• Important Notice
  1. This annual report summary is extracted from the full annual report. To fully understand the company's operating results, financial status, and future development plans, investors should carefully read the full annual report on media designated by the China Securities Regulatory Commission, such as the Shanghai Stock Exchange website.

1. 2. The Board of Directors, Supervisory Board, and the directors, supervisors, and senior management of the Company warrant that the content of this annual report is true, accurate, and complete, free from any false records, misleading statements, or major omissions, and assume individual and joint legal liabilities.

1. 3. All directors of the company attended the board meeting.

1. 4. Zhongshen Zhonghuan Certified Public Accountants (Special General Partnership) issued a standard unqualified audit report for the company.

1. 5. Profit distribution plan or capital reserve to share capital increase plan for the reporting period, reviewed by the Board of Directors

Audited by Zhongshen Zhonghuan Certified Public Accountants (Special General Partnership), 2020 The company's net profit attributable to shareholders of the parent company for the year 314,538,627.08 Yuan, the parent company achieved net profit 158,953,777.34 Yuan, extracted surplus reserve 15,895,377.73 Yuan, plus undistributed profit at the beginning of the year 300,396,451.43 Yuan, excluding 2020 half-year dividend 277,826,400.00 Yuan, the profit available for distribution to shareholders by the parent company at the end of the reporting period was 165,628,451.04 Yuan.

In view of 2020 After being reviewed and approved by the company's board of directors and general meeting of shareholders for the half-year, the company implemented a cash dividend. Considering the company's future development and capital requirements, the profit distribution plan reviewed and approved by this board meeting is: 2020 The annual profit will not be distributed, nor will there be any capital reserve transferred to share capital.

• Company Basic Information

1. Company Profile

2. Introduction to the Company's Main Business during the Reporting Period

The company's main business is the research and development, production, and sales of diesel engine parts. The main business models include product sales and entrusted processing. Under the product sales model, the company procures rough castings of cylinder blocks, cylinder heads, connecting rods, etc., processes them, and then sells them to customers. Under the entrusted processing model, the company processes rough castings of cylinder blocks, cylinder heads, connecting rods, etc., provided by customers according to their requirements. The company's main customers are large engine manufacturers and vehicle manufacturers such as Foton Cummins, Dongfeng Cummins, Dongfeng Commercial Vehicle, Guangxi Yuchai, and Sinotruk.

The company adopts the "order-based production" model widely applicable in the industry. The company generally first signs framework agreements with major customers, including product types. Under the framework agreement, customers regularly provide specific orders, and the company performs batch procurement, production, and supply according to the customer's specific orders. The company's production model is "order-driven under lean production." Based on the actual needs of customers, and according to the product design drawings, production process requirements, and supply standards specified by the customers, the company organizes implementation discussions and customizes supporting diesel engine parts production and processing workflows for customers, forming a complete set of diesel engine parts production and processing solutions, providing qualified products to customers within the agreed time.

The company's industry is the automotive parts industry, an important part of the specialized division of labor in automobile manufacturing. According to the "Classification of National Economic Industries" ( GB/T4754-2017 ), the company's industry is " Automobile Manufacturing ” ( C36 ) within " Automotive Parts and Accessories Manufacturing ” ( C3670 ); According to the China Securities Regulatory Commission's "Guidelines for Industry Classification of Listed Companies" (CSRC Announcement [2012]31 No.), the company's industry is " Automobile Manufacturing ” ( C36 ).

The automotive industry has a long industrial chain, wide coverage, and numerous upstream and downstream related industries, playing a very important role in China's national economic development. With the continuous rapid development of China's automotive industry, its importance in the national economy is constantly increasing, and it has become one of the leading industries supporting and driving China's sustained rapid economic growth. 2005-2016 In the year, the added value of the automotive industry nationwide GDP The proportion occupied by 2005 year's 1.18% rose to 2016 year's 1.53% The vigorous development of China's automobile industry has also significantly driven the development of upstream and downstream related industries. China's automobile industry has become an important part of the world's automobile industry, fundamentally changing the pattern of the world's automobile industry and laying the foundation for China's growth into a major automobile manufacturing power.

