[中报]东方精工:2021年半年度报告（英文版）
原标题:东方精工:2021年半年度报告（英文版） Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2021 July 2021 Part I Important Notes, Table of Contents and Definitions The Board of Directors (or the “Board”), the Supervisory Committee as well as the directors, supervisors and senior management of Guangdong Dongfang Precision Science & Technology Co., Ltd. (hereinafter referred to as the “Company”) hereby guarantee that the contents of this Report are true, accurate and complete and free of any misrepresentations, misleading statements or material omissions, and collectively and individually accept legal responsibility for such contents. Tang Zhuolin, the Company’s legal representative, Shao Yongfeng, the Company’s Chief Financial Officer, and Yao Bin, the Head of the Company’s Accounting Department (equivalent to Financial Manager) hereby guarantee that the financial statements carried in this Report are truthful, accurate and complete. Apart from the following director, other directors of the Company attended in person the board meeting for the approval of this Report. The name of director who did not attend in person The post of director who did not attend in person Reasons for not attending the meeting in person Consignee’s name Mai Zhirong Independent Director Personal Work He Weifeng For possible risks with respect to the Company, please refer to “X Risks Faced by the Company and Countermeasures” of “Part III Management Discussion and Analysis” herein. And investors are kindly advised to read through the aforesaid contents. The Company has no semi-annual dividend plan, either in the form of cash or stock. This Report has been prepared in Chinese and translated into English. Should there be any discrepancies or misunderstandings between the two versions, the Chinese version shall prevail. Table of Contents Part I Important Notes, Table of Contents and Definitions ........................................................... 2 Part II Corporate Information and Key Financial Information ................................................... 7 Part III Management Discussion and Analysis ............................................................................. 10 Part IV Corporate Governance ...................................................................................................... 40 Part V Environmental and Social Responsibilities ....................................................................... 43 Part VI Significant Events ............................................................................................................... 46 Part VII Share Changes and Shareholder Information ............................................................... 53 Part VIII Preference Shares ............................................................................................................ 62 Part IX Corporate Bonds ................................................................................................................ 63 Part X Financial Report .................................................................................................................. 64 Documents Available for Reference 1. The financial statements signed and sealed by the Company’s legal representative, Chief Financial Officer and the person-in-charge of the financial organ. 2. All the originals of the Company’s announcements and documents that were disclosed to the public during the Reporting Period on the media designated by the CSRC for information disclosure. 3. The 2021 Semi-Annual Report carrying the signature of the legal representative. 4. The documents above are lodged in the Securities Department of the Company. Definitions Term Definition Dongfang Precision, or the “Company” Guangdong Dongfang Precision Science & Technology Co., Ltd. and its consolidated subsidiaries, except where the context otherwise requires Dongfang Precision (China) The corrugated box packaging machinery division of Guangdong Dongfang Precision Science & Technology Co., Ltd. Fosber Group Fosber S.p.A. Fosber Asia Guangdong Fosber Intelligent Equipment Co., Ltd. Fosber America Fosber America, Inc. Fosber Tianjin Fosber Machinery (Tianjin) Co., Ltd. Tiru.a Group/Spain Tiru.a Tiru.a Group Industrial, S.L. Tiru.a America Tiru.a America Inc. Italy QCorr QuantumCorrugated S.r.l. Dongfang Precision (Europe)/Italy EDF EDF Europe S.r.l. Dongfang Precision (Netherland) Dong Fang Precision (Netherland) Cooperatief U.A. Dongfang Precision (HK) Dong Fang Precision (HK) Limited Parsun Power Suzhou Parsun Power Machine Co., Ltd. Suzhou Jinquan Suzhou High-Tech Zone Jinquan Business Management Partnership (Limited Partnership) Shunyi Investment Suzhou Shunyi Investment Co., Ltd. Yinglian Digital Foshan Yinglian Digital Printing Equipment Co., Ltd. Jaten Robot Guangdong Jaten Robot & Automation Co., Ltd. Hainan Yineng Hainan Yineng Investment Co., Ltd. Dongfang Digicom Dongfang Digicom Technology Co., Ltd. Dongfang Digicom (Guangdong) Dongfang Digicom Technology (Guangdong) Co., Ltd. Corrugated board Corrugated board is a multi-layer paper-bonding object composed of at least one