Company code: Shareate Tools Ltd(688257) company abbreviation: Shareate Tools Ltd(688257) Shareate Tools Ltd(688257)
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 http://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 production and operation in this report. Please refer to “IV. risk factors” in “section III Management Discussion and analysis”. 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 attend the board meeting. 5 notarial Tianye Certified Public Accountants (special general partnership) has 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’s profit distribution plan for 2021 is: Based on the total share capital on the date of equity distribution registration, the company plans to distribute cash dividends of RMB 5 (including tax) to all shareholders for every 10 shares, without converting capital reserve into share capital and bonus shares. As of December 31, 2021, the total share capital of the company is 92800000 shares. Based on this calculation, it is expected to distribute a total cash dividend of RMB 46400000 (including tax), accounting for 34.06% of the net profit attributable to shareholders of Listed Companies in the consolidated statements of the company in 2021. If the total share capital of the company changes before the equity registration date of equity distribution, the company plans to keep the total distribution unchanged and adjust the distribution amount per share accordingly. The profit distribution plan has been deliberated and approved at the ninth meeting of the Fourth Board of directors of the company, and can be implemented only after it is deliberated and approved by the 2021 annual general meeting of shareholders of the company. 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 stock abbreviation before stock code change stock abbreviation and sector
RMB common stock (a Shanghai Stock Exchange Shareate Tools Ltd(688257) Shareate Tools Ltd(688257) not applicable
(1) Kechuang board
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: Liu Guozhu, Wei Ruiyao
Office address: No. 6, Weixi Road, Weiting Town, Suzhou Industrial Park, No. 6, Weixi Road, Weiting Town, Suzhou Industrial Park
Tel: 051262851663
E-mail [email protected]. [email protected].
2. Introduction to the company’s main business in the reporting period (I) main business, main products or services
As an intermediate product and consumable in industrial production, cemented carbide is widely used in mining, oil drilling, engineering machinery, metal cutting machine tools, automobile manufacturing, electronic information, Aerospace Military Industry and other industries. It is known as “the tooth of industry”.
The company is mainly engaged in the R & D, production and sales of cemented carbide and tools. The company’s main products include cemented carbide, cemented carbide tools and supporting products provided according to the needs of customers. Cemented carbide includes mining tool alloy, cutting tool alloy and wear-resistant tool alloy. Cemented carbide tools are mainly rock drilling tools used in mining represented by cone bits.
Cemented carbide is a national strategic emerging industry. The company focuses on the technical development in the field of cemented carbide, has gradually mastered the core technology of cemented carbide in the application fields of mining, cutting and wear resistance, has a high level of production technology, and has established a perfect sales channel.
Relying on the core technology and market position in the cemented carbide field, the company extends the industry to the downstream tool manufacturing field, forming an operation mode of integrated development of upstream and downstream industries of cemented carbide and tool manufacturing. At the same time, the company actively expands the overseas market and provides comprehensive solutions for mining consumables by supplying mining cemented carbide tools and their supporting products in the mining and exploration fields to overseas mine customers, The supporting products are mainly purchased and can be sold without further production and processing. （2） Main business model
1. Procurement mode
The main raw materials of the company are tungsten carbide powder, cobalt powder and alloy steel. Tungsten carbide and cobalt powder have commodity properties, active market transactions, open and transparent prices and many potential suppliers; Alloy steel is the special steel required by the company to produce cone bits, which needs to be produced by suppliers according to the needs of the company. The company adopts the procurement mode of “order by production” for main raw materials. At the same time, in order to improve production efficiency, reduce investment in fixed assets and improve the rate of return on investment, the company completes a small number of processes in the form of entrusted processing. In addition, the company provides comprehensive solutions for mining and exploration consumables to overseas large mining enterprises. In addition to selling cone bits, it also provides supporting consumables products. There are a wide variety of supporting products and strong personalized customer needs. In order to focus on its main business, the company purchases some supporting products to meet customer needs and improve its comprehensive service ability.
