Review of the 2017 Annual Board of Directors of Jinlun Co., Ltd.

On April 20th, the review of the 2017 annual board of directors of Jinlun Co., Ltd. is as follows:

I. Overview

During the reporting period, the company focused on the development strategy of “focusing on industrial segmentation, joint advantage of enterprises, building B2B platform, promoting industrial upgrading, and restructuring industrial ecosystem”, and expanding both in-depth expansion and intrinsic growth. Excellent performance management model to improve business management and profitability.

During the reporting period, the company continued to seek breakthroughs in textile carding equipment and stainless steel decorative materials business, and laid out new business segments to enhance its core competitiveness.

First, pay attention to the research and development of textile carding equipment, optimize product structure, and develop textile sector

During the reporting period, Jinlunzheng signed a cooperation mechanism with research institutes such as Donghua University and Shandong Lutai and other benchmark textile enterprises to form a four-in-one R&D platform. The company used the R&D platform to improve its products and continuously introduced new products to the market. The sales performance of new products represented by blue diamond series products and double-toothed clothing was better than expected, the product structure was further optimized, and the proportion of high-end and ultra-high-end products increased rapidly. During the reporting period, the company try in the textile sector, the new Nantong source-Textile Technology Co., Ltd. Nantong grapefruit yarn electricity providers, through the "investment-driven" - the key resources of enterprises and associated enterprises business collaboration under investment in the textile industry chain of online and offline Gradually realize supply chain management and industrial chain integration, and strive to create "specialized e-commerce platform for textile raw materials", "professional e-commerce platform for yarns", "professional e-commerce platform for fabrics", online and offline integration, and finally become "textile industry" The value chain organizer "creates the textile industry chain ecosystem and promotes the advancement and upgrading of the textile industry.

Second, to promote the improvement of the quality of stainless steel decorative materials, developing domestic and foreign markets

During the reporting period, Senda Decoration continuously optimized the process control of the production line, improved the flexible production management capability, focused on the continuous improvement and innovation of the company's production equipment and products, further combing and clarifying the standard production process and standard products of each process, and improving the capacity utilization rate. To promote quality improvement. At the same time, Senda Decoration strengthens brand building, pays attention to brand image, actively expands domestic and foreign markets, and expands foreign markets on the basis of stabilizing and consolidating the domestic market to ensure the company's business continues to grow steadily. The Chengdu Haorui project, which is invested by the company to change the use of raised funds, is expected to be put into production in July 2018. The Chengdu Haorui project will not only provide more capacity for the company's stainless steel decoration business, but also play an active role in the company's stainless steel decoration business to explore the southwestern Chinese market. .

Third, implement textile and advanced manufacturing sector investment projects to accelerate the industrial chain layout

During the reporting period, the company strived to promote more projects that are in line with the company's strategic direction. In addition to the original layout of the textile carding equipment and business services outer stainless steel decorative panels, to go into the field of intelligent manufacturing. During the reporting period, the company newly established Nantong Jinlun Intelligent Equipment Research and Development Co., Ltd. and Nantong Ruige Precision Machinery Co., Ltd., adhering to the business philosophy of "unique, excellent and simple", will be based on the wisdom and capital, with basic software and hardware. Cut in, gradually lay out the business of automation equipment, digital production line combination, smart factory, etc., build the value chain of intelligent manufacturing technology solutions, and promote the technical level of related industrial products.

In 2017, the operating income was 2,094,991,038.31 yuan, a year-on-year increase of 20.53%. The main reasons for the increase in operating income: First, the price of stainless steel raw materials rose, resulting in rising sales prices. The operating income of subsidiary Haimen City Senda Decoration Materials Co., Ltd. increased compared with the same period of last year; the second is the establishment of Nantong Jinyuanyun Textile Technology Co., Ltd. Income; third, the operating income of other subsidiaries also increased slightly compared with the same period last year. The net profit attributable to shareholders of listed companies was 85,735,735.97 yuan, a year-on-year decrease of 31.31%. The main reasons for the decline in profits: First, the company made large-value impairment provision for long-term equity investment; second, the company is in an important stage of strategic transition. With the development of multiple business segments of the company, the company actively cultivates and introduces The excellent talents adapted to the company's strategic transformation led to an increase in management expenses. Third, the increase in assets such as current assets and long-term equity investments led to an increase in short-term borrowings. The current financial expenses increased over the same period last year.

