Stock Code: 000570, 200570 Stock Name: Changchai, Changchai-B Announcement No. 2021-011
CHANGCHAI COMPANY, LIMITEDANNUAL REPORT 2020 (SUMMARY)
Part I Important NotesThis Summary is based on the full Annual Report of Changchai Company, Limited (together with itsconsolidated subsidiaries, the “Company”, except where the context otherwise requires). In order for a fullunderstanding of the Company’s operating results, financial position and future development plans, investorsshould carefully read the aforesaid full text, which has been disclosed together with this Summary on the mediadesignated by the China Securities Regulatory Commission (the “CSRC”).All the directors of the Company attended in person the board meeting for the approval of this Report exceptfor the following:
| Name | Office title | Reason for not attending the meeting in person | Proxy entrusted to attend the meeting |
| Xing Min | Independent Director | For reason of work | Zhang Yan |
Independent auditor’s modified opinion:
□ Applicable √ Not applicable
Board-approved final cash and/or stock dividend plan for ordinary shareholders for the Reporting Period:
□ Applicable √ Not applicable
The Company has no final dividend plan, either in the form of cash or stock.Board-approved final cash and/or stock dividend plan for preferred shareholders for the Reporting Period:
□ Applicable √ Not applicable
This Report and its summary have been prepared in both Chinese and English. Should there be anydiscrepancies or misunderstandings between the two versions, the Chinese versions shall prevail.
Part II Key Corporate Information
1. Stock Profile
| Stock name | Changchai， Changchai-B | Stock code | 000570, 200570 | |
| Stock exchange for stock listing | Shenzhen Stock Exchange | |||
| Contact information | Board Secretary | Securities Representative | ||
| Name | He Jianjiang | |
| Address | 123 Huaide Middle Road, Changzhou, Jiangsu, China | |
| Fax | （86）519-86630954 | |
| Tel. | （86）519-68683155 | |
| Email address | cchjj@changchai.com |
2. Principal Activities or Products in the Reporting Period
As a manufacturer, we specialize in the manufacture and sale of diesel engines, diesel engine fittings andcastings, gasoline engines, gasoline engine fittings, rotovators, walking tractors, molds and jigs as well as theassembly and sale of diesel engine and gasoline engine supporting sets.
We mainly manufacture and sell small and medium-sized single-cylinder and multi-cylinder diesel enginesunder the brand of “Changchai”, which are often used in tractors, combine-harvesters, light commercial vehicles,agriculture equipment, small-sized engineering machinery, generator sets, ship machines, etc.
3. Key Financial Information
(1) Key Financial Information of the Past Three Years
Indicate by tick mark whether there is any retrospectively restated datum in the table below.
√ Yes □ No
Reason for retrospective restatement:
Correction of accounting error.
Unit: RMB
| 2020 | 2019 | 2020-over-2019 change (%) | 2018 | |||
| Before | Restated | Restated | Before | Restated | ||
| Operating revenue | 2,296,464,711.24 | 2,040,133,717.30 | 2,045,820,801.10 | 12.25% | 2,132,902,718.60 | 2,139,272,523.92 |
| Net profit attributable to the listed company’s shareholders | 52,432,443.05 | 24,934,586.11 | 24,966,526.85 | 110.01% | 62,021,374.04 | 62,409,528.46 |
| Net profit attributable to the listed company’s shareholders before exceptional gains and losses | 25,483,147.57 | 14,376,783.21 | 14,405,485.64 | 76.90% | -43,333,196.13 | -42,961,549.69 |
| Net cash generated from/used in operating activities | 251,796,654.53 | -20,542,857.52 | -20,325,189.56 | —— | 273,819,526.89 | 274,514,945.73 |
| Basic earnings per share (RMB/share) | 0.0934 | 0.0444 | 0.0445 | 109.89% | 0.1112 | 0.1112 |
| Diluted earnings per share (RMB/share) | 0.0934 | 0.0444 | 0.0445 | 109.89% | 0.1112 | 0.1112 |
| Weighted average return on equity (%) | 2.40% | 1.20% | 1.21% | 1.19% | 2.84% | 2.86% |
| 31 December 2020 | 31 December 2019 | Change of 31 December 2020 over 31 December 2019 (%) | 31 December 2018 | |||
| Before | Restated | Restated | Before | Restated | ||
| Total assets | 3,952,954,464.45 | 3,484,975,990.48 | 3,488,820,324.60 | 13.30% | 3,542,019,195.75 | 3,546,079,628.86 |
| Equity attributable to the listed company’s shareholders | 2,273,349,347.02 | 2,109,239,597.94 | 2,110,892,767.58 | 7.70% | 2,043,308,026.74 | 2,044,929,255.64 |
Reason for change in accounting policies and correction of accounting error:
The 4th Meeting of the 9th Board of Directors held on 29 July 2020 reviewed and approved the Proposal onCorrection of Accounting Errors in Previous Period. Changzhou Xingsheng Property Management Co., Ltd. thatwas not included in the scope of consolidated statements before has been conducted accounting treatment accordingto the provisions of the accounting standards during the Reporting Period. For further information, see theAnnouncement No. 2020-043 on the Resolutions of the 4th Meeting of the 9th Board of Directors, theAnnouncement No. 2020-045 on Correction of Accounting Errors in Previous Period and the Verification Report onthe Special Statement Regarding the Correction of Accounting Errors in the Period from 2017 to 2019, which can befound on Securities Times, Ta Kung Pao and http://www.cninfo.com.cn.