2. Production mode
The company’s products are divided into standardized products and non standardized products. The standardized products mainly include cemented carbide products such as bars and sectors and cemented carbide tools such as cone bits. The non standardized products mainly include customized or special-shaped cemented carbide products such as cemented carbide teeth, diamond composite substrate and wear-resistant parts. The company adopts the production mode of “production based on sales and appropriate preparation”. For standardized products, the company usually makes production plans in combination with orders and historical sales, and maintains a certain safety inventory. For non standardized products, they are produced according to customer orders.
3. Sales model
The downstream customers of the company are scattered and belong to different industries. According to the characteristics of customer structure, the company adopts the sales mode of “direct sales first, supplemented by distribution”. For customers with large purchase volume or concentrated sales areas, the company usually establishes its own sales channels. For overseas regions where the company has not established sales channels, the company’s new product promotion stage and customers with low and scattered purchase volume, the company realizes product coverage with the help of the stable sales channel resources of dealers. All sales modes of the company are buyout sales, and there is no commission sales.
4. R & D mode
The company’s products are widely used and there are a large number of downstream customers. The company maintains a good cooperative relationship with its main customers. In order to meet the needs of specific application scenarios of its main customers and keep up with the cutting-edge development direction of the market, the company has established a perfect R & D system with the technology R & D center as the independent R & D platform and the R & D Department of various categories of products as the product and process innovation platform. The company implements the project-based R & D mode, and has formed a R & D mode driven by R & D and sales. It can quickly and effectively put forward R & D topics according to market demand and industry development trend, quickly establish a project R & D team, and form a good communication mechanism with the market. The company attaches importance to basic technology research and development. By closely tracking the latest research results in the field of cemented carbide and making full use of the technical experience accumulated for many years, the company actively develops new products and technologies suitable for high-end cemented carbide and tools, so as to ensure that the company’s technology and product layout adapt to the continuous evolution of industry development. （3） Industry 1 Development stage, basic characteristics and main technical threshold of the industry
(1) Industry
The company’s main business is the R & D, production and sales of cemented carbide and tools. Cemented carbide is an advanced non-ferrous metal material made of refractory metal compounds such as tungsten carbide and bonding metals such as cobalt and nickel through powder metallurgy process. Cemented carbide tools are the application of cemented carbide extending downstream.
According to the guidelines for Industry Classification of listed companies (revised in 2012) issued by China Securities Regulatory Commission, the company’s business belongs to “C32 nonferrous metal smelting and rolling processing industry” in the sub category of “C manufacturing industry”; According to the classification standard of national economic industry classification (gb-t47542017), the company’s business belongs to “c3240 nonferrous metal alloy manufacturing” in “C32 nonferrous metal smelting and rolling processing industry”; According to the guidance catalogue of key products and services of strategic emerging industries (2016 Edition) and the classification of strategic emerging industries (2018), the company’s industry belongs to the “new material industry”.
(2) Development stage and basic characteristics of the industry
In the cemented carbide industry chain, from top to bottom are the mining and smelting of tungsten, cobalt and other metal compounds and powders, the production of cemented carbide in mining, cutting and wear-resistant fields, the manufacturing of cemented carbide tools in the above fields, and the application scenarios of cemented carbide tools. After purchasing tungsten carbide powder, cobalt powder and other raw materials from upstream suppliers and producing and processing cemented carbide in mining, cutting, wear-resistant and other application fields, in addition to selling cemented carbide, the company further produces mining cemented carbide tools such as cone bits, and provides comprehensive solutions for mining and exploration consumables to mining enterprises through outsourcing supporting products. Therefore, the company spans multiple stages of the cemented carbide industry chain, such as cemented carbide production, cemented carbide tool manufacturing and application scenario comprehensive services.
China’s cemented carbide and tool industry is an early and relatively mature industry. In recent years, there has been no significant change in the industry technology development trend, industry model, industry format and industry business model.
