I. Overview
During the reporting period, in the face of the domestic and international trade disputes intensified, the industry adjustments and the new crown epidemic normalized prevention and control measures to the overall economic situation brought about by the adverse impact of the company's timely and proactive response to the prevention of the epidemic at the same time, the scientific organization of resumption of work Resumption of production, centered on the Company's annual business plan, overcame the adverse impact brought about by the decline in the Company's traditional smartphone shipment industry, and pushed forward various tasks in an orderly manner. During the reporting period, the company's operating income of 4,006,199,600 yuan, by the epidemic and cell phone industry downturn in the case of the impact of the company still made a small increase; attributable to shareholders of the listed company's net profit of 229,079,000 yuan, an increase of 91.10% compared with the same period last year, of which the second quarter of the deducted net profit of 122.24% increase over the same period last year.
(A) Continuous "double adjustment", profitability rebound
During the reporting period, the company continued to promote the "double adjustment", i.e., customer structure adjustment, product structure adjustment, to improve the overall profitability.
In terms of customer structure, the Company undertook 146 new projects from international customers during the reporting period, exceeding the number of new projects for the whole year of 2019. At the same time, the revenue contributed by mass production projects of international customers increased significantly, accounting for nearly 50% of the company's overall revenue. The company began to expand international customers since 2017, with the successive mass production of key projects, the company's ability to obtain a high degree of recognition of a number of international customers, the cooperation has also been further deepened, the supply of product application terminals covering cell phones, tablet computers, e-books, laptops, smart wearable devices, smart home products and other fields.
In terms of product structure, the company continues to increase the development of non-mobile phone business. In the field of consumer electronics, during the reporting period, the impact of epidemic prevention and control of home study and office, the demand for tablet PCs, laptops and smart home products surged. Benefiting from the company's early adjustment of the layout, the company in the epidemic prevention and control of the heavy task and the tight delivery time of the order under the double pressure, the company was able to quickly adjust the production line, expanding the production capacity of non-mobile phone consumer electronics business, in accordance with the requirements of customers to ensure the quality and quantity of delivery. In the field of new energy automobile parts and components, in the case of poor vehicle sales affected by the epidemic, the Company actively explored new customers, pushed forward the supplier certification of major customers according to the plan and obtained the supplier qualification of a number of new energy automobile customers, and the profit of the new energy automobile parts and components business continued to grow. During the reporting period, the company's non-mobile phone business revenue accounted for more than 50%, the product structure continues to optimize, the market risk resilience has been further enhanced.
(ii) Putting into production anti-epidemic materials, and actively resuming work and production
In the beginning of 2020, the outbreak of Xinguang Pneumonia, the Company donated 1 million RMB to Hubei at the first time to support Hubei to fight against the outbreak of Xinguang Pneumonia. Subsequently, in order to implement the urgent task issued by the government, the company gave full play to the company's development capabilities in automation and rapid response precision manufacturing capabilities, utilizing the company's existing clean plant, within 6 days of receiving the task, the company put into operation a high-speed planar ear band mask fully automated production line for the production of ear band medical masks. The commissioning of the fully-automated mask production line not only provided support for the company's resumption of work and production of epidemic prevention materials, but also contributed to the alleviation of the shortage of supply of mask resources. At the same time, the company's subsidiary Tianji Intelligent also use their own automation equipment and intelligent manufacturing in the field of strong R & D and manufacturing capabilities, in the epidemic after the rapid organization of R & D and manufacturing power, research and development and manufacturing industry-leading high-efficiency fully automated production line of masks to provide the market with high-quality and low-priced fully automated production equipment masks and to help the government OEM masks for the global epidemic prevention and fight against the epidemic to make the company
We are committed to the global anti-epidemic efforts to fulfill our social responsibility.
At the same time, the company actively resumed production in accordance with the requirements of governments at all levels. The company set up a group-level inter-regional epidemic prevention liaison group, and according to the specific requirements of the provinces and cities where each base of the company is located, established a strict epidemic prevention and resumption of production organization and process, and orderly and safe resumption of work to promote the work. More than 70% of production capacity was resumed in early March, providing solid product deliveries to our customers. The company's delivery guarantee during the epidemic has been praised by domestic and foreign customers for many times, and has also laid a good foundation for the company to further undertake new projects. During the whole period of epidemic prevention and resumption of production, the company did not have employees infected with new crown pneumonia.
