Summary of Annual Report 2018 Shenzhen Zhongheng Huafa Co., Ltd. Stock Code: 000020 200020 Public Notice No.: 2019-05 Short Form of the Stock: SHEN HUAFA-A, SHEN HUAFA- B
Shenzhen Zhongheng Huafa Co., Ltd.
Summary of Annual Report 2018
I. Important Notice
The summary is abstract from full-text of annual report, for more details of operating results, financial condition and future development plan of the Company; investors should found in the full-text of annual report that published on media appointed by CSRC.
Objection statement of directors, supervisors and senior executives
||||
|-|-|-|
|Name|Position|Content and reason|

Statement
Other directors attending the Meeting for annual report deliberation except for the followed
|||||
|-|-|-|-|
|Name of director absent|Title for absent director|Reasons for absent|Attorney|

Prompt of non-standard audit opinion
□ Applicable√ Not applicable
Profit distribution pre-plan of common stock or capitalizing of common reserves pre-plan deliberated by the Board in the reporting period
□ Applicable√ Not applicable
The Company has no plan of cash dividends carried out, bonus issued and capitalizing of common reserves either.
Profit distribution pre-plan of preferred stock deliberated and approved by the Board in the reporting period
□Applicable□Not applicable
II. Basic information of the company
1. Company profile
||||||
|-|-|-|-|-|
|Short form of the stock|Shen HuafaA, Shen HuafaB|Stock code||000020, 200020|
|Stock exchange for listing|Shenzhen Stock Exchange||||
|Person/Way to contact|Secretary of the Board||Rep. of security affairs||
|Name|Yang Bin||Niu Zhuo||
||33/F, No. 2 Building of Dachong BusinessCenter, Nanshan District, Shenzhen||33/F, No. 2 Building of Dachong BusinessCenter, Nanshan District, Shenzhen||
|Office add.|||||
|Fax.|0755-86360206||0755-86360206||
|Tel.|0755-86360201||0755-86360201||

Summary of Annual Report 2018 Shenzhen Zhongheng Huafa Co., Ltd.
||||
|-|-|-|
|E-mail|huafainvestor@126.com.cn|huafainvestor@126.com.cn|

2. Main business or product introduction in the reporting period
After years of development, the company has gradually formed two main businesses in industry and property management. Among them, the industrial business mainly includes injection molding, polylon (light-weight packaging materials), and complete machine production and sales of liquid crystal display, property management business is mainly the lease of its own property.
3. Main accounting data and financial indexes
(I) Main accounting data and financial indexes for recently three years
Whether it has retroactive adjustment or re-statement on previous accounting data
□Yes√ No
In RMB
||||||
|-|-|-|-|-|
||2018|2017|Changes over last year|2016|
|Operating income|637,046,707.03|858,040,132.74|-25.76%|619,167,770.74|
|Net profit attributable to|3,295,022.72|974,409.39|||
||||238.16%|5,457,710.33|
|shareholders of the listed company|||||
|Net profit attributable to|||||
|shareholders of the listed company|||||
||1,535,043.65|2,079,588.86|-26.19%|5,109,926.82|
|after deducting non-recurring gains|||||
|and losses|||||
|Net cash flow arising from|-21,894,459.66|11,723,254.36|||
||||-286.76%|-18,693,296.58|
|operating activities|||||
|Basic earnings per share|0.0116|0.0034|||
||||241.18%|0.0193|
|(RMB/Share)|||||
|Diluted earnings per share|0.0116|0.0034|||
||||241.18%|0.0193|
|(RMB/Share)|||||
|Weighted average ROE|1.02%|0.30%|0.72%|1.72%|
||||Changes over end of||
||End of 2018|End of 2017||End of 2016|
||||last year||
|Total assets|617,090,153.46|629,762,731.38|-2.01%|632,475,542.40|
|Net assets attributable to|323,968,000.74|320,672,978.02|||
||||1.03%|319,698,568.63|
|shareholder of listed company|||||

(2) Quarterly main financial index
In RMB
||||||
|-|-|-|-|-|
||First quarter|Second quarter|Third quarter|Fourth quarter|
|Operating income|171,620,013.62|169,364,829.62|148,975,383.05|147,086,480.74|
|Net profit attributable to|307,367.89|2,485,765.71|-2,295,638.52|2,797,527.64|
|shareholders of the listed company|||||

Summary of Annual Report 2018 Shenzhen Zhongheng Huafa Co., Ltd.
||||||
|-|-|-|-|-|
|Net profit attributable to|5,469.74|2,047,997.28|-3,406,233.82|2,887,810.45|
|shareholders of the listed company|||||
|after deducting non-recurring gains|||||
|and losses|||||
|Net cash flow arising from|337,819.42|-27,009,145.05|-27,365,096.05|32,141,962.02|
|operating activities|||||

