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2019-019 2018年年度报告摘要(英文)

Part I Important Notes

This Summary is based on the full text of the 2018 Annual Report of Beijing Oriental Yuhong Waterproof Technology Co., Ltd. (together with its consolidated subsidiaries, the “Company”, except where the context otherwise requires). In order for a full understanding of the Company’s operating results, financial position and future development plans, investors should carefully read the aforesaid full text, which has been disclosed together with this Summary on the media designated by the China Securities Regulatory Commission (the “CSRC”).

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 

Bonus issue from capital reserves:

□ Yes √ No

The Board has approved a final dividend plan for the ordinary shareholders as follows: based on the total share capital (the share capital at the record date when the dividend plan is implemented minus the repurchased shares in the Company’s securities account for repurchase), a cash dividend of RMB3.00 (tax inclusive) per 10 shares is to be distributed to the shareholders, with no bonus issue from either profit or capital reserves.

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 any discrepancies or misunderstandings between the two versions, the Chinese versions shall prevail.

Part II Key Corporate Information

1. Stock Profile

Stock name

Oriental Yuhong

Stock code

002271

Stock exchange for stock listing

Shenzhen Stock Exchange

Contact information 

Board Secretary

Securities Representative 

Name

Zhang Bei


Office address

No. 4 Building, Kang Jiayuan, Gao Beidian North Road, Chaoyang District, Beijing, China


Tel.

010-85762629


E-mail address

stocks@yuhong.com.cn


2. Principal Activities or Products in the Reporting Period

(I) The Company’s Principal Activities

The Company develops, produces and markets new waterproof materials for buildings, as well as provides waterproof engineering. It is a provider of construction materials and systems that bases itself on the provision of professional, comprehensive services around waterproofing systems, as well as extends to civil construction materials, energy saving and heat preservation, non-woven fabric, specialized mortar, building coating materials, building repair, etc.

Waterproof materials for buildings are the principal product of the Company, which are widely used for buildings, high-speed railways, metro and urban railways, highways & urban roads and bridges, airports, water conservancy facilities, utility tunnels, etc. The Company’s products have been used in China’s iconic buildings such as the Chairman Mao Memorial Hall, the Great Hall of the People, the National Convention Centre, the Bird’s Nest and the Water Cube, as well as in the country’s major infrastructure projects including the Beijing-Shanghai high-speed railway, the Beijing-Tianjin inter-city high-speed railway and Beijing Metro. The Company sees “for the motherland, for the society, for customers, for employees, and for shareholders” as its corporate tenet, “serving the country by developing industry, benefiting the people with good services” as its guideline, and “building a durable and safe environment for human beings and the society” as its corporate vision. In addition to the core business of building waterproofing, the Company is also engaged in energy saving and heat preservation, non-woven fabric, specialized mortar, building coating materials, etc. It owns many brands and business lines: Oriental Yuhong (engineering), Yuhong (civil construction materials), Woniushan (energy saving and heat preservation), Fuda (energy saving and heat preservation), Yueda (energy saving and heat preservation), Yanghe (energy saving and heat preservation), Tiandingfeng (non-woven fabric), Fasion (waterproofing), Vasa (mortar), Lodi (diatom mud), DAW (building coating), building repair, etc.

The Company sells its products through direct marketing and channels (engineering dealers and retail dealers) according to different usages and users. Formerly, the Company sells directly to major cities such as Beijing, Shanghai, Guangzhou, Shenzhen, Tianjin, Chengdu and Kunming, segment markets of railways, urban railways and additives, as well as large real estate companies and conglomerates. And the engineering marketing channels were a dealer network covering engineering markets outside the major cities. During the Reporting Period, the Company integrated the engineering and construction material business of all its subsidiaries and business divisions to set up an engineering and construction material group to take charge of the sale and service of its waterproof products, Vasa’s products, Woniushan’s heat preservation products and DAW’s products on the engineering market. Following the principle of “develop a marketing partner system in an orderly manner, and develop direct marketing in a high-quality, healthy way”, this new marketing model deeply integrates the former direct marketing and engineering channels. It breaks the territory boundary of the old marketing model by dividing the engineering and construction material group into three major segments, namely, the north segment, the east segment and the south segment. It boosts marketing and operational efficiency through integrating and optimizing the old engineering marketing network. The retail dealers, managed by Oriental Yuhong Civil Construction Materials Co., Ltd. (a wholly-owned subsidiary of the Company), formulate an all-in-one composite marketing network covering home decoration companies, construction material supermarkets, construction material dealers and e-commerce to serve the general consumer home decoration market. Meanwhile, during the Reporting Period, the Company incorporated Beijing Hongyun Basic and Auxiliary Material Supply Chain Management Co., Ltd. (later with a capital increase) and Beijing Dingzhimei Construction Technology Co., Ltd. in order for better operations with regard to auxiliary material transportation and repair on the civil construction market.

