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1、1Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement,make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in relia
2、nce upon the whole or any part of the contents of this announcement.山 東 晨 鳴 紙 業 集 團 股 份 有 限 公 司SHANDONG CHENMING PAPER HOLDINGS LIMITED*(a joint stock company incorporated in the Peoples Republic of China with limited liability)(Stock Code:1812)ANNOUNCEMENT OF ANNUAL RESULTSFOR THE YEAR ENDED 31 DEC
3、EMBER 2024The Board of Directors(the“Board”)of Shandong Chenming Paper Holdings Limited(the“Company”)is pleased to announce the annual results of the Company and its subsidiaries(together referred to as the“Group”)for the year ended 31 December 2024.This announcement,containing the full text of the
4、2024 annual report(“Annual Report”)of the Company,complies with the relevant requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited in relation to information to accompany preliminary announcement of annual results.The printed version of the Companys
5、 Annual Report will be despatched subsequently to the shareholders of the Company upon request and available on the websites of Hong Kong Exchanges and Clearing Limited at www.hkexnews.hk and of the Company at for perusal on 31 March 2025.BASIS OF PREPARATION OF THE FINANCIAL STATEMENTSThe Companys
6、financial statements are prepared on a going concern in accordance with the Accounting Standards for Business Enterprises,the application guidelines thereof,interpretations and other related rules(hereinafter referred to as“ASBEs”)promulgated by the Ministry of Finance,and the disclosure requirement
7、s of the“Regulation on the Preparation of Information Disclosures of Companies Issuing Public Shares,No.15:General Requirements for Financial Reports”(revised in 2023)of China Securities Regulatory Commission.The Companys financial statements have been prepared on an accrual basis in accordance with
8、 the ASBEs.Except for certain financial instruments,the financial statements are prepared under the historical cost convention.In the event that depreciation of assets occurs,a provision for impairment is made accordingly in accordance with the relevant regulations.2REVIEW OF ANNUAL RESULTS BY THE A
9、UDIT COMMITTEEThe Audit Committee of the Company discussed with the management of the Company the accounting standards and practices adopted by the Company,and discussed and reviewed the annual results,including the review of the financial statements of the Company for the year ended 31 December 202
10、4 prepared in accordance with the ASBEs of China.FINAL DIVIDENDThe Board does not recommend the payment of a final dividend for 2024,subject to the approval of shareholders at the annual general meeting to be held on 15 May 2025(the“AGM”).CLOSURE OF REGISTER OF MEMBERSThe register of members of the
11、Company will be closed from 12 May 2025 to 15 May 2025(both days inclusive)for the purpose of determining the list of H Share Shareholders of the Company entitled to attend the AGM.In order to be entitled to attend and vote at the AGM,H Share Shareholders should ensure that all share transfer docume
12、nts accompanied by the corresponding share certificates are lodged with the Companys H share registrar,Computershare Hong Kong Investor Services Limited at Shops 1712-1716,17/F,Hopewell Centre,183 Queens Road East,Wan Chai,Hong Kong)for registration not later than 4:30 p.m.on 9 May 2025.By Order of
13、the BoardShandong Chenming Paper Holdings LimitedHu ChangqingChairmanShandong,the PRC31 March 2025As at the date of this announcement,the executive Directors are Mr.Hu Changqing,Mr.Li Xingchun,Mr.Li Feng and Mr.Li Weixian;the non-executive Directors are Mr.Han Tingde and Mr.Li Chuanxuan;and the inde
14、pendent non-executive Directors are Ms.Yin Meiqun,Mr.Sun Jianfei,Mr.Yang Biao and Mr.Li Zhihui.*For identification purposes only2024 ANNUAL REPORT1I Important Notice,Table of Contents and DefinitionsThe board of directors(the“Board”),the supervisory committee(the“Supervisory Committee”)and the direc
15、tors(the“Directors”),supervisors(the“Supervisors”)and senior management(the“Senior Management”)of the Company hereby warrant the truthfulness,accuracy and completeness of the contents of the annual report,guarantee that there are no false representations,misleading statements or material omissions c
16、ontained in this annual report,and are jointly and severally responsible for the liabilities of the Company.Hu Changqing,head of the Company,Dong Lianming,head in charge of accounting and Zhang Bo,head of the accounting department(Accounting Officer),declare that they warrant the truthfulness,accura
17、cy and completeness of the financial report in the annual report.All Directors have attended the board meeting to review this report.Grant Thornton(Special General Partnership)has issued the 2024 annual audit report with a qualified opinion for the Company.The Board and the Supervisory Committee of
18、the Company have provided detailed explanations regarding the relevant matters.Investors are advised to carefully read these explanations.Reminder of material deficiencies in internal control Applicable Not applicableGrant Thornton(Special General Partnership)has issued an adverse opinion in the aud
19、itors report on internal control for 2024 for the Company.Please refer to XII to XIV of section VI Corporate Governance for details.Forward-looking statements such as future plans contained in this annual report do not represent earnings forecasts of the Company nor constitute substantive commitment
20、s to investors by the Company.Investors and relevant persons shall maintain a sufficient risk awareness hereto and understand the differences among plans,forecasts and commitments.The Company is exposed to various risk factors such as macro-economic fluctuation,state policies and regulations and com
21、petition in the industry.Investor should be aware of investment risks.For further details,please refer to the risk factors likely to be faced and the measures to be taken to address them as set out in the outlook on the future development of the Company in section VI Management Discussion and Analys
22、is.The Company does not propose distribution of cash dividends or bonus shares,and there will be no increase of share capital from reserves.SHANDONG CHENMING PAPER HOLDINGS LIMITED2I Important Notice,Table of Contents and DefinitionsTable of ContentsIImportant Notice,Table of Contents and Definition
23、s.1IICompany Profile and Key Financial Indicators.6IIIChairmans Report.11IVManagement Discussion and Analysis.13VDirectors Report.42VICorporate Governance.52VIIEnvironmental and Social Responsibility.105VIIIMaterial Matters.112IXChanges in Share Capital and Shareholders.134XPreference Shares.145XIBo
24、nds.146XIIFinancial Report.1472024 ANNUAL REPORT3I Important Notice,Table of Contents and DefinitionsDocuments Available for InspectionI.The financial statements signed and sealed by the legal representative,the head in charge of accounting and the head of the accounting department of the Company;II
25、.The original copy of the auditors report which is sealed by the accounting firm and signed and sealed by the certified public accountants;III.The original copies of the documents and announcements of the Company disclosed in the designated newspaper and on the website as approved by the CSRC during
26、 the reporting period;IV.The annual report disclosed on the website of The Stock Exchange of Hong Kong Limited;V.Other related information.SHANDONG CHENMING PAPER HOLDINGS LIMITED4I Important Notice,Table of Contents and DefinitionsDefinitionsItemDefinitionCompany,Group,Chenming Group,Chenming Paper
27、 or Chenming Paper CompanymeansShandong Chenming Paper Holdings Limited and its subsidiariesParent Company or Shouguang HeadquartersmeansShandong Chenming Paper Holdings LimitedChenming HoldingsmeansChenming Holdings Company LimitedShenzhen Stock ExchangemeansShenzhen Stock ExchangeStock Exchangemea
28、nsThe Stock Exchange of Hong Kong LimitedCSRCmeansChina Securities Regulatory CommissionShandong CSRCmeansShandong branch of China Securities Regulatory CommissionZhanjiang ChenmingmeansZhanjiang Chenming Pulp&Paper Co.,Ltd.Jiangxi ChenmingmeansJiangxi Chenming Paper Co.,Ltd.Shanghai ChenmingmeansSh
29、anghai Chenming Industry Co.,Ltd.Huanggang ChenmingmeansHuanggang Chenming Pulp&Paper Co.,Ltd.Chenming(HK)meansChenming(HK)LimitedJilin ChenmingmeansJilin Chenming Paper Co.,Ltd.Shouguang MeilunmeansShouguang Meilun Paper Co.,Ltd.Shouguang Art PapermeansShouguang Chenming Art Paper Co.,Ltd.Finance C
30、ompanymeansShandong Chenming Group Finance Co.,Ltd.2024 ANNUAL REPORT5I Important Notice,Table of Contents and DefinitionsItemDefinitionChenming InvestmentmeansShandong Chenming Investment LimitedChenming LeasingmeansShandong Chenming Financial Leasing Co.,Ltd.and its subsidiariesChenrong FundmeansW
31、eifang Chenrong Growth Driver Replacement Equity Investment Fund Partnership(Limited Partnership)Jiangxi PortmeansJiangxi Chenming Port Co.,Ltd.Yujing HotelmeansShandong Yujing Grand Hotel Co.,Ltd.Guangyuan Real PropertymeansShouguang Chenming Guangyuan Real Property Company Limitedthe reporting per
32、iod or the yearmeansThe period from 1 January 2024 to 31 December 2024the beginning of the year or the periodmeans1 January 2024the end of the year or the periodmeans31 December 2024the prior yearmeansThe period from 1 January 2023 to 31 December 2023SHANDONG CHENMING PAPER HOLDINGS LIMITED6II Compa
33、ny Profile and Key Financial IndicatorsI.Company profileStock abbreviationST 晨鳴Stock code000488ST晨鳴 B200488Stock exchanges on which the shares are listedShenzhen Stock ExchangeStock abbreviationChenming PaperStock code01812Stock exchanges on which the shares are listedThe Stock Exchange of Hong Kong
34、 LimitedName in Chinese of the Company山東晨鳴紙業集團股份有限公司Short name in Chinese of the Company晨鳴紙業Name in English of the Company(if any)SHANDONG CHENMING PAPER HOLDINGS LIMITEDShort name in English of the Company(if any)SCPHLegal representative of the CompanyHu ChangqingRegistered addressNo.595 Shengcheng
35、 Road,Shouguang City,Shandong ProvincePostal code of registered address262700Changes of the registered address of the CompanyNilOffice addressNo.2199 Nongsheng East Road,Shouguang City,Shandong ProvincePostal code of office address262705Website of the Companyhttp:/Email II.Contact persons and contac
36、t methodsSecretary to the BoardSecurities affairs representativesHong Kong Company SecretaryNameYuan XikunZhang ChuangyongChen LinChu Hon LeungEmail ZQCLliamchuli-Correspondence addressNo.2199 Nongsheng East Road,Shouguang City,Shandong ProvinceNo.2199 Nongsheng East Road,Shouguang City,Shandong Pro
37、vince22nd Floor,World Wide House,Central,Hong KongTelephone0536-21580080536-215800800852-21629600Facsimile0536-21589770536-215897700852-25010028III.Information disclosure and places for inspectionWebsites of the stock exchanges where the Company discloses its annual reportDomestic:http:/;overseas:ht
