves Consolidated Statement of Changes in Owners' Equity (Current Period) | Item | Beginning Balance (RMB) | Change in Current Period (RMB) | Ending Balance (RMB) | | :--- | :--- | :--- | :--- | | Total Owners' Equity Attributable to Parent Company | 6,373,725,760.72 | 50,017,378.61 | 6,423,743,139.33 | | Minority Interests | 5,585,324.96 | -330,892.56 | 5,254,432.40 | | Total Owners' Equity | 6,379,311,085.68 | 49,686,486.05 | 6,428,997,571.73 | [Company Basic Information](index=49&type=section&id=%E4%B8%89%E3%80%81%E5%85%AC%E5%8F%B8%E5%9F%BA%E6%9C%AC%E6%83%85%E5%86%B5) Sichuan Lutianhua Co., Ltd., established on April 5, 1999, with a registered capital of **1.568 billion RMB**, is a state-controlled listed company in the chemical industry, primarily producing and selling fertilizers and chemical products - Sichuan Lutianhua Co., Ltd. publicly issued RMB A-shares on April 5, 1999, with a registered capital of **1.568 billion RMB**[125](index=125&type=chunk)[127](index=127&type=chunk)[131](index=131&type=chunk) - The company's legal representative is Liao Tingjun, its address is in Naxi District, Luzhou City, Sichuan Province, and its organizational form is a joint-stock company (listed, state-controlled)[131](index=131&type=chunk) - The company operates in the chemical industry, primarily engaged in the production and sale of various fertilizers and chemical products[132](index=132&type=chunk) - The company's largest shareholder is Lutianhua (Group) Co., Ltd., and its ultimate actual controller is the Luzhou State-owned Assets Supervision and Administration Commission[135](index=135&type=chunk) [(I) Company History](index=49&type=section&id=(%E4%B8%80)%E5%85%AC%E5%8F%B8%E5%8E%86%E5%8F%B2%E6%B2%BF%E9%9D%A9) Since its establishment in 1999, the company has undergone several capital increases and equity transfers, with Lutianhua Group regaining its controlling shareholder status through various transactions - The company publicly issued 150 million RMB A-shares on April 5, 1999, with a total share capital of 450 million shares after issuance[125](index=125&type=chunk) - On July 27, 2018, the company implemented a capital reserve conversion to shares at a ratio of 16.803419 shares for every 10 shares, increasing its total share capital to **1.568 billion shares**[127](index=127&type=chunk) - In December 2018, Lutianhua Group purchased **286 million** shares of the company's capital reserve converted shares, increasing its stake to **18.24%**, and together with its concerted party, Chanfa Group, held a combined **25.58%**, becoming the controlling shareholder[129](index=129&type=chunk) - From March 1, 2024, to August 30, 2024, Lutianhua Group cumulatively increased its shareholding in the listed company by **25,091,400 shares** through centralized bidding, changing its shareholding ratio to **15.09%** and remaining the controlling shareholder[130](index=130&type=chunk) [(II) Company's Registered Address, Organizational Form, and Headquarters Address](index=50&type=section&id=(%E4%BA%8C)%E5%85%AC%E5%8F%B8%E6%B3%A8%E5%86%8C%E5%9C%B0%E5%9D%80%E3%80%81%E7%BB%84%E7%BB%87%E5%BD%A2%E5%BC%8F%E3%80%81%E6%80%BB%E9%83%A8%E5%9C%B0%E5%9D%80) The company's latest business license was issued by the Luzhou Market Supervision Administration, with a unified social credit code of 91510500711880825C, registered capital of **1.568 billion RMB**, and its legal representative is Liao Tingjun - The company's latest business license was issued by the Luzhou Market Supervision Administration, with a unified social credit code: 91510500711880825C[131](index=131&type=chunk) - Registered capital: **1.568 billion RMB**; organizational form: joint-stock company (listed, state-controlled); legal representative: Liao Tingjun; company address: Naxi District, Luzhou City, Sichuan Province[131](index=131&type=chunk) [(III) Company's Business Nature, Scope, and Revenue Composition](index=50&type=section&id=(%E4%B8%89)%E5%85%AC%E5%8F%B8%E7%9A%84%E4%B8%9A%E5%8A%A1%E6%80%A7%E8%B4%A8%E3%80%81%E7%BB%8F%E8%90%A5%E8%8C%83%E5%9B%B4%E5%92%8C%E8%90%A5%E4%B8%9A%E6%94%B6%E5%85%A5%E6%9E%84%E6%88%90) The company operates in the chemical industry, primarily producing and selling various fertilizers and chemical products, with revenue mainly derived from its parent company and subsidiaries' production and sales activities - The company operates in the chemical industry, primarily engaged in the production and sale of various fertilizers and chemical products[132](index=132&type=chunk) - Its business scope includes the production of ammonia, carbon dioxide, methanol, nitric acid, etc., as well as fertilizer manufacturing, synthetic fiber monomer (polymer) manufacturing, import and export, and technology promotion and application services[133](index=133&type=chunk) - The company's operating revenue primarily consists of the production and sale of fertilizers and chemical products by the parent company and Ningxia Hening Chemical Co., Ltd., with compound fertilizer production and sales and purchased product sales by Jiuhe Co., Ltd. also forming part of the operating revenue[134](index=134&type=chunk) [(IV) Approver of Financial Report](index=50&type=section&id=(%E5%9B%9B)%E8%B4%A2%E5%8A%A1%E6%8A%A5%E5%91%8A%E7%9A%84%E6%89%B9%E5%87%86%E6%8A%A5%E5%87%BA%E8%80%85) The company's financial report was approved and issued by the Board of Directors at its fourteenth meeting of the eighth session in August 2025 - The company's financial report was approved and issued by the Board of Directors, with this financial report approved at the fourteenth meeting of the eighth session of the Board of Directors in August 2025[136](index=136&type=chunk) [Basis of Financial Statement Preparation](index=51&type=section&id=%E5%9B%9B%E3%80%81%E8%B4%A2%E5%8A%A1%E6%8A%A5%E8%A1%A8%E7%9A%84%E7%BC%96%E5%88%B6%E5%9F%BA%E7%A1%80) The company's financial statements are prepared on a going concern basis, adhering to accounting standards issued by the Ministry of Finance and disclosure regulations by the CSRC, with historical cost measurement and no significant doubt about future operations - The company's financial statements are prepared on a going concern basis, in accordance with actual transactions and events, and in compliance with the accounting standards issued by the Ministry of Finance, their accompanying guidelines and interpretations, and the disclosure requirements of the China Securities Regulatory Commission's "Rules for the Preparation of Information Disclosure by Companies Issuing Securities No. 15 - General Provisions for Financial Reports" (Revised in 2023)[137](index=137&type=chunk) - The company's accounting is based on the accrual basis. Except for certain financial instruments, these financial statements are measured at historical cost. If assets are impaired, corresponding impairment provisions are made in accordance with relevant regulations[137](index=137&type=chunk) - The company believes there are no significant doubts or circumstances regarding its ability to continue as a going concern for the next 12 months, and thus, preparing financial statements on a going concern basis is reasonable[138](index=138&type=chunk) [Significant Accounting Policies and Estimates](index=51&type=section&id=%E4%BA%94%E3%80%81%E9%87%8D%E8%A6%81%E4%BC%9A%E8%AE%A1%E6%94%BF%E7%AD%96%E5%8F%8A%E4%BC%9A%E8%AE%A1%E4%BC%B0%E8%AE%A1) This section outlines the company's adherence to Enterprise Accounting Standards, covering accounting periods, operatin