(C) New business is advancing smoothly, the company continues to invest in business and research and development, and continues to lay out new categories of core competencies and products
During the reporting period, the company's layout of a number of new businesses have achieved growth. Among them, the revenue of smart wearable products increased by more than 25% year-on-year during the reporting period, mainly contributed by the growth of smartwatch products from major customers in South Korea and North America; the revenue of notebook computer products increased by more than one times year-on-year, with the product line covering notebook exterior components, built-in battery structural components and touchpad structural components; the revenue of tablet PC products increased by more than three times year-on-year, with the product line covering smart tablet exterior components and external components for major customers in China, South Korea and North America. The smart tablet PC appearance components and external keyboard structural components; new SMCLED bracket business in the reporting period revenue growth of more than 3 times year-on-year; wholly-owned subsidiary of Dongguan Alpha Electronics in the reporting period to obtain a number of products assembly business, the follow-up is expected to continue to grow significantly.
During the reporting period, the company established Shanghai Lingang (600848) Changying New Energy Technology Co., Ltd. with the support of the Shanghai government, which is the most important part of the company's industrial layout in the new energy automobile gathering place in East China, and can serve the domestic and foreign new energy leading enterprises including Tesla nearby. Lingang Changying will mainly focus on new energy electric vehicle high- and low-voltage electrical connectors, power battery structural components and hydrogen fuel automobile battery bipolar plate projects. During the reporting period, the Company's revenue to Tesla rose 31.42% year-on-year. The company set up R&D and manufacturing base in Lingang Changying platform, which is conducive to the company to seize the opportunity of the development of new energy industry in Shanghai and East China, strengthen the upstream and downstream regional synergy, improve the overall business operation efficiency, consolidate and enhance the business advantages in the field of new energy vehicles.
During the reporting period, the Company continued to invest heavily in research and development to further strategically lay out its core competencies for the future. During the reporting period, the Company and its holding subsidiaries granted 177 patents (including 85 invention patents). New patent applications 245 items, including 37 items of multi-Pin, low-height BTB connectors, 10 items of RF transmission BTB connectors, 13 items of TypeC connectors, 7 items of stacked card holders, 7 items of folding pivot mechanism, 5 items of power battery cover. The company's controlling subsidiary Tianji Intelligent, foreign investment in the establishment of a wholly owned subsidiary of Shanghai Fu Hei Technology Co., Ltd. is mainly engaged in motion control systems and sensing technology research and development; the company and the core R & D team outside the development of a number of potential new products.
(4) start the construction of corporate culture, solidify the company's human resources organization, improve the company's system management, and help the company's transformation and upgrading of the company's listing in the past ten years has achieved rapid development, in order to enable the company to successfully achieve the scale of the transformation of the company's international transformation goals, the company in the reporting period to start the construction of the corporate culture project. Corporate culture construction will be in the company's business, the organization of the prominent contradictions and cultural management of the status quo to form an accurate judgment, based on the construction of a set of systematic, guiding the transformation and upgrading of the long surplus and sustained growth of the corporate culture program, driven by the middle and senior management and the backbone of the team of employees to carry out a cultural baptism and management thinking to enhance the formation of the long surplus corporate culture management of the basic atmosphere and conceptual system, to guide the company's long-term development.
The company's ongoing new business, new products and new layout, all need a sufficient number and quality of talents organized to complete. Over the past few years, the Company has made a lot of useful attempts and work on organizational structure, management system and human resource cultivation, but it still needs continuous improvement and perfection. The corporate culture project initiated during the reporting period will be combined with the Company's overall strategy formulation, organizational change, human resources incentive mechanism and the existing "Project 3161" talent training system in the coming year to cultivate more talents suitable for the Company's development, and provide impetus for the further development of the Company through effective organizational drive. Power.
