Anhui Zhongding Sealing Parts CO.,Ltd.
Abstract of the Annual Report 2021
Anhui Zhongding Sealing Parts CO.,Ltd.
Abstract of the Annual Report 2021
Stock Abbreviation: Zhongding Stock
Stock code: 000887
Stock Abbreviation: Zhongding Stock
Stock code: 000887April 2022
Ⅰ.Important StatementsThis is an abstract of the Annual Report 2021.Investors are suggested to read the complete version of the AnnualReport 2021 on the media, which is designated by the China Securities Regulatory Commission(the “CSRC”) tohave a full understanding of operational results, financial statements, and future plans of the Company. Should therebe any inconsistency between the Chinese version and English version, the Chinese version shall prevail.All directors attended the Annual Report Meeting of the Board of Directors except the following directors.
Name of directors who are
absent
| Name of directors who are absent | Position of directors who are not present in person | Reason for not attending the meeting in person | Name of delegate |
Modified Audit Opinion
□ Applicable √ N/A
The preliminary plan for dividend distribution and converting capital reserves into share capital for commonshareholders which were considered and approved by the Board during the reporting period.
√ Applicable □ N/A
Converting capital reserves into share capital
□ Yes √ No
The Board has considered and approved the following dividend payout plan for the Reporting Period: based on theCompany's total shares of 1,316,489,747，the Company should distribute a cash dividend of RMB 2.0 (tax inclusive)and 0 stock dividend (taxinclusive) per 10 shares to all the shareholders and should not convert capital reserves into share capital.The preliminary plan for dividend distribution for preferred shares in the reporting period was approved by theBoard
□ Applicable √ N/A
Ⅱ.Company Profile
1. Company Information
| Stock Abbreviation | Zhongding Stock | Stock Code | 000887 | |
| Stock Exchange Where the Shares of the Company are Listed | Shenzhen Stock Exchange | |||
| Contact Us | Board Secretary | Securities Representative | ||
| Name | Jiang Weijian | Wang Songyuan | ||
| Address | Economic and Technological Development Zone, Ningguo City, Anhui Province | Economic and Technological Development Zone, Ningguo City, Anhui Province | ||
| Fax | 0563-4181880 transfer to 6071 | 0563-4181880 transfer to 6071 | ||
| Tel. | 0563-4181887 | 0563-4181887 | ||
| jiangwj@zhongdinggroup.com | wangsy@zhongdinggroup.com | |||
2. Business or Product Review in the Reporting Period
1)The main business of the company during the reporting period
The company continued to promote the cost control and refined management of overseas factories. Under thesevere impact of the industry downturn and the novel coronavirus epidemic, the company further carried out a seriesof measures such as cost optimization and non-core business divestiture of overseas enterprises, which increased therecovery of overseas business speed and certainty; through continuous management improvement, domestic andforeign production capacity has been fully restored and maintained a continuous positive growth trend, the orders inhand continued to increase month-on-month, and the company's overall profit gradually increased. On the basis ofyears of mutual adaptation with overseas enterprises, the company has gradually strengthened the strategy ofmanagement output and cultural output, upgraded from regional management to modular management,strengthened the cost control of overseas enterprises, promoted business integration and market expansion, at the
same time, take advantage of the Chinese engineer bonus, and further accelerate technology absorption andinnovation. While maintaining the steady growth of traditional businesses, the company continues to promote thegrowth of incremental businesses of air suspension systems, lightweight chassis systems, and fluid piping systems.Currently, the incremental business has a good momentum of development, and related orders are showing amomentum of accelerated growth. The company will continue to focus on the core strategic goal of intelligentchassis system, and promote the company's business to move towards intelligence. The company continued to rankamong the "Top 100 Global Auto Parts Industry" (ranked 87th).
(1）Intelligent Chassis system business-Air suspension system
①Introduction of Products
Compare to coil spring suspension, air suspension system has the advantage that the Spring stiffness can beadjusted according to different usage scenario.Base on the different road conditions and the input from the heightand acceleration sensor, the ECU of ECAS system will identify the vehicle height change, the air height of air springcan be adjusted through the control the air compressor and valve block to realize the lift or lowering of the vehiclebody.It can make the vehicle body more stable and improve the trafficability characteristic.The application of ECAS system can improve the comfort and the manoeuvrability of vehicle.The scope of ECAS includes air compressor, ECU, sensors, air springs,etc.
