Stock Code: 000581, 200581 Public Notice No: 2020-012Short Form of the Stock: WFHT, Su Weifu-B
Weifu High-Technology Group Co., Ltd.Summary of Annual Report 2019I. Important NoticeThe 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.The directors, supervisors and senior officers declared that they guarantee the matters in the Report are truthful,accurate and completed without objection.All directors are attend the Meeting of the Board for Report deliberation.
Prompt of non-standard audit opinion
□ Applicable √ Not applicable
Profit distribution plan of common stock or public reserve transfer into share capital deliberated by the Board inthe reporting period
√Applicable □Not applicable
Transfer of public reserve into share capital
□Yes √No
The profit distribution plan that deliberated and approved by the Board is: based on total share capital of1,008,950,570, distributed 11 Yuan (tax included) bonus in cash for every 10-share hold by all shareholders, 0share bonus issued (tax included) and no public reserve transfer into share capital either.Profit distribution plan of preferred stock deliberated and approved by the Board in the reporting period
□ Applicable √ Not applicable
II. Company information
1. Company Profile
| Short form of the stock | WFHT, 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, Xinwu District, Wuxi | No.5 Huashan Road, Xinwu District, Wuxi |
| Fax. | 0510-80505199 | 0510-80505199 |
| Tel. | 0510-80505999 | 0510-80505999 |
| wfjt@public1.wx.js.cn | wfjt@public1.wx.js.cn |
2.Main business or products introduction in the reporting period
(i) Main business of the Company
1. The Company belongs to automobile components industry, and its main products include diesel fuel injectionsystem products, 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 Air management system products (supercharger): matches with most of the domestic small-bore dieselengine plants and some six-cylinder diesel engine manufacturers, and meet the needs of the light and heavycommercial vehicles and some passenger cars, and meets the national emission standards.
3. Business model of the Company
The 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's2020 is the ending year in which China achieves its first century-long goal, builds a well-off society in anall-round way and the “Thirteenth Five-Year Plan”, and is also the benchmark year to start a new journey oftransforming “from big to strong”, and serves as a connecting link between the preceding and the following.Maintaining stable macroeconomic development in 2020 is of great significance, the macro economy will remain
stable under the escort of multiple policies, the fundamentals of China’s healthy and stable economic developmentwill not change, and economic growth will remain within a reasonable range. In the next five years, the macroeconomy will enter a critical period of transformation, reducing speed and improving quality will be the maintheme. After more than ten years of rapid growth, the Chinese auto market has begun to enter a period oftransformation and adjustment. The “new four modernizations” are reshaping the automotive industry pattern,with the rapid penetration of technological advance, big data and artificial intelligence into the industry, the newenergy and intelligent connected vehicles have ushered in a wave of development, the automobile industry is morefirmly developing towards intelligence, networking, and coordinated development of vehicles and roads.Therefore, we will unswervingly seek effective resources in line with the corporate vision and meet the challengesof the industry with sufficient confidence.
After more than 60 years of hard work, the company has become a backbone enterprise of core parts of domesticauto (power engineering), 80% products of the existing Automobile components core business are matched withthe electronic control systems and electronically controlled. The company will actively respond to the nationalnew energy 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
| 2019 | 2018 | Changes over last year | 2017 | |
| Operating revenue | 8,784,356,960.30 | 8,721,674,671.18 | 0.72% | 9,017,280,159.80 |
| Net profit attributable to shareholders of the listed company | 2,268,026,432.78 | 2,396,077,415.21 | -5.34% | 2,571,339,490.04 |
| Net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses | 1,947,408,959.68 | 2,014,800,714.20 | -3.34% | 2,322,218,596.99 |
| Net cash flows arising from operating activities | 1,048,670,053.23 | 874,381,526.63 | 19.93% | 957,697,901.07 |
| Basic earnings per share (RMB/Share) | 2.25 | 2.37 | -5.06% | 2.55 |
| Diluted earnings per share (RMB/Share) | 2.25 | 2.37 | -5.06% | 2.55 |
| Weighted average ROE | 13.77% | 15.48% | -1.71% | 18.52% |
| Year-end of 2019 | Year-end of 2018 | Changes over end of last year | Year-end of 2017 | |
| Total assets | 23,958,348,185.78 | 20,892,041,460.30 | 14.68% | 20,231,006,224.36 |
| Net assets attributable to shareholder of listed company | 16,990,405,136.62 | 15,913,828,778.82 | 6.77% | 14,835,673,669.75 |
（2）Quarterly main financial index
In RMB
| Q 1 | Q 2 | Q 3 | Q 4 | |
| Operating revenue | 2,270,130,717.54 | 2,133,313,628.51 | 1,916,020,020.78 | 2,464,892,593.47 |
