Stock Code: 000020 200020 Public Notice No.: 2020-15Short Form of the Stock: SHEN HUAFA-A, SHEN HUAFA- B
Shenzhen Zhongheng Huafa Co., Ltd.
Summary of Annual Report 2019
I. Important NoticeThe summary is abstract from full-text of annual report, for more details of operating results, financial condition and futuredevelopment plan of the Company; investors should found in the full-text of annual report that published on media appointed byCSRC.Objection statement of directors, supervisors and senior executives
| Name | Position | Content and reason |
StatementOther directors attending the Meeting for annual report deliberation except for the followed
| Name of director absent | Title for absent director | Reasons for absent | Attorney |
Prompt of non-standard audit opinion
□ Applicable √ Not applicable
Profit distribution pre-plan of common stock or capitalizing of common reserves pre-plan deliberated by the Board in the reportingperiod
□ Applicable √ Not applicable
The Company has no plan of cash dividends carried out, bonus issued and capitalizing of common reserves either.Profit distribution pre-plan of preferred stock deliberated and approved by the Board in the reporting period
□Applicable □Not applicable
II. Basic information of the company
1. Company profile
| Short form of the stock | Shen HuafaA, Shen HuafaB | Stock code | 000020, 200020 | |
| Stock exchange for listing | Shenzhen Stock Exchange | |||
| Person/Way to contact | Secretary of the Board | Rep. of security affairs | ||
| Name | Niu Zhuo | |||
| Office add. | 618, 6/F, East Tower, No.411 Building, Huafa (N) Road, Futian District, Shenzhen | |||
| Fax. | 0755-86360206 | |||
| Tel. | 0755-86360201 | |||
| huafainvestor@126.com.cn |
2. Main business or product introduction in the reporting period
After years of development, the company has gradually formed two main businesses in industry and propertymanagement. Among them, the industrial business mainly includes injection molding, polylon (light-weightpackaging materials), and complete machine production and sales of liquid crystal display, property managementbusiness is mainly the lease of its own property.
3. Main accounting data and financial indexes
(I) Main accounting data and financial indexes for recently three years
Whether it has retroactive adjustment or re-statement on previous accounting data
□Yes √ No
In RMB
| 2019 | 2018 | Changes over last year | 2017 | |
| Operating income | 721,557,440.51 | 637,046,707.03 | 13.27% | 858,040,132.74 |
| Net profit attributable to shareholders of the listed company | 5,460,049.15 | 3,295,022.72 | 65.71% | 974,409.39 |
| Net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses | 4,843,096.96 | 1,535,043.65 | 215.50% | 2,079,588.86 |
| Net cash flow arising from operating activities | 74,463,707.01 | -21,894,459.66 | 440.10% | 11,723,254.36 |
| Basic earnings per share (RMB/Share) | 0.0193 | 0.0116 | 66.38% | 0.0034 |
| Diluted earnings per share (RMB/Share) | 0.0193 | 0.0116 | 66.38% | 0.0034 |
| Weighted average ROE | 1.67% | 1.02% | 0.65% | 0.30% |
| End of 2019 | End of 2018 | Changes over end of last year | End of 2017 | |
| Total assets | 614,163,899.86 | 617,090,153.46 | -0.47% | 629,762,731.38 |
| Net assets attributable to shareholder of listed company | 329,428,049.89 | 323,968,000.74 | 1.69% | 320,672,978.02 |
(2) Quarterly main financial index
In RMB
| First quarter | Second quarter | Third quarter | Fourth quarter | |
| Operating income | 143,921,648.63 | 195,268,525.42 | 209,822,500.84 | 172,544,765.62 |
| Net profit attributable to shareholders of the listed company | 258,233.98 | 2,322,177.15 | 796,282.59 | 2,083,355.43 |
| Net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses | 196,868.38 | 2,001,043.68 | -207,411.34 | 2,757,615.61 |
| Net cash flow arising from operating activities | 19,403,902.99 | 20,584,093.18 | 8,608,010.36 | 25,867,700.48 |
Whether there are significant differences between the above-mentioned financial index or its total number and the relevant financialindex disclosed in the company’s quarterly report and semi-annual report
□Yes √ No
4. Shares and shareholders
(1) Particulars about common stock shareholders, preference shareholders with voting rights recoveredand top ten shareholders
In Share
| Total common stock shareholders in reporting period-end | 23,761 | Total common stock shareholders at end of last month before annual report disclosed | 24,131 | Total preference shareholders with voting rights recovered at end of reporting period | 0 | Total preference shareholders with voting rights recovered at end of last month before annual report disclosed | 0 | |||||
| Top ten shareholders | ||||||||||||
