Stock Code: 000581, 200581 Public Notice No: 2019-008Short Form of the Stock: Weifu High- Tech, Su Weifu-B
Weifu High-Technology Group Co., Ltd.
Summary of Annual Report 2018
I. Important Notice
The summary is abstract from full-text of annual report, for more details of operating results, financial conditionand future development plan of the Company; investors should found in the full-text of annual report thatpublished on media appointed by CSRC.Statement: no directors, supervisors or senior management declare the authenticity, accuracy and integrity of thereport cannot be guaranteed or there is objection.Other directors attending the Meeting for annual report deliberation except for the followed
| Name of director absent | Title for absent director | Reasons for absent | Attorney |
| Zhang Xiaogeng | Director | Travel for business | Hua Wanrong |
Prompt of non-standard audit opinion□ Applicable √ Not applicableProfit distribution pre-plan of common stock or capitalizing of common reserves pre-plan deliberated by theBoard in the reporting period√Applicable □Not applicableWhether has capitalizing of common reserves carried out□Yes √ NoThe profit distribution plan that deliberated and approved by the Board is: based on total stock issued1,008,950,570 shares, distributed 12.00 Yuan (tax included) bonus in cash for every 10-share hold by allshareholders, 0 shares bonus issued (tax included) and no capitalizing of common reserves carried out.Profit distribution pre-plan of preferred stock deliberated and approved by the Board in the reporting period□ Applicable √ Not applicable
II. Company profile
1. Company Profile
| Short form of the stock | Weifu High- Tech, Su Weifu-B | Stock code | 000581, 200581 | |
| Stock exchange for listing | Shenzhen Stock Exchange | |||
| Person/Way to contact | Secretary of the Board | Rep. of security affairs | ||
| Name | Zhou Weixing | Yan Guohong | ||
| Office add. | No.5, Huashan Road, New District, Wuxi City | No.5, Huashan Road, New District, Wuxi City | ||
| Fax. | 0510-80505199 | 0510-80505199 | ||
| Tel. | 0510-80505999 | 0510-80505999 | ||
| wfjt@public1.wx.js.cn | wfjt@public1.wx.js.cn | |||
2. Main business or product introduction in the reporting period
(i) Main business of the Company1. The Company belongs to auto parts industry, and its main business products include diesel fuel injection systemproducts, exhaust after-treatment system products and air management system products.2. Main uses of the Company's products(1) The diesel fuel injection system products are widely used in different power diesel engines supporting all typesof trucks, passenger cars, buses, construction machinery, marine, and generator sets. The company not only makesproducts matching with the main engines used at home but also exports some products to the Americas, SoutheastAsia, and the Middle East. The products meet the needs of national emission standards.(2) The auto exhaust after-treatment system products: mainly support the major manufacturers of automobile,motorcycle and general machinery at home which meet the national emission standards.(3) The intake system products (supercharger): matches with most of the domestic small-bore diesel engine plantsand some six-cylinder diesel engine manufacturers, and meet the needs of the light and heavy commercialvehicles and some passenger cars, and meets the national emission standards.3. Business model of the CompanyThe Company follows the operating philosophy of making competitive products, creating famous brands, strivingfor first choices, and creating value for the users, implements the business model that parent company unifies themanagement and subsidiaries decentralize the production. Namely, the group company is responsible for makingstrategic development planning and operation targets, and making the unified management, instruction andassessment for the finance, significant personnel management, core raw materials, quality control, and technologyof the subsidiaries. The subsidiaries arrange production based on the order management model of market, whichmakes the subsidiaries keep the consistent quality with the company, helps keep abreast of customer needs andsaving logistics costs, maintain the timeliness of products production and supply, and improve the company’seconomic benefits.During the reporting period, the Company’s main business and business model have no significant changes.