sandwich layer of wavy medium (commonly known as "corrugated paper", "corrugated medium paper", "corrugated paper medium" and "corrugated base paper") and one layer of cardboard (also known as "liner board"). Corrugated box Corrugated box is a rigid paper container made of corrugated boards through die cutting, indenting, nailing or gluing. Corrugated box is one of the most widely used packaging containers in modern business and trade. Corrugated box printing and packaging machinery Corrugated box printing and packaging machinery include corrugated box printing and packaging line and stand-alone products that integrates pre-feeding, printing, grooving, die cutting, forming and packaging functions in whole or in part, which is highly functionally integrated, highly automated and highly technical, can save the capital and manpower investment, reduce workers' workload and improve the production efficiency of box manufacturers, and requires equipment manufacturers to be highly competent in design, technological innovation, assembly and finishing of parts. Corrugator lines Corrugator lines are assembly lines comprising corrugating, gluing, agglutinating, bundle breaking, dimension board cutting and output processes, which are used to produce and process corrugated boards. A corrugator line has two independent process sections as the wet section and the dry section. The wet section, composed of the base paper stand, auto splicer, preheat preregulator, single-face corrugator, feeding bridge, glue machine and double facer, is used to make corrugated based paper into three-layer, five-layer and seven-layer corrugated boards of different corrugated combinations. The dry section, composed of the rotary shear, slitter indenter, cut-off knife and stacker, is used to slit, indent, cut off and stack corrugated boards as ordered. Corrugator lines are key production equipment for corrugated board and box manufacturers. Pre-printing and post-printing intelligent automatic packaging machinery Pre-printing and post-printing intelligent automatic packaging machinery refers to equipment that is compatible with the corrugated box printing line or stand-alone products and can provide functions related to pre-printing and post-printing processes of corrugated box printing and packaging. It includes the pre-feeder, stripper conveyor, intelligent stacker and folder gluer. Outboard motors Outboard motors are a kind of detachable power units that are mounted on the stern plate of a boat to drive the boat to sail. General utility small gasoline motors General utility small gasoline motors are a kind of thermo-dynamic machinery of 20kW power or less with a wide range of applicability. It is characterized by small size, light weight and easy operation, and is usually used as a power engine for a variety of terminal products. By the structure of engine and principle of work, general utility small gasoline motors can be divided into two-stroke general utility small gasoline motors and four-stroke general utility small gasoline motors. CSRC China Securities Regulatory Commission SZSE, or the “Stock Exchange” Shenzhen Stock Exchange RMB yuan, RMB yuan’0,000 Expressed in the Chinese currency of Renminbi, expressed in tens of thousands of Renminbi The “Reporting Period” or “Current Period” The period from 1 January 2021 to 30 June 2021 Part II Corporate Information and Key Financial Information I Corporate Information Stock name Dongfang Precision Stock code 002611 Stock exchange Shenzhen Stock Exchange Company name in Chinese 广东东方精工科技股份有限公司 Abbr. 东方精工 Company name in English (if any) Guangdong Dongfang Precision Science & Technology Co., Ltd Abbr. (if any) Dongfang Precision Legal representative Tang Zhuolin II Contact Information Board Secretary Securities Representative Name Zhou Wenhui Zhu Hongyu Office address 25/F, Hisense Southern Building, 1777 Chuangye Road, Nanshan District, Shenzhen City, Guangdong Province, China 25/F, Hisense Southern Building, 1777 Chuangye Road, Nanshan District, Shenzhen City, Guangdong Province, China Tel. 0755-36889712 0755-36889712 Fax 0755-36889822 0755-36889822 Email address [email protected] [email protected] III Other Information 1. Contact information of the company Whether the company's registered address, company office address and its postal code, company website and e-mail address have changed during the reporting period. □ Applicable √ Not applicable The company's registered address, company office address and its postal code, the company's website and e-mail address remain unchanged during the reporting period, which can be found in the 2020 Annual report. 