②Future Market potential
With the advent of the era of new energy vehicles, the appeal of new energy vehicles intelligent, while chassisprotection air suspension system is no longer the exclusive high-end models, because the new energy vehicle chassissystem stability requirements are much higher than pure fuel vehicles, air suspension system has gradually becomethe mainstream configuration of the new energy vehicle platform.
Leading voice intelligent system, intelligent air suspension system and excellent automatic driving function arethe core of current automobile intelligence.Tesla, NIO, Lixiang, Xiaopeng and other new car-making forces of theirown brands are also equipped with these technologies and intelligent functions such as air suspension systems.Withthe further improvement of air suspension system technology and the improvement of car owners' recognition of theultimate experience of air suspension products, more and more cars will be equipped with air suspension systems toimprove product superiority and customer satisfaction in the future.
In addition to the passenger car, developed countries in the vast majority of medium-sized passenger cars andlight commercial vehicles are used in the air suspension system, heavy truck in addition to the engineering car roadtransport vehicle almost all use air suspension in China in 2018 effective GB7258 motor vehicle operation safetytechnical conditions also require:"The rear axle of Dangerous goods transport trucks with a total mass greater thanor equal to 12,000kg, all semi-trailers for transporting dangerous goods, as well as three-axle fence type, warehousegrid type Semi-trailers should be equipped with air suspension."
The air suspension system will gradually move from high-end to popular, and eventually become anindispensable part of cars, especially smart cars.
③Company industry position and business promotion
AMK Germany, as a high-end supplier of air suspension system, is one of the top three leaders in the industry.Since entering the field of air suspension system business in the 1990s, it has continuously improved the productassembly technology, and has been deeply engaged in the industry for more than 20 years, supporting the world'stop host manufacturers such as Jaguar, Land Rover, Volvo, Audi, Benz, BMW.
The domestic air suspension market is in its infancy, and AMK China has been accelerating the improvementof the performance and cost optimization of the air suspension system supply chain in the Chinese passenger carmarket. With the divestment of industrial business at the beginning of the year, AMK started its business lightly anddeveloped steadily around the strategic goals of "localization promotion, technology iteration and upgrading, andindustrial strengthening and completing". AMK China continues to promote the implementation of otherself-produced hardware projects while launching air supply unit product assembly and production lines insuccession to increase the proportion of self-produced hardware.
Business of AMK China has made breakthrough progress, and it has also obtained orders from many domesticnew car manufacturing forces and leading enterprises of traditional independent brands. Up to now, AMK China hasreceived orders with a total output value of 2.485 billion RMB, and it is expected to get more projects in the future,especially new energy vehicle projects.
(2）Intelligent Chassis System Business-Lightweight chassis system
①Introduction of Products
Automotive metal parts are widely used in automotive chassis systems, including steering systems,suspension systems, braking systems and driving systems. The lightweight of automobiles has formed a broadconsensus in the automobile manufacturing industry. The lightweight of the chassis plays a vital role in theperformance of the whole vehicle. Lightweight chassis products such as aluminum alloy control arm assemblieshave high bicycle value, it is a core parts of operational stability and comfortability.
② Future market potential
Due to the needs of environmental protection and energy saving, the lightweight of automobiles has becomethe trend of automobile development in the world. The lightweight of automobiles is not only suitable for traditionalfuel vehicles, for new energy electric vehicles, it is also very important to reduce body weight and achieve vehiclelightweighting, because it is related to the main battery life of new energy vehicles. Experiments have shown that interms of acceleration performance, it takes about 10 seconds for a 1.5-ton car to accelerate to a speed of 60kilometers per hour; if the weight is reduced by 25%, it can be reduced to 8 seconds.
