Stock Code: 000570, 200570 Stock Name: Changchai, Changchai-B Announcement No. 2020-065
CHANGCHAI COMPANY, LIMITED
THIRD QUARTERLY REPORT 2020 (SUMMARY)
Part I Important NotesThe Board of Directors (or the “Board”), the Supervisory Committee as well as the directors,supervisors and senior management of Changchai Company, Limited (together with itsconsolidated subsidiaries, the “Company”, except where the context otherwise requires)hereby guarantee the factuality, accuracy and completeness of the contents of this Report andits summary, and shall be jointly and severally liable for any misrepresentations, misleadingstatements or material omissions therein.All the Company’s directors have attended the Board meeting for the review of this Reportand its summary.Shi Xinkun, the Company’s legal representative, Zhang Xin, the Company’s General Manager,and Jiang He, head of the Company’s financial department (equivalent to financial manager)hereby guarantee that the financial statements carried in this Report are factual, accurate andcomplete.This Report and its summary have been prepared in both Chinese and English. Should therebe any discrepancies or misunderstandings between the two versions, the Chinese versionsshall prevail.
Part II Key Corporate InformationI Key Consolidated Financial InformationIndicate by tick mark whether there is any retrospectively restated datum in the table below.
√ Yes □ No
Reason for retrospective restatement:
Correction of accounting error
| 30 September 2020 | 31 December 2019 | Change (%) | ||||||
| Before | After | After | ||||||
| Total assets (RMB) | 3,764,223,265.12 | 3,484,975,990.48 | 3,488,820,324.60 | 7.89% | ||||
| Equity attributable to the listed company’s shareholders (RMB) | 2,173,457,688.37 | 2,109,239,597.94 | 2,110,892,767.58 | 2.96% | ||||
| Q3 2020 | Q3 2019 | YoY change (%) | Q1-Q3 2020 | Q1-Q3 2019 | YoY change (%) | |||
| Before | After | After | Before | After | After | |||
| Operating revenue (RMB) | 584,404,482.93 | 460,579,449.28 | 462,134,190.47 | 26.46% | 1,751,860,265.23 | 1,576,409,294.87 | 1,581,005,315.47 | 10.81% |
| Net profit attributable to the listed company’s shareholders (RMB) | 11,263,467.62 | 950,668.62 | 944,815.43 | 1092.13% | 38,953,778.68 | 20,008,693.69 | 20,062,451.12 | 94.16% |
| Net profit attributable to the listed company’s shareholders before exceptional items (RMB) | 8,151,814.68 | 197,704.53 | 159,010.84 | 5026.58% | 28,823,954.64 | 14,424,860.12 | 14,419,757.46 | 99.89% |
| Net cash generated from/used in operating activities (RMB) | 38,040,529.46 | -23,645,425.75 | -23,579,838.08 | -- | 17,685,800.21 | -177,873,130.52 | -176,901,330.95 | -- |
| Basic earnings per share (RMB/share) | 0.0201 | 0.0017 | 0.0017 | 1082.35% | 0.0694 | 0.0356 | 0.0357 | 94.40% |
| Diluted earnings per share (RMB/share) | 0.0201 | 0.0017 | 0.0017 | 1082.35% | 0.0694 | 0.0356 | 0.0357 | 94.40% |
| Weighted average return on equity (%) | 0.54% | 0.05% | 0.05% | 0.49% | 1.86% | 1.02% | 1.02% | 0.84% |
Reason for change in accounting policy and particulars about correction of accounting error:
The Proposal on Correction of Previous Accounting Error was reviewed and approved on the 4
thMeeting of the
thBoard of Directors held on 29 July 2020, and Changzhou Xingsheng Property Management Co., Ltd. whichwas not included in the scope of consolidated balance sheet before has been carried out accounting treatment inaccordance to the stipulations of accounting standards. For details, see the Announcement on the Resolutions ofthe 4th Meeting of the 9
thBoard of Directors (Announcement No.:2020-043), the Announcement on Correction ofPrevious Accounting Error (Announcement No.:2020-045), and the Authentication Report of Special Instructionregarding Correction of Accounting Error from 2017 to 2019 disclosed on Securities Times, Ta Kung Pao andhttp://www.cninfo.com.cn.