(II) Overview of the Industry and the Company’s Position in the Industry

The Company competes in the waterproof construction material industry, a segment of the construction material industry. Waterproof materials are functional materials indispensible for modern architecture. As cities keep growing, the waterproofing industry enters a stage of fast growth with great prospects.

Currently, with low concentration and unhealthy competition, the domestic construction waterproofing industry features “many small firms in a large industry”. Among the many waterproofing firms, only a few can provide good services, while the many others are of a small size with outdated technology and production technique. The market is flooded with counterfeit and shoddy products. And the industry is trapped in excessive lagged output capacity, unhealthy competition and environmental issues. In the recent years, with the rollout of quality inspection, environment inspection and safe production policies, a consumption upgrade, higher quality requirements of major corporate customers, as well as increasing competitiveness of large waterproofing companies, the waterproofing market is witnessing increasing concentration towards leading companies.

The Company is committed to becoming a global provider of construction materials and systems and building a product ecosystem covering the entire industrial chain. Since its establishment, the Company has been providing high-quality, integrated construction material and system solutions for major infrastructure constructions, as well as industrial, civil and commercial constructions. It is dedicated to solving construction safety problems caused by low-quality waterproofing and the high leakage rate. Upon more than two decades of experience in the construction material industry, the Company has transformed and upgraded to be a domestic leader in terms of R&D, production technique, marketing model, standardized construction, brand presence, etc., with strong competitiveness and growth.

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

Unit: RMB


2018

2017

2018-over-2017 change (%)

2016

Operating revenue

14,045,708,250.74

10,292,965,441.05

36.46%

7,000,232,779.37

Net profit attributable to the listed company’s shareholders

1,508,221,286.20

1,238,836,792.54

21.74%

1,028,709,692.11

Net profit attributable to the listed company’s shareholders before exceptional items

1,323,057,092.18

1,141,010,956.23

15.95%

956,471,658.39

Net cash generated from/used in operating activities

1,013,946,629.91

68,211,165.39

1,386.48%

590,415,049.41

Basic earnings per share (RMB/share)

1.01

0.83

21.69%

0.700

Diluted earnings per share (RMB/share)

1.00

0.80

25.00%

0.700

Weighted average return on equity (%)

20.40%

21.91%

-1.51%

23.17%


31 December 2018

31 December 2017

Change of 31 December 2018 over 31 December 2017 (%)

31 December 2016

Total assets

19,651,708,389.43

13,316,861,455.03

47.57%

8,856,548,542.40

Equity attributable to the listed company’s shareholders

7,900,749,970.23

6,714,718,074.34

17.66%

4,974,514,336.93

(2) Key Financial Information by Quarter

Unit: RMB


Q1

Q2

Q3

Q4

Operating revenue

1,904,587,600.65

3,708,416,355.24

3,687,604,020.54

4,745,100,274.31

Net profit attributable to the listed company’s shareholders

98,857,595.45

519,557,198.20

495,885,650.07

393,920,842.48

Net profit attributable to the listed company’s shareholders before exceptional items

76,132,853.06

452,309,914.31

466,332,140.13

328,282,184.68

Net cash generated from/used in operating activities

-870,849,122.90

491,382,113.87

-151,217,118.97

1,544,630,757.91

Indicate by tick mark whether any of the quarterly financial data in the table above or their summations differs materially 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 as Holdings of Top 10 Shareholders

Unit: share

Number of ordinary shareholders at the period-end

52,488

Number of ordinary shareholders at the month-end prior to the disclosure of this Report

