Hunan Sokan New Materials Co.Ltd(688157) : summary of annual report for 2021

Company code: Hunan Sokan New Materials Co.Ltd(688157) company abbreviation: Hunan Sokan New Materials Co.Ltd(688157) Hunan Sokan New Materials Co.Ltd(688157)

Summary of annual report 2021

Section I important tips

1 the summary of this annual report comes from the full text of the annual report. In order to fully understand the company’s operating results, financial status and future development plan, investors should go to the website of Shanghai Stock Exchange (www.sse. Com. CN.) The website carefully reads the full text of the annual report. 2 major risk tips

The company has elaborated various risks that the company may face in the process of operation in this report. Please refer to “IV. risk factors” in Section III “management discussion and analysis” of this report. Please pay attention to investment risks. 3 the board of directors, the board of supervisors and the directors, supervisors and senior managers of the company guarantee the authenticity, accuracy and completeness of the contents of the annual report, and there are no false records, misleading statements or major omissions, and bear individual and joint legal liabilities. 4. All directors of the company attended the board meeting. 5 Tianzhi International Certified Public Accountants (special general partnership) issued a standard unqualified audit report for the company. 6. The company is not profitable and has not yet achieved profitability when it is listed □ yes √ No 7. The profit distribution plan or the plan for the conversion of provident fund into share capital in the reporting period adopted by the resolution of the board of directors

The company held the 10th meeting of the second board of directors on February 25, 2022, deliberated and approved the profit distribution plan for 2021, and planned to distribute cash dividends of RMB 3.70 (including tax) to all shareholders for every 10 shares. As of December 31, 2021, the total share capital of the company is 79 Shanghai Pudong Development Bank Co.Ltd(600000) shares. Based on this calculation, the total cash dividend to be distributed is RMB 2945200000 (including tax). The profit distribution amount accounts for 30.24% of the net profit attributable to the shareholders of the listed company in the consolidated statements of 2021. No capital reserve will be converted into share capital and no bonus shares will be given this time. The profit distribution plan can only be implemented after being deliberated and approved by the 2021 annual general meeting of shareholders. 8. Whether there are important matters such as special arrangements for corporate governance □ applicable √ not applicable

Section II basic information of the company

1 company profile company stock profile √ applicable □ not applicable

Company stock profile

Stock type stock exchange and sector stock abbreviation stock abbreviation before stock code change

RMB ordinary shares (A shares) Shanghai Stock Exchange Kechuang board Hunan Sokan New Materials Co.Ltd(688157) Hunan Sokan New Materials Co.Ltd(688157) none

Profile of the company’s depositary receipts □ applicable √ not applicable contact person and contact information

Contact person and contact information secretary of the board of directors (domestic representative of information disclosure) securities affairs representative

Name: Wu Junyun Zhou Huan

Office address: No. 777, No. 777, North Third Ring Road, Ningxiang Economic and Technological Development Zone, Hunan

Tel: 0731871917778088

E-mail [email protected]. huan. [email protected].

2. Discussion and analysis of operation

2021 is the first year of the national “14th five year plan” and a key node period connecting the company’s strategic objectives. Under the macro background of the global economy entering the post epidemic era and the continuous transmission of the pressure of rising prices of upstream raw materials, the company will be farsighted and repair both inside and outside in 2021; Anchor the core business, maintain strategic concentration and patience, and work for a long time. In the field of high-end consumer electronics, we adhered to the guidance of market and customer demand, deeply cultivated the potential of core strategic customers, continued to explore new customers and markets, and ensured the steady growth of the company’s business performance; At the same time, supported by technology and R & D innovation, we seized the new historical opportunities brought by the change of industry pattern and technological change, actively deployed the second and third growth curves, made great breakthroughs in new business expansion, technology R & D and platform construction, and laid a good foundation for the long-term and healthy development of the company.

