Securities Code: 002050 Securities Abbr.: Sanhua Intelligent Control Public Announcement No.: 2019-008 Zhejiang Sanhua Intelligent Controls CO., LTD.
Annual Report 2018 (Abstract)
I. Important Notes
This Abstract is extracted from 2018 Annual Report of Zhejiang Sanhua Intelligent Controls Co., Ltd. (“the Company). In order to have a full understanding of the operating results, financial status and future development planning of the Company, investors are suggested to read the full report carefully on the media designated by the China Securities Regulatory Commission (the “CSRC”).
Indicate by check mark if independent auditor issues non-standard unqualified opinion
□Applicable√Not applicable
Indicate by check mark if there is a pre-arranged plan of profit distribution or transferring capital reserve into common stock for the report period which has been reviewed and approved by the Board of Directors
√Applicable□Not applicable
Indicate by check mark if transferring capital reserve into common stock
√Applicable□Not applicable
Pre-arranged profit distribution plan reviewed and approved by the Board of Directors: distribute 2.5 Yuan cash dividends per 10 common stocks (tax inclusive) and 3 stock dividend per 10 common stocks through capital reserve to all shareholders. 2,116,703,682 shares of common stock were issued and outstanding as of this reporting date.
Indicate by check mark if preplan for preferred stocks profit distribution to shareholders for the report period which has been reviewed and approved by the Board of Directors
□Applicable√Not applicable
II. Company Profile
1. Stock profile
||||||||
|-|-|-|-|-|-|-|
|Stock abbr.|Sanhua Intelligent Control||Stock code|||002050|
|Stock exchange||Shenzhen Stock Exchange|||||
|Contact information||Board Secretary|||Securities Representative||
|Name|Kaicheng Hu|||Yutong Wong|||
||5F, 18#building, No. 12 St., No. 289Xiasha Economic Development,Hangzhou, Zhejiang, China.|||No. 219, Woxi Avenue, Meizhu Town,Xinchang County, Zhejiang, China.|||
|Office add.|||||||
|Tel.|0571-28020008|||0575-86255360|||
|E-mail|shc@zjshc.com|||shc@zjshc.com|||