Second, the analysis of core competitiveness

During the reporting period, the company's main business includes the research and development, production and sales of textile carding equipment and the development, production and sales of various types of stainless steel decorative materials, which are operated by related subsidiaries, and the parent company is positioned as industrial investment. . The company's core competitiveness has not undergone major changes, mainly reflected in the following aspects: subsidiary textile carding equipment business

1. Technological innovation and research and development advantages

The company has built carding equipment from product design and development, research carding equipment manufacturing technology, design and development of specialized equipment, equipment combed the whole industry chain research system with steel wire and backing of research and development, China Textile Machinery Association was assessed as "clothing product development center". The company has dozens of patents and has established many years of professional magazines in the industry, "Textile Technology", which brings together experts and professors in the industry to conduct cutting-edge technologies and research on textiles, so that the company's carding technology is at the forefront of the industry and serves the majority of textile enterprises. . At present, the company has established cooperation mechanism with research universities such as Donghua University and Shandong Lutai and other benchmark textile enterprises, and has built a "four-in-one" research and development platform and technological innovation system. In the report period, the company cooperated with 10 universities, such as Donghua University and Xi'an Jiaotong University, and produced 10 research projects. The results of 8 projects were transformed and applied. In 2017, the company applied for 21 national patents, including 8 invention patents. The company specializes in the design and development of clothing products. At present, it has four series of products: "Blue Diamond, Diamond, Pioneer, Wolf". The company successfully launched the world's first high-speed and high-yield special card clothing - double-toothed card clothing. This card clothing has been widely recognized by users for its superior performance beyond the design, not only obtained the national invention patent, but also obtained the Chinese textile. industry Federation's "product development contribution Award." At the same time, according to the needs of raw materials and products, the company has successfully developed rust-proof clothing, self-locking clothing, single-sided or double-sided horizontal clothing, step-type doffer work roller clothing, surface polishing clothing and various special designs. Card clothing products. Future construction of multi-level improvement and innovation system, mainly around the equipment innovation, product innovation, materials technology innovation system R & D efforts, and strive to develop high-end materials with independent intellectual property rights, ensure its own core technical resources.

2, customer resource advantages Textile carding equipment is a textile machinery parts, belonging to consumable equipment, a single customer's business procurement is not high, so the business of textile carding equipment business and development needs to have a large number of customer resources. After many years of accumulation, the company currently has more than 5,000 domestic and foreign enterprises to establish a stable and cooperative relations, a large number of high-quality customers to ensure a robust company's business continues to grow, the company has gradually become a well-known non-woven fabric supplier of choice for customers . In the future, the company will build a precise marketing system around the overall marketing strategy, and accelerate the layout of overseas markets, especially along the “ Belt and Road ” countries and regions.

3. Industry chain advantage

The company is one of the few textile carding equipment enterprises in China that has the ability to produce needle cloth and base fabric at the same time. At the same time, the company's key production equipment is basically self-made. The relatively complete industrial chain enables the company to master the complete technology of textile carding equipment manufacturing, the new product development speed is faster, the production cycle and product delivery time are shorter, the quality is stable and the production cost is lower.

4. The scale advantage and fast delivery ability of multi-variety production After years of accumulation, the company has formed more than one thousand specifications and models of textile carding equipment product system, which can provide a full range of matching carding equipment for high-speed and high-yield carding machines. Meet the textile industry's various fiber and various purposes of combing needs. Most of the company's production equipment has the ability to quickly change types, and can produce a variety of products at the same time online, so it can quickly respond to customers' various individual needs and supply in large quantities. With excellent product quality, extensive product range and fast delivery capabilities, the company for four consecutive years, was awarded the title of China's outstanding providers Textiles Industry Association.