1. Effects to the consolidated balance sheet of the same period in 2019
| Effected items | 1 January - 30 September 2019 | |
| Before | After | |
| Income statement: | ||
| 1. Revenues | 1,576,409,294.87 | 1,581,005,315.47 |
| Operating revenue | 1,576,409,294.87 | 1,581,005,315.47 |
| 2. Costs and expenses | 1,561,504,072.64 | 1,566,116,694.04 |
| Cost of sales | 1,359,819,510.40 | 1,363,790,338.62 |
| Taxes and levies | 5,752,156.03 | 5,768,967.47 |
| Administrative expense | 56,227,095.34 | 56,859,918.77 |
| Finance costs | -5,341,321.85 | -5,349,163.54 |
| Interest expense | 3,845,353.84 | 3,864,569.25 |
| Interest income | 3,262,988.18 | 3,264,215.89 |
| Other income | 326,259.20 | 338,322.49 |
| Investment income | 6,454,405.76 | 6,512,955.00 |
| Credit impairment loss | -5,586,101.21 | -5,581,969.86 |
| 3. Operating profit | 17,097,695.63 | 17,155,838.71 |
| Non-operating income | 961,235.14 | 977,241.24 |
| Non-operating expense | 233,654.06 | 246,251.41 |
| 4. Gross profit | 17,825,276.71 | 17,886,828.54 |
| Income tax expense | -2,232,431.33 | -2,224,636.93 |
| 5. Net profit | 20,057,708.04 | 20,111,465.47 |
| By operating continuity | 20,057,708.04 | 20,111,465.47 |
| Net profit attributable to owners of the Company as the parent | 20,008,693.69 | 20,062,451.12 |
| 6. Total comprehensive income | 51,056,783.04 | 51,110,540.47 |
| Attributable to owners of the Company as the parent | 51,007,768.69 | 51,061,526.12 |
| 7. Earnings per share | ||
| 7.1 Basic earnings per share | 0.0356 | 0.0357 |
| 7.2 Diluted earnings per share | 0.0356 | 0.0357 |
| Cash Flow Statement: | ||
| 1. Cash flows from operating activities | ||
| Proceeds from sale of commodities and rendering of services | 1,359,318,699.75 | 1,364,093,458.22 |
| Cash generated from other operating activities | 11,459,085.79 | 12,148,649.31 |
| Subtotal of cash generated from operating activities | 1,394,569,539.45 | 1,400,033,861.44 |
| Payments for commodities and services | 1,266,094,750.13 | 1,269,133,440.46 |
| Cash paid to and for employees | 219,511,319.88 | 220,572,688.59 |
| Taxes and levies paid | 20,471,465.12 | 20,667,117.44 |
| Cash used in other operating activities | 66,365,134.84 | 66,561,945.90 |
| Subtotal of cash used in operating activities | 1,572,442,669.97 | 1,576,935,192.39 |
| Net cash generated from/used in operating activities | -177,873,130.52 | -176,901,330.95 |
| 2. Cash flows from investing activities: | ||
| Proceeds from disinvestment | 14,000,000.00 | 17,900,000.00 |
| Return on investment | 6,454,405.76 | 6,480,702.52 |
| Subtotal of cash generated from investing activities | 21,494,911.84 | 25,421,208.60 |
| Payments for the acquisition of fixed assets, intangible assets and other long-lived assets | 16,257,775.02 | 16,317,913.12 |
| Payments for investments | 70,138,441.76 | 77,088,441.76 |
| Subtotal of cash used in investing activities | 86,396,216.78 | 93,406,354.88 |
| Net cash generated from/used in investing activities | -64,901,304.94 | -67,985,146.28 |
| 5. Net increase in cash and cash equivalents | -287,128,835.58 | -289,240,877.35 |
| Cash and cash equivalents, beginning of the period | 687,079,639.59 | 691,266,373.34 |
| 6. Cash and cash equivalents, end of the period | 399,950,804.01 | 402,025,495.99 |
Exceptional gains and losses:
√ Applicable □ Not applicable
Unit: RMB
| Item | Q1-Q3 2020 | Note |
| Gain/Loss arising from disposal of non-current assets (inclusive of impairment allowance write-offs) | 181,780.55 | |
| Government subsidies recognized in the current period, except for those acquired in the ordinary course of business or granted at certain quotas or amounts according to the government’s unified standards | 5,695,097.89 |
| Capital occupation charges on non-financial enterprises that are recorded into current profit or loss | 257,714.14 | |