| Net profit attributable to shareholders of the listed company | 699,726,864.34 | 556,934,712.75 | 470,100,118.65 | 541,264,737.04 |
| Net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses | 623,891,223.54 | 490,203,601.20 | 426,217,054.93 | 407,097,080.01 |
| Net cash flows arising from operating activities | 145,409,651.46 | 544,914,256.79 | 548,646,172.99 | -190,300,028.01 |
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 | 56,658 | Total common stock shareholders at end of last month before annual report disclosed | 51,432 | 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 | Number of lock-up stocks 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 | 5.47% | 55,230,663 | |||
| BBH BOS S/A FIDELITY FD - CHINA FOCUS FD | Foreign corporate | 1.84% | 18,530,315 | |||
| NSSF-107 | Other | 1.59% | 15,998,673 | |||
| Central Huijin Assets Management Co., Ltd. | State-owned corporate | 1.27% | 12,811,200 | |||
| NSSF - 403 | Other | 0.67% | 6,740,200 | |||
| FIDELITY INVMT TRT FIDELITY INTL SMALL CAP FUND | Foreign corporate | 0.64% | 6,411,002 | |||
| HKMA - own funds | Foreign corporate | 0.62% | 6,232,134 | |||
| Monetary Authority of Macao - own fund | Foreign corporate | 0.61% | 6,202,109 | |||
| Explanation on associated relationship among the aforesaid shareholders | Among the aforesaid 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. | |||||
(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:
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 of the Operation
1. Brief introduction of operation in the reporting period
(i) Overall situationAccording to the data released by China Association of Automobile Manufacturers:: the production and salesvolume of automobiles for year of 2019 in the country amounted to 25,721,000 and 25,769,000 respectively, with
7.5% and 8.2% down from a year earlier respectively; growth of production and sales continued last year’s lowrunning state, of which, the production and sales volume of passenger vehicles were 21,360,000 and 21,444,000respectively, with 9.2% and 9.6% declined over same period of last year respectively, declining scope is greaterthan the total number of cars; production and sales volume of commercial vehicles were respectively amounted as4,360,000 and 4,324,000, the production has 1.9% up from a year earlier while sales have 1.1% declined,production and sales for commercial vehicles is better than that of passenger vehicles.Facing the complex and severe macro situation, the company’s management team led all employees to turnexternal pressure into motivation based on various operating performance indicators formulated at the beginningof the year, gathered strength and responded calmly, collaborated and advanced bravely, laid emphasis onoperation and management quality, controlled costs and expenditures, reduced capital occupation, acceleratedcapital turnover, focused on the layout of National VI products, well completed various goals and tasks throughoutthe year, and maintained the overall stability of the integrated economic operation. In reporting period, operatingrevenue achieved 8,784 million yuan with 0.72% up on a y-o-y basis; total net profit amounted to 2,450 millionyuan with 5.83% down on a y-o-y basis; total assets of the Company was 23,958 million yuan with 14.68% upfrom a year earlier; and the owners interest attributable to parent company was 16,990 million yuan, a y-o-ygrowth of 6.77% achieved.
(ii) Main work carried out
1. Calmly responded to market fluctuations and ensured the stability of the three major system businessproducts.In 2019, affected by the economic downturn and the decline in consumer demand, the overall sales volume of theautomobile market have declined. Facing the severe market situation, the company calmly responded to ensure thestability of its main business products. Fuel injection system business: the sales volume of common rail pumpsreached 1.75 million units, and the main product CPN2 remained high; the sales volume of VE pumps continuedto grow in the off-road market and continued to maintain market share of key customers. ExhaustAfter-treatment system business: seized market opportunities, ensured the market share of CNG purifiers,ensured the supply needs of key customers; steadily advanced the development and realized the mass productionof the National VI project products in the heavy truck market, ensured the quality customer market of theself-owned brand passenger car market, and enhanced the integration capabilities of National VI system in thelight truck market to further expand target customers in the off-road market. Air management system business:
the sales volume of 4-cyl turbochargers were generally stable throughout the year, and the entire series won theNational VI project and gradually ramped up production, at the same time, quickly deployed the VNT market. The
sales volume of 6-cyl turbochargers increased by 10% on a year-on-year basis, and achieved the simultaneousdevelopment of the National VI project. Meanwhile, the company’s manufacturing capabilities for precisionmanufacturing and parts processing have been rapidly improved.