46,168

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

Li Weiguo

Domestic natural person

29.68%

442,871,891

332,153,917

In pledge

309,839,616

Xu Limin

Domestic natural person

6.02%

89,812,833

68,158,280

In pledge

45,799,923

CITIC SecuritiesChina CITIC BankCITIC Securities Extraordinary Growth Stock Collective Asset Management Plan

Other

2.55%

38,117,315

0



National Social Security FundPortfolio 418

Other

2.26%

33,686,696

0



China Construction Bank Co., Ltd.Aegon-Industrial Social Responsibility Mixed Securities Investment Fund

Other

1.96%

29,246,198

0



China Merchants Bank Co., Ltd.Aegon-Industrial Proper Dynamic Asset Allocation Mixed Securities Investment Fund

Other

1.88%

28,001,563

0



Hong Kong Securities Clearing Company Ltd.

Foreign legal person

1.54%

22,958,083

0



Central Huijin Asset Management Co., Ltd.

State-owned legal person

1.45%

21,707,351

0



China Merchants Bank Co., Ltd.Aegon-Industrial Asset-Light Investment Mixed Securities Investment Fund

Other

1.37%

20,499,483

0



Xiang Jinming

Domestic natural person

1.28%

19,046,215

14,601,751

In pledge

4,210,000

Related or acting-in-concert parties among the shareholders above

It is unknown whether there is any related party or acting-in-concert party as defined in the Measures for the Administration of the Takeover of Listed Companies among the shareholders above.

Shareholders involved in securities margin trading (if any)

None

(2) Number of Preferred Shareholders and Shareholdings of Top 10 of Them

□ Applicable √ Not applicable

No preferred shareholders in the Reporting Period.

(3) Ownership and Control Relations between the Actual Controller and the Company


Note: Mr. Li Weiguo is the actual controller of the Company. And Mr. Li Xingguo is Mr. Li Weiguo’s brother and acting-in-concert party.

5. Corporate Bonds

Does the Company have any corporate bonds publicly offered on the stock exchange, which were outstanding before the date of this Report’s approval or were due but could not be redeemed in full?

Yes.

(1) Bond Profile

Bond name

Abbr.

Bond code

Maturity

Balance

Coupon rate

Convertible Corporate Bond of Beijing Oriental Yuhong Waterproof Technology Co., Ltd.

Yuhong Convertible Bond

128016

25 September 2023

RMB1,839,484.8 thousand

Year 1: 0.30%

Year 2: 0.50%

Year 3: 1.00%

Year 4: 1.30%

Year 5: 1.50%

Year 6: 1.80%

Interest payment during the Reporting Period

On 25 September 2018, interest on the Yuhong Convertible Bond was paid for the first interest year from 25 September 2017 to 24 September 2018 with a coupon rate of 0.30%, which means interest of RMB3.00 (tax inclusive) for every 10 Yuhong Convertible Bonds (par value: RMB1,000).

(2) Latest Rating and Rating Change

During the Reporting Period, Dagong Global Credit Rating Co., Ltd. issued on 21 June 2018 a follow-up rating report, maintaining the Company’s main body long-term credit rating at AA+ with a stable outlook, and at the same time maintaining the credit rating of the Yuhong Convertible Bond at AA+. The said report is available on www.cninfo.com.cn.

(3) Selected Financial Information of the Company for the Past Two Years

Item

2018

2017

Change

Debt/asset ratio

58.84%

48.23%

10.61%

Debt/EBITDA ratio

43.33%

57.42%

-14.09%

Interest cover (times) 

9.48

19.2

-50.63%

Part III Operating Performance Discussion and Analysis 

1. Business Overview of the Reporting Period

Is the Company subject to any industry-specific disclosure requirements?

No.

I Overview

In 2018, uncertain and unstable factors increased in the international environment and the overall drivers of the global economy weakened. In light of such a macro background, China persisted in the general work tone of seeking improvement while maintaining stability, stuck to the new development concept, effectively dealt with profound changes in the internal and external environment in accordance with the requirements for high-quality development, further promoted the supply-side structural reform, and maintained sustained and sound economic development. At the same time, however, economic performance was generally stable with changes, some of which caused concern, the external environment was complicated and challenging, and economy faced downward pressure.