| Gain/Loss on changes in fair value arising from holding of held-for-trading financial assets and liabilities, derivative financial assets and liabilities and investment income from disposal of held-for-trading financial assets and liabilities, derivative financial assets and liabilities and other debt investments other than effective hedge business related to the Company’s normal operating businesses | 5,503,903.85 | |
| Other non-operating income and expense other than the above | 224,536.62 | |
| Less: Income tax effects | 1,486,385.30 | |
| Non-controlling interests effects (after tax) | 246,823.71 | |
| Total | 10,129,824.04 | -- |
Explanation of why the Company reclassifies as recurrent an exceptional gain/loss item defined or listed in theExplanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to thePublic—Exceptional Gain/Loss Items:
□ Applicable √ Not applicable
No such cases in the Reporting Period.II Total Number of Shareholders and Holdings of Top 10 of Them as at the End of theReporting Period
1. Numbers of Ordinary Shareholders and Preference Shareholders with Resumed Voting Rights as well asHoldings of Top 10 Shareholders
Unit: share
| Number of ordinary shareholders | 46,684 | Number of preference shareholders with resumed voting rights (if any) | 0 | |||
| Top 10 shareholders | ||||||
| Name of shareholder | Nature of shareholder | Shareholding percentage | Total shares held | Restricted shares held | Shares in pledge or frozen | |
| Status | Shares | |||||
| Changzhou Investment Group Co., Ltd. | State-owned corporation | 30.43% | 170,845,236 | |||
| China Construction Bank－First State Cinda New Energy Industry Equity Securities Investment Fund | Other | 1.70% | 9,554,765 | |||
| KGI ASIA LIMITED | Foreign corporation | 0.57% | 3,189,845 | ||||
| Chen Jian | Domestic individual | 0.34% | 1,914,000 | ||||
| China Citic Bank－CCB CSI 500 Index Enhanced Securities Investment Fund | Other | 0.29% | 1,614,501 | ||||
| China Construction Bank－First State Cinda Advanced Intelligence Equity Securities Investment Fund | Other | 0.28% | 1,594,500 | ||||
| Li Suinan | Domestic individual | 0.28% | 1,548,100 | ||||
| Huang Guoliang | Domestic individual | 0.27% | 1,528,891 | ||||
| Hu Wenyong | Domestic individual | 0.27% | 1,500,266 | ||||
| UBS AG | Foreign corporation | 0.25% | 1,392,120 | ||||
| Top 10 unrestricted shareholders | |||||||
| Name of shareholder | Unrestricted ordinary shares held | Shares by class | |||||
| Class | Shares | ||||||
| Changzhou Investment Group Co., Ltd. | 170,845,236 | RMB-denominated ordinary share | 170,845,236 | ||||
| China Construction Bank－First State Cinda New Energy Industry Equity Securities Investment Fund | 9,554,765 | RMB-denominated ordinary share | 9,554,765 | ||||
| KGI ASIA LIMITED | 3,189,845 | Domestically listed foreign share | 3,189,845 | ||||
| Chen Jian | 1,914,000 | RMB-denominated ordinary share | 1,914,000 | ||||
| China Citic Bank－CCB CSI 500 Index Enhanced Securities Investment Fund | 1,614,501 | RMB-denominated ordinary share | 1,614,501 | ||||
| China Construction Bank－First State Cinda Advanced Intelligence Equity Securities Investment Fund | 1,594,500 | RMB-denominated ordinary share | 1,594,500 | ||||
| Li Suinan | 1,548,100 | Domestically listed foreign share | 1,548,100 | ||||
| Huang Guoliang | 1,528,891 | Domestically listed foreign share | 1,528,891 |
| Hu Wenyong | 1,500,266 | Domestically listed foreign share | 1,500,266 |
| UBS AG | 1,392,120 | RMB-denominated ordinary share | 1,392,120 |
| 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 engaged in securities margin trading (if any) | Shareholder Chen Jian held 800,000 shares in the Company through his account of collateral securities for margin trading in Zhongtai Securities Co., Ltd., accounting for 0.14% of shareholding. | ||
Indicate by tick mark whether any of the top 10 ordinary shareholders or the top 10 unrestricted ordinaryshareholders of the Company conducted any promissory repo during the Reporting Period.