38、tp:/.hkNames and websites of the media where the Company discloses its annual reportChina Securities Journal,Shanghai Securities News,Securities Times,Securities Daily,Hong Kong Commercial Daily and CNINFO(http:/)Places for inspection of the Companys annual reportSecurities investment department of
39、the CompanyIV.Change in registrationOrganisation registration code913700006135889860Change of principal activities since its listing(if any)NilChange of the controlling shareholder(if any)Nil2024 ANNUAL REPORT7II Company Profile and Key Financial IndicatorsV.Other relevant informationCPAs engaged by
40、 the CompanyName of CPAsGrant Thornton(Special General Partnership)CPAs Office AddressFloor 11,Building No.4,HuaChuang GuanLi Center,219 Shunhai Road,Lixia District,JinanName of the Signing Certified Public AccountantsJiang Tao and Guo DongmeiSponsors engaged by the Company to continuously perform i
41、ts supervisory function during the reporting period Applicable Not applicableFinancial advisors engaged by the Company to continuously perform its supervisory function during the reporting period Applicable Not applicableVI.Major accounting data and financial indicatorsRetrospective adjustment to or
42、 restatement of the accounting data for prior years by the Company Yes No20242023Increase/decrease for the year as compared to the prior year2022Revenue(RMB)22,729,474,852.7626,608,570,228.20-14.58%32,004,367,320.91Net profit attributable to shareholders of the Company(RMB)-7,410,784,491.65-1,281,28
43、9,649.82-478.38%189,290,120.82Net profit after extraordinary gains or losses attributable to shareholders of the Company(RMB)-7,202,385,457.32-1,942,120,184.70-270.85%-361,459,377.16Net cash flows from operating activities(RMB)2,623,191,664.604,389,949,308.82-40.25%3,449,824,242.37Basic earnings per
44、 share(RMB per share)-2.53-0.45-462.22%0.03Diluted earnings per share(RMB per share)-2.53-0.45-462.22%0.03Rate of return on weighted average net assets-57.25%-7.65%Decreased by 49.60 percentage points0.55%As at the end of 2024As at the end of 2023Increase/decrease as at the end of the year compared
45、to the end of the prior yearAs at the end of 2022Total assets(RMB)63,509,295,142.0879,487,052,953.58-20.10%84,301,017,409.62Net assets attributable to shareholders of the Company(RMB)9,156,104,358.9116,692,175,196.53-45.15%19,084,565,494.92SHANDONG CHENMING PAPER HOLDINGS LIMITED8II Company Profile
46、and Key Financial IndicatorsThe lower of the Companys net profit before or after extraordinary gains or losses in the last three accounting years is negative,and the audit report for the last year shows that the Companys ability to continue as a going concern is uncertain Yes NoThe lower of net prof
47、it before or after extraordinary gains or losses is negative Yes NoItem20242023RemarkRevenue(RMB)22,729,474,852.7626,608,570,228.20Revenue from sales of materials of RMB105,595,945.36 and other revenue of RMB54,384,875.03.Deduction to revenue(RMB)159,980,820.39986,216,965.96Revenue after deduction(R
48、MB)22,569,494,032.3725,622,353,262.24VII.Differences in accounting data under domestic and overseas accounting standards1.Differences between the net profit and net assets disclosed in accordance with international accounting standards and China accounting standards in the financial report Applicabl
49、e Not applicableThere was no difference between the net profit and net assets disclosed in accordance with international accounting standards and China accounting standards in the financial report during the reporting period.2.Differences between the net profit and net assets disclosed in accordance
50、 with overseas accounting standards and China accounting standards in the financial report Applicable Not applicableThere was no difference between the net profit and net assets disclosed in accordance with overseas accounting standards and China accounting standards in the financial report during t
51、he reporting period.2024 ANNUAL REPORT9II Company Profile and Key Financial IndicatorsVIII.Key Financial Indicators by QuarterUnit:RMBQ1Q2Q3Q4Revenue6,761,777,174.007,122,954,345.045,940,014,289.432,904,729,044.29Net profit attributable to shareholders of the Company58,196,200.97-29,549,995.55-738,7
52、44,725.34-6,700,685,971.73Net profit after extraordinary gains or losses attributable to shareholders of the Company-226,480,578.98-44,384,464.53-804,074,160.18-6,127,446,253.63Net cash flows from operating activities473,092,608.521,519,406,784.55391,884,014.73238,808,256.80Whether the above indicat
53、ors or their aggregated amounts have any material difference with the respective amounts as disclosed in the quarterly report or interim report Yes NoIX.Five-year financial summary under paragraph 19 of appendix D2 of the Hong Kong Listing RulesUnit:RMB0,000For the year ended 31 December202420232022
54、20212020Revenue2,272,9472,660,8573,200,4373,301,9813,073,652Profit before tax-785,319-170,97018,227230,618217,227Tax-6,017-38,306-13,50921,65026,606Profit for the current period attributable to shareholders of the Company-741,078-128,12918,929206,551171,203Minority interests-38,223-4,53512,8072,4171
55、9,418Basic earnings per share(RMB/share)-2.53-0.450.030.560.36Rate of return on weighted average net assets(%)-57.25%-7.65%0.55%9.56%5.84%Unit:RMB0,000For the year ended 31 December20242023202220212020Total assets6,350,9307,948,7058,430,1028,286,9669,157,546Total liabilities5,067,3525,838,9206,057,2
56、766,029,4636,577,519Minority interests367,967440,568464,369345,705152,329Equity attributable to shareholders of the Company915,6101,669,2181,908,4571,911,7992,427,697Net current assets(liabilities)-2,795,136-2,121,186-1,917,930-1,766,446-1,516,398Total assets less current liabilities1,966,6962,970,9
57、313,240,2273,233,4714,052,922SHANDONG CHENMING PAPER HOLDINGS LIMITED10II Company Profile and Key Financial IndicatorsX.Items and amounts of extraordinary gains or losses Applicable Not applicableUnit:RMBItemAmount for 2024Amount for 2023Amount for 2022DescriptionProfit or loss from disposal of non-
58、current assets(including write-off of provision for assets impairment)35,240,228.34431,805,592.54161,509,859.17Government grants(except for the government grants closely related to the normal operation of the Company,granted in accordance with an established standard and having an ongoing effect on
59、the Companys profit or loss in compliance with national policies and regulations)accounted for in profit or loss for the current period64,412,067.13117,211,489.25314,934,315.62Except for effective hedging business conducted in the ordinary course of business of the Company,gain or loss arising from
60、the change in fair value of financial assets and financial liabilities held by a non-financial company,as well as gain or loss arising from disposal of its financial assets and financial liabilities-181,379,218.4658,579,398.48-35,178,162.53Reversal of provision for impairment of receivables individu
61、ally tested for impairment99,483,459.63275,585,463.86Profit or loss from debt restructuring3,519,918.3655,297,346.06967,464.91Profit or loss from changes in the fair value of consumable biological assets subsequently measured at fair value-153,411,759.176,775,808.389,924,233.72Other non-operating in
62、come and expenses other than the above items-15,275,886.14-11,642,079.10-37,391,130.09Less:Effect of income tax-18,173,051.0789,176,973.22137,333,913.66Effect of minority interests(after tax)-20,322,564.547,503,507.142,268,633.02Total-208,399,034.33660,830,534.88550,749,497.98Details of other gain o
63、r loss items that fall within the definition of extraordinary gain or loss:Applicable Not applicableThe Company did not have details of other gain or loss items that fall within the definition of extraordinary gain or loss.Explanation on the extraordinary gain or loss items as illustrated in the Exp
64、lanatory Announcement on Information Disclosure for Companies Offering Their Securities to the Public No.1 Extraordinary Gains or Losses defined as its recurring gain or loss items Applicable Not applicableItemAmount involved(RMB)ReasonOther income56,090,636.54Government grants related to assets and
65、 closely related to the normal operation of the Company as extraordinary gain or loss due to the inclusion of their subsequent amortisation in other income and their ongoing effect on the Companys profit or loss2024 ANNUAL REPORT11III Chairmans ReportDear shareholders and investors,First of all,on b
66、ehalf of the Company,I would like to express my sincere gratitude to the shareholders and investors for their attention to and support for the development of the Group.Over the past year,the Company has faced severe challenges.During reporting period,the contradiction between supply and demand in th
67、e short term has been prominent due to the concentration of newly-added production capacity in the paper industry.The prices of the Companys major paper products,in particular the price of white cardboard,have declined significantly under the influence of the supply-demand contradiction,leading to r
68、educed profitability of the Company,and incurring losses.At the same time,as some financial institutions downsized the loan scale,the Company faced temporary liquidity shortages,and thus the Company and some of its subsidiaries encountered instances of debt defaults.In response,some creditors have f
69、iled lawsuits against these debts in the court and simultaneously applied for property preservation,and the court has made a ruling to freeze some of the bank accounts of the Company and its subsidiaries.In 2024,due to factors such as production restrictions and shutdowns for maintenance,the Company
70、 produced 4.27 million tonnes of machine-made paper and sold 4.47 million tonnes of machine-made paper,achieving revenue of RMB22,729 million and a net profit attributable to the parent company of RMB-7,411 million,representing a significant decline as compared to the previous year.To reduce losses,
71、the Company has implemented production restrictions and shutdowns at some of its production bases since November,along with maintenance of machinery and equipment.However,due to the fact that the shutdown and maintenance has exceeded three months,and the Company failed to resume large-scale producti
72、on and operations,the Companys A shares and B shares have been subject to other risk warnings by the Shenzhen Stock Exchange.To turn the tables,we have taken the following measures:Firstly,the Company made every effort to promote the resumption of operation and production.The Company established pro
73、duction resumption plans,conducted comprehensive overhauls across all production systems,improved automated detection and control functions,and enhanced equipment integrity and operational efficiency.Striving to achieve the resumption of operation and production within the shortest possible time,the