2. Brief introduction to main business or products in the report period
(Ⅰ) Main business
The company is specialized in developing thermal management solution of heat exchange and intelligent control in a variety of aspects, including buildings, household appliances and vehicles, established on the core technologies of heat-pump and thermal management system. Based on different development stages, needs and features of its strategic and matured business, the Company divides its main business into refrigeration components and automotive components. The company insists on “Focus on leading”, customer orientation and rapid response to the market.
The company manufactures and markets components of refrigeration (including HVAC and refrigerators), automotive A/C, new energy vehicle thermal management, coffee maker, dishwasher and washing machine. Major products of refrigeration business are widely used in residential and commercial A/C, refrigerators, cold chain logistics, dishwashers, etc., including four-way reversing valve, EEV, solenoid valve, Micro-channel heat exchanger, Omega pump, etc. Major products of automotive business are widely used in traditional vehicles, hybrid power vehicles and new energy vehicles, including TXV, receiver drier, EXV, electronic water pump, etc.
No changes occurred to the main business or operation model in this report period.
(Ⅱ) Industry Development
1. Refrigeration components industry
China is the largest manufacturing base of A/C and refrigerator in the world with its production and sales volume ranking the first globally. High energy efficiency and intelligent technology has a rapid growth under the background of increasing requirements in energy-saving and environment protection, which brings new opportunities as well as a series of new requirements to the component market. As a leader in refrigeration component industry, the Company will grasp these opportunities and develop steadily.
2. Automotive components industry
The global automotive industry has developed at a high speed, which also increases market demand in components of automotive A/C and thermal management products. In recent years, the development of new energy vehicles has become a clear trend, and it brings a variety of higher and new requirements to A/C and thermal management products. The company focuses on in-depth research of A/C and thermal management system of new energy vehicles, which has started from components to modules and subsystems. The Company has become a strategic vendor of Valeo, MAHLE, Volkswagen, Benz, BMW, Volvo, Tesla, GM, Geely, BYD, SAIC Motor, etc.
(Ⅲ) Industry Position
The Company is both the largest refrigeration components manufacturer as well as the leading components manufacturer in automotive A/C and thermal management area. Sanhua has become one of theworld’s top brands and a strategic partner of numerous well-known auto makers and A/C manufacturers. After over 30 years of development, the Company has established industrial leading position in the global refrigeration components market.Sanhua’s products of EEV, four-way reversing valve, solenoid valve, Micro-channel heat exchanger and Omega pump rank first globally in terms of market share. The market share of service valve, automotive TXV, receiver drier is at the forefront of the world.
At the same time, the Company concentrates onR&D of new energy automotive A/C and thermal management products. Sanhua is the first Chinese enterprise that has won the Pace Award of American Auto News.
3. Selected Financial Data
(1) Key accounting data and financial ratios for the past three years
Indicate by check mark if there is any retrospectively restated accounting data of previous years.
√Yes□No
The reason for retrospective restatement
Change of accounting policy
Unit: million Yuan
||||||||
|-|-|-|-|-|-|-|
|||||Increase/decrea|||
|||||se of current|||
|||2017|||2016||
|||||year over prior|||
||2018||||||
|||||year|||
|||Before|After|After|Before|After|
|||adjustment|adjustment|adjustment|adjustment|adjustment|
|Revenue|10,835.99|9,581.24|9,581.24|13.10%|7,656.33|7,656.33|
|Net profit attributable to|1,292.35||1,235.95||||
|||1,235.95||4.56%|990.95|990.95|
|shareholders|||||||
|Net profit attributable to|||||||
|shareholders excluding|1,294.77|1,085.28|1,085.28|19.30%|777.51|777.51|
|non-recurring gains and losses|||||||
|Net cash flows from operating|1,287.60||664.09||||
|||648.72||93.89%|1,507.38|1,521.59|
|activities|||||||
|Basic EPS (RMB Yuan / share)|0.61|0.60|0.60|1.67%|0.49|0.49|
|Diluted EPS (RMB Yuan /|0.61||0.60||||
|||0.60||1.67%|0.49|0.49|
|share)|||||||
|Weighted average ROE (%)|15.65%|19.12%|19.12%|-3.47%|17.79%|17.79%|
|||||Increase/decrea|||
|||||se of current|||
|||As of Dec.31, 2017|||As of Dec.31, 2016||
||As of Dec.31,|||year over prior|||
||2018|||year|||
|||Before|After|After|Before|After|
|||adjustment|adjustment|adjustment|adjustment|adjustment|
|Total assets|13,932.17|12,347.97|12,347.97|12.83%|9,547.13|9,547.13|
|Net assets attributable to|8,614.84||7,875.37||||
|||7,875.37||9.39%|5,887.15|5,887.15|
|shareholders|||||||

The reason for accounting policy change and retrospective restatement
The Company retrospectively restates the corresponding comparative data of the financial statement for the year 2018 according to Revised Format of General Enterprise Financial Statements for 2018 (Accounting NO. 15), its Interpretation as well as provisions of Enterprise Accounting Standards. Please refer to “Important accounting policy changes” of the 2018 annual report. The assets-related government subsidies of current year
as well as prior year in the cash flow statement is reclassified from "receipt of cash related to other investment
activities" to "receipt of cash related to other operating activities". Due to the consolidation enterprises under
the same control in 2017, the relative data of 2016 have been adjusted retrospectively. Please refer to the
Company’s 2017 Annual Report for more details. Accordingly, the Before Adjustment data for 2016 in the above table is presented as the After Adjustment data for 2016 disclosed in theCompany’s 2017 Annual Report.
(2) Key accounting data by quarter
Unit: million Yuan
|||||||||
|-|-|-|-|-|-|-|-|
|||Q1|Q2||Q3||Q4|
|Revenue|2,577.55||3,012.79|2,674.85||2,570.80||
|Net profit attributable to|248.31||428.74|346.34||268.96||
|shareholders||||||||
|Net profit attributable to|239.08||435.30|346.84||273.56||
|shareholders excluding||||||||
|non-recurring gains and losses||||||||
|Net cash flows from operating|-72.92||254.46|378.88||727.17||
|activities||||||||