□ Yes √ No
No such cases in the Reporting Period.
2. Number of Preference Shareholders and Shareholdings of Top 10 of Them
□ Applicable √ Not applicable
Part III Significant EventsI Changes in Key Financial Statement Line Items and Explanation of why
√ Applicable □ Not applicable
1. Consolidated Balance Sheet Items as at 30 September 2020
| Item | 30 September 2020 (RMB) | 31 December 2019 (RMB) | Change (%) | Explanation of why |
| Accounts receivable | 798,741,555.78 | 419,302,056.87 | 90.49% | The Company properly allowed customers’ buying on credit for more markets and multi-cylinder diesel engine customers are mainly supporting companies of main engine, which are usually given longer payment days. |
| Other receivables | 6,375,613.71 | 9,703,390.94 | -34.29% | Recovery of an amount of RMB5 million due to wholly-owned subsidiary Housheng Investment |
| Construction in progress | 136,252,904.99 | 91,358,156.24 | 49.14% | Wholly-owned subsidiary Changchai Machinery being under construction |
| Notes payable | 573,397,000.00 | 403,035,000.00 | 42.27% | More bank acceptance bills were paid to suppliers as required by them during Q1-Q3 2020 |
| Employee benefits payable | 13,343,460.16 | 44,559,015.79 | -70.05% | Salaries and bonuses accrued in the nine months ended 30 September 2019 were paid in the corresponding period of the current year |
| Taxes and levies payable | 12,144,962.87 | 9,094,382.58 | 33.54% | Increases in both sales and profit during Q1-Q3 2020 |
2. Consolidated Income Statement Items for Q1~Q3 2020
| Item | Q1~Q3 2020 (RMB) | Q1~Q3 2019 (RMB) | Change (%) | Explanation of why |
| Finance costs | 7,051,835.86 | -5,349,163.54 | - | Exchange gains and losses resulted from exchange rate fluctuations and increase in discounting expense |
| Other income | 5,695,097.89 | 338,322.49 | 1583.33% | Increase in government grants received by the Company and its subsidiaries during Q1~Q3 2020 |
| Income tax expense | 5,108,476.05 | -2,224,636.93 | - | Profit increased during Q1~Q3 2020, and the same period of last year saw corporate income tax rebates, with no such tax rebates in the current period. |
| Net profit attributable to shareholders of the Company as the parent | 38,953,778.68 | 20,062,451.12 | 94.16% | Increases in both sales revenue and profitability during Q1~Q3 2020 |
3. Consolidated Cash Flow Statement Items for Q1~Q3 2020
| Item | Q1~Q3 2020 (RMB) | Q1~Q3 2019 (RMB) | Change (%) | Explanation of why |
| Net cash generated from/used in operating activities | 17,685,800.21 | -176,901,330.95 | - | Increase in sales revenue during Q1~Q3 2020 |
| Payments for the acquisition of fixed assets, intangible assets and other long-lived assets | 114,151,611.40 | 16,317,913.12 | 599.55% | Increase in the acquisition of fixed assets, etc. by wholly-owned subsidiary Changchai Machinery, which was being under construction |
| Payments for investments | 25,022,956.16 | 77,088,441.76 | -67.54% | Q1~Q3 2019 saw an investment of RMB50 million by the Company in Housheng New Energy, with no such investment in Q1~Q3 2020 |
| Net cash generated from/used in financing activities | -2,280,722.28 | -44,354,400.12 | - | Q1~Q3 2019 saw the repayment of some bank loan and the payment of cash dividends, with no such dividend payout in Q1~Q3 2020 |
II Progress, Influence and Solutions in respect of Significant Events
√ Applicable □ Not applicable
1. On the 9 April 2020, the Company held the 24
th
Meeting of the 8
th Board of Directors and the 19
thMeeting ofthe 8
th
Supervisory Committee, on which the Proposal on the Plan for Private Placement of A-shares in 2020 andrelated proposals were reviewed and approved and the Company was allowed to privately offer stocks notexceeding 168,412,297 shares (inclusive) to specific investors not exceeding 35 including Changzhou InvestmentGroup Co., Ltd. (hereinafter referred to as “Investment Group”) for raising funds not exceeding RMB635 million(inclusive). On 8 May 2020, above issue was reviewed and approved by the 2019 Annual General Meeting of theCompany.