(I) main operating conditions during the reporting period

During the reporting period, the company achieved an operating revenue of 508232000 yuan, a year-on-year increase of 16.85%; The net profit attributable to the shareholders of the listed company was 973949 million yuan, a year-on-year increase of 11.72%. As of December 31, 2021, the total assets of the company were 1344411700 yuan, and the net cash flow from operating activities was 569937 million yuan.

From the perspective of operating revenue, the application fields of the company’s products are as follows:

Unit: 10000 yuan

Proportion of increase and decrease of projects in 2021 and 2020 compared with the same period of the previous year proportion of amount proportion of amount

1. High end consumer electronics 4804932 94.54% 4278095 98.36% 12.31%

Including: mobile phones and related accessories 2857143 56.22% 2683338 61.70% 6.48%

Notebook computer and related accessories 994774 19.57% 980761 22.55% 1.43%

Wearable devices 711788 14.01% 469908 10.80% 51.47%

Smart appliances 241227 4.75% 144088 3.31% 67.42%

2. Passenger car sector 224623 4.42% 599.97 1.38% 274.39%

Subtotal of main business income 5029555 98.96% 4338092 99.74% 15.94%

Subtotal of other business income 527.65 1.04% 111.71 0.26% 372.34%

Total operating revenue 5082320 100.00% 4349263 100.00% 16.85%

Note 1: the operating income of Guangxi beichi passenger automobile field has been included in the consolidated statements since April 30, 2021.

Note 2: in 2020, other coatings and special ink products were classified and recognized according to the business areas corresponding to the company’s operating revenue.

In 2021, the company continued to focus on its main business and blossomed at multiple points in subdivided application fields. The business income of wearable devices, smart appliances and passenger cars increased significantly. Specifically, the sales volume of major North American consumer electronics customers, Xiaomi, glory, vivo, oppo, voice transmission, Amazon, ASUS, Logitech, Google and other end customers increased to varying degrees, which effectively hedged the adverse effects caused by Huawei’s lack of core and changes in the external environment, and ensured the steady growth of revenue in the field of mobile phones and accessories, laptops and accessories. With the continuous improvement of the company’s brand influence, the cooperation with major consumer electronics customers in North America, Xiaomi, Huawei, Casio and other end customers has been strengthened. The annual revenue in the field of wearable devices was 711788 million yuan, a year-on-year increase of 51.47%. Benefiting from the consumption upgrading of downstream end users, the demand for appearance and functional coatings of smart home appliances was indirectly driven. The revenue in the field of smart home appliances was 241227 million yuan, a year-on-year increase of 67.42%. After early exploration, the field of passenger cars successfully passed the series terminal certification and obtained customer recognition. The sales performance was gradually reflected, and the annual revenue was 224623 million yuan, a year-on-year increase of 274.39%.

(II) progress of key work during the reporting period

1. Technological innovation “keeps walking” and continues to strengthen hematopoietic function.

In 2021, the company adhered to the driving force of R & D innovation, with a high proportion of R & D investment. The annual R & D investment reached 587544 million yuan.

In terms of core technology, in the field of high-end consumer electronics, in order to continue to maintain the leading edge of technology, the original products are constantly updated and iterated, the old and the new are introduced, and the product matrix is expanded. For example, silicone hand coating and water-based DTM (direct to metal) coating that can be applied to more substrate types have been developed, which provides technical support to better meet the diversified needs of downstream markets and customers. At the same time, keep an eye on the industry trends, carry out forward-looking research in new fields such as smart Siasun Robot&Automation Co.Ltd(300024) , AR / VR, passenger cars, new energy, semiconductors and special equipment, actively implant and cultivate new products and further enrich downstream application scenarios. For example, participated in the coating technology development of Amazon’s first home assistant Siasun Robot&Automation Co.Ltd(300024) ASTRO, provided UV silicon hand coating solutions for AR equipment end customers 3glasses, Microsoft, Lenovo, etc., successfully developed the industry-leading second-generation anti fog lamp coating and UV ink, and made relevant technical reserves for the implementation of the strategy in the next stage.