74、 Company also strengthened its communication and coordination with suppliers to foster stable long-term cooperative relationships between them.As of the date of this report,some production lines at Huanggang Chenming,Jiangxi Chenming and Shouguang Chenming have gradually resumed production and opera
75、tions.Secondly,the Company made every effort to speed up the granting of a new syndicated credit facility.On 18 December 2024,provincial debt committees had been set up.It is agreed that they shall maintain the stability of existing credit facilities.They will renew expiring loans wherever possible
76、without loan cancellations or delays,and will provide support such as extended loan terms,reduced interest rates and extended interest settlement cycles,in order to alleviate the operational burden on the Company.The relevant matters are still subject to the respective consideration and approval pro
77、cedures of the financial institutions.As of the date of this report,most banks and leasing companies have completed decisions on renewals,interest rate reductions and extensions of interest settlement cycles,and have begun implementing these measures.The Company actively communicated and coordinated
78、 with all banks in the syndicate to speed up internal approvals and push for the granting of a new syndicated credit facility of RMB2.31 billion as soon as possible to inject funds for the resumption of operation and production of the Company.Thirdly,the Company made every effort to revitalise and d
79、ispose of its existing assets.The Company strengthened the disposal of assets in its non-principal business,established an asset management center,adjusted and optimised internal management,divided asset disposal management areas by region,and assigned responsibilities to individuals to improve the
80、efficiency of asset disposal.The Company also stepped up efforts to recover outstanding debts,and pursued debtors with realisable assets with priority given to negotiation means.For accounts receivable that are difficult to recover,the Company resorted to judicial channels to resolve the issues,and
81、striving to improve its liquidity.SHANDONG CHENMING PAPER HOLDINGS LIMITED12III Chairmans ReportFourthly,the Company made every effort to introduce strategic investments.A task force for the introduction of strategic investors has been set up.Dedicated personnel are responsible for engaging and nego
82、tiating with interested strategic investors and use flexible cooperation methods to effectively integrate resources.At the same time,the Company insisted on the approach of combining“going out”and“bringing in”,took the initiative to cooperate with competent enterprises,and acquired the necessary wor
83、king capital for the resumption of production through a variety of channels,so as to support the Company in achieving normal production and operation as soon as possible.Difficulties and hardships polish us like jade.We have the confidence,determination and capability to resolve all issues currently
84、 affecting our production and operations.By achieving the highest management standards,the lowest production costs,the best product offerings and the most competitive product prices,we will enhance our profitability and achieve new growth.Finally,I would like to extend our heartfelt gratitude once a
85、gain to all shareholders,investors and all sectors of the community for their attention to and support for the development of the Company.Hu ChangqingChairman31 March 20252024 ANNUAL REPORT13IV Management Discussion and AnalysisI.Industry situation of the Company during the reporting periodAs a basi
86、c raw material industry closely related to economic and social development,the paper industry experienced a complex and volatile development process against the backdrop of fluctuating raw material prices,increased supply of paper products,slow growth in sales,and short-term supply and demand tensio
87、ns in 2024.On the raw material side,the raw materials for the paper industry primarily include wood pulp,among others.In 2024,the prices of softwood pulp and hardwood pulp were affected by both unexpected international supply disruptions and the release of new domestic production capacity,showing a
88、mixed trend of upward and downward movements.For softwood pulp,due to labour strikes and maintenance at pulp mills in major international suppliers of softwood pulp such as Finland,Chile and Canada in the first half of the year,its supply tightened,which pushed up its price.However,with the release
89、of new domestic pulp production capacities,supply pressure increased and overseas demand weakened,and thus the price fell again.As of 31 December 2024,the average market price of softwood pulp in Shandong was RMB6,400 per tonne,representing an increase of 9.4%from the beginning of the year.For hardw
90、ood pulp,its price trend was different from that of softwood pulp,which demonstrated an overall decline.As of 31 December 2024,the average market price of hardwood pulp in Shandong was RMB4,610 per tonne,representing a decrease of 8.53%from the beginning of the year.On the supply side,the paper indu
91、stry saw a continuous increase in the supply of paper products driven by new production capacity in 2024.From January to December 2024,the national production of machine-made paper and paper board reached 158.469 million tonnes,representing a year-on-year increase of 8.6%.According to statistics,as
92、of the end of October 2024,the number of papermaking enterprises nationwide reached 7,999,representing an increase of 331 from the end of 2023.As an important component of the paper industry,the paper and paperboard manufacturing sector saw cumulative year-on-year growth of 20.6%in its fixed asset i
93、nvestment,demonstrating strong momentum of investment growth.On the demand side,despite the continuous increase in supply in the paper industry,the growth in sales of paper products remained slow due to the global economic slowdown and sluggish domestic consumer demand.Product prices struggled to ri
94、se,with overall price levels lower than the same period in the previous year.For the price of culture paper,the price of culture paper experienced a fluctuation process of rising first and then falling in 2024.At the beginning of the year,the price of culture paper rose due to market demand and adju
95、stments in supply-side production capacity.However,as end-user demand weakened and the orders for finished paper decreased,the prices of bulk paper continued to decline,leading to a drop in the price of culture paper.In particular,starting from May,both the price and profit fell to historically low
96、levels.Although the price of culture paper recovered in late November due to short-term supply contractions and the concentrated delivery of tender orders,the current prices of duplex press paper and coated paper remain at relatively low levels.For the price of white cardboard,the white cardboard se
97、ctor also faced significant challenges in 2024.Affected by the substantial release of new supply in the previous period and the relatively slow recovery of end-user demand,the price of white cardboard remained in a downward trend,with a profitability level near the lowest point in history.Although t
98、he state subsidy for new home appliances had been gradually extended to small kitchen appliances in certain regions,which provided some boost to industry demand,the overall sector still faced considerable competitive pressure.The paper industry needs to pay close attention to policy changes and the
99、recovery of market demand,strengthen technological innovation and digital transformation,and enhance its core competitiveness and market adaptability in order to achieve sustainable development.SHANDONG CHENMING PAPER HOLDINGS LIMITED14IV Management Discussion and AnalysisII.Principal activities of
100、the Company during the reporting period1.Business overview of the CompanyThe Company is a large modern conglomerate principally engaged in pulp production and paper making and committed itself to implementing a pulp and paper integration strategy.The Company has production bases in Shandong,Guangdon
101、g,Hubei,Jiangxi,Jilin and other places for the production of machine-made paper products covering more than 200 types in seven series,including culture paper,coated paper,white cardboard,copy paper,industrial paper,special paper,and household paper.It is the enterprise with the largest variety of pr
102、oducts and the most complete products in the domestic paper industry.It is also the first domestic paper making enterprise that achieves a balance between pulp production and paper making capacity in general.During the reporting period,the machine-made paper business was the major source of revenue
103、and profit of the Company,with no significant changes in the principal activity.In recent years,the contradiction between supply and demand in the short term has been prominent due to the concentration of newly-added production capacity in the paper industry.As a result,the prices of the Companys ma
104、jor products continued to decline during the reporting period with a year-on-year decrease in gross profit.In addition,some of the Companys production bases had successively been in shutdown and maintenance in the fourth quarter,leading to unsatisfactory capacity utilisation and a year-on-year decli
105、ne in production and sales volumes.The Company made impairment provisions for certain assets,and also increased the provision ratio for bad debts related to underperforming financial leasing customers out of prudence,which collectively contributed to a decline in profitability.In 2024,the net profit
106、 attributable to shareholders of the Company recorded a loss of RMB7,411 million.2.Major products of the Company and their applicationThe Company attaches great importance to technology research and development and brand benefits.Focusing on key areas of green papermaking technology,the Company cont
107、inuously strengthens the construction of research platforms and other hardware facilities,and has a number of domestically leading innovative R&D platforms including a national enterprise technology centre,a post-doctoral working station,a collaborative innovation centre for cleaner production and r
108、efinery of light industry bio-based products,the Shandong Pulp and Paper Making Engineering Lab,in order to promote standardised production,optimise and adjust its product structure,and facilitate high-quality development of its principal business.During the reporting period,the Company successfully
109、 passed the audit of China Environmental United Certification Center,and was awarded the certificate of“China Environmental Labelling(Type I)Product Certification”.Projects such as the“development of green wet processing technology for corn starch”were included in the 2024 Shandong Provincial Techno
110、logical Innovation Project Campaign.2024 ANNUAL REPORT15IV Management Discussion and AnalysisII.Principal activities of the Company during the reporting period(Continued)2.Major products of the Company and their application(Continued)Major brands of machine-made paper products and their applications