5, brand advantage

The company is one of the earliest companies engaged in the production and sales of textile carding equipment. The "Golden Wheel" brand has a high market awareness, and customers have a higher recognition of the "Golden Wheel" brand carding equipment. During the reporting period, the company's product structure was further optimized, and the proportion of high-end and ultra-high-end products increased rapidly. At the same time, the company pays attention to enhance the brand image, vigorously promotes brand building, and forms the brand value and brand promotion language of each sub-brand of Jinlunzheng, which greatly enriches the brand connotation. During the " Thirteenth Five-Year Plan" period, we will further systematically plan and promote brand building through various channels such as exhibitions and media, strengthen the core value shaping and dissemination of the Golden Wheel brand, and strive to enhance the reputation of the industry for the Golden Wheel brand and customers to the Golden Wheel. The loyalty of the brand continues to enhance the grade and international image of the Golden Wheel brand.

6, service advantages

The company has established a relatively complete sales service system, providing full-process services covering pre-sales, sales and after-sales. Focus on improving the technical service system and improving the technical service capability and level from the perspective of solving problems for customers. By tailoring a wide range of professional carding solutions for customers, we offer the guarantee of spinning differentiated yarns and high quality yarns. During the reporting period, the company organized a number of technical exchange meetings across the country to provide customers with specialized training on the development of textile carding technology and the use of carding equipment, and to maintain long-term and stable communication with customers through interactive forms, so that the company has A stable, highly loyal customer base.

Compared with foreign counterparts, the company's advantages in responding quickly to the domestic market and providing full-service are particularly evident.

Subsidiary stainless steel decorative materials business

1. Technical advantages

1Strong research and development capability Senda Decoration is one of the early companies entering the stainless steel decorative panel industry. After more than ten years of development, it has accumulated rich experience in the industry and formed an excellent technical research and development team. Leading innovative technology and excellent product quality have become high-tech enterprises in Jiangsu Province, private small and medium-sized enterprises in Jiangsu Province, top 100 enterprises in Nantong, and gold medal enterprises in Haimen. The company cooperated with the Research Institute of Materials Science and Engineering of Nanjing University to establish a special R&D center, and introduced advanced experimental equipment such as constant environment scanning electron microscope and X-ray diffractometer to provide guarantee for the research and development of new products. The company has 5 invention patents and 17 utility model patents.

In 2001, the company independently developed oil-based grinding production equipment, and successfully produced oil-based surface stainless steel filament plate and short wire plate, becoming the first enterprise in China to produce flat-plate stainless steel wire. In 2005, the anti-fingerprint stainless steel decorative board was successfully developed in combination with the imported German technology, and applied for national invention patents and utility model patents. In 2009, the company successfully developed a new generation of oleophobic and hydrophobic stainless steel decorative panels in combination with imported American technology. In 2012, the company developed a new color printed stainless steel decorative board.

2 independent research and development production special equipment

Production and testing required stainless steel decorative panels equipped with more advanced equipment, the company in the absorption of imported equipment technology on the device continue to conduct technological transformation and improve based on market demand, developed for the characteristics of the enterprise production equipment. The special equipment developed by the company through independent development and cooperative development has played an important role in improving the stability and consistency of product quality.

2. Production process control and flexible production capacity advantages

In order to meet the diversified needs of end customers, stainless steel decorative panels have the characteristics of "small batches and multiple varieties". Each customer has certain differences in product requirements, such as variety, specification and thickness. Therefore, it is difficult for enterprises. Achieving high-volume production increases the difficulty of production control.

Through years of development, Senda Decoration has rich experience in process control of production lines, strong flexible production management capabilities, strict process quality control and product quality testing procedures to ensure and improve the stability and consistency of product quality. The company has a number of high-tech testing instruments such as constant temperature water bath, paint film adhesion tester, portable mirror gloss meter, salt spray corrosion box, color difference meter, roughness meter, coating thickness gauge, paint film impact tester, etc. To ensure that each batch of products delivered by the company meets or exceeds the quality standards of customers. At the same time, the company has a certain reserve for different types of stainless steel, can supply and supply according to the individual needs of downstream customers, and can respond to customers' various needs in a timely and rapid manner.