2. Information disclosure and location. Whether the information disclosure and location have changed during the reporting period. □ Applicable √ Not applicable The name of the information disclosure newspaper selected by the company, the URL of the website designated by the CSRC that publishes the semi-annual report, and the location where the semi-annual report lodges remain unchanged during the reporting period, which can be found in the 2020 Annual report. IV Key Financial Information Indicate whether there is any retrospectively restated datum in the table below. □ Yes √ No 2021H1 2020H1 change (%) Operating revenue (RMB yuan) 1,400,558,964.18 1,177,491,225.13 18.94% Net profit attributable to the listed company’s shareholders (RMB yuan) 191,117,520.46 127,198,462.09 50.25% Net profit attributable to the listed company’s shareholders before exceptional gains and losses (RMB yuan) 156,022,832.56 81,018,675.86 92.58% Net cash generated from/used in operating activities (RMB yuan) 206,023,828.25 29,409,409.32 600.54% Basic earnings per share (RMB yuan /share) 0.14 0.08 75.00% Diluted earnings per share (RMB yuan /share) 0.14 0.08 75.00% Weighted average return on equity (%) 4.72% 2.89% 1.83% 30 June 2021 30 June 2020 Change (%) Total assets (RMB yuan) 6,478,830,955.64 6,323,236,687.05 2.46% Equity attributable to the listed company’s shareholders (RMB yuan) 3,885,981,229.85 4,158,538,499.75 -6.55% V Accounting Data Differences under China’s Accounting Standards for Business Enterprises (CAS) and International Financial Reporting Standards (IFRS) and Foreign Accounting Standards 1. Net Profit and Equity under CAS and IFRS □ Applicable √ Not applicable No difference for the Reporting Period. 2. Net Profit and Equity under CAS and Foreign Accounting Standards □ Applicable √ Not applicable No difference for the Reporting Period. VI Exceptional Gains and Losses √ Applicable □ Not applicable Unit: RMB yuan Item 2021H1 Note Gain or loss on disposal of non-current assets (inclusive of impairment allowance write-offs) 244,619.17 Government grants through profit or loss (exclusive of government grants given in the Company’s ordinary course of business at fixed quotas or amounts as per the government’s uniform standards) 6,712,327.65 Gain or loss on fair-value changes on held-for-trading and derivative financial assets and liabilities & income from disposal of held-for-trading and derivative financial assets and liabilities and other debt investments (exclusive of the effective portion of hedges that arise in the Company’s ordinary course of business) 31,537,269.94 Non-operating income and expenses other than the above -24,078.31 Less: Income tax effects 2,960,044.59 Non-controlling interests effects (net of tax) 415,405.96 Total 35,094,687.90 -- Explanation of why the Company reclassifies as recurrent an exceptional gain/loss item defined or listed in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Exceptional Gain/Loss Items: □ Applicable √ Not applicable No such cases in the Reporting Period. Part III Management Discussion and Analysis I Principal Activities of the Company in the Reporting Period Dongfang Precision focuses on the main business of "high-end intelligent equipment", regarding "intelligent manufacturing" as its strategic vision. Intelligent corrugated packaging machinery is the Company's core strategic business. Currently, Dongfang Precision has grown into a supplier of corrugated packaging machinery with comprehensive strength leading the globe. Besides, it is endeavouring to become an overall solution provider for intelligent plants by virtue of intelligent and digitalisation transformation. Parsun Power, a subsidiary of the Company that focuses on the field of outboard motors, is a domestic advanced supplier specialising in hydrodynamic equipment. The Company's principal activities/products are divided into four categories, namely corrugator lines, corrugated box printing and packaging machinery, overall solutions for intelligent plants, and outboard motors. The details are shown in the following table: Principal activity/product Corresponding business entity Main functions and application fields Corrugator lines Subsidiary Fosber Group Subsidiary Fosber Asia Corrugator lines are key production equipment for corrugated board and box manufacturers, which are used to process and produce corrugated boards of different specifications. They are widely used by corrugated board manufacturers (primary plant + secondary plant) in the corrugated packaging industry chain. Corrugated box printing and packaging machinery Dongfang Precision (China) Subsidiary Dongfang Precision (Europe) Corrugated box printing and packaging machinery is key equipment for the production of corrugated boxes, which is used to process corrugated boards into corrugated boxes of different specifications according to customer needs. It is widely used by all kinds of enterprises that process and produce corrugated boxes (primary plant + secondary plant + tertiary plant) in the Principal activity/product Corresponding business entity Main functions and application fields corrugated packaging industry chain. Corrugated box printing and packaging machinery includes the corrugated box printing line, individual machine units for corrugated box printing, as well as pre-printing and post-printing intelligent and automatic machinery like pre-feeders, stripper conveyors, intelligent stackers, and folder gluers. Overall solutions for intelligent plants Subsidiary Dongfang Digicom An enterprise- and industry-level industrial Internet platform for downstream customers in the corrugated