(ii) Development stage and periodic characteristics of the industry the Company involves and the Company'sIn the past 40 years of reform and opening up, China’s economy has shifted from a high-speed growth stage to ahigh-quality development stage. Although the market may continue to show unexpected changes in the future, webelieve that the fundamentals of China’s healthy and stable economic development will not change, and theChinese economy is fully capable of maintaining a reasonable growth range. At the same time, the Chineseautomobile market has entered a period of steady growth since 2010, in order to solve the increasingly severetraffic jams, environmental pollution, energy conservation and consumption reduction, the automobile industryhas accelerated the technology upgrades, and the automobile new energy applications are rapidly advancing,nowadays the artificial intelligence, internet of things and other technologies develop rapidly and accelerate thepenetration into various fields, it has reached a consensus on the development of intelligent networkedautomobiles which promotes the development environment of intelligent networked automobiles to become
increasingly perfect.After 60 years of hard work, the company has become a backbone enterprise of core parts of domestic auto(power engineering), 80% products of the existing Automobile components core business are matched with theelectronic control systems and electronically controlled. The company will actively respond to the national newenergy and intelligent network strategy, take the Automobile components industry chain as the core and otherrelated fields as supplements, lay out new energy auto drive technology, and promote the hydrogen fuel celltechnology and intelligent network technology research and development capacity building. Market objectives:
consolidate the existing business market position and take a position in the new business potential market.Technical objectives: strengthen the technical strength of the pillar business, lay out the new business frontiertechnology, and actively expand new areas based on the existing business. Strive to achieve the goal of becominga leader in the auto core parts enterprises.
3. Main accounting data and financial indexes
(1) Main accounting data and financial indexes for recently three years
Whether it has retroactive adjustment or re-statement on previous accounting data or not□Yes √ No
In RMB
| 2018 | 2017 | Changes over last year | 2016 | |
| Operating income | 8,721,674,671.18 | 9,017,280,159.80 | -3.28% | 6,422,700,399.27 |
| Net profit attributable to shareholders of the listed company | 2,396,077,415.21 | 2,571,339,490.04 | -6.82% | 1,672,224,317.05 |
| Net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses | 2,014,800,714.20 | 2,322,218,596.99 | -13.24% | 1,435,963,836.76 |
| Net cash flow arising from operating activities | 874,381,526.63 | 957,697,901.07 | -8.70% | 527,344,364.04 |
| Basic earnings per share (RMB/Share) | 2.37 | 2.55 | -7.06% | 1.66 |
| Diluted earnings per share (RMB/Share) | 2.37 | 2.55 | -7.06% | 1.66 |
| Weighted average ROE | 15.48% | 18.52% | -3.04% | 13.53% |
| End of 2018 | End of 2017 | Changes over end of last year | End of 2016 | |
| Total assets | 20,892,041,460.30 | 20,231,006,224.36 | 3.27% | 17,263,771,897.78 |
| Net assets attributable to shareholder of listed company | 15,913,828,778.82 | 14,835,673,669.75 | 7.27% | 12,927,344,292.47 |
(2) Quarterly main financial index
In RMB
| 1st Q | 2nd Q | 3rd Q | 4th Q | |
| Operating income | 2,391,982,640.39 | 2,568,819,250.60 | 1,898,914,219.62 | 1,861,958,560.57 |
| Net profit attributable to shareholders of the listed company | 784,228,178.43 | 761,014,526.49 | 510,387,493.91 | 340,447,216.38 |
| Net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses | 691,078,505.55 | 687,786,996.02 | 452,953,425.86 | 182,981,786.77 |
| Net cash flow arising from operating activities | 86,416,705.11 | 292,506,985.37 | 127,146,119.98 | 368,311,716.17 |
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 recovered andtop ten shareholders
In Share
| Total common stock shareholders in reporting period-end | 60,946 | Total common stock shareholders at end of last month before annual report disclosed | 54,791 | 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 | |||||||||||||
| 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 | ||||||||||||
| Wuxi Industry Development Group Co., Ltd | State-owned corporate | 20.22% | 204,059,398 | ||||||||||
| ROBERT BOSCH GMBH | Foreign corporate | 14.16% | 142,841,400 | ||||||||||