① Cemented carbide industry
Due to its high hardness and high wear resistance, cemented carbide can be manufactured into various mining tools, cutting tools and wear-resistant tools. It is widely used in engineering machinery, metal cutting machine tools, automobile manufacturing, electronic information, Aerospace Military Industry and other fields. It is known as “the tooth of industry”.
China is the country with the largest output of cemented carbide. According to the statistics of cemented carbide branch of China Tungsten Industry Association, in 2021, 54 major cemented carbide enterprises in China produced 4479263 tons of cemented carbide. China’s Cemented Carbide output showed an overall growth trend. From 2010 to 2021, the compound growth rate of cemented carbide output was 7.94%. In the cost composition of cemented carbide, the material cost accounts for a relatively high proportion, and the price fluctuation of raw materials will have a certain impact on the gross profit margin of cemented carbide industry.
In order to solve the current situation of low deep processing degree of products and insufficient self-sufficiency rate of high-end cemented carbide in China’s cemented carbide industry, with the support of a series of incentive policies, the scale of enterprises in China’s cemented carbide industry has been growing through resource integration, optimization and reorganization. At the same time, for a series of key areas of “neck sticking”, through introduction, absorption and independent innovation, a series of significant progress has been made in raw material production, product and material development of hard materials, application of process and equipment, quality inspection, recycling of waste alloys, etc. With the improvement of China’s Cemented Carbide output and quality, China’s Cemented Carbide export has increased rapidly in recent years. According to the statistics of cemented carbide branch of China Tungsten Industry Association, China’s Cemented Carbide export has increased to 952328 tons in 2021, with a compound growth rate of 6.32% from 2010 to 2021.
② Mining cemented carbide tool industry
The investment in mineral resources, energy exploitation and infrastructure construction determines the overall demand of the industry. Mining cemented carbide tools mainly include cone bit, top hammer impact drill, DTH impact drill, reverse raise drill and coal cutter pick. The market scale of mining cemented carbide tools changes with the fluctuation of mineral resources, energy exploitation and infrastructure construction investment. Taking iron ore as an example, according to the data of USGS, since 2010, the global iron ore mining volume has shown an overall growth trend. The increase of iron ore mining volume directly drives the market demand of mining cemented carbide tools such as rock drilling tools, and further drives the market demand of mining cemented carbide. From product output to service output is the development direction of the industry. The downstream customers of mining cemented carbide tools are mainly large energy and mineral mining enterprises. Due to the great differences in geological structure and working environment, the above customers usually have different needs for various rock drilling tool products and supporting products. Therefore, suppliers who can provide comprehensive solutions for mining and exploration consumables can usually become their long-term partners, It can also obtain higher added value, which also puts forward higher requirements for mining cemented carbide tool industry enterprises.
(3) Main technical threshold
The cemented carbide industry in which the company is located is a national strategic emerging industry and a technology intensive industry. The technical threshold of the industry is high. It needs a sustained high level of R & D investment to maintain the technical advantages of products and narrow the gap with world-class enterprises.
The company’s core technology covers the whole process of R & D, design and production of main products, including cemented carbide products such as mining tool alloy, cutting tool alloy and wear-resistant tool alloy, mining cemented carbide tool products, as well as cermet and other products under development and promotion. The core technologies related to mining tool alloy and mining cemented carbide tools of the company have reached the leading level in China, which promotes the company to occupy a high market share in the subdivided application fields of mining tool alloy in China, helps the company rank first in the Chinese market share of mining cone bit products, and has the ability to compete with multinational companies in the international market. 2. Analysis of the company’s industry position and its changes
Focusing on the R & D, production and sales of medium and high-end cemented carbide, the company has built an advanced R & D and production base of medium and high-end cemented carbide in China. According to the statistical data published by the cemented carbide branch of China Tungsten Industry Association, the company