Lightweight the chassis, the benefits in terms of fuel consumption, handling, etc. far exceed the lightweight ofother components at the same level. The mass of most components on the chassis is unsprung weight. Relativelyspeaking, the mass of the body (structural parts, reinforcements parts and coverings parts) is sprung weight. It isgenerally believed that the effect of the same magnitude of unsprung weight reduction is 5-15 times that of thesprung weight reduction. At the same time, lightening the unsprung weight increases the ratio of the sprung mass tothe unsprung weight, which is equivalent to the athlete removing the sandbag tied to the legs, which cansignificantly improve the response speed and comfort of the car during acceleration, braking and steering.
③Company industry position and business promotion
In recent years, the company has been vigorously developing chassis lightweight system assembly products,and the forged aluminum control arm assembly project has made breakthrough progress. At the same time, itssubsidiary Sichuan Wangjin Company, whose core technology is the ball joint assembly product, is the core safetycomponent and performance component of the chassis system. It has the world's leading technology and has a veryhigh technical threshold.
With the continuous advancement of the company's chassis lightweight system assembly business, it hasobtained orders from many traditional OEMs such as Mercedes-Benz, Changan, GAC, BYD, etc. At the same time,it has made breakthroughs in the business of leading new energy enterprises and obtained relevant orders.
(3) Fluid pipeline system
①Introduction of Products
German TFH, a subsidiary of the company, has been R&D and production of thermal management pipelineproducts. On the basis of supporting traditional thermal management pipelines, TFH vigorously promotes thethermal management pipeline system assembly business of new energy vehicles, and actively expands theapplication of new materials in products. TFH vigorously develops the application of nylon pipes and TPV materials.Compared with traditional internal combustion engine pipes, the application of new technologies can make productslighter in weight, lower in cost, and more flexible in assembly. In addition, it can maintain good NVH and flexibility.With its innovative and technologically swift updating capabilities, TFH is able to respond to changes in hybrid andfuel cell vehicles and is actively engaged in advanced development projects with several OEMs customers.
②Future market potential
As the temperature control requirement for battery modules of the new energy vehicle is much higher thanthose of traditional vehicles, and also because of the absorption of TFH pipeline assembly technology, the singlevehicle value of the company fluid management products has increased from about RMB300 for traditional vehiclesto nearly RMB1,000 for new energy vehicles and even about RMB1,500 for Range Extend New Energy vehicles.With the development of new energy vehicles, the market for fluid piping systems is also expanding rapidly.
③The company's industry status and business promotion
The company has been promoting the R&D and production of thermal management rubber piping products formany years, and its subsidiary German TFH is just an excellent supplier of thermal management piping assemblyproducts for engines and new energy vehicle batteries. TFH has the exclusive production technology creatubeprocess with independent patent and the core technology of TPV hose and nylon tube, which ranks among the toptwo in the world in the industry segment. The company vigorously promotes the business of thermal managementpipeline system assembly for new energy vehicles, and currently it has been supplied to BMW, Volvo, Audi,Volkswagen, Geely, Xiaopeng and LI and other new energy vehicle platforms.TFH China has now completed the establishment and began to expand the domestic market. In the future, thedevelopment of cooling pipeline assembly business will be dominated by German TFH, and the development ofnew energy temperature control system assembly business will be dominated by Zhongding Fluid. The company'sprevious projects have made great progress, and the number of orders in hand has shown a sustained rapid growth.In the future, it is expected to get more project designations, especially new energy vehicle projects.
（4）Sealing System
The company’s subsidiaries, KACO GmbH + Co. KG in Germany, Cooper in the United States, andACUSHNET in the United States, have the top three sealing technologies in the world. KACO actively promotesthe portfolio for NEV on behalf of the companies under the sealing system, and has successfully developed andmatched new energy motor seals of high-performance. At the same time, the company has developed themass-produced products for new energy battery module sealing systems and electric axle assemblies now, whichare delivered to NEV platforms of Volvo, NIO, SAIC, and GAC.
The automotive sealing industry is a high-tech barrier industry with extremely high requirements for reliability.Dynamic seal has the most difficult technology in the sealing industry, especially the high-speed oil seal for newenergy vehicle motors, which represents the most advanced technical level in the global sealing industry. In recentyears, the company has continued to increase the speed of business expansion, especially in the US brand car andlocal brand customers, which has made great breakthroughs, and the industry market share has steadily increased.