Indicate by check mark if any material difference between the above financial indicators or their summations and those which have been disclosed in theCompany’s Quarterly or Interim report.
√Yes□No
Net cash flows from operating activities in this table has been adjusted quarterly according to the latest regulation, please refer to the reason for accounting change and retrospective restatement mentioned previously.
4. Capital and Shareholders
(1) Top 10 shareholders of common stock and preferred stock with resumed voting rights
Unit: Share
|||||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|||35,901||||36,043||Total number|0||||||0|
||||||Total numberofshareholdersof commonstocks atpreviousmonth-end ofthis report’sdisclosure|||||||||||
|||||||||of||||||||
|||||||||||Total number of||||||
|||||||||shareholders||||||||
||Total number of|||||||||shareholders of||||||
|||||||||of preferred||||||||
||shareholders of|||||||||preferred stock with||||||
|||||||||stock with||||||||
||common stocks at|||||||||resumed voting rights||||||
|||||||||resumed||||||||
||the end of the|||||||||at previous||||||
|||||||||voting right at||||||||
||reporting period|||||||||month-end of this||||||
|||||||||the end of the||||||||
|||||||||||report’s disclosure||||||
|||||||||reporting||||||||
|||||||||period||||||||
||Top 10 shareholders|||||||||||||||
|||||||||||||Pledged or frozen||||
|||||||||||||stocks||||
|||||||Quantity ofstocks||Quantity of restricted||||||||
||Name||Nature||Ownership|||||||||||
|||||||||stocks held||||||||
|||||||||||||Status||Quantity||
|Sanhua HoldingGroup Co., Ltd.||Domesticnon-state-ownedcorporate||37.00%||788,374,733|0||||Pledged||457,000,000|||

|||||||
|-|-|-|-|-|-|
|Zhejiang SanhuaLvneng IndustryGroup Co., Ltd.||Domesticnon-state-ownedcorporate|20.63%|439,495,831|230,686,695|
|Hong KongSecurities ClearingCompany Ltd.(HKSC)||Foreigncorporate|6.45%|137,400,171||
|Yabo Zhang||Domesticnatural person|1.81%|38,480,000|28,860,000|
|Goldman, SACHS& CO. LLC||Foreigncorporate|0.92%|19,700,204||
|XinhechengHoldings Co., Ltd.||Domesticnon-state-ownedcorporate|0.85%|18,200,000||
|Bank ofCommunicationsCo., Ltd.—GuotaiJinying MixedSecuritiesInvestment Fund||Other|0.66%|14,049,876||
|112 Portfolio ofNational SocialSecurity Fund||Other|0.65%|13,888,151||
|Central Huijin AssetManagement Co.,Ltd.||Domesticstate-ownedcorporate|0.64%|13,718,000||
|Shenzhen AnpengCapital InnovationCo., Ltd.||Domesticstate-ownedcorporate|0.63%|13,333,333||
||||Among the above-mentioned shareholders, Sanhua Holding Group Co., Ltd.,Zhejiang Sanhua Lvneng Industry Group Co., Ltd. and Yabo Zhang are the personsacting in concert. The Company is not made aware whether there is any affiliatedrelationship between the other shareholders or whether they are persons acting inconcert as defined in Administrative Measures for the Acquisition of ListedCompanies.|||
||Explanation on the above-mentioned|||||
||shareholders’ affiliated relationship or|||||
||concerted action|||||
||Explanation on the above-mentioned||Not applicable|||
||shareholders that are engaged in margin|||||
||trading business|||||

(2) Total number of and top 10 shareholders of preferred stocks
□Applicable√Not applicable
No shareholders holding preferred stocks noted in the reporting period
(3) The ownership and controlling relationship between the Company and its actual controller in
form of diagram
||||||
|-|-|-|-|-|
||Daocai Zhang|Qingjuan Yu|||
|33%||||31%|
||||6%||

|||
|-|-|
|64.06%|Xinchang Huaqing Investment Co., Ltd.|

Xinchang Huaxin Investment Co., Ltd. 10.85%
27.27%
||
|-|
|11.81%|

Sanhua Holding Group Co., Ltd.
100%
1.81%
Haoyide International Limited OF Hong Kong
|||
|-|-|
||100%|
|Fuxun Co., Ltd.||
||37.89%|