During the Reporting Period, all team members of Yuhong implemented fully the guiding principles of the Basic Rules of Oriental Yuhong, worked in concerted efforts, overcame difficulties, held fast to the objectives, forged ahead against challenges and made hard-earned achievements. The Company adjusted its operation strategy to “Sound Operation and Stable Advancement”, focused on operation quality, prioritized risk control and drove itself towards high-quality, sustainable and sound development; it proactively transformed and upgraded into a “provider of construction material and systems”, vigorously expanded other emerging business segments while reinforcing the waterproof field, made steady progress in retail market, continued to develop the building and decorative coating field, deeply cultivated and refined the building conservation field, and went into full swing for the building renovation market; it fully implemented corporate culture and values, and based on players, enhanced corporate beliefs and cohesion; it proactively boosted the organizational reform aimed at increasing efficiency, reviewed and promoted the successful experience of “partner mechanism” in the engineering channel field, studied business market and sales model innovation, advanced business transformation, and gave full play to the advantage of “1+1>2” effects of channel + direct sales; it further strengthened and developed strategic cooperation with large real estate companies, explored the depth and extent of expanding and extending customer resources and continued to intensify the sales and promotion of non-real estate fields including infrastructure construction, urban emerging infrastructure construction and industrial warehousing and logistics fields; by reinforcing the research and development in products, applied technologies, construction equipment and production processes, it further enhanced its R&D competence and innovation capabilities in international technologies; it promoted a standardized construction service system on all fronts, and through professional training and management, improved its professional service capabilities, developed and expanded an industrialized construction team with global competitiveness.

To further propel the implementation of the strategic goal of “penetrating into the whole country”, the Company invested for the construction of production bases in a number of places nationwide, including Jiande (Hangzhou), Puyang (Henan), Wuhu (Anhui), Laixi (Qingdao) and Deyang (Sichuan). It made full use of local resources and regional advantages, optimized the capacity and business layout of waterproof, thermal insulation, building and decorative coatings, mortar and other businesses, adopted world’s advanced production lines, and accomplished an intelligent and automatic production system for “Yuhong Intelligent Manufacturing”. By virtue of its leading advantages in product R&D, manufacturing, applied technologies, construction, engineering technology consultation, and deep integration of informatization and industrialization, the Company was dedicated to providing each customer with excellent services and made solid steps in the transformation from a guide to a leader in China’s waterproof industry.

II Progress of Business Plans Disclosed Previously during the Reporting Period

(I) Took corporate culture as its soul and made full efforts to create human capital.

During the Reporting Period, with the Basic Rules of Oriental Yuhong at its core, the Company implemented the core concept of “people-oriented”, centered on business development, integrated organizational resources and increased per capita efficacy. During the Reporting Period, in respect of human resource work, the Company focused on the agile organization building of “orderly games, efficient services and powerful control”, exploration of innovation and sustainability in staff motivation modes and talent development; achieved the rapid adjustment and implementation of organization structure under the principles of resource integration, “upgrading and policy establishment” for strategic key businesses and empowerment of functions; strengthened ways and quality of talent introduction, formed a corporate talent bank and emphasized the establishment of talent development mechanism and talent training system.

(II) Accelerated brand building and drove product upgrading.

During the Reporting Period, the Company continued to explore and establish an optimized internal capacity system for brand development, building and management, and kept carrying out brand promotions through diverse media operations and cooperation; it strengthened the co-movement mechanism between brand and product, R&D and market, built a brand evaluation system, and with the support of National Key Laboratory of Special Waterproof Materials and domestic and overseas R&D platforms, enhanced innovation capabilities, further optimized product system and increased brand premiums.

(III) Intensive cultivation oriented by market.

During the Reporting Period, the Company closely centered on market, relied on market, seized market, cultivated market, furthered market investigations, and carried out data integration and analysis, product planning and management and marketing and promotion. The Company further worked out market volume and scale and developed emerging market demands; by virtue of the sales network after the reform and the continuously upgraded partner mechanism, it managed the whole process of sales and strengthened control over channel resources to increase the project operation success rate; it refined the full-life cycle management of products and opened up various stages from customers’ demands to the establishment of product project, core R&D, product promotion and sales, and product upgrading; it developed customers’ demands to a great depth, took waterproof products and construction services as its core, relied on existing customer, channel and management resources, accelerated the market import of whole-series products, reduced management costs and increased business efficiency.