1) Main business analysis
1.Overview
The company's internationalization strategy since 2008 has gradually entered the harvest period. By the end ofthe reporting period, the sales in the three major regions of Asia, Europe and America were 51.47%, 35.62% and
12.92% respectively. Through the effective integration of global resources, the company's technology, brand,profitability, and customer base have been rapidly improved, and the two-wheel drive of internal and externalextensions has been realized; at the same time, the company has concentrated its advantageous resources to increaseits support for new energy and environmental protection vehicles, automobiles electronics, system assembly andother fields,and has actively done a good job in project incubation and reserve for the company's sustainable andrapid development in the future.In 2021, with the joint efforts of all employees, the operating revenue was 12.577 billion, up 8.91% year on year; netprofit attributable to shareholders of listed companies was 965 million, up 95.96% year on year; the companycontinues to rank among "Top 100 Global auto Parts" (87th) and "Top 50 Global non-tire rubber products" (13th, 1stin China).
（1）Overseas mergers and acquisitions projects in China landing performance displayIn recent years, the company has actively promoted the domestic implementation strategy of overseas mergers andacquisitions business, and the growth rate of performance has also exceeded expectations. See the following table:
Unit: ten thousand yuan
| 2021 | 2020 | 2019 | ||||
| Operating revenues | Net profit | Operating revenues | Net profit | Operating revenues | Net profit | |
| Wuxi KACO Anhui KACO | 61847 | 11523 | 54614 | 8978 | 49679 | 6006 |
| Anhui WEGU | 21092 | 2541 | 13831 | 2114 | 10825 | 1564 |
| Anhui TFH | 43473 | 2627 | 33929 | 1554 | 27236 | 1163 |
Anhui AMK
| Anhui AMK | 2778.55 | -6 |
（2）The customer structure of OEM supporting
Through overseas mergers and acquisitions, global technology and product integration, brand advantages arehighlighted, and product sales are developing towards mid-to-high-end models. The top ten OEM customers areshown in the table below:
| Top | Customer Name | Top | Customer Name |
| 1 | VW | 6 | Changan |
| 2 | GM | 7 | Daimler |
| 3 | BMW | 8 | RenaultNissan |
| 4 | VOLVO | 9 | BYD |
| 5 | Ford | 10 | GreatWall |
The total direct and indirect sales of the above top ten customers are 6.794 billion, accounting for 54.02% of theoperating revenues in 2021, and the concentration of high-end customers is relatively high.
（3）New energy vehicle project
The company actively deploys the field of new energy vehicles, with intelligent chassis systems as the core, and is atthe international leading level in many new energy sectors such as thermal management pipelines, battery packmotor seals, etc. In 2021, the new energy field business has reached 2.061 billion sales, accounting for 17.28% ofthe annual operating revenues of the automobile business.
2.Revenue and Cost
（1）Composition of operating revenue
Unit: yuan
| 2021 | 2020 | Increase/Decrease over the previous year (%) | |||
| Amount | % of Operating Revenues | Amount | % of Operating Revenues | ||
Total Operating Revenues
| Total Operating Revenues | 12,577,189,139.54 | 100% | 11,548,324,048.12 | 100% | 8.91% |
| By Industry | |||||
Auto Industry
| Auto Industry | 11,926,798,123.81 | 94.83% | 10,617,165,869.64 | 91.94% | 12.34% |
| Non-Auto Industry | 650,391,015.73 | 5.17% | 931,158,178.48 | 8.06% | -30.15% |
| By Product | |||||
| Intelligent chassis-Air Suspension System | 630,809,699.66 | 5.02% | 779,468,001.86 | 6.75% | -19.07% |
| Intelligent chassis-lightweight chassis system | 789,318,431.45 | 6.28% | 441,494,729.76 | 3.82% | 78.78% |
| Intelligent Chassis-rubber business | 2,758,930,779.80 | 21.94% | 2,223,074,743.01 | 19.25% | 24.10% |
Cooling System
| Cooling System | 3,297,365,151.50 | 26.22% | 3,033,063,825.52 | 26.26% | 8.71% |
| Sealing System | 3,057,539,609.52 | 24.31% | 2,790,106,009.98 | 24.16% | 9.59% |
| Others | 2,043,225,467.6 | 16.25% | 2,281,116,737.99 | 19.75% | -10.43% |