packaging industry will be created to help the customers realise a digital and network-based equipment layer, connect business, cash, and information flows, and promote comprehensive digitalisation of the production and operation layer, as well as data-based reasonable management and decision-making, in order to promote intelligent transformation, and enhance enterprise competitiveness in all respects. Outboard motors Subsidiary Parsun Power Outboard motors are a kind of detachable power units that are mounted on the stern plate of a boat to drive the boat to sail. They can be applied to boats shorter than 24m in inland rivers, lakes, and coastal waters. Currently, the equipment has been widely used for civil short-distance transportation/fishing, leisure sports like yachts/motorboats, and military use/maritime affairs/flood control and rescue. In the first half of 2021, the global pandemic eased, the world economy gradually recovered, and the overall development trend improved. China's economy continued its strong recovery, and its foreign trade maintained upward momentum. Under the strong leadership of the Board of Directors and management team, Dongfang Precision took active actions and seized opportunities to promote the steady and sound development of its business in all aspects. (I) Operating results continued to grow, and operating revenue growth accelerated In the first half of 2021, the Company's main business and operating results continued the growth trend since 2020. Changes in the major indicators of operating results are shown in the following table: H1 2021 H1 2020 Change (%) Operating revenue (RMB yuan) 1,400,558,964.18 1,177,491,225.13 18.94% Net profit attributable to the listed company’s shareholders (RMB yuan) 191,117,520.46 127,198,462.09 50.25% Net profit attributable to the listed company’s shareholders before exceptional gains and losses (RMB yuan) 156,022,832.56 81,018,675.86 92.58% Net cash generated from/used in operating activities (RMB yuan) 206,023,828.25 29,409,409.32 600.54% During the Reporting Period, the Company's domestic business segment showed strong momentum for revenue growth, driving the overall operating revenue growth to accelerate compared to the previous half year; its overseas business segment continued to develop steadily, with operating quality and profit margin steadily improving. Since the beginning of the year, prices of raw materials such as steel products in China have fluctuated. The Company actively took measures during the Reporting Period to strengthen cooperation with core suppliers and moderately adjust the selling prices of some products. As a result, the overall gross profit margin of domestic business entities remained stable. (II) Analysis of main business operations 1. Domestic business segment: The overall growth momentum was strong (1) Corrugator lines of subsidiary Fosber Asia: Significant growth was achieved In the first half of 2021, subsidiary Fosber Asia took full advantage of development opportunities and increased its business development efforts in the domestic and Southeast Asian markets. Coupled with the impact of the low performance base under the pandemic in the same period last year, its operating performance grew significantly year-on-year. With an operating revenue of RMB150 million, 4.6 times that of the same period in H1 2020, the company created the best first-half performance level in its history. The intelligent corrugator line "Pro-Line" launched by Fosber Asia is well received by industrial customers from both China and the Southeast Asian market. During the Reporting Period, order shipments grew significantly. The company's sales in the domestic market contributed to more than 80% of its operating revenue in the first half of the year, with a particularly impressive growth rate. Moreover, cooperation between Fosber Asia and downstream leading enterprises in the corrugated packaging industry proved fruitful. Fosber Asia successfully completed the fulfilment of high-end production line orders from customers leading the downstream industries. The first group of domestic industrial customers all repurchased the products in the first half of the year. Fosber Asia also reached strategic cooperation with Hengsheng Packaging under Xinsheng Group. Furthermore, progress was made in the expansion of the Southeast Asian market. Production line orders or equipment orders from industrial customers in countries such as Thailand and India were fulfilled. Since the first quarter, Fosber Asia has been in a state of full production and sale. With ample orders in hand, its production has been scheduled until the end of the year. Capacity utilisation remains efficient. Based on actual needs and future planning, during the Reporting Period, Fosber Asia made efforts to improve the utilisation rate and operational efficiency of existing production capacity on the one hand, and on the other hand initiated and steadily promoted plans for land acquisition and new capacity development. Fosber Asia's high-end corrugator line, the Pro-Line series, is developed based on the needs of customers