| Hong Kong Securities Clearing Company | Foreign corporate | 4.01% | 40,482,044 | ||||||||||
| Bank of Communication – HSBC Jixin Double Core Strategy Mixed Securities Investment Fund | Other | 2.64% | 26,612,573 | ||||||||||
| BBH BOS S/A FIDELITY FD - CHINA FOCUS FD | Foreign corporate | 1.78% | 18,002,797 | ||||||||||
| Central Huijin Assets Management Co., Ltd. | State-owned corporate | 1.27% | 12,811,200 | ||||||||||
| Zhonghai Trust Co., Ltd. - Jinhai No.9 Securities Investment Collective Fund Trust | Other | 0.79% | 7,931,752 | |||
| Agricultural Bank of China - CS 500 ETF | Other | 0.62% | 6,211,068 | |||
| FIDELITY INVMT TRT FIDELITY INTL SMALL CAP FUND | Foreign corporate | 0.57% | 5,791,618 | |||
| Basic pension fund-- 1207 portfolio | Other | 0.50% | 5,028,007 | |||
| Explanation on associated relationship among the aforesaid shareholders | Among the top ten shareholders, there has no associated relationship between Wuxi Industry Development Croup Co., Ltd. and other shareholders, the first largest shareholder of the Company; and they do not belong to the person acting in concert regulated by the Management Measure of Information Disclosure on Change of Shareholding for Listed Company. | |||||
| Explanation on shareholders involving margin business (if applicable) | Not applicable | |||||
(2) Total preferred stock shareholders of the Company and shares held by top ten shareholders withpreferred stock held
□ Applicable √ Not applicableThe 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:
100%
20.22%
5. Corporate bonds
Whether the Company has a corporation bonds that issuance publicly and listed on stock exchange and without due on the date whenannual report approved for released or fail to cash in full on dueNo
State-owned Assets Supervision & AdministrationCommission of Wuxi Municipality of Jiangsu ProvinceWuxi Industry Development Croup Co., Ltd.
Wuxi Industry Development Croup Co., Ltd.
Weifu High-Technology Group Co., Ltd.
III. Discussion and analysis by the Management Team
1. Introduction of operation in the reporting period(i) General introductionIn 2018, the macroeconomic growth rate declined. China’s automobile production and sales growth rate was lowerthan that estimated at the beginning of the year, the total quantity showed the first negative growth in 28 years.According to the data released by the China Association of Automobile Manufacturers, the annual production andsales volume of automobiles were 27.809 million and 28.081 million, respectively declined by 4.2% and 2.8% on ayear-on-year basis, and the annual production and sales volume of passenger vehicles were respectively 23.529million and 23.71 million, respectively declined by 5.2% and 4.1% over the same period of the previous year, whilethe annual production and sales volume of commercial vehicles were respectively 4.28 million and 4.371 million,respectively increased by 1.7% and 5.1% over the same period of the previous year, and the growth rate declined.Facing the complicated market environment, the company worked hard to overcome difficulties and maintain theoverall stability of comprehensive economic operation. During the reporting period, the company achievedoperating income of 8.722 billion yuan, a decline of 3.28% on a year-on-year basis, realized total profit of 2.602billion yuan, a decline of 8.06% on a year-on-year basis; total assets were 20.892 billion yuan, an increase of3.27% on a year-on-year basis; the owner’s equity attributable to the parent company was 15.914 billion yuan, anincrease of 7.27% on a year-on-year basis.
(ii) Main work carried out1. Actively responded to the severe market challenges and fully guaranteed the stability of main businessUnder the influence of the decline in automobile market and engine market, the company responded positively,focused on the core market, continuously improved the manufacturing system, strengthened the process controlcapability, improved the delivery capability of leading products, improved the physical quality of key products,and ensured the total amount of main business products. The market share of fuel injection system relatedproducts and supercharger products remained relatively stable and had a certain growth throughout the year, theproduction and sales volume of multiple-piston pumps for fuel injection systems still exceeded 2 million units,and the sales of supercharger products increased by 10% on a year-on-year basis. Due to market fluctuations, themarket share of post-processing system business has slightly declined.