2. On 7 September 2020, the Company received the Acceptance Form regarding Application for AdministrativePermission of China Securities Regulatory Commission from China Securities Regulatory Commission(hereinafter referred to as the “CSRC”), and the CSRC accepted the Company’s application for administrativepermission for private placement of A-shares.
3. On 14 September 2020, the Company received the Notice of First Feedback on Administrative PermissionProject of CSRC from the CSRC. The Company carefully checked and implemented the feedback together withrelated intermediaries, supplemented materials of and answered questions about issues involved as required by thefeedback and disclosed the reply on the feedback on 29 September 2020. The Company timely submitted thematerials regarding the reply on the feedback to the CSRC as required.
4. On 18 September 2020, the Company held the interim meeting of the Board of Directors and the interimmeeting of the Supervisory Committee, reviewed and approved the Proposal on Plan (Revised) for Private
Placement of Stocks in 2020 and related proposals which have been reviewed and approved on the 2
nd
Extraordinary General Meeting of 2020 held on 12 October 2020. The information in the plan about the validity ofresolutions and authorization by the general meeting to the Board of Directors to handle related issues about thisprivate placement of stocks were adjusted.Progress of any share repurchase:
□ Applicable √ Not applicable
Progress of any reduction of the repurchased shares through centralized bidding:
□ Applicable √ Not applicable
III Commitments that the Company’s Actual Controller, Shareholders, Related Parties,Acquirers, the Company Itself or Other Relevant Parties, Failed to Fulfill on Time during theReporting Period
√ Applicable □ Not applicable
| Commitment | Commitment maker | Type of commitment | Contents | Date of commitment making | Period of commitment | Fulfillment |
| Other commitments made to minority shareholders | Changchai Company, Limited | Bonus | Rewards Plan for Shareholders in Next Three Years(2020-2022) Under the premise of positive distributive profit (remaining after-tax profits after making up for the loss and extracting for the common reserves) in this year or half year and abundant money flow and no influence on the following-up going concern after cash bonus, the profits allocated by cash every year shouldn’t be lower than 10% of the allocable profits from parent company. Meanwhile, the accumulated allocable profits by cash in the arbitrary continuous three accounting years should not be lower than 30% of the annual average allocable profits in those three years. | 8 May 2020 | Year 2020-2022 | Implement in a normal way |
| Fulfilled on time | Yes | |||||
| When the commitment was not completely fulfilled at maturity, the specific reasons and following work plan shall be given | N/A | |||||
IV Securities Investments
√ Applicable □ Not applicable
| Type of securities | Code of securities | Name of securities | Initial investment cost | Accounting measurement method | Opening carrying amount | Gain/loss on fair-value changes in the current period | Cumulative fair-value changes through equity | Purchased in the current period | Sold in the current period | Gain/loss in the current period | Closing carrying amount | Accounting title | Funding source |
| Domestic/foreign stock | 600166 | Foton Motor | 41,784,000.00 | Fair value method | 260,100,000.00 | 89,590,000.00 | 261,720,100.00 | 0.00 | 0.00 | 0.00 | 349,690,000.00 | Investment in other equity instruments | Self-funded |
| Domestic/foreign stock | 600919 | Bank of Jiangsu | 18,000,000.00 | Fair value method | 102,060,000.00 | 7,380,000.00 | 77,724,000.00 | 0.00 | 0.00 | 0.00 | 109,440,000.00 | Investment in other equity instruments | Self-funded |
| Total | 59,784,000.00 | -- | 362,160,000.00 | 96,970,000.00 | 339,444,100.00 | 0.00 | 0.00 | 0.00 | 459,130,000.00 | -- | -- | ||
2. Investments in Derivative Financial Instruments
□ Applicable √ Not applicable
No such cases in the Reporting Period.V Progress of Projects Financed with Raised Funds
□ Applicable √ Not applicable
VI 2020 Annual Operating Performance Forecast