in China and Southeast Asia, and is produced in Nanhai District, Foshan. The localisation rate of parts and accessories stabilises at around 90%. Fosber Asia has established a stable supply chain system in China. Taking full advantage of China's industry chain and supply chain with the most complete industrial categories and the most complete supporting facilities in the world, Fosber Asia is able to provide industrial customers in the Chinese and Southeast Asian markets with high-quality high-end corrugator lines made in China. (2) Outboard motors of subsidiary Parsun Power: The sales of outboard motors grew rapidly, and operating benefits continued to be released In the first half of 2021, benefiting from the continuous growth of overseas countries' demand for aquatic recreation and entertainment under the pandemic, as well as the trend of global manufacturing orders shifting to China as the pandemic continued, orders and shipments of subsidiary Parsun Power for outboard motors and general utility small gasoline motors grew rapidly year-on-year, driving the operating revenue and net profit of Parsun Power to both increase by more than 50% year-on-year. Parsun Power actively seized market opportunities. While intensifying marketing and promotion efforts targeted at domestic customers, it increased R&D investment and improved its product structure. During the Reporting Period, the year-on-year growth rate of Parsun Power's domestic market revenue exceeded 60%, and the sales revenue of its medium- and large-horsepower outboard motors grew by more than 40% year-on-year. In early July, the 115-horsepower gasoline outboard motor independently developed by Parsun Power was successfully rolled out. The power and horsepower of this model are by far the largest among all domestic self-owned brands. The successful rollout of the 115 model broke the monopoly of foreign brands such as the United States and Japan in the large-horsepower gasoline outboard motor market, filling the gap in the R&D and manufacturing of high-power gasoline outboard motors in China. Parsun Power entered into cooperation with Swedish diesel outboard motor brand OXE Marine in August 2020 on the sale of OXE large-horsepower diesel outboard motor products in China. In the first half of 2021, a sales breakthrough was successfully achieved. It is expected that sales will continue to grow in the second half of the year. During the Reporting Period, Parsun Power actively improved the level of operations management. In the first half of the year, it continued to introduce outstanding talent in R&D, sale, production, and operation. As a result, the comprehensive strength of the team was further enhanced, and the development foundation was further consolidated. Additionally, by implementing lean management, as well as improving operational efficiency and capacity utilisation, Parsun Power achieved steady improvement in shipment quality, providing support for the shipment growth of medium- and large-horsepower models. In the first half of 2021, Parsun Power steadily promoted the R&D of electric outboard motors and its business development in the domestic military market, with positive results achieved. The company will continue to strengthen the development and promotion of large-horsepower models and electric outboard motors, and increase investment in military market development. (3) Corrugated box printing and packaging machinery of Dongfang Precision (China): Domestic market revenue growth accelerated In the first half of 2021, due to the impact of international shipping factors, the export revenue of Dongfang Precision (China)'s corrugated box printing and packaging machinery declined, but at the same time, its domestic market revenue increased rapidly year-on-year. Cooperation with large group customers in the downstream industries such as Shanying Intl, MYS, and HXPP was steadily promoted. Moreover, the machinery was successfully sold for the first time in several emerging market countries along the "Belt and Road". The sales and shipments of technical support services, spare products, and spare parts maintained good and stable growth momentum. 2. Overseas business segment: The trend of steady development continued, and operating quality steadily improved The Company's overseas business is operated by Fosber Group, a wholly owned subsidiary of the Company (its subsidiaries include Fosber America, Italy QCorr, and Spain Tiru.a), and Dongfang Precision (Europe), another wholly owned subsidiary. The above overseas business entities are mainly located in Europe and the United States. All of them implement localised management and operation. Their product design, development, production, and manufacturing are carried out in Europe and the United States; their main products are corrugator lines and corrugated packaging and printing machinery that are used to process and produce corrugated packaging products. Corrugated packaging is a rigid consumer product in European and American countries and regions. The operations and development of the Company's overseas business entities are not negatively