| 1 | ||
| By Region | ||
Domestic
| Domestic | 5,613,066,111.56 | 44.63% | 4,593,235,055.03 | 39.77% | 22.20% |
| Overseas | 6,964,123,027.98 | 55.37% | 6,955,088,993.09 | 60.23% | 0.13% |
| By Sales Methods | |||||
Direct Selling
| Direct Selling | 12,577,189,139.54 | 100.00% | 11,548,324,048.12 | 100.00% | 8.91% |
（2）Information about industries, products, regions, and sales models that account for more than 10% ofthe company's operating revenues or operating profit
Unit: yuan
| Operating Revenues | Operating Cost | Gross Profit Rate | Increase/Decrease of operating revenues over the previous year (%) | Increase/Decrease of operating cost over the previous year (%) | Increase/Decrease of gross profit rate over the previous year (%) | |
| By Industry | ||||||
| Auto industry | 11,926,798,123.81 | 9,388,168,843.77 | 21.29% | 12.34% | 13.49% | -0.80% |
| By Product | ||||||
Intelligentchassis-AirSuspensionSystem
| Intelligent chassis-Air Suspension System | 630,809,699.66 | 524,777,417.29 | 16.81% | -19.07% | -23.44% | 4.75% |
| Intelligent chassis-lightweight chassis system | 789,318,431.45 | 662,531,396.73 | 16.06% | 78.78% | 82.64% | -7.21% |
| Intelligent Chassis-rubber business | 2,758,930,779.80 | 2,206,686,350.02 | 20.02% | 24.10% | 31.21% | 20.02% |
| Cooling System | 3,297,365,151.50 | 2,454,470,191.11 | 25.56% | 8.71% | -1.48% | 7.70% |
Sealing System
| Sealing System | 3,057,539,609.52 | 2,204,247,300.00 | 27.91% | 9.59% | 8.11% | 0.99% |
| Others | 2,043,225,467.61 | 1,692,789,748.33 | 17.15% | -10.43% | 1.23% | -9.54% |
| By Region | ||||||
| Domestic | 5,613,066,111.56 | 3,910,471,806.92 | 30.33% | 22.20% | 22.54% | -0.19% |
| Overseas | 6,964,123,027.98 | 5,835,030,596.55 | 16.21% | 0.13% | 1.63% | -1.24% |
| By Sales Methods | ||||||
| Direct Selling | 12,577,189,139.54 | 9,745,502,403.47 | 22.51% | 8.91% | 9.10% | 6.41% |
3 . Main accounting data and financial indicators
（1）Main accounting data and financial indicators in the past three years
Whether the company needs to retrospectively adjust or restate accounting data for previous years
□ Yes √ No
Unit: yuan
| At the end of 2021 | At the end of 2021 | Increase/Decrease at the end of the current year compared with the end of the previous year (%) | At the end of 2019 | |
| Total assets | 18,296,566,389.99 | 18,922,894,919.73 | -3.31% | 18,125,297,428.81 |
| Net assets attributable to shareholders of the Company | 9,266,893,212.21 | 8,975,848,243.77 | 3.24% | 8,897,358,628.55 |
| 2021 | 2020 | Increase/Decrease over the previous year (%) | 2019 | |
| Operating revenues | 12,577,189,139.54 | 11,548,324,048.12 | 8.91% | 11,706,104,396.94 |
| Net profit attributable to shareholders of the Company | 965,194,114.53 | 492,554,600.75 | 95.96% | 601,992,956.87 |
| Net profit attributable to shareholders of the Company before non-recurring gains and losses | 667,607,422.70 | 294,683,214.43 | 126.55% | 474,307,690.32 |
| Net cash flows from operating activities | 881,528,470.23 | 1,437,881,971.80 | -38.69% | 1,643,004,472.74 |
| Basic earnings per share (RMB Yuan /share) | 0.79 | 0.40 | 97.50% | 0.49 |
| Diluted earnings per share (RMB Yuan /share) | 0.76 | 0.41 | 85.37% | 0.49 |
| Weighted average return on net assets | 10.62% | 5.49% | 5.13% | 6.91% |
（2）Main Accounting Data by Quarter
Unit:yuan
| Q1 | Q2 | Q3 | Q4 | |
| Operating Revenues | 3,195,667,003.92 | 3,187,343,491.35 | 2,956,854,315.19 | 3,237,324,329.08 |
| Net profit attributable to shareholders of the Company | 237,567,215.01 | 353,611,946.94 | 227,133,927.88 | 146,881,024.70 |
Net profit attributable toshareholders of the Company beforenon-recurring gains and losses
| Net profit attributable to shareholders of the Company before non-recurring gains and losses | 203,282,948.68 | 237,064,809.92 | 195,608,237.66 | 31,651,426.44 |
| Net cash flows from operating activities | 275,714,341.81 | 369,165,314.04 | 146,843,105.95 | 89,805,708.43 |
Whether there are significant differences between the above financial data or the total value previously disclosed quarterly or interim reports.