2. Made full use of information technology, improved the system management platform, and promoted thecompany’s operation and management efficiencyThrough information technology and means, supported the establishment and improvement of the company’smanagement business platform. Established information security risk assessment mechanism to ensure the controlof IT asset management software; completed the process management platform architecture design and systemplatform selection, continued to advance the promotion of intelligent manufacturing projects, built the overallframework of intelligent manufacturing, and information planning and roadmap, orderly launched the pilot projectof intelligent manufacturing, and independently completed the common rail intelligent equipment line, the firstphase of intelligent manufacturing project passed acceptance and was rated as the Jiangsu Industrial InternetDevelopment Demonstration Enterprise. Strengthened the overall management of equipment and realized theprogress tracking of the entire process of equipment investment; improved the construction of human resourcesinformation system platform, improved the company’s salary management, career development and other systems,increased talent development, made special training for skills, technology, business, and management personnel,according to business development needs, optimized incentives, formulated special reward schemes for productprojects and sales, and gave full play to the effectiveness of incentives; completed the launch of procurementsharing system, and initially realized the full-cycle management from procurement requirements, sourcing,supplier management to payment settlement process, and carried out standardization of direct materialprocurement management, got through to the information flow, logistics, and capital flow of suppliers, andrealized information interconnection; promoted the construction and promotion of financial sharing platforminformation system, and achieved the stable operation of business and accounting.
3. Planned around strategic goals to promote investment cooperation in new business in an orderly mannerBased on the company’s strategic planning and combined with the company’s existing business, carried outdeep-level research planning one by one, and focused on two major areas of new energy and intelligent network tolay out new business. On the one hand, the company strengthened and promoted a new round of strategiccooperation with its strategic investor Robert Bosch GmbH on the new business of hydrogen vehicles andcoordinated the strategic development. On the other hand, the company controlled the Denmark IRD Fuel CellCompany through mergers and acquisitions, IRD Company had a world-class research and development team,mastered advanced manufacturing technologies for membrane electrode and bipolar plate core components, andhad a stable market in Europe, North America and China, the controlling of IRD Company enabled the companyto quickly enter the field of fuel cell core components and enhance its competitiveness in emerging markets.
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 or
operating profit
√Applicable □Not applicable
In RMB
| Products | Operating revenue | Operating profit | Gross profit ratio | Increase/decrease of operating revenue y-o-y | Increase/decrease of operating profit y-o-y | Increase/decrease of gross profit ratio y-o-y |
| Automobile fuel injection system | 4,872,783,878.47 | 1,475,527,183.45 | 30.28% | -3.09% | 0.43% | 1.06% |
| Air management system | 445,878,703.66 | 121,738,801.53 | 27.30% | 1.26% | -1.54% | -0.78% |
| Automobile exhaust after-treatment system | 3,036,081,382.54 | 434,667,272.02 | 14.32% | 8.64% | 29.39% | 2.30% |
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 revenue, operating cost, total net profitattributable to common stock shareholders of listed company or composing the previous reporting period
□ Applicable √ Not applicable
6. Particular about suspension and termination of listing
□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 financial statement format
In accordance with the Notice on Revised and Printing the Format of Financial Statements for General Enterprisesin 2019 (Cai Kuai [2019] No.6), the Notice on Revised and Printing the Consolidate Financial Statement Format(2019 version) (Cai Kai [2019] No.16 from Ministry of Finance and requirement of accounting standards forbusiness enterprise, the Company prepared the financial statement for year of 2019 and retroactive adjustment shallprevail for the change of such accounting policy.Items and amount have major impact on financial statement of 2018:
| On statement | Items | Book value present on former policy | Book value present on new policy | Number adjusted |
| 2018-12-31 | 2018-12-31 | |||
| Consolidate balance | Note receivable | -- | 1,148,107,603.68 | 1,148,107,603.68 |
| Account receivable | -- | 1,919,793,266.91 | 1,919,793,266.91 |
| sheet | Note receivable and account receivable | 3,067,900,870.59 | -- | -3,067,900,870.59 |