affected by international trade disputes. In the management and control of overseas subsidiaries, the Company has integrated modern business management means, such as corporate governance and the operation of the shareholders' meeting, the Board of Directors, and the Supervisory Committee, the management and control of strategies and finance, and the management of decentralisation and authorisation of authority. Based on the Company's actual situation, after years of exploration and cooperation, a set of effective methods for managing and controlling overseas subsidiaries has been formed. On the basis of "mutual respect and mutual trust", with an open mind to seek common ground while reserving differences, the Company has achieved adequate management and control of overseas subsidiaries, effectively reducing the risks caused by "globalisation and internationalisation". In the past five years since 2016, the overseas segment has developed steadily overall, with operating revenue and profit increasing year after year. In the first half of 2021, the vaccination rate in developed countries such as the United States and Europe kept increasing, countries successively lifted lockdowns, and their monetary and fiscal policies remained loose. The overseas business segment benefited from the above-mentioned positive changes in the macroeconomic environment. Subsidiaries Fosber Group and Dongfang Precision (Europe) achieved steady growth in order sales, as well as steady improvement in operating quality and internal synergy. From 2019 to 2020, Fosber Group completed the acquisitions of Spain Tiru.a, a manufacturer of high-end corrugating and pressure rolls with a history of nearly one century, and relevant business assets of Agnati, an Italian manufacturer of corrugator lines with a glorious history. A series of post-investment integration, operational adjustment, and other measures implemented after the acquisitions bore fruits in the first half of 2021: The operating results of Spain Tiru.a and Italy QCorr both improved from the same period last year; the order sales of Spain Tiru.a's corrugating roll products grew year-on-year; positive progress was also made in the order sales of Italy QCorr's Quantum high-speed corrugator lines; the expense ratios of the two companies were effectively controlled, and their operational efficiency was improved. 3. Firm promotion of "digitalisation and intellectualisation" strategy In 2020, the Company deemed "digitalisation and intellectualisation" as a vital part of its five-year strategies, endeavouring to promote the digitalisation and intellectualisation transformation of corrugated printing and packaging machinery. Subsidiary Dongfang Digicom is an institution that undertakes the Company's overall solutions for intelligent plants. In the first half of 2021, Dongfang Digicom checked, sorted, and analysed the Company's actual situation and its "digitalisation and intellectualisation" planning, surveyed the solution demand and development of customers in the downstream industries, further clarified and defined the specific direction and path of action, and steadily promoted the development of solution-related products. At the same time, it quickly promoted team building, clarified the organisational structure and post setting, and vigorously introduced outstanding talent. In the future, Dongfang Digicom will, by taking advantage of the Company's presence in the whole industry chain of corrugated packaging machinery, product library with the most complete and richest product specifications and market positioning in the industry, technologies and accumulated practices of information-based production management systems in the industry, as well as experience related to corrugated packaging machinery in the past three decades, create an enterprise- and industry-level industrial Internet platform through new-generation information technologies, such as 5G, the Internet of Things (IoT), edge computing, big data, cloud computing, and artificial intelligence (AI), to promote comprehensive digitalisation of the production and operation layer, and boost the digital and intelligent upgrading and transformation of customers in the corrugated packaging industry. (III) Epitaxial business segment: New industrial development opportunities were created to facilitate the Company's higher-level development In 2020, the Company set up a wholly owned subsidiary, Yineng Investment. With industries as the body and capital as the wings, Yineng Investment is positioned as an institution to undertake the Company's epitaxial business segment. Guided by the Company's strategic plan, it focuses on industries related to the main business of Dongfang Precision and fully participates in the industries supported by the "14th Five-Year Plan" by virtue of the industrial advantages. For equity investment, it focuses on areas such as high-end manufacturing and big consumption, and aims at enterprises with extensive industrial development opportunities and favourable industrial advantages. It will obtain good investment returns and seek industrial synergy at the same