| Full name of Shareholders | Nature of shareholder | Proportion of shares held | Amount of shares held | Amount of restricted shares held | Number of shares pledged/frozen | |||||||
| State of share | Amount | |||||||||||
| Wuhan Zhongheng Group | Domestic non-state-owned legal person | 42.13% | 119,289,894 | 0 | Pledged | 116,100,000 | ||||||
| Frozen | 119,289,894 | |||||||||||
| SEG (HONG KONG) CO., LTD. | Overseas legal person | 5.85% | 16,569,560 | 0 | Pledged | 0 | ||||||
| Frozen | 0 | |||||||||||
| GOOD HOPE CORNER INVESTMENTS LTD. | Overseas legal person | 4.40% | 12,464,500 | 0 | Pledged | 0 | ||||||
| Frozen | 0 | |||||||||||
| Changjiang Securities Brokerage (Hong Kong) Co., Ltd. | Overseas legal person | 1.89% | 5,355,249 | 0 | Pledged | 0 | ||||||
| Frozen | 0 | |||||||||||
| Guoyuan Securities Brokerage (Hong Kong) Limited | Overseas legal person | 1.36% | 3,870,117 | 0 | Pledged | 0 | ||||||
| Frozen | 0 | |||||||||||
| Li Zhongqiu | Overseas legal person | 1.00% | 2,830,000 | 0 | Pledged | 0 | ||||||
| Frozen | 0 | |||||||||||
| Zhong Jiachao | Domestic nature person | 0.47% | 1,329,602 | 0 | Pledged | 0 |
| Frozen | 0 | |||||
| LI SHERYN ZHAN MING | Overseas legal person | 0.36% | 1,022,600 | 0 | Pledged | 0 |
| Frozen | 0 | |||||
| Li Senzhuang | Domestic nature person | 0.35% | 989,350 | 0 | Pledged | 0 |
| Frozen | 0 | |||||
| Wang Jianxin | Domestic nature person | 0.34% | 959,000 | 0 | Pledged | 0 |
| Frozen | 0 | |||||
| Explanation on associated relationship among the aforesaid shareholders | Among the top ten shareholders, Li Zhongqiu is the actual controller of Wuhan Zhongheng New Science & Technology Industrial Group Co., Ltd. and is a party acting in concert. | |||||
| Explanation on involving margin business (if applicable) | Among the top ten shareholders, Zhong Jiachao held 795,602 shares through ordinary accounts, 534,000 shares through credit securities accounts, and total held 1,329,602 shares. | |||||
(2) Total preferred stock shareholders of the Company and shares held by top ten shareholders withpreferred stock held
□ Applicable √ Not applicable
The Company had no shareholders with preferred stock held in the reporting.
(3) Property right and controlling relationships between the actual controllers of the Company and theCompany is as follows:
| Li Zhongqiu | Li Li (Son of Li Zhongqiu) |
Wuhan Zhongheng New Science & Technology Industrial Group
Co., Ltd.Shenzhen Zhongheng Huafa Co., Ltd.
Shenzhen Zhongheng Huafa Co., Ltd.51%
51%49%
49%
42.21%
5. Corporate bonds
Whether or not the Company public offering corporation bonds in stock exchange, which undue or without payment in full atmaturity on the approval date for annual report disclosedNoIII. Discussion and analysis of business
1. Introduction of operation in the reporting period
In 2019, affected by the Sino-US trade war, the downward pressure on China’s economy increased, and theeconomic growth slowed down. Facing the unfavorable market environment, the company has actively takenmeasures to adjust its management concept and operating strategies and expand its main business which weresupplemented with assessment and incentive mechanism. At the same time, some assets were cleaned anddisposed of to maximize the benefits of assets and achieve better returns. In 2019, the company achievedoperating revenue of 721,557,400 Yuan, an increase of 13.27% on a year-on-year basis, total net profits of7,750,800 Yuan, increased by 68.79% compared with the same period last year, net profit amounted to 5,460,000yuan, a 65.71% up from a year earlier.
●Video service business achieved annual operating income of 332,014,600 Yuan, an increase of 13.41% on ayear-on-year basis, operation profit amounted as 2,786,900 Yuan with 17.73% down from a year earlier. Duringthe reporting period, the Video Business Division adjusted the product structure and optimized the sales ratio ofeach brand of products. The sales ratio of AOC, VSCN and VSC series brands have increased, which openedonline sales channels such as Jingdong while completing existing customer orders, and sold 820,000 LCDmonitors in 2019, an increase of 16.5% over last year.
●Injection molding business achieved annual operating income of 250,187,900 Yuan, an increase of 13.25% overthe same period last year, operation profit amounted as 535,800 Yuan, an increase of 20.81% from a year earlier.With the unceasingly fierce competition in the market, the profit margin of injection molding was squeezed, butthe new production line put into production by this business division at the end of 2018 gave full play to itsautomation advantages in 2019, which greatly improved production efficiency and reduced production costs. Theinjection molding division achieved annual sales volume of 10,800 tons, outperforming the annual sales target.