111、 are set out below:CategoryMajor brands and typesMajor manufacturing companiesRange of applicationCulture paper series1.“BIYUNTIAN”,“CLOUDY MIRROR”,“CLOUDY LEOPARD”and“YUNJIN”all-wood pulp offset paper and electrostatic base paper2.“CLOUDY LION”and“CLOUDY CRANE”original white offset paper3.“CLOUDY P
112、INE”and“GREEN PINE”light weight paper4.Blueprint paper,colour offset paper,pure texture paper,non-fluorescent offset paper,PE offset paper5.Beige and high white book paper6.Light weight coated paperShouguang HeadquartersShouguang MeilunZhanjiang ChenmingJiangxi ChenmingJilin ChenmingPrinting publica
113、tions,textbooks,magazines,covers,illustrations,notebooks,test papers,teaching materials,reference books,etc.Coated paper series1.“SNOW SHARK”and“EAGLE”one-sided coated paper2.“SNOW SHARK”,“EAGLE”and“RABBIT”double-sided coated paper3.“EAGLE”and“RABBIT”matte coated paperShouguang HeadquartersShouguang
114、 MeilunDouble-sided coated paper is suitable for high quality printing,such as high-grade picture albums,picture,magazines and so on,promotional materials such as interior pages of high-end books,wall calendars,posters and so on,and suitable for suitable for high-speed sheet printing and high-speed
115、rotary printing;One-sided coated paper is suitable for upscale tobacco package paper,adhesive sticker,shopping bags,slipcases,envelopes,gift wrapping and so on,and suitable for large format printing and commercial printing.White cardboard series1.White cardboard of“LIYA”series,white cardboard and iv
116、ory cardboard of“LIPIN”and“POPLAR”series,high bulk cardboard and ivory cardboard of“LIZZY”and“BAIYU”series,and super high bulk cardboard of“LIYING”and“BAIYU”series2.Food package board of“LIYA”and“LIZZY”series3.Coated cattle card and LIYA book card4.Playcard paper board5.Chenming cigarette cardboardS
117、houguang Headquarters Jiangxi Chenming Zhanjiang ChenmingHigh-end gift boxes,cosmetics boxes,tags,shopping bags,publicity pamphlets,high-end postcards;cigarette package printing of medium and high quality;milk package,beverage package,disposable paper cups,milk tea cups,and noodle bowls.Copy paper s
118、eries“GOLDEN MINGYANG”and“GOLDEN CHENMING”copy paper,“BOYA”and“BIYUNTIAN”copy paper,“MINGYANG”,“LUCKY CLOUDS”,“BOYANG”and“SHANYIN”copy paper,and“GONGHAO”and“TIANJIAN”copy paperShouguang HeadquartersShouguang MeilunZhanjiang ChenmingPrinting and copying business documents,training materials,and writi
119、ng.Industrial paper seriesHigh-grade yellow anti-sticking base paper,ordinary yellow/white anti-sticking base paper and PE paperShouguang Headquarters Jiangxi ChenmingZhanjiang ChenmingAnti-stick base paper is mainly used for producing the paper base of stripping paper or anti-sticking base paper;Ca
120、st coated base paper is suitable for producing adhesive paper or playcard compound paper after coating.Special paper seriesThermal paper and glassine paperShouguang Art PaperHigh-grade adhesive backing paper for electronics,medicine,food,washing supplies,supermarket labels,double-sided tapes,etc.Hou
121、sehold paper seriesToilet paper,facial tissue,pocket tissue,napkin,paper towels and“XINGZHILIAN”Shouguang MeilunDaily toilet supplies;used in restaurants and other catering industries,and used in public toilets in hotels,guesthouses,and office buildings,and also suitable for home and other environme
122、nt.SHANDONG CHENMING PAPER HOLDINGS LIMITED16IV Management Discussion and AnalysisII.Principal activities of the Company during the reporting period(Continued)3.Operation model(1)Purchase modelThe Company has established a supply chain management centre which adopts a supply chain management model o
123、f“centralised procurement by the Group,source as the first priority,hierarchical separation and one-vote veto”.Through continuous improvement of the procurement information system,the Company has fully realised online bidding,and effectively developed high-quality suppliers,improving the fairness an
124、d impartiality of procurement.Based on the needs of production bases,the Group integrates the resources of related parties and implements centralised procurement.The Company seeks sources and high-quality suppliers through industry exhibitions,on-site inspections and competitive factory research to
125、strengthen procurement at source and reduce procurement costs;and introduces a supplier competition mechanism by establishing a three-level joint review mechanism for suppliers and implementing a system of eliminating substandard suppliers,so as to improve supply quality.(2)Production modelThe Compa
126、ny has committed itself to implementing a pulp and paper integration strategy.Adhering to the concept of“placing green development and environmental protection as its priority”,the Company has actively promoted clean production and vigorously carried out energy conservation and emission reduction,ai
127、ming to be a resource-saving and environmentally friendly model enterprise.It is innovating an integrated use of resources and a circular industrial development mode,and an“ecological chain”featuring resources,products and recycled resources has been established.As for production process,the Company
128、 takes planned management as the focus and implements a hierarchical planned management model for the Group,the Company,factories and workshops.Its production volume is determined based on the sales,its production is arranged scientifically,and its inventories are under strict control.The Group has
129、set up a production scheduling centre to monitor the operation of the production lines of each subsidiary around the clock on a real-time basis,so as to ensure normal production.It has actively built and promoted the MES management system,and realised the timely information transfer between the mana
130、gement and the production control unit through bridging the gap between the ERP and DCS systems.Starting from the fourth quarter of the reporting period,the Companys production bases in Shouguang,Zhanjiang,Jiangxi and Jilin had successively been in shutdown and maintenance,resulting in unsatisfactor
131、y capacity utilisation of the Company during the reporting period and a year-on-year decline in production and sales volumes.(3)Marketing modelThe Company has always adhered to the marketing concept of“Good faith,Win-Win and Sharing”while wholeheartedly serving its customers.The Company has a relati
132、vely mature sales network,and has set up specialised sales companies responsible for the development of domestic and overseas markets,product sales,and formulation of sales policies.The sales companies management systems are divided into product lines,product companies,management areas,and branches
133、to achieve matrix management.The sales companies are divided into culture paper series,coated paper series,electrostatic paper series,special paper series and household paper series according to product line.Each product company has its administrative district.A regional general manager is responsib
134、le for his/her administrative district,under which branch companies are set up.The chief representatives of the branch companies have full authority to deal with branch business.2024 ANNUAL REPORT17IV Management Discussion and AnalysisII.Principal activities of the Company during the reporting perio
135、d(Continued)3.Operation model(Continued)(3)Marketing model(Continued)The Company has implemented a three-level scheduling mechanism.Branch companies,administrative districts,and sales companies schedule task indicators daily to ensure the effective implementation of the plans.It sticks to a“four-lev
136、el visit mechanism”to gain deep market insights and meet customer needs.Meanwhile,by leveraging its comprehensive information systems,the Company has realised It-based management.It has also established and improved the complaint handling system and customer satisfaction system to enhance the Compan
137、ys marketing management level.(4)R&D modelThe Company is market-oriented,and innovation is it driving force.It highly values technological R&D,and has formed a variety of R&D modes such as independent R&D,technology introduction,and industry university research cooperation.At present,the Company has
138、 a number of domestically leading innovative R&D platforms,including a national enterprise technology centre,a post-doctoral working station,a collaborative innovation centre for cleaner production and refinery of light industry bio-based products and Shandong Pulp and Paper Making Engineering Lab,w
139、hich continuously enhance its independent innovation capabilities.Meanwhile,on the basis of introducing internationally advanced pulp and paper production lines and advanced technologies,the Company has made technological improvements,optimised product processes and improved product quality,forming
140、distinctive core technologies.The Company also works hard on carrying out academic research with colleges and universities and R&D institutions such as Qilu University of Technology,and Shandong Paper Industry Research and Design Institute,introducing,digesting and absorbing scientific research and
141、innovation achievements,optimising product mix,and improving the competitiveness of its products in the market.III.Analysis of core competitivenessAfter innovation and development for more than 60 years,the Company has created a strong brand influence and cultivated a solid comprehensive competitive
142、ness.It promotes product upgrades,enhances R&D strength and improves core competitiveness by creating competitive advantages in an industry chain featured with pulp and paper integration.The core competitiveness of the Company did not underwent major changes during the reporting period.The details o
143、f the core competitiveness of the Company are as follows:1.Advantages of pulp and paper integrationThe Company has unwaveringly implemented a pulp and paper integration strategy.At present,its major production bases located in Shouguang,Zhanjiang,and Huanggang are equipped with chemical pulp product
144、ion lines.It is the first modern large-scale paper making company that basically realises wood pulp self-sufficiency in China.A complete supply chain not only creates cost advantage for the Company,but also safeguards the safety,stability and quality of upstream raw materials,and renders strong supp
145、ort for the Company to maintain its long-term competitiveness.2.Scale advantagesThe paper industry is a typical capital-intensive and technology-intensive industry that follows the laws of economies of scale.The Company is a leading player in the paper industry in China.Its large-scale production ba
146、ses can be found in the major markets in Southern,Central,Northern,and Northeast China,where reasonable production scale creates the marginal cost advantage.Meanwhile,by leveraging the scale advantages,the Company has built an international logistics centre and railway dedicated lines and docks,and