time to create new industrial development opportunities and facilitate the Group's sound development. During the Reporting Period, the main progress of the Company's epitaxial business segment is as follows: 1. Increase in holdings of Fosber Asia In the first half of 2021, the Company reached an agreement with minority shareholders of Fosber Asia on the acquisition of the minority shareholders' 32.8% equity interests in Fosber Asia. After the completion of the acquisition, the equity interests in Fosber Asia held by Dongfang Precision increased from 56.4% to 89.2%. Fosber Asia has entered the fast lane of development since 2020. With the successive launch of its localised high-end intelligent corrugator line products and the continuous growth of its market shares in China and Southeast Asia, Fosber Asia is expected to achieve favourable growth in operating results over the next few years. Through this transaction, Fosber Asia's contribution ratio to the net profit attributable to the listed company’s shareholders in Dongfang Precision's consolidated statements will be increased. More importantly, the rapid growth of Fosber Asia's own operating results will be able to improve the Company's performance to a greater extent, driving the Company's revenue and profit to achieve favourable growth. The transaction price of this equity acquisition is approximately RMB36.12 million. The transaction does not constitute a related-party transaction or a major asset restructuring, and has no significant influence on the Company's current operating results or financial position. Therefore, the involuntary disclosure standards stipulated in relevant laws and regulations, as well as rules and normative documents of departments are not met. 2. Investment progress in high-end manufacturing In the first half of 2021, the Company completed two equity investments in the high-end manufacturing industry, namely: (1) Investment in Guizhou Aerospace Xinli Technology Co., Ltd. with approximately 3.86% equity interests obtained Guizhou Aerospace Xinli Technology Co., Ltd. (hereinafter referred to as "Aerospace Xinli") is affiliated to China Aerospace Science and Industry Corporation. Its main business is the R&D, production, and manufacturing of high-end alloy steel castings and forgings, non-ferrous castings, structural parts, and new aviation and aerospace materials which are widely used in nuclear energy, nuclear power, aviation, aerospace, and other fields. It is a domestically renowned manufacturer of nuclear-level parts and components qualified for national defense equipment research and production. With great R&D strength, Aerospace Xinli has completed the R&D and localisation of dozens of alloy materials and key parts for nuclear energy equipment. A number of its key materials and parts are the first of its kind in China. Aerospace Xinli has also achieved import substitution. The key materials and parts of nuclear safety machinery and equipment used in domestic pressurised water nuclear power plants are all produced by Aerospace Xinli. Aerospace Xinli participated in the first-phase technology R&D of the International Thermonuclear Experimental Reactor (ITER) and delivered the first batch of magnet support products in the world, making China the first country to deliver products in batches to the ITER project. (2) Investment in Sichuan Dajin Stainless Steel Co., Ltd. with approximately 2.29% equity interests obtained Sichuan Dajin Stainless Steel Co., Ltd. (hereinafter referred to as "Dajin Stainless Steel"), whose main business is the precision machining and manufacturing of key aero-engine parts and components (such as engine casings and ring parts), is a professional supplier of aero-engine parts and components. It is also involved in many fields such as aerospace missiles and rail transit. Dajin Stainless Steel has all the qualifications for the production and manufacturing of military products. Its core products are key aero-engine parts and components with the characteristics of structural complexity, high test difficulty, and high tolerability. Occupying a leading position in the segment, Dajin Stainless Steel is the most professional and largest manufacturer of aero-engine ring parts among private-owned enterprises. (3) Impact on the Company In the above two projects, one target company is engaged in nuclear energy and nuclear power while the other is engaged in aviation and aerospace, both of which are national strategic science and technology industries and industries supported by the state during the "14th Five-Year Plan" period. The two companies focus on the manufacturing of key high-end parts and components. With core R&D technology advantages, a certain business scale, as well as strong sustainable development capability and profitability, they have become leading enterprises in their respective industries. The Company's investment in the above two high-end manufacturing enterprises is in line with the positioning and purpose of the Company's epitaxial business; it helps the Company to enter relevant high-end manufacturing areas, create industrial development