3. Customer resource advantages

Senda Decoration started earlier and positioned high-end. The "SDZS" trademark has a high market recognition. It was rated as "China Well-known Trademark" by the Trademark Office of the State Administration for Industry and Commerce, and was evaluated by the Jiangsu Administration for Industry and Commerce as " Famous Trademark of Jiangsu Province (2009-2012). Under the double guarantee of quality and delivery time, the company meets the market demand of multi-variety, small batch, high quality and fast delivery, thus winning a group of stable and high-quality customer groups. A large number of quality customers ensure the steady and sustained growth of the company's business.

4, the scale advantage of multi-variety production

Senda Decoration is one of the most complete manufacturers of stainless steel decorative panels in the industry. The products cover mirror panels, wire drawing plates, sanding plates, and patterns, sandblasting plates, etched plates, embossed plates, anti-fingerprint plates, and sparse Oil plates, etc., can meet the diverse needs of customers.

In the reporting period of parent company's industrial investment and development, the company closely focused on "focusing on industrial segmentation, joint advantage of enterprises, building B2B platform, promoting industrial upgrading, and restructuring industrial ecosystem" + development strategy continued.

The company will transfer the research and development, manufacturing and sales of its main products to the independent management of the subsidiaries, and the parent company will be positioned as industrial investment. In this way, the parent company management team can concentrate on industrial investment and control of the subsidiary's strategic level. The subsidiary management team focuses on the operation and management of their respective business-related fields, and the parent-subsidiary company's responsibilities are clearly defined, which is conducive to the efficient operation of the company as a whole. During the reporting period, the company established three major cluster management and operation companies, commissioned to implement the textile sector, stainless steel sector, intelligent manufacturing sector investment layout, post-investment management, and operational coordination. At the same time, through practice, the company has accumulated a lot of investment management experience, and introduced and cultivated investment management talents, and gradually formed an investment management team with reasonable professional knowledge structure and rich practical experience.

Third, the company's future development prospects

(1) Industry competition pattern, development trend and company development strategy

In the future, the company will deepen its two major business segments, become bigger and stronger, and explore and develop in the field of intelligent manufacturing.

The social demand of the textile sector textile industry has generally shown an upward trend. Under the background of accelerated urbanization, e-commerce prosperity and the liberalization of the second-child policy, China's textile industry will continue to maintain low growth. Textile carding equipment is a key consumable in the process of textile fiber carding process. Therefore, the development trend of textile carding equipment industry is closely related to the overall development trend of the textile industry. The textile carding equipment industry will also develop steadily with the slow growth of the textile industry. By "along the way", "Made in China 2025", affecting "the supply-side reform" and environmental protection policies, China's textile industry to upgrade to high-end, high-end market capacity continues to grow. The high-end market capacity of carding equipment is also on the rise, while the low-end market is down year-on-year, and the overall structure is developing towards the mid-to-high end. The overseas market stock is generally close to the domestic market. The company has a low market share in overseas markets and still has a large room for growth. With the diversity of the development of the textile industry, textile equipment segments of the overall showing steady growth.

The company will enhance its research and development capabilities and level, improve product quality, strengthen the construction of high-end product brands and replace imports, and enhance market competitiveness. At the same time, the company will actively expand overseas emerging markets and expand the market share of its products in overseas markets. The company will also plan and implement the innovation and upgrade of the technical service model, and promote it through the pilot area to form a full-process, one-stop, and convenient service.

In recent years, the company has invested in a series of textile e-commerce companies, and at the same time, through the establishment of e-commerce platform companies, actively research and explore the construction of textile e-commerce platform. In the future, the company will continue to explore in the textile sector, researching and promoting online transactions based on the existing offline suppliers and user resources.

In recent years, the competition pattern of stainless steel panels in the field of stainless steel decorative panels has remained relatively stable. In the future, with the increasing demand for quality of life, stainless steel decorative panels will usher in a wider range of applications in industries such as industry, construction, home appliances, and daily necessities. Since the corrosion resistance of stainless steel greatly prolongs the service life of steel and products, the use of stainless steel instead of ordinary carbon steel is also conducive to energy saving and emission reduction . Therefore, the state has also included the alloy resource-saving stainless steel in the national encouraged industry catalogue.