147、constructed a comprehensive logistics service platform covering container shipping,bonded warehousing,transfer and storage at stations and terminals,realising the improvement of logistics efficiency and the stability of logistics costs.SHANDONG CHENMING PAPER HOLDINGS LIMITED18IV Management Discussi
148、on and AnalysisIII.Analysis of core competitiveness(Continued)3.Product advantagesThe Company is an enterprise that offers the widest and the most complete product range in the paper industry in China.The product series include culture paper,white cardboard,coated paper,copy paper,household paper,th
149、ermal paper,etc.,with each major product ranking among the best in terms of market share.The Company has attached great importance to technology research and development.By introducing the most advanced pulping and paper making technology and equipment in the world,it persists in technological innov
150、ation and work process optimisation,so as to help improve product quality and structure upgrade,continuously improve the brand value of Chenming,and enhance brand benefits.4.Industry layout advantagesClosely centring on the pulp and paper integration strategy,the Company has integrated resources and
151、 established its production bases in the core target market to promote the coordinated development of all regions.Currently,the Company adopts the market-oriented approach and has production bases in Shandong,Guangdong,Hubei,Jiangxi,Jilin and other places.With all products sold at close distances,th
152、e Company substantially reduces transportation costs while improving service efficiency,achieving a“win-win”between the Company and its users.5.Advantages in technical equipmentThe Company highly values the introduction and upgrades of technical equipment,actively push equipment and technology upgra
153、de forward and boasts the largest and most advanced pulping and paper making production line in the world.The Companys major production equipment has been imported from internationally renowned manufacturers,including Metso and Valmet of Finland,Voith of Germany,Andritz of Austria,etc.and reached th
154、e advanced international level,thus ensuring production efficiency and product quality.6.Advantages in research and innovationThe Company has scientific research institutions including a national enterprise technology centre,a post-doctoral working station,a collaborative innovation centre for clean
155、er production and refinery of light industry bio-based products,and Shandong Pulp and Paper Making Engineering Lab.At the same time,the Company actively carries out in-depth industry-university-research cooperation with prestigious domestic universities and research institutes,continuously improves
156、technical innovation capabilities and scientific research and development levels,and develops a series of new products with high technology contents and high added value as well as proprietary technologies.The Company and its subsidiaries Zhanjiang Chenming,Shouguang Meilun,Jiangxi Chenming,Jilin Ch
157、enming and Huanggang Chenming are high and new technology enterprises.As at the end of the reporting period,the Company had obtained 470 national patents,including 42 invention patent authorisation,7 national new products,16 scientific and technological progress awards above the provincial level,5 n
158、ational scientific and technological projects and 75 Shandong provincial technological innovation projects.The Company took the lead in obtaining the ISO9001 quality system certification,the ISO14001 environmental protection system certification and the FSC-COC international forest system certificat
159、ion among domestic peers.7.Team management advantagesThe Company possesses a complete and reasonable talent structure consisting of experienced personnel,including high-end talents specialising in production,technology,sales,finance,laws,etc.In the course of business operations,the stable core team
160、has developed a corporate culture that ties in with the Companys development,summarised management experience with industry characteristics,and formed a team advantage integrating management and culture,allowing it to accurately grasp the industry development trend.At the same time,the Company has p
161、aid attention to the construction of a talent reserve and cultivation mechanism.With advanced business concepts and enormous development space,the Company has attracted an array of high-calibre professionals and improved the level of human capital construction,providing solid guarantee for the Compa
162、nys long-term sustainable development.2024 ANNUAL REPORT19IV Management Discussion and AnalysisIII.Analysis of core competitiveness(Continued)8.Advantages in environmental governance capacityThe Company has actively upheld the concept of“lucid waters and lush mountains are invaluable assets”,adhered
163、 to the development idea of“placing green development and environmental protection as its priority”,always regarded environmental protection as the“life project”,clung to the green development model of clean production and resource recycling,and earnestly shouldered the corporate responsibility for
164、environmental protection.In recent years,the Company and its subsidiaries have invested more than RMB8 billion in total in environmental protection,and have constructed the pollution treatment facilities including the alkali recovery system,reclaimed water treatment system,reclaimed water reuse syst
165、em,white water recovery system and black liquor comprehensive utilisation system.The environmental protection indicators rank high in China and in the world.At present,the Company adopts the worlds most advanced“ultrafiltration membrane+reverse osmosis membrane”technology to complete the reclaimed w
166、ater recycling membrane treatment project,which is the largest reclaimed water reuse project in the domestic paper industry.The reclaimed water recycle rate attains the industry-leading level.Meanwhile,in response to the“dual carbon”policy,the Company actively introduces photovoltaic power generatio
167、n and biomass power generation,continuously optimises the energy structure and improves the level of low-carbon production.IV.Analysis of principal operations1.OverviewIn recent years,the contradiction between supply and demand in the short term has been prominent due to the concentration of newly-a
168、dded production capacity in the paper industry.The prices of the Companys major paper products,in particular the price of white cardboard,have declined significantly under the influence of the supply-demand contradiction.The profit level of the Company has been decreasing,and has even turned from pr
169、ofits into losses.In 2024,the prices of the Companys major products continued to be low,with a year-on-year decline in gross profit.Starting from the fourth quarter,the Companys production bases in Shouguang,Zhanjiang,Jiangxi and Jilin had successively been in shutdown and maintenance,resulting in u
170、nsatisfactory capacity utilisation of the Company and a year-on-year decline in production and sales volumes.At the same time,the Company made impairment provisions for certain assets,resulting in increased operating losses.The Company will accelerate the progress of maintenance for technical renova
171、tion,focus on its main responsibilities and principal business,and make every effort to promote the resumption of normal production and achieve sustainable and sound operation.During the reporting period,the Company completed machine-made paper production of 4.27 million tonnes and sales volume of 4
172、.47 million tonnes,and realised revenue of RMB22,729 million and net profit attributable to shareholders of the Company of RMB-7,411 million.Next,the Company will continue to implement the pulp and paper integration strategy,adjust and optimise internal management,strengthen cost management,optimise
173、 product structure,consolidate and expand sales market,promote corporate reform and innovation,and strive to improve corporate management and operation quality.At the same time,as the pressure of new production capacity in the paper industry has eased off,the industry is expected to alleviate the im
174、balance between supply and demand.Along with an orderly rebound in the prices of major paper products,the Companys profitability will be further restored.SHANDONG CHENMING PAPER HOLDINGS LIMITED20IV Management Discussion and AnalysisIV.Analysis of principal operations(Continued)2.Revenue and cost(1)
175、Components of revenueUnit:RMB20242023Increase/decreaseAmount%of revenueAmount%of revenueTotal revenue22,729,474,852.76100%26,608,570,228.20100%-14.58%By industryMachine-made paper20,179,848,508.5788.79%23,892,883,773.1089.79%-15.54%Chemical pulp1,519,262,130.756.68%551,886,319.482.07%175.29%Electric
176、ity and steam216,763,239.540.95%223,450,300.540.84%-2.99%Hotel and property rentals193,494,961.950.85%212,364,573.640.80%-8.89%Construction materials127,783,427.120.56%222,788,884.780.84%-42.64%Chemicals88,627,247.450.39%128,495,469.030.48%-31.03%Others403,695,337.381.78%1,376,700,907.635.18%-70.68%
177、By productDuplex press paper6,117,888,314.7026.92%7,702,426,452.7528.95%-20.57%White cardboard4,553,056,974.2520.03%5,477,558,929.5620.59%-16.88%Coated paper3,758,928,113.9516.54%3,925,663,395.2314.75%-4.25%Electrostatic paper3,547,162,310.5315.61%4,005,559,008.3615.05%-11.44%Anti-sticking raw paper
178、909,489,122.984.00%1,127,626,969.184.24%-19.34%Thermal paper432,929,902.581.90%553,666,757.692.08%-21.81%Other machine-made paper860,393,769.583.79%1,100,382,260.334.14%-21.81%Chemical pulp1,519,262,130.756.68%551,886,319.482.07%175.29%Electricity and steam216,763,239.540.95%223,450,300.540.84%-2.99
179、%Hotel and property rentals193,494,961.950.85%212,364,573.640.80%-8.89%Construction materials127,783,427.120.56%222,788,884.780.84%-42.64%Chemicals88,627,247.450.39%128,495,469.030.48%-31.03%Others403,695,337.381.78%1,376,700,907.635.18%-70.68%By geographical segmentMainland China18,082,061,604.7779
180、.55%20,082,348,032.3675.47%-9.96%Other countries and regions4,647,413,247.9920.45%6,526,222,195.8424.53%-28.79%By sales modelDistribution16,965,016,680.6974.64%18,126,061,624.6468.12%-6.41%Direct sales5,764,458,172.0725.36%8,482,508,603.5631.88%-32.04%2024 ANNUAL REPORT21IV Management Discussion and
181、 AnalysisIV.Analysis of principal operations(Continued)2.Revenue and cost(Continued)(2)Industries,products,regions and sales model accounting for over 10%of revenue or operating profit of the Company Applicable Not applicableUnit:RMBRevenueOperating costsGross profit marginIncrease/decrease of reven
182、ue as compared to the corresponding period of the prior yearIncrease/decrease of operating costs as compared to the corresponding period of the prior yearIncrease/decrease of gross profit margin as compared to the corresponding period of the prior yearBy industryMachine-made paper20,179,848,508.5719