Whether there are significant differences between the above-mentioned financial index or its total number and the relevant financial index disclosed in thecompany’s quarterly report and semi-annual report
□Yes√ No
4. Shares and shareholders
(1) Particulars about common stock shareholders, preference shareholders with voting rights recovered and top ten shareholders
In Share
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|||||||||Total preference|||
|||Total common||||Total preference|||||
|Total commonstock||||||||shareholders with|||
|||stock||||shareholders|||||
|||||||||voting rights|||
|||shareholders at||||with voting|||||
|shareholders in|25,862|||24,818|||0|recovered at end of||0|
|||end of last month||||rights recovered|||||
|reportingperiod-end||||||||last month before|||
|||before annual||||at end of|||||
|||||||||annual report|||
|||report disclosed||||reporting period|||||
|||||||||disclosed|||
|Top ten shareholders|||||||||||
||||||||||Number of shares||
|Full name of|Nature of||Proportion of||Amount of||||||
|||||||Amount of restricted shares held|||pledged/frozen||
|Shareholders|shareholder||shares held||shares held||||||
||||||||||State of share|Amount|
|WuhanZhonghengGroup|Domesticnon-state-owned legalperson||41.21%||116,681,094|0|||Pledged|116,100,000|
||||||||||Frozen|116,489,894|
|SEG (HONGKONG) CO.,LTD.|Overseaslegal person||5.85%||16,569,560|0|||Pledged|0|
||||||||||Frozen|0|
|GOOD HOPECORNERINVESTMENTS LTD|Overseaslegal person||4.49%||12,700,000|0|||Pledged|0|
||||||||||Frozen|0|
|ChangjiangSecuritiesBrokerage(Hongkong)Co., Ltd.|Overseaslegal person||1.89%||5,355,249|0|||Pledged|0|
||||||||||Frozen|0|
|GuoyuanSecuritiesBrokerage(Hong Kong)|Overseaslegal person||1.36%||3,845,117|0|||Pledged|0|
||||||||||Frozen|0|

Summary of Annual Report 2018 Shenzhen Zhongheng Huafa Co., Ltd.
||||||||
|-|-|-|-|-|-|-|
|Limited|||||||
|Li Senzhuang|Domesticnaturalperson|0.36%|1,022,260|0|Pledged|0|
||||||Frozen|0|
|LI SHERYNZHAN MING|Overseasnaturalperson|0.36%|1,009,900|0|Pledged|0|
||||||Frozen|0|
|Han Yaming|Domesticnaturalperson|0.31%|864,200|0|Pledged|0|
||||||Frozen|0|
|BINGHU LIU|Domesticnaturalperson|0.30%|840,313|0|Pledged|0|
||||||Frozen|0|
|Wu Jinmin|Domesticnaturalperson|0.28%|788,352|0|Pledged|0|
||||||Frozen|0|
|||Among the top ten shareholders, Wuhan Zhongheng Group neither bears associated relationship|||||
|||with other shareholders, nor belongs to the consistent actor that are prescribed in Measures for the|||||
|Explanation on associated|||||||
|||Administration of Disclosure of Shareholder Equity Changes of Listed Companies. The Company|||||
|relationship among the|||||||
|||neither knew whether there exists associated relationship among the other tradable shareholders, nor|||||
|aforesaid shareholders|||||||
|||they belong to consistent actors that are prescribed in Measures for the Administration of Disclosure|||||
|||of Shareholder Equity Changes of Listed Companies.|||||
|Explanation on involving|||||||
|margin business (if||N/A|||||
|applicable)|||||||