||
|-|
|37.00%|

20.63%
Zhejiang Sanhua Intelligent Controls Co., Ltd.
5. Bonds
Does the Company have any corporate bond that is publicly issued and listed on the stock exchange and that are immature or not fully redeemed as of the approved issuance date of the Annual Report?
None
III. Management Discussion and Analysis
1. Business review for the reporting period
Is the Company subjected to the disclosure requirements for specific industries?
No
In 2018, with the global economy and trading landscape undergoing significant adjustments, overall growth
momentum of the global macro economy has slowed down. Meanwhile, under the impact of the Federal
Reserve increasing discount rate and the rising of international trade protectionism, international trade situation
is suffering from continuous turmoil. Given such complex and changing domestic and international environment, the Company insists on the guiding ideology of “Focus on leading and innovation”, adheres to the implementation of global business strategy. Under such context, theCompany’s refrigeration components business has still realized a positive growth rate, while the automotive components business has entered a slight growth phase after its high-speed expansion. The automotive industry is experiencing an unprecedented change, and the trend of new energy and intelligent vehicle is incontrovertible.
In this reporting period, for the first time, theCompany’s total revenue exceeds the milestone of 10 billion, which concludes at 10.84 billion Yuan with an increase of13.10% over the same period of last year. The operating profit is 1.55 billion Yuan with year over year growth rate of5.03%, and the net profit attributable to shareholders is 1.29 billion Yuan with year over year growth rate of4.56%. Based on the product classification, the revenue of refrigeration business is 9.40 billion Yuan with year over year growth rate of12.34%, and the revenue of automotive business is 1.43 billion Yuan with year over year growth rate of18.33%.
TheCompany’s major business activities in 2018 include:
Ⅰ. Focus on operation and steady growth of core businesses
1. Refrigeration components business
Under the macroeconomic uncertainty and friction of international trade, the Company seizes the market opportunities by innovation in technologies and materials and keeps establishing its industrial leading position. The Company constantly optimizes design for its customer solutions and expands the application fields of energy-efficient products and their penetration rate, thus the Company can enhance its core competencies.
2. Automotive components business
The automotive industry is moving from rapid development to a more steady development phase, while the new energy vehicle industry is achieving high growth rate due to the powerful political drivers and industrial upgrading. The development of new energy vehicles has become a clear trend along with the gradual mass production of auto makers. Having developed in the new energy vehicle thermal management products industry for more than a decade, the Company keeps improving its technical and manufacturing capabilities following itscustomers’ demands, and its products are gradually developing from components to modules and subsystems. The Company has become a qualified supplier of well-known customers such as Valeo, MAHLE, Volkswagen, Benz, BMW, Volvo, Tesla, GM, Geely, BYD, SAIC Motor, etc. The maximum value supplied by the Company is over 5,000 Yuan per vehicle, which is mainly due to its competitive advantages in the field of new energy vehicle thermal management.
Ⅱ. Focus on technology and increaseR&D investments
During the reporting period, the company strengthens the core competencies of its strategic products with sustainedR&D investments.R&D expense of 2018 is 437 million Yuan with year over year growth rate of33.62%. TheCompany’sR&D investment mainly focuses on the core technologies of heat-pump and intelligent control in order to develop more competitive products. Meanwhile, it actively promotes lean production and automation. By the end of this reporting period, the Company has 1,394 skilled technicians and 1,667 patents including 765 patents of invention.
Ⅲ. Strengthen the talent development mechanism of "Selecting, Using, Educating and Retaining" to support the global development of the Company's business
The company insists the talent development strategy of “Internal training is superior to external recruitment” and it established three different level of talent training system to identify and make career development
planning for excellent cadres. At the same time, the first Management Trainee program was started to ensure the rapid growth of theCompany’s global business. In addition, the Company launched its first stock incentive plan for directors, senior managers, and some core talents, which closely integratesemployees’ career with theCompany’s future development.
Ⅳ. Maintain investor relations and strengthen the awareness of service and return to shareholders
In order to boostinvestors’ confidence, promote the reasonable value return and enhance the long-term investment value of the stocks, the Company plans to repurchase its outstanding stocks with theCompany’s self-owned funds in the reporting period. Meanwhile, the Company continuously improves and maintains an effective and efficient internal control system, regulates its operation of board of director, supervisor andshareholders’ meeting, and maintains an effective information disclosure and investor relations management, etc. In addition, timely and smooth communication between the Company and its investors is ensured through the various means such as platform of Shenzhen Stock Exchange, calls from investors, on-site reception and other ways.
2. Significant changes in main business in the reporting period
□Applicable√Not applicable
3. Products contributing to over10% of theCompany’s main business revenue or profit
√Applicable□Not applicable
Unit: Yuan
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
||||||||||Revenue:||||Gross profit|
||||||||Gross profit||||Profit: +/-%|||
||Product||Revenue||Profit||||+/-% over last||||margin +/-%|
||||||||margin (%)||||over last year|||
||||||||||year||||over last year|
|RefrigerationUnit||5,960,937,724.48||1,009,630,883.39||32.56%||21.03%||3.62%||-3.32%||
|AWECO Unit||1,092,953,774.62||-24,690,258.07||14.85%||-9.29%||-50.24%||-2.62%||
|Micro-channelUnit||1,216,200,152.69||227,355,119.66||30.35%||-2.90%||-4.13%||-4.30%||
|AutomotiveUnit||1,432,231,867.30||304,881,679.69||29.38%||18.33%||43.05%||-1.45%||
|Other||1,133,667,158.42||29,146,096.27||18.03%||14.70%||-54.54%||-3.02%||