183、,870,513,391.351.53%-15.54%-9.84%-6.23%By productDuplex press paper6,117,888,314.705,767,014,322.775.74%-20.57%-16.77%-4.30%White cardboard4,553,056,974.255,140,713,897.07-12.91%-16.88%-9.38%-9.34%Coated paper3,758,928,113.953,263,366,438.2413.18%-4.25%-3.73%-0.47%Electrostatic paper3,547,162,310.53
184、3,146,628,608.3511.29%-11.44%-7.74%-3.57%By geographical segmentMainland China18,082,061,604.7717,512,725,170.983.15%-9.96%-4.42%-5.61%Other countries and regions4,647,413,247.994,632,103,497.450.33%-28.79%-24.35%-5.85%By sales modelDistribution16,965,016,680.6916,675,644,976.421.71%-6.41%-0.64%-5.7
185、0%Direct sales5,764,458,172.075,469,183,692.015.12%-32.04%-28.63%-4.55%Under the circumstances that the statistics specification for the Companys principal operations data experienced adjustment in the reporting period,the principal activity data upon adjustment of the statistics specification as at
186、 the end of the reporting period in the latest year Applicable Not applicableSHANDONG CHENMING PAPER HOLDINGS LIMITED22IV Management Discussion and AnalysisIV.Analysis of principal operations(Continued)2.Revenue and cost(Continued)(3)Whether revenue from sales in kind is higher than revenue from ser
187、vices Yes NoBy industryItemUnit20242023Increase/decreaseMachine-made paperSales0,000 tonnes447474-5.70%Production0,000 tonnes427478-10.67%Inventories0,000 tonnes1636-55.56%Explanation on why the related data varied by more than 30%Applicable Not applicableInventories decreased by 55.56%as compared t
188、o the corresponding period of the prior year,mainly due to the temporary shutdown for maintenance of certain production bases of the Company,which resulted in lower production and sales year on year and a significant decline in inventories.(4)Performance of material sales contracts and material proc
189、urement contracts of the Company during the reporting period Applicable Not applicable2024 ANNUAL REPORT23IV Management Discussion and AnalysisIV.Analysis of principal operations(Continued)2.Revenue and cost(Continued)(5)Composition of operating costsBy industryUnit:RMB20242023By industryItemAmount%
190、of operating costsAmount%of operating costsIncrease/decreaseMachine-made paperRaw materials11,828,109,710.9859.53%12,570,191,697.4557.04%-5.90%Chemicals2,583,423,761.5913.00%2,971,091,082.4813.48%-13.05%Energy and power2,386,038,849.3912.01%3,035,894,899.7313.78%-21.41%Depreciation960,184,014.414.83
191、%974,858,417.494.42%-1.51%Freight686,460,621.133.55%879,576,446.703.99%-21.96%Labour costs291,717,645.901.47%273,486,536.001.24%6.67%Other production costs1,134,578,787.955.61%1,333,740,009.766.05%-14.93%Subtotal19,870,513,391.35100.00%22,038,839,089.61100.00%-9.84%Chemical pulpRaw materials958,370,
192、750.8669.94%326,385,778.0159.41%193.63%Chemicals241,722,332.1517.64%77,144,557.3614.04%213.34%Accumulated depreciation52,876,991.993.86%25,312,257.024.61%108.90%Energy and power38,763,133.202.83%78,827,192.3514.35%-50.83%Labour costs9,468,190.030.69%7,101,094.241.29%33.33%Other production costs68,99
193、3,613.365.04%34,630,638.996.30%99.23%Subtotal1,370,195,011.59100.00%549,401,517.97100.00%149.40%Electricity and steamRaw materials157,175,024.0060.54%161,991,982.3576.38%-2.97%Depreciation34,156,605.2313.16%16,818,943.237.93%103.08%Labour costs15,489,066.885.97%7,859,289.013.71%97.08%Energy and powe
194、r4,724,477.711.82%4,983,704.942.35%-5.20%Chemicals2,636,036.761.02%387,301.280.18%580.62%Other production costs45,419,675.7917.49%20,048,349.419.45%126.55%Subtotal259,600,886.37100.00%212,089,570.22100.00%22.40%Construction materialsRaw materials95,782,541.6070.44%161,288,633.9174.50%-40.61%Energy a
195、nd power13,470,743.699.91%20,858,840.979.64%-35.42%Labour costs6,940,173.795.10%7,205,420.783.33%-3.68%Depreciation6,917,316.315.09%5,941,206.012.74%16.43%Freight4,181,321.703.07%5,718,100.502.64%-26.88%Other production costs8,690,233.126.39%15,469,301.877.15%-43.82%Subtotal135,982,330.21100.00%216,
196、481,504.04100.00%-37.19%SHANDONG CHENMING PAPER HOLDINGS LIMITED24IV Management Discussion and AnalysisIV.Analysis of principal operations(Continued)2.Revenue and cost(Continued)(6)Change of scope of consolidation during the reporting period Yes NoDuring the year,2 subsidiaries were newly establishe
197、d,namely Shandong Chenming Industrial Trading Co.,Ltd.and Hubei Chenming Technology Industrial Co.,Ltd.2 subsidiaries were deregistered,namely Chenming International Co.,Ltd.and Guangzhou Chenming Commercial Factoring Co.,Ltd.1 subsidiary was disposed of,namely Kunshan Tuoan Plastic Products Co.,Ltd
198、.(7)Significant change in or adjustment of the businesses,products or services of the Company during the reporting period Applicable Not applicable(8)Sales to major customers and major suppliersSales to major customers of the CompanyTotal sales to top 5 customers(RMB)6,640,449,070.92Total sales to t
199、op 5 customers as a percentage of the total sales for the year29.22%Sales to top 5 customers who are related parties as a percentage of the total sales for the year0.00%Information on top 5 customers of the CompanyNo.Name of customerSales(RMB)As a percentage of the total sales for the year(%)1Custom
200、er A2,064,673,781.539.08%2Customer B1,756,822,697.407.73%3Customer C1,435,062,542.986.31%4Customer D750,788,017.873.30%5Customer E633,102,031.142.80%Total6,640,449,070.9229.22%Other explanation of the major customers Applicable Not applicable2024 ANNUAL REPORT25IV Management Discussion and AnalysisI
201、V.Analysis of principal operations(Continued)2.Revenue and cost(Continued)(8)Sales to major customers and major suppliers(Continued)Major suppliers of the CompanyTotal purchases from top 5 suppliers(RMB)5,545,576,735.77Total purchases from top 5 suppliers as a percentage of the total purchases for t
202、he year25.04%Total purchases from top 5 suppliers who are related parties as a percentage of the total purchases for the year0.00%Information on top 5 suppliers of the CompanyNo.Name of supplierPurchases(RMB)As a percentage of the total purchases for the year(%)1Supplier A2,397,232,744.2110.83%2Supp
203、lier B930,208,840.684.20%3Supplier C822,725,545.623.72%4Supplier D756,893,525.573.42%5Supplier E638,516,079.692.87%Total5,545,576,735.7725.04%Other explanation of the major suppliers Applicable Not applicableIncome from trading business accounted for more than 10%of revenue during the reporting peri
204、od Yes No Not applicable3.ExpensesUnit:RMB20242023Increase/decreaseReasons for material changesSelling and distribution expenses241,171,109.12230,999,637.434.40%General and administrative expenses751,168,974.00690,319,782.018.81%Legal costs,litigation expenses and depreciation expenses increased yea
205、r on year during the reporting period.Finance expenses1,967,982,467.342,009,666,708.14-2.07%SHANDONG CHENMING PAPER HOLDINGS LIMITED26IV Management Discussion and AnalysisIV.Analysis of principal operations(Continued)4.Research and development expenditure Applicable Not applicableName of major R&D p
206、rojectProject purposeProject progressObjectives to be achievedExpected impact on the future development of the CompanyResearch on deep delignification technology for broadleaf wood sulphate pulpingSaving raw materialsTrial production stageTo become domestically leadingImproving product quality,lower
207、ing production costs and improving the Companys economic benefits.Research on the strengthening effect of amphoteric dry strength agent on electrostatic copy paperEnhancing product functionality or improving performancePilot testing stageTo become domestically leadingImproving product quality,loweri
208、ng production costs and improving the Companys economic benefits.Development of green wet processing technology for corn starchReducing energy consumption or improving energy efficiencySmall testing stageTo become domestically leadingImproving product quality,lowering production costs and improving
209、the Companys economic benefits.Development of technology for high-end kitchen paperEnhancing product functionality or improving performancePilot testing stageTo become domestically leadingImproving customer satisfaction with products and increasing market share.Development of key grinding technology
210、 for thermal paper colour developing processEnhancing product functionality or improving performancePilot testing stageTo become domestically leadingImproving customer satisfaction with products and increasing market share.Development of technology for coated cattle cardEnhancing product functionali
211、ty or improving performancePilot testing stageTo become domestically leadingImproving customer satisfaction with products and increasing market share.2024 ANNUAL REPORT27IV Management Discussion and AnalysisIV.Analysis of principal operations(Continued)4.Research and development expenditure(Continue
212、d)R&D personnel of the Company20242023Percentage of changeR&D headcount1,3101,502-12.78%Ratio of R&D personnel13.65%14.16%-0.51%Academic background of R&D personnelBachelors degree143154-7.14%Masters degree330.00%Age composition of R&D personnelUnder 30230319-27.90%3040 years old824853-3.40%R&D expe
213、nditure of the Company20242023Percentage of changeR&D expenditure(RMB)1,080,331,754.421,164,419,698.13-7.22%R&D expenditure to revenue4.75%4.38%0.37%Amount of R&D expenditure capitalised(RMB)0.000.000.00Capitalised R&D expenditure to R&D expenditure0.00%0.00%0.00%Reasons for and effects of significa
214、nt changes in the composition of the Companys R&D personnel Applicable Not applicableReasons for significant change in total R&D expenditure to revenue Applicable Not applicableReasons for and reasonableness of the significant change of the capitalisation rate of R&D expenditure Applicable Not appli
215、cableSHANDONG CHENMING PAPER HOLDINGS LIMITED28IV Management Discussion and AnalysisIV.Analysis of principal operations(Continued)5.Cash flowsUnit:RMBItem20242023Increase/decreaseSubtotal of cash inflows from operating activities23,774,221,275.0929,165,118,764.19-18.48%Subtotal of cash outflows from
216、 operating activities21,151,029,610.4924,775,169,455.37-14.63%Net cash flows from operating activities2,623,191,664.604,389,949,308.82-40.25%Subtotal of cash inflows from investing activities535,245,822.29377,601,853.1141.75%Subtotal of cash outflows from investing activities69,444,183.34319,310,876
217、.89-78.25%Net cash flows from investing activities465,801,638.9558,290,976.22699.10%Subtotal of cash inflows from financing activities34,062,925,816.7635,277,274,955.07-3.44%Subtotal of cash outflows from financing activities37,787,846,793.1941,061,017,053.99-7.97%Net cash flows from financing activ
218、ities-3,724,920,976.43-5,783,742,098.9235.60%Net increase in cash and cash equivalents-612,290,496.30-1,395,226,406.9056.12%Explanation on main effects of material changes in relevant data year on year Applicable Not applicable(1)Net cash flows from operating activities decreased by 40.25%as compare
219、d to the corresponding period of the prior year mainly due to the decrease in sales revenue as a result of the decrease in sales volume during the reporting period.(2)Net cash flows from investing activities increased by 699.10%as compared to the corresponding period of the prior year mainly due to