●Polylon business achieved annual operating income of 64.33 million Yuan, a decrease of 3.39% over the sameperiod last year, operating profit amounted as -1.08 million yuan, a decrease of 40.63% from a year earlier. Theactual sales volume throughout the year was 3900 tons, basically reaching the sales target, but due to the fiercemarket competition, in order to improve market competitiveness, this business division made some sacrifices inprofit. In order to better fulfill the sales target of 2020, the EPS business division maintained existing orders,increased the proportion of structural parts orders, developed new customer resources, and strive to accept moredomestic and foreign large-scale household appliance customers’ orders.
●The property rental business achieved annual operating income of 38.82 million yuan, an increase of 12.95%from a year earlier, operating profit amounted as 5.56 million yuan with major growth over that of lat year. In2019, the company optimized the structural proportion of commercial tenants, and the occupancy rate was greatlyimproved, at the same time, the company strictly controlled costs and reduced unnecessary expenditures.Therefore, the company’s overall rental profits increased significantly compared with the previous year.
2. Whether the main business had major change in the reporting period
□ Yes √ No
3. About the industries, products, or regions accounting for over 10% of the company’s operating incomeor operating profit
√Applicable □Not applicable
In RMB
| Name | Operating revenue | Operating cost | Gross profit ratio | Increase/decrease of operating revenue y-o-y | Increase/decrease of operating cost y-o-y | Increase/decrease of gross profit ratio y-o-y |
| Monitor | 332,014,645.59 | 310,508,719.13 | 6.48% | 13.41% | 13.05% | 0.30% |
| Injection model | 250,187,919.33 | 223,473,984.32 | 10.68% | 13.25% | 8.36% | 4.03% |
| EPS products | 64,330,319.24 | 62,186,951.52 | 3.33% | -5.90% | -3.39% | -2.52% |
| Property lease | 38,819,374.89 | 2,478,432.62 | 93.62% | 12.95% | 78.22% | -2.33% |
4. Whether the characteristics of management seasonal or cyclical need special attention
□ Yes √ No
5. In the reporting period, note of major changes in operating income, operating cost, total net profitattributable to common stock shareholders of listed company or composing the previous reporting period
□ Applicable √ Not applicable
6. Particular about suspended and delisting
□ Applicable √ Not applicable
7. Related matters relating to financial reports
(1) Particulars about the changes in aspect of accounting policy, estimates and calculation methodcompared with the financial report of last year
√Applicable □ Not applicable
The Ministry of Finance issued revised “Accounting Standards for Business Enterprises No. 22-Recognition andMeasurement of Financial Instruments”, “Accounting Standards for Business Enterprises No. 23-Transfer ofFinancial Assets”, and “Accounting Standards for Business Enterprises No. 24- Hedge Accounting”, and
“Accounting Standards for Business Enterprises No. 37-Presentation of Financial Instruments” in 2017 (the abovefour standards are hereinafter collectively referred to as “new financial instrument standards”). The Company hasimplemented the above revised standards from January 1, 2019, and adjusted the relevant content of accountingpolicies.In April 2019, the Ministry of Finance issued the “Notice on the Revision and Issuance of the Format of GeneralEnterprise Financial Statements for 2019” (CK [2019] No. 6) (hereinafter referred to as the “financial statementformat”). An enterprise that implements accounting standards for business enterprises should prepare the 2019interim financial statements and annual financial statements and financial statements for subsequent periods inaccordance with the requirements of the accounting standards for business enterprises and the notice.This accounting policy change was reviewed and approved by the 11
th
meeting of the Ninth Board of Directors.The company will implement the relevant provisions of CK (2019) No. 6 issued by the Ministry of Finance, andadjust and change the presentation of the relevant financial statements. The items and amount of the balance sheetthat were significantly affected on December 31, 2018 are as follows:
| Item | Consolidated balance sheet | |
| Before adjustment | After adjustment | |
| Note receivable and Account receivable | 185,983,351.22 | |
| Note receivable | 69,185,516.71 | |
| Account receivable | 116,797,834.51 | |
| Notes payable and Account payable | 88,617,663.09 |
| Notes payable | 27,642,356.66 |
(2) Major accounting errors within reporting period that needs retrospective restatement
□ Applicable √ Not applicable
No major accounting errors within reporting period that needs retrospective restatement for the Company in the period.
(3) Compare with last year’s financial report; explain changes in consolidation statement’s scope
□ Applicable √ Not applicable
No changes in consolidation statement’s scope for the Company in the period.