opportunities, develop and grow in the national aerospace, aviation, nuclear energy, and nuclear power industries, as well as share revenue during the rapid growth and development of the two enterprises. None of the two equity investments constitutes a related-party transaction or a major asset restructuring, or has any significant influence on the Company's current operating results or financial position. Therefore, the involuntary disclosure standards stipulated in relevant laws and regulations, as well as rules and normative documents of departments are not met. 3. Investment progress in big consumption-related areas In the first half of 2021, the Company contributed RMB50 million to the establishment of Jiaxing Fengrong Equity Investment Partnership (Limited Partnership) as one of the limited partners. The partnership invested specifically in Hangzhou SF Intra-city Industrial Co., Ltd. (hereinafter referred to as "SF Intra-city"). SF Intra-city is the largest independent third-party real-time logistics service provider in China. It is positioned as a high-quality, efficient, and full-scenario independent third-party distribution platform intended to create a zero-distance life circle relying on a comprehensive real-time logistics network; it is a majority-owned subsidiary of SF Holding (stock code: 002352). In June and July 2021, SF Holding announced that SF Intra-city's application for the initial public offering of overseas listed foreign shares on the Hong Kong Stock Exchange had been accepted by the CSRC, and that the application materials for listing on the Main Board of the Stock Exchange of Hong Kong Limited had been submitted to the Hong Kong Stock Exchange. The target of this investment is a leader in the domestic big consumption market. It has great comprehensive strength, and has initiated an IPO in Hong Kong. The risks in this investment are controllable, and the certainty of obtaining returns is high. In February 2021, the Company disclosed the Announcement on Joint Investment with Professional Investment Intermediaries, fulfilling the relevant information disclosure obligation regarding its capital contribution to the establishment of the partnership. The investment does not constitute a related-party transaction or a major asset restructuring, and has no significant influence on the Company's current operating results or financial position. (IV) Capital operation: Active actions were taken to improve value creation capability and capability of shareholder return 1. Spin-off listing of subsidiary Parsun Power was initiated In June 2021, according to the Company's development plan of the third five-year strategic development period (2018-2022), in order to promote the better and faster development of subsidiary Parsun Power's outboard motors business, the management of the Company initiated the preliminary preparation for the spin-off of Parsun Power and its listing on the Shenzhen Stock Exchange after being approved and authorised by the Board of Directors. The spin-off listing of subsidiary Parsun Power will not only help the Company better focus on the intelligent corrugated packaging machinery business, and realise the upgrading and transformation of the Company's core business to "an overall solution provider for intelligent plants in the corrugated packaging industry", but also facilitate Parsun Power's full use of the direct financing function in the capital market to further expand, strengthen, and refine its core strategic business, that is, the outboard motors business, with a view to becoming a leading enterprise in the domestic outboard motors industry, and better serving the goals of national high-end equipment localisation, independence, controllability, safety, and efficiency during the "14th Five-Year Plan" period. The Company disclosed the Announcement on Authorising the Management of the Company to Initiate Preliminary Preparation for the Spin-off and Domestic Listing of the Subsidiary on 8 June 2021. 2. Under the premise of controllable risks, active management of idle funds was carried out to increase the return on net assets In the first half of 2021, upon the approval and authorisation of the General Meeting and the Board of Directors, in accordance with the Policy for Securities Investment Management of the Company, the Company and subsidiary Yineng Investment conducted securities investment with carrying temporarily idle funds on the premises that legal compliance, the Company's need of routine operating funds and fund safety were ensured and that the Company's development of major business would not be affected. The active management of idle funds is conducive to improving capital utilisation efficiency, raising the return on net assets, and enhancing value creation capability. 3. The repurchase of nearly RMB1 billion shares was successfully completed, and all the 212 million repurchased shares were retired In the first half of 2021, the Company continued to promote the share repurchase plan, which was successfully completed on 2 June 2021. From 10 July 2020 to 2 June 2021, through centralized bidding, the （未完）  |