220、the receipt of proceeds from the disposal of equity in a subsidiary during the reporting period.(3)Net cash flows from financing activities increased by 35.60%as compared to the corresponding period of the prior year mainly due to the year-on-year decrease in debts due for repayment during the repor
221、ting period.Explanation on reasons leading to the material difference between net cash flows from operating activities during the reporting period and net profit for the year Applicable Not applicableNet profit decreased significantly mainly due to credit impairment losses and loss on impairment of
222、assets during the year.At the same time,receipts from sales of the Company during the year were higher than raw material costs and various expenses,leading to a material difference between the cash flow from operating activities and the net profit during the year.2024 ANNUAL REPORT29IV Management Di
223、scussion and AnalysisV.Analysis of non-principal operations Applicable Not applicableUnit:RMBAmountAs a percentage of total profit ReasonSustainable or not?Other income295,803,414.30-3.77%Receipt of government grants related to daily business activitiesIncluding RMB105 million,the annual amortisatio
224、n amount of government grants received in prior periods,and sustainable in nature.Investment income-766,913,269.239.77%Recognition of external investment income and dividends,as well as income from equity disposal and derecognition of financial assets during the reporting periodGain or loss arising
225、from the change in fair value-192,216,967.502.45%Fluctuations of fair values of the shares of China Bohai Bank as well as forestry assets and other non-current financial assetsCredit impairment loss-3,198,089,208.4640.72%Bad debt provisions for receivablesLoss on impairment of assets-332,755,406.254
226、.24%Bad debt provisions for non-current assetsVI.Analysis of assets and liabilities1.Material changes of asset itemsUnit:RMBAs at the end of 2024As at the beginning of 2024AmountAs a percentage of total assetsAmountAs a percentage of total assetsPercentage changeDescriptionMonetary funds5,909,879,81
227、2.189.31%12,124,832,831.3015.25%-5.94%Mainly due to a decrease in guarantee deposits as at the end of the reporting period.Accounts receivables1,384,290,313.702.18%2,528,507,059.833.18%-1.00%Mainly due to a decrease in receivables from customers as at the end of the reporting period.Other receivable
228、s1,084,651,870.941.71%2,224,904,557.882.80%-1.09%Mainly due to a decrease in payments with external entities as at the end of the reporting period.Inventories2,835,388,802.154.46%4,958,178,000.366.24%-1.78%Mainly due to a decrease in inventories and raw materials as at the end of the reporting perio
229、d.SHANDONG CHENMING PAPER HOLDINGS LIMITED30IV Management Discussion and AnalysisAs at the end of 2024As at the beginning of 2024AmountAs a percentage of total assetsAmountAs a percentage of total assetsPercentage changeDescriptionNon-current assets due within one year2,840,365,519.484.47%4,161,725,
230、935.755.24%-0.77%Mainly due to a decrease in long-term receivables due within one year as at the end of the reporting period.Other current assets559,911,202.830.88%1,068,826,944.781.34%-0.46%Mainly due to a decrease in one-year finance lease and factoring receivables as at the end of the reporting p
231、eriod.Construction in progress593,838,603.870.94%859,617,965.161.08%-0.14%Mainly due to the transfer of some construction in progress into fixed assets during the reporting period.Short-term borrowings26,780,358,809.1142.17%33,475,479,021.6242.11%0.06%Mainly due to a reduction in short-term debts as
232、 at the end of the reporting period.Bills payable1,423,918,112.992.24%4,618,986,463.955.81%-3.57%Mainly due to the overdue bills being reclassified to accounts payable,other payables and short-term borrowings as at the end of the reporting period.Accounts payable7,708,967,406.4712.14%3,902,620,870.2
233、04.91%7.23%Mainly due to an increase in payables to suppliers and some overdue commercial bills being reclassified to accounts payable as at the end of the reporting period.Contract liabilities274,829,824.350.43%1,443,680,155.621.82%-1.39%Mainly due to a decrease in advance payments from customers a
234、s at the end of the reporting period.Non-current liabilities due within one year1,577,936,964.142.48%3,631,937,677.824.57%-2.09%Mainly due to in the overdue equipment lease payments being reclassified to other current liabilities as at the end of the reporting period.Other current liabilities2,680,5
235、62,600.584.22%100,000,000.000.13%4.09%Mainly due to the overdue equipment lease payments being reclassified to other current liabilities as at the end of the reporting period.Long-term payables774,965,008.291.22%2,541,095,217.663.20%-1.98%Mainly due to the overdue equipment lease payments being recl
236、assified to other current liabilities as at the end of the reporting period.A higher proportion of overseas assets Applicable Not applicableVI.Analysis of assets and liabilities(Continued)1.Material changes of asset items(Continued)2024 ANNUAL REPORT31IV Management Discussion and AnalysisVI.Analysis
237、 of assets and liabilities(Continued)2.Assets and liabilities measured at fair value Applicable Not applicableUnit:RMBItemOpening balanceProfit or loss from change in fair value during the periodCumulative fair value change charged to equityImpairment provided during the periodAmount acquired during
238、 the periodAmount disposed of during the periodOther changesClosing balanceFinancial assets1.Held-for-trading financial assets(excluding derivative financial assets)46,294,291.71-9,757,917.81-159,474,419.34722,951.8037,259,325.702.Other non-current financial assets781,561,040.57-29,047,290.5230,221,
239、725.861,483,295.37751,030,454.683.Consumable biological assets measured at fair value1,483,978,089.61-153,411,759.17-116,650,954.1423,849,675.1698,036,231.751,256,379,773.85Total2,311,833,421.89-192,216,967.50-245,903,647.622,044,669,554.23Whether there were any material changes on the measurement a
240、ttributes of major assets of the Company during the reporting period Yes No3.Restriction on asset rights as at the end of the reporting periodUnit:RMBAs at the end of the periodAs at the beginning of the periodItemBook balanceBook valueType of restrictionRestrictionBook balanceBook valueType of rest
241、rictionRestrictionFixed assets34,375,256,421.2920,001,586,415.43ChargedAs collateral for bank borrowings and long-term payables9,411,111,670.626,303,095,864.20ChargedAs collateral for bank borrowings and long-term payablesInvestment properties6,742,657,317.445,433,525,500.09ChargedAs collateral for
242、bank borrowings5,941,741,699.605,004,776,921.76ChargedAs collateral for bank borrowingsMonetary funds5,728,747,806.125,728,747,806.12Pledged,frozenAs deposits for bank acceptance bills,letter of credit,loans,deposit reserves or frozen accounts and interest receivable,frozen by litigation,etc.11,360,
243、599,088.6911,360,599,088.69Pledged,frozenAs deposits for bank acceptance bills,letter of credit,letter of guarantee,loans,deposit reserves and interest receivable,etc.Intangible assets1,789,243,785.121,312,981,381.52ChargedAs collateral for bank borrowings and long-term payables865,105,844.99665,784
244、,045.39ChargedAs collateral for bank borrowings and long-term payablesLong-term equity investments1,549,103,158.311,549,103,158.31FrozenFrozen due to being sued for arrearsAccounts receivable207,017,962.56206,147,426.74PledgedAs collateral for borrowings403,349,324.55398,710,807.32PledgedAs collater
245、al for borrowingsInventories120,195,864.99103,566,055.40Seized by courtSeized due to being sued for arrearsAccounts receivable financing90,551,168.0190,551,168.01PledgedAs collateral for obtaining letters of creditTotal50,512,222,315.8334,335,657,743.6128,072,458,796.4623,823,517,895.37SHANDONG CHEN
246、MING PAPER HOLDINGS LIMITED32IV Management Discussion and AnalysisVII.Analysis of investments1.Overview Applicable Not applicableInvestments during the reporting period(RMB)Investments during the corresponding period of prior year(RMB)Change83,000,000.00582,400,000.00-85.75%2.Material equity investm
247、ents acquired during the reporting period Applicable Not applicableUnit:RMBName of investeePrincipal activitiesForm of investmentInvestment amountShareholdingSource of fundPartner(s)Period of InvestmentProduct typeProgress as at the date of balance sheetEstimated returnProfit or loss from investment
248、 for the periodInvolvement in lawsuitDate of disclosure,if anyDisclosure Index,if anyShouguang Chenming Import and Export Trade Co.,Ltd.Sale of paper products and paper production materialsCapital increase33,000,000.00100%Self-owned fundsSubsidiaryLong-termTradingCompletedN/A-333,840,339.76NoN/AN/AH
249、ubei Chenming Technology Industrial Co.,Ltd.Sale of pulp and paper productsNewly established50,000,000.00100%Self-owned fundsSubsidiaryLong-termTradingCompletedN/A-1,004,888.55NoN/AN/ATotal83,000,000.00-334,845,228.312024 ANNUAL REPORT33IV Management Discussion and AnalysisVII.Analysis of investment
250、s(Continued)3.Material non-equity investments during the reporting period Applicable Not applicableConstruction in progress which had not yet been completed and transferred with a contract amount of more than RMB200 million as at the end of the reporting period.Yes No Not applicable4.Financial asset
251、 investment(1)Security investments Applicable Not applicableUnit:RMBType of securityStock codeAbbreviation of stock nameInitial investment costAccounting measurement modelBook value at the beginning of the reporting periodProfit or loss from changes in fair value for the periodAccumulated changes in
252、 fair value included in equityAmount acquired during the periodAmount disposed of during the periodProfit or loss during the reporting periodBook value as at the end of the reporting periodAccounting itemSource of fundDomestic and foreign shares09668China Bohai Bank 195,684,817.15Measured at fair va
253、lue46,294,291.71-9,757,917.81-159,474,419.340.000.00-9,034,966.0137,259,325.70 Held-for-trading financial assetsSelf-owned fundsTotal195,684,817.1546,294,291.71-9,757,917.81-159,474,419.340.000.00-9,034,966.0137,259,325.70 Disclosure date of announcement in relation to the consideration and approval
254、 of securities investments by the Board20 June 2020Disclosure date of announcement in relation to the consideration and approval of securities investments by the shareholders general meeting(if any)N/A(2)Derivative investments Applicable Not applicableThe Company did not have any derivative investme
255、nts during the reporting period.5.Use of proceeds Applicable Not applicableThe Company did not use any proceeds during the reporting period.SHANDONG CHENMING PAPER HOLDINGS LIMITED34IV Management Discussion and AnalysisVIII.Disposal of material assets and equity interest1.Disposal of material assets