Warning of a forecast loss on or a forecast significant year-on-year change in the 2020 annual net profit, as well asexplanation of why:
□ Applicable √ Not applicable
VII Significant Contracts Arising from the Company’s Ordinary Course of Business
□ Applicable √ Not applicable
VIII Cash Entrusted for Wealth Management
√ Applicable □ Not applicable
Unit: RMB’0,000
| Type | Funding source | Amount | Undue amount | Unrecovered overdue amount |
| Broker’s wealth management product | Self-funded | 730.00 | 1,380.00 | 0.00 |
| Bank’s wealth management product | Self-funded | 310.00 | 0.00 | 0.00 |
| Total | 1,040.00 | 1,380.00 | 0.00 | |
High-risk wealth management transactions with a significant single amount, or with low security, low liquidity orno principal protection:
□ Applicable √ Not applicable
Wealth management transactions with possible impairments including an expectedly unrecoverable principal:
□ Applicable √ Not applicable
IX Irregularities in the Provision of Guarantees
□ Applicable √ Not applicable
No such cases in the Reporting Period.X Occupation of the Company’s Capital by the Controlling Shareholder or any of Its RelatedParties for Non-Operating Purposes
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XI Communications with the Investment Community such as Researches, Inquiries andInterviews Received during the Reporting Period
√ Applicable □ Not applicable
| Date of communication | Place of communication | Way of communication | Type of communication party | Communication party | Main contents communicated and materials provided | index of the basic facts according to the investigation |
| 14 September 2020 | Easy IR | Other | Individual | Individual investor | The pricing of the private placement of stocks in 2020 by the Company | Easy IR |
| 18 August 2020 | Easy IR | Other | Individual | Individual investor | The ownership structure and products of Housheng New Energy | Easy IR |
| 18 August 2020 | Easy IR | Other | Individual | Individual investor | The ownership structure of Housheng New Energy | Easy IR |
| 13 August 2020 | Easy IR | Other | Individual | Individual investor | The disposal plan of shares in Futon Motor held by the Company | Easy IR |
| 13 August 2020 | Easy IR | Other | Individual | Individual investor | The reason for the increase in sales expense of the Company for the first half the year | Easy IR |
| 13 August 2020 | Easy IR | Other | Individual | Individual investor | The progress of the application for the private placement of stocks by the Company | Easy IR |
| 27 July 2020 | Easy IR | Other | Individual | Individual investor | The progress of the private placement of stocks by the Company | Easy IR |
| 27 July 2020 | Easy IR | Other | Individual | Individual investor | The construction period for the innovation capacity building project of the Company’s technical center | Easy IR |
| 24 July 2020 | Easy IR | Other | Individual | Individual investor | Suggestions on the quest of the Company for the government | Easy IR |
| 24 July 2020 | Easy IR | Other | Individual | Individual investor | The disposal flow of old factories | Easy IR |
| 7 July 2020 | Easy IR | Other | Individual | Individual investor | The remuneration appraisal standards for the Company’s senior management and plan for the investors meeting | Easy IR |
| 7 July 2020 | Easy IR | Other | Individual | Individual investor | Factory inspection for Lithium battery diaphragm project | Easy IR |
| 7 July 2020 | Easy IR | Other | Individual | Individual investor | The industrial transformation and upgrading of the Company | Easy IR |
| 7 July 2020 | Easy IR | Other | Individual | Individual investor | The industrial transformation and upgrading of the Company | Easy IR |
| 7 July 2020 | Easy IR | Other | Individual | Individual investor | Product R&D of the Company | Easy IR |
| 7 July 2020 | Easy IR | Other | Individual | Individual investor | Work performance of the Company’s Board Secretary | Easy IR |
| 7 July 2020 | Easy IR | Other | Individual | Individual investor | The labor contract of the General Manager of Housheng New Energy | Easy IR |
| 6 July 2020 | Easy IR | Other | Individual | Individual investor | Land of the Company | Easy IR |