 4. Seasonal or periodic characteristics in operating performance that needs special attention
□Applicable√Not applicable
5. Significant changes in revenues, costs and net profit attributable to shareholders with common shares or their composition comparing to prior reporting period
□Applicable√Not applicable
6. Listing suspension or termination
□Applicable√Not applicable
7. Matters related to financial statements
(1) Explanation on changes in accounting policy, accounting estimations and accounting methods
comparing to prior year financial statement
√Applicable□Not applicable
1. In accordance with the Revised Format of General Enterprise Financial Statements for 2018 (Accounting NO. 15) and its interpretation and the provisions of Enterprise Accounting Standards which were issued by Ministry of Finance, the corresponding comparative data of the financial statements in 2018 are restated retrospectively. The accounts and amounts of the financial statements that are significantly affected in 2017 are shown in the following table:
Unit: Yuan
|||||
|-|-|-|-|
|Accounts and amounts of the original financial statement||Accounts and amounts of the new financial statement||
|Balance sheet as of Dec.31, 2017||||
|Notes receivable|1,984,932,895.65|Notes receivable andaccounts receivable|3,616,670,930.73|
|Accounts receivable|1,631,738,035.08|||
|Notes payable|1,016,823,594.85|Notes payable and accountspayable|2,497,466,550.92|
|Accounts payable|1,480,642,956.07|||
|Interest payable|2,364,117.76|Other payable|78,543,886.02|
|Other payable|76,179,768.26|||
|Income statement in 2017||||
|General and Administrativeexpense|872,020,125.73|General and Administrativeexpense|544,849,254.97|
|||R&D expense|327,170,870.76|
|Cash flow statement in 2017 (Note)||||
|Cash inflows from otherinvestment activities|15,368,289.00|Cash inflows from otheroperating activities|15,368,289.00|

Note: The cash inflows of assets-related government subsidies of 15,368,289.00 Yuan in the cash flow statement is reclassified from "cash inflows from other investment activities" to "cash inflows from other operating activities".
2. Ministry of Finance promulgated four regulations: Interpretation of Enterprise Accounting Standards No. 9: Accounting Treatment of Net Investment Loss under Equity Method, Interpretation of Enterprise Accounting Standards No. 10: Depreciation Method Based on Income from the Use of Fixed Assets, Interpretation of Enterprise Accounting Standards No. 11: Amortization method based on income generated from the use of intangible assets, Interpretation of Enterprise Accounting Standards No. 12: Whether the Provider and Receiver of Key Manager Services are Affiliated Parties. Since January 1, 2018, the company has implemented the aforementioned interpretation of Enterprise Accounting Standards. The implementation of the above interpretations has no impact on the opening balances of theCompany’s financial statement.
(2) Explanation on retrospective restatement due to significant accounting error correction in the reporting period
□Applicable√Not applicable
(3) Explanation on changes of consolidation scope comparing to prioryear’s financial statement
√Applicable□Not applicable
(Ⅰ) Merger of enterprises under different control
1. Merger of enterprises under different control in this reporting period
(1) Basic information
||||||
|-|-|-|-|-|
|Name of acquiree|Acquisition date|Cost of equity acquisition|Ownership|Acquisition method|
|Qingdao Debaiyi Refrigeration Equipment Co.,Ltd.|2018-07-31|RMB 14,580,943.52|70%|Agreement|
|American Investments Fund I, LLC|2018-05-18|USD 3,188,283.62|100%|Agreement|

||||||
|-|-|-|-|-|
|Name of acquiree|Acquisition date|Basis of acquisitiondate|Acquiree’s revenue fromacquisition date to the endof the reporting period|Acquiree’s net profit fromacquisition date to the end ofthe reporting period|
|Qingdao DebaiyiRefrigerationEquipment Co., Ltd.|2018-07-31|Substantive Control ofOwnership of SubjectEquity|4,215,170.69|-2,380,945.62|
|American InvestmentsFund I, LLC|2018-05-18|Substantive Control ofOwnership of SubjectEquity|151,452,858.77|-4,356,244.98|