(IV) Persisted in the principles of maintaining quality and reducing losses and implemented the cost leadership strategy.

During the Reporting Period, the Company persisted in the principles of maintaining quality and reducing losses and implemented the cost leadership strategy on all fronts. With a focus on lean production and comprehensive innovation, all relevant departments worked closely with each other, connected seamlessly and maintained the cost and quality leadership advantages. The Company increased production efficiency and optimized core product competitiveness through a combination of measures, including procurement bidding negotiations and timely procurement, product formula optimization and upgrading and raw material substitution, removal of excess product interior and packaging weight, technical reform of equipment and new processes, as well as unit-based operations, benchmarking of each factory manufacturing expense and monthly evaluation and appraisal of energy consumption.

(V) Refined a comprehensive risk control system and ensured sound corporate development.

The Company established a comprehensive risk management system and carried out closed-loop risk management step by step; held a zero tolerance attitude towards accounts receivable due and reinforced the process management in respect of accounts receivable and accounts receivable due; intensified internal credit risk management and built up and refined the credit risk management system of channel system partners; strengthened the process management of projects, specified the first principal of each business unit as the principal managing risks in their business unit, established an internal control assessment mechanism and enhanced management standards. The Company focused on prevention in respect of the safeguarding of brand rights, and proactively carried out project construction site and market inspections; cleaned up the market in key counterfeit areas in a concentrated manner and firmly cracked down upon the production, sales and use of counterfeit products that infringe upon the Company’s rights and interests in accordance with laws; realistically enhanced the professional level of practitioners to strengthen the criminal measures against cases involving counterfeit products.

(VI) Reinforced informatization and established an intelligent service system.

During the Reporting Period, the Company comprehensively promoted informatization for financial data accounting and statements, salary accounting and statements, distribution of logistics orders and feedback of logistics information, project budget and project management, and the management of suppliers and distributors, and carried out internal control inspections on the use of informationized business processes; opened up the concentrated running of all data, increased the efficiency of informatization, and supported big data analysis on all fronts; continued to optimize process and approval nodes, increased the time efficiency and satisfaction assessment for process approval, and enhanced service efficiency. 

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 (%)

Waterproof sheet materials

7,318,577,962.56

2,688,729,959.64

36.74%

37.19%

24.77%

-3.66%

Waterproof coating

3,976,325,066.84

1,544,884,946.83

38.85%

33.80%

26.13%

-2.36%

Waterproof engineering

1,950,997,050.22

544,199,896.94

27.89%

37.70%

30.97%

-1.43%

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 Listed Company’s Ordinary Shareholders or Their Compositions

√ Applicable  □ Not applicable 

For the Reporting Period, the Company recorded operating revenue of RMB14,045,708,250.74, up 36.46% year-on-year, primarily driven by the higher unit sales of its major products as a result of a smooth business expansion; recorded cost of sales of RMB9,187,089,970.45, up 43.34% year-on-year, primarily driven by the higher sales revenue.

6. Possibility of Listing Suspension or Termination

□ Applicable  √ Not applicable 

7. Matters Related to Financial Reporting

(1) YoY Changes to Accounting Policies, Accounting Estimates or Measurement Methods

√ Applicable  □ Not applicable 

(1) Important Accounting Policy Changes

① According to the Notice of the Ministry of Finance on Revising and Issuing the Format of 2018 Annual Financial Statements of General Enterprises (CK [2018] No. 15), and as approved at the 55th meeting of the Company’s 6th Board of Directors, the Company has revised the format of its financial statements as follows:

A. Balance Sheet

The “notes receivable” and “accounts receivable” items have been combined into one item, “notes and accounts receivable”.

The “interest receivable” and “dividends receivable” items have been included into the item of “other receivables”.

The “disposal of fixed assets” item has been included into the “fixed assets” item.

The “engineering materials” item has been included into the “construction in progress” item.

The “notes payable” and “accounts payable” items have been combined into one item, “notes and accounts payable”.

The “interest payable” and “dividends payable” items have been included into the item of “other payables”.

The “specific payables” item has been included into the “long-term payables” item.