2. Took advantage of information technology means to gradually establish an operation management system tofurther enhance the company’s operating efficiencyThe company continuously promoted the optimization and upgrading of management, actively sorted out themanagement duties, standardized and optimized the existing system processes, planned and designed thecompany’s financial reform and transformation, built the company’s financial sharing center, established thecompany’s procurement and sharing platform project, further improved the human resource management system,strengthened the security construction of the Group’s information system, thus the comprehensive managementcapability of the enterprise has been further improved.
3. Started the future layout, established the “double-engine-driven” strategic model of “new business becomes along-term new engine, and traditional businesses guarantee the enterprise forward again”, and took the auto partsindustry chain as the core and other related fields as supplements to further improve the R&D system, promote theresearch and development of platform products, quickly deploy the forward-looking projects, and activelypromote the investment cooperation of new business.
2. Whether the main business had major change in the reporting period
□Yes √No
3. The industries, products, or regions accounting for over 10% of the company’s operating income oroperating 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 |
| Auto fuel injection system | 5,027,966,298.51 | 1,469,230,901.34 | 29.22% | -10.02% | -13.82% | -1.29% |
| Intake system | 440,331,903.61 | 123,637,620.24 | 28.08% | 15.69% | 29.98% | 3.09% |
| Exhaust after-treatment system | 2,794,656,676.75 | 335,946,193.86 | 12.02% | 8.87% | 6.73% | -0.24% |
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 Relevant items involving financial report
(1) Particulars about the changes in aspect of accounting policy, estimates and calculation method compared with thefinancial report of last year√ Applicable □Not applicable
(1) Change of major accounting policyOn June 15, 2018, the Ministry of Finance issued the Notice on Amending the Format of Financial Statements ofGeneral Enterprises in 2018 (CK No. [2018] 15), revised the financial statements format of general enterprises.According to the requirement, relevant content of the accounting policy needs to be adjusted, and the financialstatement should be prepared in line with the format of financial statement for general enterprise(applicable toenterprise that have not yet implemented new financial and revenue standards).
The impacts on the items and amounts related to consolidated financial statements and the parent company’sfinancial statements during the comparable period are as:
| Changes of accounting policy | Impact on the amount in relevant financial statement of 2017/on 31 December 2017 | ||
| Item | |||
| Amount affected (+,-) | |||
| Consolidate financial statement | Financial statement of parent company | ||
| The Company prepared the financial statement of 2018 in line with the format regulated in CK No. [2018] 15, and changed the presentation of relevant financial statements by retrospective method | Note receivable | -1,464,256,934.83 | -449,209,323.02 |
| Account receivable | -1,995,577,830.90 | -1,047,012,889.92 | |
| Note receivable and account receivable | 3,459,834,765.73 | 1,496,222,212.94 | |
| Interest receivable | -2,281,979.17 | -97,627.77 | |
| Other account receivable | 2,281,979.17 | 97,627.77 | |
| Note payable | -947,976,759.10 | -459,762,950.78 | |
| Account payable | -2,570,956,205.83 | -1,082,206,882.07 | |
| Note payable and account payable | 3,518,932,964.93 | 1,541,969,832.85 | |
| Interest payable | -401,928.43 | -93,777.78 | |
| Other account payable | 401,928.43 | 93,777.78 | |
| Long-term account payable | 18,265,082.11 | -- | |
| Special account payable | -18,265,082.11 | -- | |
| Administrative expenses | -391,315,234.75 | -119,083,205.53 | |
| R&D expenses | 391,315,234.75 | 119,083,205.53 | |
(2) Major accounting errors within reporting period that needs retrospective restatement
□ Applicable √ Not applicableNo 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
| Content changed | Company | Way of obtained the equity | Time when equity obtained | Ratio of fund contribution |
| Consolidate scope increased | Nanchang Weifu Leader Auto Parts & Components Co., Ltd. | Newly established | 2018-3-8 | 100.00% |
Board of Directors ofWeifu High-Technology Group Co., Ltd.23 April 2019