At present, China's stainless steel consumption level is still far from that of developed countries and regions. Regardless of the overall consumption of stainless steel or the market demand for stainless steel decorative panels, it is expected to continue to grow in the next few years. At present, the company's market share in stainless steel decorative panels is still relatively low, and there is still much room for development.

The company will take the status quo of Senda decoration management as the starting point, continuously improve equipment facilities and on-site management level, enhance current advantages and maintain its influence in high-end elevator customers. Through the improvement and improvement of process quality, we will gain recognition from key white electricity, kitchen and bathroom markets, expand market share in the kitchen appliance industry, and solve customer pain problems and improve service quality in the field of extended processing such as cutting film. Standardize project management processes, make full use of internal and external resources, and improve technology development and new product development capabilities. In order to expand the production capacity of stainless steel decorative materials, the company changed its use of raised funds to invest in the Chengdu Haorui project. In 2017, the project officially started construction, and will be put into production in the second half of 2018. The construction of a stainless steel processing center in Chengdu will play an important role in the development of the stainless steel sector of Jinlun Co., Ltd. in the southwest. In the future, the company will be based on Senda Decoration, supplemented by industrial support and supplemented by civilians. It will build or jointly establish stainless steel cold-rolled sheet surface processing enterprises in industrial clusters, integrate production, supply and marketing, and enhance competition in stainless steel surface processing. force.

At the same time, the company will also use existing resources to vigorously explore new application areas, expand business scope, form comprehensive advantages, and expand the breadth of downstream products. The company invested in Guangdong Yufeng Chuangzhan Metal Technology Co., Ltd., focusing on the R&D, production and sales of high-end stainless steel partitions, and achieved breakthroughs in high-end applications of stainless steel. The company invested in Hangzhou Soft Star Technology Co., Ltd., around the supply chain service, with SAAS software to assist in the construction of stainless steel B2B integrated platform to provide reliable information services for the procurement of stainless steel materials. In the future, the company will further increase the resource allocation of stainless steel plates, introduce new work teams, and explore the construction of stainless steel e-commerce platforms.

The intelligent manufacturing sector actively implemented strategic transformation, gathered resources, improved organizational capabilities, and accelerated the strategic layout of the company. The company's fourth board of directors reviewed and approved the 12th meeting in 2017, and the company adjusted the organizational structure. In addition to the textile sector and the stainless steel sector, the intelligent manufacturing sector has become one of the company's business segments.

The launch of the "Made in China 2025" strategic plan aims to achieve the strategic goal of manufacturing a strong country through "three steps." In the planning, it is clearly stated: "Accelerate the promotion of the integration of the next generation of information technology and manufacturing technology, and take intelligent manufacturing as the main direction of the integration of two technologies; focus on the development of intelligent equipment and intelligent products, promote the intelligentization of the production process, and foster new production methods. To comprehensively improve the intelligent level of R&D, production, management and service of enterprises. "Intelligent manufacturing can realize the seamless connection between equipment and equipment, equipment and factories, between factories and between enterprises in the supply chain and between enterprises and users. Enterprises can more accurately predict user needs, flexibly produce according to the diverse and personalized needs of users, and monitor the entire production process in real time to achieve low-cost customized services.

In this context, the company strives to find development opportunities in the field of smart manufacturing. The existing two subsidiaries of Nantong Jinlun Intelligent Equipment Research and Development Co., Ltd. and Nantong Ruige Precision Machinery Co., Ltd. are expanding their business in precision rolling mills and precision parts processing. On this basis, the company will seek more in the field of intelligent manufacturing. Suitable for the company's investment opportunities, to promote the company's business extension to the smart manufacturing sector.

(II) Company business plan

In 2018, the company will work harder along the established development strategy, improve work quality, strive to achieve double expansion of extension expansion and intensive growth, and strive to achieve the following annual work goals: 2018, operating income of 2,186,857,200 yuan, to achieve The net profit was 11,013.17 million yuan.