In terms of R & D achievements, the quantity and quality of technology patent authorization and application have increased simultaneously. During the reporting period, the company added 1 PCT international authorized patent; There are 42 national authorized patents, and the new patents cover a number of application technology fields, such as water-based antifogging coating, UV curing coating, photosensitive ink of 3D glass and so on. As of the end of the reporting period, the company has accumulated 2 internationally authorized patents and 88 nationally authorized patents, and its overall R & D strength has been further enhanced.

In terms of R & D team construction, we have built a nest to attract Phoenix, and successively introduced a number of strategic high-level talents and industry expert talents. The talent team system supporting the company’s future development strategy has been preliminarily formed.

2. The core customer base has been continuously expanded and the anti risk ability has been effectively improved.

In order to actively respond to the uncertain changes of the external environment, while practicing its internal skills, the company continues to strengthen the development of new businesses and new markets, and further optimize the customer and market structure.

In the field of high-end consumer electronics, with more systematic service capabilities, it has deepened its cooperation with major consumer electronics customers in North America and fully entered its supply chain system of multiple product sequences of mobile phones, laptops, wearable, smart appliances and accessories. Through continuous and in-depth market penetration, the paint product share of Xiaomi, major consumer electronics customers in North America, Amazon, Google, Logitech and other important strategic customers has been further improved.

In terms of customer reserve and certification, breakthroughs have been made in key new customer development. The strategic cooperation relationship with oppo and vivo was further consolidated and product solutions were provided. It has established business cooperation with many new high-quality customers such as ASUS, Lenovo, voice transmission, Logitech, meta (formerly Facebook), magicleap (American VR / AR brand), OtterBox (American consumer electronics protective shell brand), Anker Innovations Technology Co.Ltd(300866) , Iflytek Co.Ltd(002230) , Schneider, Kohler and so on. It is fully connected with ODM manufacturers such as Wentai, Huaqin and Longqi, and some mobile phone and laptop projects are developed and implemented in the mold factory. It has successfully passed the supplier certification of glory, Jabra (Danish earphone and accessories brand), huami and Philips. With the continuous increase of downstream demand for green environmental protection water-based coatings, with the first mover technical advantages of water-based coatings, the shipments of major North American consumer electronics customers, Amazon, Logitech, Google and other terminal brands continued to increase, and the annual revenue of water-based environmental protection coatings increased by 59.93% year-on-year.

In the field of passenger cars, two wheel drive through technology and market has opened a new situation. In the second half of 2021, antifogging lamp coatings were introduced into mass production in Byd Company Limited(002594) , PVD products and UV silicon products were delivered in T company in North America, and stainless steel coatings were successfully trial produced or mass produced in some projects in Weilai. It has successively obtained the AVL qualification certification of more than ten well-known automobile enterprises such as Byd Company Limited(002594) , North American T company, Xiaopeng, Weilai, Geely, FAW, GAC, SAIC GM Wuling, Volkswagen, Toyota and great wall, and obtained many opportunities to participate in the interactive research and development of new model samples and new projects. It has established strategic cooperative relations with many well-known auto parts manufacturing enterprises at home and abroad, such as Yanfeng group, Changzhou Xingyu Automotive Lighting Systems Co.Ltd(601799) , Ningbo Huaxiang Electronic Co.Ltd(002048) , minshi group and gelhan, so as to provide a strong guarantee for future performance growth.

3. “Paint + ink + adhesive” multi category coordinated development and achieved market breakthrough.

After years of market cultivation and technical precipitation in the early stage, the business of special ink products is becoming more and more vibrant. In 2021, the company fully participated in the development of Google Mobile ink project and realized the introduction and mass production of environmental friendly ink solutions. The environmental friendly low VOC ink was successfully mass produced on the glass panel of automobile charging pile of T company in North America. UV ink products were further expanded and applied in combination with inkjet printing process, and successfully realized small batch mass production. The annual revenue of special ink was 188475 million yuan, Year on year increase

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