(2) Key Financial Information by Quarter
Unit: RMB
| Q1 | Q2 | Q3 | Q4 | |
| Operating revenue | 537,033,349.19 | 630,422,433.11 | 584,404,482.93 | 544,604,446.01 |
| Net profit attributable to the listed company’s shareholders | 1,510,305.60 | 26,180,005.46 | 11,263,467.62 | 13,478,664.37 |
| Net profit attributable to the listed company’s shareholders before exceptional gains and losses | 1,271,708.92 | 19,400,431.04 | 8,151,814.68 | -3,340,807.07 |
| Net cash generated from/used in operating activities | 19,241,295.96 | -39,596,025.21 | 38,040,529.46 | 234,110,854.32 |
Indicate by tick mark whether any of the quarterly financial data in the table above or their summations differsmaterially from what have been disclosed in the Company’s quarterly or interim reports.
□ Yes √ No
4. Share Capital and Shareholder Information at the Period-End
(1) Numbers of Ordinary Shareholders and Preferred Shareholders with Resumed Voting Rights as well asHoldings of Top 10 Shareholders
Unit: share
| Number of ordinary shareholders at the period-end | 47,770 | Number of ordinary shareholders at the month-end prior to the disclosure of this Report | 57,470 | Number of preferred shareholders with resumed voting rights at the period-end | 0 | Number of preferred shareholders with resumed voting rights at the month-end prior to the disclosure of this Report | 0 | ||||
| Top 10 shareholders | |||||||||||
| Name of shareholder | Nature of shareholder | Shareholding percentage | Total shares held at the period-end | Restricted shares held | Shares in pledge or frozen | ||||||
| Status | Shares | ||||||||||
| Changzhou Investment Group Co., Ltd | State-owned legal person | 30.43% | 170,845,236 | ||||||||
| China Construction Bank- First State Cinda New Energy Industry Stock Type Securities Investment Fund | Other | 1.47% | 8,233,132 | ||||||||
| KGI ASIA LIMITED | Foreign legal person | 0.57% | 3,189,845 | ||||||||
| Chen Jian | Domestic natural person | 0.49% | 2,764,000 | ||||||||
| Li Suinan | Domestic natural person | 0.28% | 1,548,100 | ||||||||
| Huang Guoliang | Domestic natural person | 0.27% | 1,528,891 | ||||||||
| Zeng Li | Domestic natural person | 0.24% | 1,360,000 | ||||||||
| Chen Hengjun | Domestic natural person | 0.23% | 1,281,000 | ||||||||
| Xue Hong | Domestic natural person | 0.22% | 1,240,000 | ||||||||
| Hu Wenyong | Domestic natural person | 0.22% | 1,230,066 | ||||||||
| Related or acting-in-concert parties among the shareholders above | It is unknown whether there is among the top 10 public shareholders and the top 10 unrestricted public shareholders any related parties or acting-in-concert parties as defined in the Administrative Measures for Information Regarding Shareholding Alteration. | ||||||||||
| Top 10 shareholders involved in securities margin trading (if any) | Shareholder Chen Jian held 900,000 shares in the Company through a margin account. |
(2) Number of Preferred Shareholders and Shareholdings of Top 10 of Them
□ Applicable √ Not applicable
(3) Ownership and Control Relations between the Actual Controller and the Company
5. Corporate Bonds
Does the Company have any corporate bonds publicly offered on the stock exchange, which were outstandingbefore the date of this Report’s approval or were due but could not be redeemed in full?No.Part III Operating Performance Discussion and Analysis
1. Business Overview of the Reporting Period
In 2020, the outbreak of the COVID-19 pandemic caused decline in the international trade and turmoil in thefinancial markets. The agricultural machinery industry and the internal combustion engine industry ushered in atrend of contrarian growth in the continuous deep adjustment under the combined effect of various favorable factorssuch as the comprehensive and effective national prevention and control measures, the proactive local policies forsupporting the resumption of work and production, China attaching great importance to food safety andstandardizing the implementation of subsidy policies for agricultural machinery purchases, and new infrastructureconstruction promoting the rapid growth of the construction machinery market. The Company closely followed thedecisions and arrangements of the central, provincial and municipal governments, and coordinated the promotion ofpandemic prevention and control and corporate economic development. Under the premise of comprehensivelystrengthening the implementation of pandemic prevention and control arrangements and normalizing pandemicprevention and control, the Company correctly grasped the strategic development direction and insisted on
strengthening the main business, expanding the areas and improving quality and efficiency, thus achieving goodoperating results. Performance in economic indicators such as sales and profits have improved. During theReporting Period, the Company sold 759,500 units of diesel engines, gasoline engines and related generator sets,including 132,200 units of gasoline engines, generating total sales revenue of RMB2,296,464,711.24, an increase of
12.25% year-on-year.