| Note payable | -- | 1,018,367,533.74 | 1,018,367,533.74 | |
| Account payable | -- | 2,047,336,834.66 | 2,047,336,834.66 | |
| Note payable and account payable | 3,065,704,368.40 | -- | -3,065,704,368.40 | |
| Balance sheet of parent company | Note receivable | -- | 264,264,207.30 | 264,264,207.30 |
| Account receivable | -- | 742,246,990.99 | 742,246,990.99 | |
| Note receivable and account receivable | 1,006,511,198.29 | -- | -1,006,511,198.29 | |
| Note payable | -- | 330,545,052.37 | 330,545,052.37 | |
| Account payable | -- | 823,693,469.51 | 823,693,469.51 | |
| Note payable and account payable | 1,154,238,521.88 | -- | -1,154,238,521.88 |
②Implementation of New Financial Instrument Standards
The Accounting Standards for Business Enterprise No.22- Recognition and measurement of financial instrument,Accounting Standards for Business Enterprise No.23- Transfer of financial assets, Accounting Standards forBusiness Enterprise No.24- Hedge accounting and Accounting Standards for Business Enterprise No.37-Presentation of financial instruments (collectively name as New Financial Instrument Standards) revised byMinistry of Finance are implemented by the Company since 1 January 2019. No adjustment is required toinformation in comparable periods in accordance with the linkage between the relevant old and new standards. Oninitial implementation date, the difference between former and new standards shall retroactively adjusted on theretained earnings or other comprehensive income at beginning of the reporting period.Main impact on the financial statement dated 1 Jan. 2019 while implementing the new financial instrumentstandard:
Consolidate financial statement:
In RMB
| Item | 2018-12-31 | Re-classified | Re-measured | 2019-1-1 |
| Assets: | ||||
| Transaction financial asset | 4,692,952,711.43 | 25,169,410.96 | 4,718,122,122.39 | |
| Other current assets | 4,632,137,600.26 | -4,571,886,703.43 | 60,250,896.83 | |
| Available-for-sale financial assets | 255,975,176.91 | -255,975,176.91 | ||
| Other equity instrument investment | 87,088,272.91 | 87,088,272.91 | ||
| Other non-current financial assets | 47,820,896.00 | 47,820,896.00 | ||
| Deferred income tax assets | 234,697,139.58 | -3,775,411.64 | 230,921,727.94 | |
| Note receivable | 1,148,107,603.68 | -49,984,087.50 | 1,098,123,516.18 | |
| Receivables financing | 49,984,087.50 | 49,984,087.50 | ||
| Liability: |
| Short-term borrowings | 298,928,213.94 | 420,478.58 | 299,348,692.52 | |
| Other account payable | 64,448,723.52 | -510,791.08 | 63,937,932.44 | |
| Non-current liabilities due within one year | 15,000,000.00 | 21,770.83 | 15,021,770.83 | |
| Long-term borrowings | 30,000,000.00 | 43,541.67 | 30,043,541.67 | |
| Long-term account payable | 35,422,354.11 | 25,000.00 | 35,447,354.11 | |
| Owners’ equity: | ||||
| Other comprehensive income | -19,809,442.95 | 19,809,442.95 | ||
| Retained profit | 10,996,945,870.13 | -19,809,442.95 | 21,393,999.32 | 10,998,530,426.50 |
Financial statement of parent company:
In RMB
| Item | 2018-12-31 | Re-classified | Re-measured | 2019-1-1 |
| Assets: | ||||
| Transaction financial asset | 4,692,952,711.43 | 25,169,410.96 | 4,718,122,122.39 | |
| Other current assets | 4,576,688,553.49 | -4,571,886,703.43 | 4,801,850.06 | |
| Available-for-sale financial assets | 180,035,176.91 | -180,035,176.91 | ||
| Other equity instrument investment | 11,148,272.91 | 11,148,272.91 | ||
| Other non-current financial assets | 47,820,896.00 | 47,820,896.00 | ||
| Deferred income tax assets | 140,286,756.70 | -3,775,411.64 | 136,511,345.06 | |
| Liability: | ||||
| Short-term borrowings | 112,000,000.00 | 149,966.66 | 112,149,966.66 | |
| Other account payable | 12,142,596.68 | -149,966.66 | 11,992,630.02 | |
| Owners’ equity: | ||||
| Other comprehensive income | -19,809,442.95 | 19,809,442.95 | ||
| Retained profit | 9,340,610,451.36 | -19,809,442.95 | 21,393,999.32 | 9,342,195,007.73 |
(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
| Changes of consolidate scope | Enterprise | Equity obtained method | Contribution ratio |
| Consolidate scope increased | Wuxi Weifu Electric Drive Technology Co., Ltd. | In September 2018, the company obtained 80.00% equity of Weifu Electric Drive by way of cash contribution. According to the Articles of Association of Weifu Electric Drive, the company could not control Weifu Electric Drive, and its investment was accounted for as a joint venture using the equity method. On May 5, 2019, the BOD of Weifu Electric Drive reviewed and approved the proposal to amend the Articles of Association of Weifu Electric Drive. After the revision of the Articles of Association of Weifu Electric Drive, the company was able to control Weifu Electric Drive, so the company incorporated it into the scope of consolidation on May 5, 2019. | 80.00% |
| Consolidate scope increased | Weifu Holding ApS | Newly established in April 2019 | 100.00% |
Board of Directors ofWeifu High-Technology Group Co., Ltd.21 April 2020