(2) Other explanations
The Company eventually acquired70% equity of Qingdao Debaiyi Refrigeration Equipment Co., Ltd. (referred to as Qingdao Debaiyi) by means of agreement transfer and capital increase. On July 31, 2018, the Company has substantial control over Qingdao Debaiyi and has incorporated it into the scope of consolidation since August 1, 2018. As of December 31, 2018, the Company has paid a total of 14,580,943.52 Yuan for equity transfer and capital increase.
The Company acquired100% of American Investments Fund I, LLC (AIF) owned by Leander J. Foley, III, Brent Porterfield by means of agreement transfer. On May 18, 2018, the Company has substantial control over AIF and has incorporated it into the scope of consolidation since May 1, 2018. As of December 31, 2018, the Company has paid USD 3,188,283.62 for equity transfer.
2. Merger costs and goodwill
||||
|-|-|-|
|Items|Qingdao Debaiyi|AIF|
|Merger cost|14,580,943.52|20,450,926.45|
|Cash paid|14,580,943.52|20,450,926.45|
|Minus：Fair value of identifiable net asset|14,580,943.52|19,012,845.74|
|Difference|0.00|1,438,080.71|
|Investment losses|0.00|1,438,080.71|

 3.Acquiree’s identifiable assets and liabilities on acquisition date
(1) Basic information
||||||
|-|-|-|-|-|
|Accounts|Qingdao Debaiyi||AIF||
||Fair value onacquisition date|Book value onacquisition date|Fair value onacquisition date|Book value onacquisition date|
|Assets|24,437,856.90|24,437,856.90|178,841,656.44|163,407,220.82|
|cash|13,417,210.95|13,417,210.95|7,175,701.40|7,175,701.40|
|Notes receivable and accountsreceivable|1,628,714.49|1,628,714.49|34,775,708.47|34,775,708.47|
|Prepayments|107,399.00|107,399.00|237,900.54|222,254.98|

||||||
|-|-|-|-|-|
|Other receivables|113,034.07|113,034.07|669,645.40|669,645.40|
|Inventories|2,218,727.84|2,218,727.84|23,623,099.85|22,251,944.94|
|Other current assets|||4,422,628.86|4,422,628.86|
|Fixed assets|2,328,252.55|2,328,252.55|97,468,796.46|83,421,161.31|
|Construction in progress|16,118.00|16,118.00|3,924,204.58|3,924,204.58|
|Intangible assets|||6,543,970.88|6,543,970.88|
|Long-term prepaid expense|628,400.00|628,400.00|||
|Other non-current assets|3,980,000.00|3,980,000.00|||
|Liabilities|3,607,937.58|3,607,937.58|159,828,810.70|159,828,810.70|
|Notes payable and accounts payable|1,252,653.72|1,252,653.72|30,766,972.10|30,766,972.10|
|Salaries payable|||2,904,820.82|2,904,820.82|
|Tax payable|338,784.79|338,784.79|719,091.38|719,091.38|
|Other payable|2,016,499.07|2,016,499.07|7,886,347.39|7,886,347.39|
|Long-term loans|||117,551,579.01|117,551,579.01|
|Net assets|20,829,919.32|20,829,919.32|19,012,845.74|3,578,410.12|
|Minus: Minority interest|6,248,975.80|6,248,975.80|||
|Acquired net assets|14,580,943.52|14,580,943.52|19,012,845.74|3,578,410.12|

 (2) The method of determining the fair value of recognized assets and liabilities
The fair value of identifiable assets and liabilities shall be determined by the management of the Company according to the valuation of the asset-based method or the determination method of the fair value specified in the guidelines.
(Ⅱ) Change in consolidation scope due to other reasons
1. Increased scope of consolidation
||||||
|-|-|-|-|-|
|Company Name|Acquisitionmethod|Acquisition date|Actual invested capital|Ownership|
|Sanhua (Vietnam) Co., Ltd.|New investment|2018-09-04|USD 19,800,000|100%|

2. Decreased scope of consolidation
||||||
|-|-|-|-|-|
|Corporation|Disposalmethod|Disposal date|Net assets ondisposal date|Net profit from beginning ofthe reporting period to thedisposal date|
|Sanhua Refrigeration Components (Thailand) Co.,Ltd.|LiquidationandCancellation|2018-02-01|5,228,245.83|572,897.82|

(4) Estimation on 2019 Q1 business performance
□Applicable√Not applicable