From the perspective of various market segments, in terms of passenger vehicles, 2017、2018 year, the demand growth in China's passenger vehicle market slowed down, with year-on-year growth of 1.58% 、 -4.08% In terms of commercial vehicles, with sustained high growth in infrastructure investment, growth in the scale of industry, wholesale and retail trade driving growth in trade volume and related enterprises' demand for logistics, and the new national standard GB1589-2016 The implementation of new regulations stimulated the Ministry of Transport and other relevant ministries to jointly conduct strict nationwide inspections of overloading, leading to high growth in China's commercial vehicle market in 2016 and 2017 years. 2018 In 2019 and GB1589-2016 years, the stimulus of the new national standard to the commercial vehicle market gradually weakened, and the growth rate of production and sales of commercial vehicles in China slowed down.

2020 In 4 month since the recovery from the epidemic in " New infrastructure, elimination of National III vehicles, and stricter control of overloading ” policies, national automobile sales have continued to grow, refreshing the monthly historical production and sales levels for consecutive 9 months, and reaching a historical high in 2020 year 6 month. 2020 In 513.3 ten thousand vehicles, a year-on-year increase of 18.7% Among them, the sales volume of heavy-duty trucks reached 161.9 ten thousand vehicles, a year-on-year increase of 37.9% 。

3. Main Accounting Data and Financial Indicators of the Company
   1. Recent 3 years' main accounting data and financial indicators

Unit: Yuan Currency: RMB

1. 2. Main accounting data for each quarter of the reporting period

Unit: Yuan   Currency: RMB

Explanation of differences between quarterly data and disclosed regular report data

4. Share Capital and Shareholder Information
   1. Number of ordinary shareholders and preferred shareholders with restored voting rights and top 10 shareholders' shareholding table

Unit: Shares

1. 2. Between the Company and its Controlling Shareholder Block Diagram of Equity and Control Relationships

1. 3. Block Diagram of Equity and Control Relationships Between the Company and the Actual Controller

1. 4. Total number of the company's preferred shareholders at the end of the reporting period and top 10 shareholder information

5. Corporate Bonds Status

• Discussion and Analysis of Operations

1. Key Operating Performance during the Reporting Period

2020 During the year, the company achieved operating revenue of 1,677,984,500 RMB, a year-on-year increase of 45.25%; achieved operating profit of 354,200,300 RMB, a year-on-year increase of 20.46%; achieved net profit of 320,727,900 RMB, a year-on-year increase of 17.72%; of which the net profit attributable to shareholders of the parent company was 314,538,600 RMB, a year-on-year increase of 17.01%.

2. Causes Causes for suspension of listing

3. Circumstances and reasons for facing termination of listing

4. Analysis and explanation of the reasons and impact of changes in accounting policies and accounting estimates by the company

( 1 ) Changes in accounting policies due to the implementation of new revenue standards

The Ministry of Finance on 2017 year 7 month 5 day issued the 'Enterprise Accounting Standard No. 14 — Revenue ( 2017 Revised) (Cai Kuai [2017]22 No.) (hereinafter referred to as "New Revenue Standard"). Approved by the 15th meeting of the third board of directors and the 12th meeting of the third supervisory board of the company, this group on 2020 year 1 month 1 The aforementioned new revenue standard became effective from the date.

The new revenue standard established a new revenue recognition model for regulating revenue arising from contracts with customers. To implement the new revenue standard, the Group re-evaluated the recognition and measurement, accounting, and presentation of major contract revenues. According to the provisions of the new revenue standard, it was decided to adjust only for contracts that were not completed as of 2020 year 1 month 1 date) cumulative impact of contracts not yet completed. The cumulative impact amount of the first-time adoption adjusts the opening balance of the current period of first-time adoption (i.e., 2020 year 1 month 1 date) retained earnings and other related items in the financial statements, with no adjustment made to comparable period information.

The specific impact of implementing the new revenue standard on the Group is the reclassification of contract consideration received in advance from customers for the transfer of goods from the "Advances from Customers" item to the "Contract Liabilities" item.

① Impact on Financial Statements as of January 1, 2020

② Impact on Financial Statements as of December 31, 2020

The Group had no other changes in accounting policies during the reporting period.

( 2 ) Changes in Accounting Estimates

The Group had no changes in accounting estimates during the reporting period.

5. Company's significant accounting errors Analysis and explanation of reasons for correction and impact

6. If the scope of consolidation of the financial statements has changed compared to the prior year's financial report, the company should provide a specific explanation.

As of December 31, 2020, the Group had a total of 5 subsidiaries included in the scope of consolidation. For details, please refer to Note IX, "Interests in Other Entities". The Group's scope of consolidation increased by 1 entity this year compared to the previous year. For details, please refer to Note VIII, "Changes in Consolidation Scope".