(2) Total preferred stock shareholders of the Company and shares held by top ten shareholders with preferred stock held
□ Applicable√ Not applicable
The Company had no shareholders with preferred stock held in the reporting.
(3) Property right and controlling relationships between the actual controllers of the Company and the Company is as follows:
Li Zhongqiu Li Li (Son of Li Zhongqiu)
49%
51%
Wuhan Zhongheng New Science& Technology Industrial Group
Co., Ltd.
41.21%
Shenzhen Zhongheng Huafa Co., Ltd.
Summary of Annual Report 2018 Shenzhen Zhongheng Huafa Co., Ltd. 5. Corporate bonds
Whether or not the Company public offering corporation bonds in stock exchange, which undue or without payment in full at maturity on the approval date for annual report disclosed
No
III. Discussion and analysis of business
1. Introduction of operation in the reporting period
Whether the company needs to comply with the disclosure requirements of the particular industry
No
In 2018, the international environment was complicated, the downward pressure onChina’s economy increased, and the economic growth slowed down. Facing the unfavorable market environment, the company has actively taken measures to adjust its management concept and operating strategies and expand its main business which were supplemented with assessment and incentive mechanism. At the same time, some assets were cleaned and disposed of to maximize the benefits of assets and achieve better returns. In 2018, the company achieved operating revenue of 637,046,700 Yuan, a decrease of25.76% on a year-on-year basis, and net profits of 3,295,000 Yuan, increased slightly compared with the same period last year.
●Video service business achieved annual operating revenue of 292,748,400 Yuan, a decrease of38.75% on a year-on-year basis, operation profit amounted as 3,387,600 Yuan with10.82% up from a year earlier. During the reporting period, the Video Business Division adjusted the product structure and optimized the sales ratio of each brand of products. The proportion of AOC series brands decreased due to the Group's adjustment, the Great Wall brand accounted for22.41%, and the proportion of VSCN domestic sales rose to24.54%, the increased VSCN export sales accounted for4.91%, ACER accounted for18.89%, and Changhong and Skyworth brands were newly increased. In 2018, it achieved sales volume of 703,900 units, outperforming the annual profit target.●Injection molding business achieved annual operating revenue of 220,923,600 Yuan, a decrease of12.46% over the same period last year, operation profit amounted as 443,500 Yuan, a declined over same period last year. With the unceasingly fierce competition in the market, the profit margin of injection molding has been greatly reduced, but all the staff of the business division adjusted the sales strategy in time, actively seized the market share, and expanded the production workshop, purchased new type of production lines, and more than 10 existing automatic equipment, such as automatic gumming robots, injection molding machines, etc., have been put into production in November 2018, and the annual output is expected to increase by 2.3 million sets.
●Polylon business achieved annual operating revenue of 68,365,100 Yuan, a decrease of16.01% over the same period last year, net profit amounted as -770,000 yuan, an increase of7.49% from a year earlier. EPS Business Division actually sold 3,873 tons in 2018. The EPS Business Division won the title of “Excellent Scientific and Technological Innovation Enterprise of China Plastics Processing Industry” due to its outstanding achievements in promoting industrial technology advancement and promoting the transformation of scientific and technological achievements. In 2018, the main projects won the bidding by several hundred percents, the electric heating P3
Summary of Annual Report 2018 Shenzhen Zhongheng Huafa Co., Ltd. packaging won100% bidding, the fuel gas and K series packaging won100% bidding, the T3 structural parts won100% bidding, the freezer Dafuhao won100% bidding, and the dual variable temperature freezer won100% bidding.
●The property rental business achieved annual operating revenue of 34369800 Yuan, a decrease of5.45% over the same period last year. Thecompany’s own property, Huafa Building, has been included in the urban renewal project, the lessees had great changes, and the rental income decreased relatively. Gongming Huafa Electronic City was still in the stage of renovation and transformation, and no rental income was generated in the current year. Therefore, in 2018, thecompany’s overall rental income decreased somewhat compared with the previous year. 2. Whether the main business had major change in the reporting period
□ Yes√ No
3. About the industries, products, or regions accounting for over10% of thecompany’s operating income or operating profit
□ Applicable√ Not applicable
4. Whether the characteristics of management seasonal or cyclical need special attention
□ Yes√ No
5. In the reporting period, note of major changes in operating income, operating cost, total net profit attributable to common stock shareholders of listed company or composing the previous reporting period□ Applicable√ Not applicable
6. Particular about suspended and delisting
□ Applicable√ Not applicable
7. Related matters relating to financial reports
(1) Particulars about the changes in aspect of accounting policy, estimates and calculation method compared with the financial report of last year
√Applicable□ Not applicable
Summary of Annual Report 2018 Shenzhen Zhongheng Huafa Co., Ltd. The “Notice on Revising and issuing the Format of General Enterprise Financial Statement for 2018”(CK[2018] No.15) issued by Ministry of Finance on 15 June 2018, the format of financial statement for enterprise who implemented the accounting standards shall be prepared for 2018 and later years in line with the above mentioned Notice.
(2) Major accounting errors within reporting period that needs retrospective restatement
□ Applicable√ Not applicable
No major accounting errors within reporting period that needs retrospective restatement for the Company in the period.
(3) Compare with lastyear’s financial report; explain changes in consolidationstatement’s scope
□ Applicable√ Not applicable
No changes in consolidationstatement’s scope for the Company in the period.