□ Yes √ No
4. Shareholders and Shares
(1) Total number of common shareholders and shareholdings of the top ten common shareholders at theperiod-end
Unit：share
| Total number of common shareholders at the end of the Reporting Period | 49,073 | Total number of common shareholders at the end of the previous month of the disclosure date of this report | 60,002 | Total number of preferred shareholders with resumed voting rights at the end of the reporting period | 0 | Total number of preferred shareholders with resumed voting rights at the end of this report previous month of the disclosure date of this report | 0 | |||||
| Top ten common shareholders | ||||||||||||
| Name of shareholder | Nature of shareholder | Shareholding percentage | Total shares held at the period-end | Number of restricted shares held | Pledged or frozen shares | |||||||
| Status | Number | |||||||||||
| Anhui Zhongding Holding (Group) Co., LTD | Domestic non-state-owned corporation | 43.63% | 532,701,321 | Pledged | 142,500,000 | |||||||
| Hong Kong Securities Clearing Co., Ltd. | Foreign corporation | 2.69% | 32,889,104 | |||||||||
| Agricultural Bank of China Co., Ltd. - Guotai Intelligent Automobile Stock Investment Fund | others | 1.05% | 12,786,088 | |||||||||
| Shanghai Pudong Development Bank Co., Ltd. - E Fund Yuxiang Return Bond Securities Investment Fund | others | 0.79% | 9,680,100 | |||||||||
Miaosu
| Miaosu | Domestic natural person | 0.71% | 8,708,941 | |||
| Shenzhen Ping An Dahua Huitong Wealth - Baoshang Bank - Anhui Gaoxin Zhiyuan Smart City Industry Fund (Limited Partnership) | others | 0.62% | 7,594,936 | |||
| (LOF) Industrial Bank Co., Ltd. - Sino-Europe New Trend Equity Securities Investment Fund (LOF) | others | 0.59% | 7,215,900 | |||
| Shanghai Pudong Development Bank Co., Ltd. - E Fund Ruicheng Flexible Allocation of Hybrid Securities Investment Fund | others | 0.57% | 6,902,000 | |||
| China Construction Bank Corporation - China Europe New Blue Chip Flexible Allocation Hybrid Securities Investment Fund | others | 0.47% | 5,796,650 | |||
| Zhao Xiyi | Domestic natural person | 0.43% | 5,233,566 | |||
| Explanation of the related relationship or concerted action of the above shareholders | The company does not know whether there is an associated relationship between the shareholders, and whether it is a person acting in concert stipulated in the "Administrative Measures for the Disclosure of Information on Changes in Shareholdings of Shareholders of Listed Companies". | |||||
| Description of shareholders participating in margin financing and securities lending business (if any) | As of December 31, 2021, Miaosu, one of the top 10 shareholders of the company, held 8,630,041 shares of the company through the customer credit transaction guarantee securities account of Huaxi Securities Co., Ltd. | |||||
（2）Total Number of Preferred Shareholders and TOP 10 Preferred Shareholders and Their Shareholdings
□ Applicable √ N/A
During the reporting period, the Company had no preferred shareholders' shareholdings.
（3）Disclose the property rights and control relationship between the Company and the actual controller inblock diagram form
5. Relevant Information on Corporate Bonds
□ Applicable √ N/A
Ⅲ.Important issues
N/A