In terms of product development and supporting areas, the Company completed the development, promotionand supporting work of major non-road multi-cylinder diesel engines of the China IV emission standards and avariety of ultra-conventional varieties, which has built strong support for the annual sales. Four power ranges of192FA and two power ranges of ZN390B have obtained Euro V emission certificates. Except for non-agriculturalsectors, products have significantly increased in marine, electromechanical and construction industries. TheCompany continued to optimize its products and had sufficient new product reserves; it comprehensively expandedsupporting resources, and achieved significant increases in the field of benchmarking.
With regard to market service, the Company strengthened the after-market service business, built andimproved the after-market sales network; it optimized market service resources and personnel structure, andenhanced the assessment management of service centers and service stations in the service process. Market servicecapabilities and service timeliness have been improved. The Company reached a new high level of market servicesatisfaction. The CRM project was integrated with the released applications within the Company, which madecustomer management more standardized and consolidated the foundation for promoting the informationization ofthe entire market.
Concerning quality management, the Company passed the ISO9001 and IATF16949 quality systemsupervision and audit views during the Reporting Period, and passed the voluntary certification of 4L88 agriculturalmachinery products by Nanjing Sam Certification T&D Co., Ltd. The Company further optimized the qualityassessment system to effectively improve product reliability.
As for internal management, the Company strengthened lean management to promote the improvement ofquality and efficiency; it further deepened the construction of internal control systems, strengthened the supervisionof key projects, and achieved obvious results in standardizing the management of subsidiaries. By accelerating themobilization of internal and external resources, the Company met market demand to the greatest extent andimproved its production and operation efficiency.
During the Reporting Period, construction of Changchai Machinery was in full swing and proceeded smoothly.In mid-April, the Company launched a private placement project of 2020, and the plan was reviewed and approvedby the China Securities Regulation Commission.
2. Significant Change to Principal Activities in the Reporting Period
□ Yes √ No
3. Product Category Contributing over 10% of Principal Business Revenue or Profit
√ Applicable □ Not applicable
Unit: RMB
| Product category | Operating revenue | Operating profit | Gross profit margin | YoY change in operating revenue (%) | YoY change in operating profit (%) | YoY change in gross profit margin (%) |
| Diesel engines | 2,112,251,290.73 | 313,033,825.90 | 14.82% | 13.80% | 5.94% | -1.10% |
| Gasoline engines | 132,735,777.75 | 24,465,587.09 | 18.43% | -0.90% | -3.14% | -0.43% |
4. Business Seasonality that Calls for Special Attention
□ Yes √ No
5. Significant YoY Changes in Operating Revenue, Cost of Sales and Net Profit Attributable to the ListedCompany’s Ordinary Shareholders or Their Compositions
□ Applicable √ Not applicable
6. Possibility of Delisting
□ Applicable √ Not applicable
7. Matters Related to Financial Reporting
(1) YoY Changes to Accounting Policies, Accounting Estimates or Measurement Methods
√ Applicable □ Not applicable
| Changes to the accounting policies and why | Approval process | Remark |
| The Ministry of Finance issued the Notice on Revising and Issuing the Accounting Standards for Business Enterprises No.14-Revenue (CK [2017] No.22) (hereinafter referred to as the “New Standards governing Revenue) in July 2017 and required all companies listed domestically to implement it since 1 January 2020. | On 28 April 2020, the Company convened the 2nd Meeting of the 9th Board of Directors and the 2nd Meeting of the 9th Supervisory Committee and approved the Proposal on Changes of Some Accounting Policies. |
(1) Influence of Implementing the New Standards governing Revenue
Affected items in the consolidated balance sheet and amount thereof:
| Item | 31 December 2019 | Affected by classification and measurement | 1 January 2020 |
| Advances from customers | 31,789,001.78 | -31,789,001.78 |
| Contract liabilities | 29,652,202.74 | 29,652,202.74 |
| Other current liabilities | 1,177,712.38 | 2,136,799.04 | 3,314,511.42 |
Affected items in the balance sheet of the Company as the parent and amount thereof:
| Item | 31 December 2019 | Affected by classification and measurement | 1 January 2020 |
| Advances from customers | 28,673,664.87 | -28,673,664.87 |
| Contract liabilities | 26,661,229.33 | 26,661,229.33 | |
| Other current liabilities | 2,012,435.54 | 2,012,435.54 |
(2) Retrospective Restatements due to Correction of Material Accounting Errors in the Reporting Period
□ Applicable √ Not applicable
No such cases.
(3) YoY Changes to the Scope of Consolidated Financial Statements
□ Applicable √ Not applicable
No such cases.