To achieve these goals, the company will work on the following key points:

(1) Strengthen the research and organizational capacity building of the stainless steel industry, deepen the layout along the industrial chain, and promote the large-scale development of the stainless steel plate;

(2) Strengthen research and exploration on the textile e-commerce platform;

(3) Seeking investment opportunities in the field of intelligent manufacturing to promote the company's business extension to the intelligent manufacturing sector;

(4) Further strengthen the Group's strategic management and control, and promote the achievement of the annual strategic objectives of its subsidiaries;

(5) Strengthen the risk management and control system and monitoring mechanism at all levels to reduce the company's operational risks;

(6) Increase the intensity of informatization construction and enhance the overall informationization level of the Group;

(7) Promote the recruitment and training of key talents and build a talent team;

(8) Deeply implement the high performance management model to improve the overall management level of the company.

(3) The main risks faced by the company

1. Risk of fluctuations in major raw material prices

The company's raw materials are mainly stainless steel, special steel and other metal materials, and the cost of raw materials accounts for a large proportion of the company's main business costs. Affected by the country's capacity-adjusting structure, steel prices fluctuate greatly, which will directly affect the company's production costs. If the product price increase is lower than the raw material price increase, the company fails to take effective hedging measures and will operate Performance has a certain impact. In this regard, the company will pay close attention to the price trend of raw materials, and effectively control the procurement cost through procurement strategies such as “high price, low inventory, low price and high inventory”. However, if steel prices fluctuate significantly, it will still have a large disadvantage to the operation. influences.

2. The expansion of the company's scale brings the risk of group management and control

With the gradual development of the company's business layout, the company's asset scale, scale of operation, and personnel scale will expand rapidly. The number of subsidiaries under the company will increase and the distribution will be dispersed. The complexity of the company's operation and management will be greatly improved, and it will face the risk of group management and control. To this end, the company will focus on group management, refine the headquarters service, management, supervision functions, systematically promote the construction of human resources, auditing, securities and other systems, further refine and improve the subsidiary's business management system and strengthen group financial management and control. Improve the overall ability of auditing, strengthen corporate culture, improve the sense of corporate identity and belonging of all personnel, and strive to reduce the risk of group management and control.

3. Risk of human resources

The company's business is gradually expanding, and the number of participating holding companies is increasing. How to attract talents becomes a key issue. The company needs to establish a market-competitive compensation and promotion mechanism to attract talents, train talents, and retain talents. The company faces risks in the construction and improvement of the human resources system. To this end, the company will improve the performance evaluation mechanism, talent inventory and echelon construction of all employees, and meet the long-term career development needs of employees, while promoting the core values ​​of "righteousness, care, science, transcendence, joint construction and sharing", through popularization Corporate culture education, enhance employees' sense of mission and identity to the company's development requirements, and meet the multi-level needs of the company's development for talents.

4. Impairment risk of assets such as goodwill At the end of each year, the company will conduct impairment test on the participating company or the enterprises not under the same control (whether or not there is any indication of impairment). The company will conduct the annual test based on the results of the impairment test. Provision for impairment (if any). If this happens, it may have an impact on the company's annual net profit. In the face of the impairment risk of assets such as goodwill, the company actively strengthens the management level while using the relevant resources of listed companies to enhance the operating performance of the participating companies, and reduce the risk of asset impairment of the company.

5. Liquidity risk

The company needs a lot of capital investment in the process of industrial layout and project development. Due to the expansion of business scale and the increase in financing scale, if the company's new projects are not up to expectations, the project payment settlement is delayed, or the country's macroeconomic situation, credit policy and capital market undergo major changes or adjustments, the company's financing may be restricted or The company's financing costs have risen, which has caused the company to face certain capital turnover pressure. To this end, the company will take active measures, relying on the platform of listed companies to expand financing channels to make the source of funds more diversified; on the other hand, by strengthening the company's risk control, through the implementation of the entire process of the sales process management, reduce the accounts receivable The risk of the payment is increased, the sales return rate is increased, and the company's liquidity risk is reduced.