II. Risks faced by the company and countermeasures (a) The uncertainties brought by the trade friction between China and the United States may affect the sales of national brands in the international market. The company actively adjusts the customer structure and product structure, improves the proportion of revenue from international customers, increases the development of non-mobile phone product projects, and disperses the risk of a single market on the company's operation. (ii) The attractiveness of the manufacturing industry to young labor has been declining year by year. In addition to wages, other labor costs, such as management and training, have been increasing rapidly, and the trend is likely to continue for a long period of time in the future. The Company will accelerate the automation upgrade of production lines, and further strengthen the team building and improve the salary incentive system to control the labor cost within a reasonable range. (iii) The Company belongs to the precision electronic components industry, and its main downstream industry is the consumer electronics industry, which has a fast update speed. The company must continue to innovate and reserve technology in advance, which requires continuous investment in research and development. With the increase of international customer projects, the R&D cycle in advance of the project is lengthened, and the cost pressure before the mass production of the project is higher. However, in the long run, R&D investment and customer structure adjustment will have a positive impact on the company's sustainable development. (D) Global epidemic risk of new coronavirus: Since the Spring Festival, the country has taken strong measures to prevent the epidemic of new coronavirus, and the epidemic has been effectively controlled in the country, but the epidemic in other countries and regions shows a trend of further spread. If the epidemic cannot be effectively controlled in the short term, it may affect the demand of downstream industries to a certain extent. The Company actively responds to the decrees and regulations issued by the Party and the State, and formulates and implements the corresponding internal epidemic prevention system documents to ensure the health and safety of the Company's employees; actively responds to the State's call to quickly transfer the production of epidemic prevention equipments and materials, so as to fulfill the Company's social responsibility; adjusts its business and product strategies in accordance with the international economic situation, and endeavors to reduce the cost of production, research and develop and produce products demanded by the market, so as to improve the Company's market competitiveness and overcome the impacts of the epidemic. Adjust business and product strategies according to the international economic situation, strive to reduce production costs, research and develop and produce products demanded by the market, improve the company's competitiveness in the market, overcome the difficulties and impacts brought by the epidemic, and ensure the long-term stable development of the company's operations. (v) Risk of tax incentives: Shenzhen Changying and Suzhou Corentyne are national high-tech enterprises, enjoying 15% tax incentives for enterprise income tax. This year, the qualification of high-tech enterprises needs to be re-identified, Shenzhen Changying and Suzhou Corente have submitted the declaration information to the relevant government departments as required, waiting for the final approval of the relevant government agencies. There is a risk that they will not be able to enjoy the enterprise income tax incentives if they are not approved.
C. Analysis of core competitiveness During the reporting period, no significant changes in the core competitiveness of the Company occurred, nor were there any cases where the core competitiveness of the Company was affected due to the departure of other key technical personnel, upgrading of equipment or technology, or the loss of franchise rights. The term of the fourth session of the Board of Directors of the Company will expire on May 9, 2020. on April 28, 2020, the Company held the twenty-sixth meeting of the fourth session of the Board of Directors and agreed to nominate Mr. Chen Qixing, Mr. Chen Xiaoshuo, Mr. Zhu Shouli, Mr. Peng Jianchun, Mr. Zhan Weijia, Mr. Liang Rong, and Mr. Kong Xiangyun as candidates for the directorships of the fifth session of the Board of Directors of the Company, with Mr. Zhan Weijia, Mr. Liang Rong, and Mr. Kong Xiangyun as the candidates for independent directorships. Mr. Zhan Weiya, Mr. Liang Rong and Mr. Kong Xiangyun are candidates for independent directors (please refer to the attachments for the biographical details of the above candidates). The term of office will be three years from the date of consideration and approval by the shareholders' general meeting. on May 15, 2020, the aforesaid proposal was considered and approved by the Company's second extraordinary shareholders' general meeting of 2020. On June 11, 2020, the Company held the second meeting of the fifth session of the Board of Directors and agreed to appoint Mr. Lai Xuchun as the deputy general manager of the Company, responsible for the operation and management of the Company's new energy business, with a term of office until the expiry of the fifth session of the Board of Directors. The above adjustment of directors and senior management personnel will not affect the core competitiveness of the Company.