256、 Applicable Not applicableDuring the reporting period,the Company did not dispose of material assets.2.Disposal of material equity interest Applicable Not applicableCounterparty(ies)Equity interest disposed ofDisposal dateTransaction consideration(RMB0,000)Net profit contribution to the Company from
257、 the beginning of the period up to the disposal date(RMB0,000)Effect of disposal on the CompanyNet profit contribution to the Company on equity disposal as a percentage of total net profitPricing basis of disposal of equity interestRelated party transaction or notRelationship with counterparty(ies)R
258、elevant equity title fully transferred or notCarried out on schedule or not,if not,the reasons and measures taken by the CompanyDisclosure dateDisclosure indexKunshan Dupen Electronics Technology Co.,Ltd.Kunshan Tuoan Plastic Products Co.,Ltd.29 February 202414,373.00-265.33The disposal of equity in
259、terest in the subsidiary Tuoan Plastic did not affect the normal operation of the Company,and the disposal of equity interest replenished the liquidity.-0.41%Assessed valueNoN/AYesYesN/AN/AIX.Analysis of major subsidiaries and investees Applicable Not applicableMajor subsidiaries and investees accou
260、nting for over 10%of the net profit of the CompanyUnit:RMBName of companyType of companyPrincipal activitiesRegistered capitalTotal assetsNet assetsRevenueOperating profitNet profitZhanjiang Chenming Pulp&Paper Co.,Ltd.SubsidiaryProduction and sale of duplex press paper,electrostatic paper and white
261、 cardboard etc.6,913,572,423.0020,415,875,711.297,729,762,990.1710,918,531,151.42-1,020,127,316.73-883,547,814.00 Shouguang Meilun Paper Co.,Ltd.SubsidiaryProduction and sale of coated paper,culture paper,household paper and chemical pulp4,801,045,519.0019,742,523,135.687,729,274,592.898,141,538,879
262、.98-686,216,151.05-570,290,773.09Huanggang Chenming Pulp&Paper Co.,Ltd.SubsidiaryProduction and sale of chemical pulp3,350,000,000.006,730,024,366.073,277,797,889.735,029,253,116.25-37,310,457.87-22,607,049.122024 ANNUAL REPORT35IV Management Discussion and AnalysisIX.Analysis of major subsidiaries
263、and investees(Continued)Acquisition and disposal of subsidiaries during the reporting period Applicable Not applicableName of companyMethods to acquire and dispose of subsidiaries during the reporting periodImpact on overall production and operation and resultsShandong Chenming Industrial Trading Co
264、.,Ltd.EstablishmentNet profit decreased by RMB938,200Hubei Chenming Technology Industrial Co.,Ltd.EstablishmentNet profit decreased by RMB1,004,900Guangzhou Chenming Commercial Factoring Co.,Ltd.DeregistrationNet profit decreased by RMB5,300Chenming International Co.,Ltd.DeregistrationNet profit dec
265、reased by RMB14,000,000Kunshan Tuoan Plastic Products Co.,Ltd.DisposalNet profit increased by RMB32,000,000Particulars of major subsidiaries and investees1.During the reporting period,Zhanjiang Chenming and Meilun Papers production bases were temporarily shut down for maintenance,which adversely aff
266、ected the Companys operation scale.At the same time,the selling prices of Zhanjiang Chenmings white cardboard and Meilun Papers electrostatic paper fell significantly,resulting in a decrease in profitability year on year.2.During the reporting period,the production and sales of chemical pulp,the mai
267、n product of Huanggang Chenming,increased significantly,while the gross profit of the product increased,resulting in an increase in profitability year on year.The Company is accelerating its maintenance and technological transformation progress,focusing on its main business,accelerating the adjustme
268、nt and optimisation of its internal management,promoting corporate reform and innovation,and pushing forward the resumption of production in accordance with the market circumstances.X.Structured entities controlled by the Company Applicable Not applicableXI.Outlook on the future development of the C
269、ompany(I)Overview and trend of the industryThe paper industry is an important basic raw material industry in China,characterised by intensive capital and technology,as well as significant economies of scale.Its upstream connects to pulp production and other sectors,while its downstream links to cult
270、ural,consumer and other sectors.The entire industrial chain is closely interconnected,collectively facilitating the development of the paper industry.With the continuous development of the industry,efficiency boosted by technological advancements,prevalent green and environmentally friendly practice
271、s,acceleration of industrial restructuring,and rapid progress of international development,have become defining features of the industry.SHANDONG CHENMING PAPER HOLDINGS LIMITED36IV Management Discussion and AnalysisXI.Outlook on the future development of the Company(Continued)(I)Overview and trend
272、of the industry(Continued)During the reporting period,affected by factors such as increased supply and sluggish demand growth,paper product prices were hit to a certain extent.Coupled with a decline in sales volumes,the profitability of enterprises was seriously constrained.Institutions predict that
273、 in 2025,production capacity will continue to expand in the industry,and thus production will increase.At the same time,demand may see marginal improvements by virtue of policy stimulus,which may boost sales volumes.A relatively ample supply structure will likely keep overall prices under pressure.I
274、n the future,the paper industry will place greater emphasis on industrial restructuring,optimising resource allocation and improving industrial concentration.These efforts will enhance the competitiveness and sustainability of the entire industry.The advantages of leading paper enterprises will beco
275、me more pronounced,potentially accelerating the pace of industry consolidation.(II)Development strategy of the CompanyTransformation and upgrading strategy:The Group will comprehensively optimise the industrial structure and regional layout,focus on developing the pulp and paper industries,and build
276、 a coordinated and efficient industrial system;Green development strategy:The Group will adhere to the operating philosophy of“pulp and paper integration”,rely on technological progress,advanced equipment and stringent management to ensure clean production,and develop a circular economy.The Group wi
277、ll establish itself as a benchmark for resource-efficient and environmentally friendly enterprises,pursue development while protecting the environment,improve environmental standards through scientific progress,and achieve both economic and environmental benefits;Internationalisation strategy:The Gr
278、oup will take root in China,expand into the world,rely on Chinas“Belt and Road”initiative,accelerate the“going out”pace,deepen international exchanges and cooperation,and gradually expand into overseas markets;Operational excellence strategy:With the management policy of“Construct a learning atmosph
279、ere and standardise everything,resolutely implement to seek practical results”,the Group will continuously strengthen the whole process management of production and operation,marketing,financial costs and project construction,effectively integrate system resources,and continuously improve corporate
280、management standards and profitability;Talent strengthening strategy:The Group will refine mechanisms for talent cultivation,recruitment,utilisation and motivation,and actively foster a high-calibre,versatile,innovative and internationally competitive talent pool to support the Company to become a w
281、orld-class enterprise with the greatest growth momentum;Harmonious development strategy:The Group will comprehensively strengthen corporate culture development,wholeheartedly care for employees,actively fulfil corporate social responsibilities,enhance the ability to create comprehensive economic,soc
282、ial and environmental values,build a positive corporate image,and strive to build a harmonious enterprise.2024 ANNUAL REPORT37IV Management Discussion and AnalysisXI.Outlook on the future development of the Company(Continued)(III)Operation plans for 2025In recent years,the contradiction between supp
283、ly and demand in the short term has been prominent due to the concentration of newly-added production capacity in the paper industry.The prices of the Companys major paper products,in particular the price white cardboard,have declined sharply,affecting the Companys profitability.Although the domesti
284、c economy continues to face challenges such as insufficient demand,the long-term positive trend of Chinas economy remains unchanged as a series of policies aimed at improving livelihoods and stimulating consumption continue to take effect and new policies are effectively implemented.The contradictio
285、n between supply and demand in the paper industry is expected to ease,and industry sentiment is likely to improve.2025 marks the final year of the“14th Five-Year Plan”.In the coming year,the Company will remain confident and act with determination,and focus on its principal responsibilities and oper
286、ations.It will adjust and optimise internal management,facilitate corporate reform and innovation,and make every effort to secure working capital.The Company will ensure orderly production across its production bases,improve production efficiency,control production costs,seize market opportunities,e
287、xpand sales channels,and achieve sustained and stable operations.1.Strengthen production management to ensure stable productionThe Companys major production bases have successively been in shutdown and maintenance in the fourth quarter,affecting capacity utilisation and efficiency of the Company.As
288、a result,prioritising the resumption of work and production at these bases has become the Companys top priority at the beginning of the coming year.In addition,the Company will continue to strengthen production management by implementing 6S on-site management practices,enhancing equipment upgrades a
289、nd maintenance,and improving equipment reliability and operational efficiency to ensure stable production.The Company will strictly control the quality of raw materials and spare parts,promote technological upgrades and R&D,actively adjust the product mix,and optimise production processes,so as to i
290、mprove product quality.At the same time,it will adjust its incentive mechanisms to motivate frontline employees,thereby boosting production efficiency.Adhering to the principle that safety and environmental protection are the lifelines of an enterprise,the Company will thoroughly investigate and add
291、ress potential hazards to ensure production safety.2.Strengthen capital management to mitigate debt risksIn recent years,the contradiction between supply and demand in the paper industry have led to declining prices of the Companys major products,which undermined the Companys profitability.Coupled w
292、ith the situation where some financial institutions downsized the loan scale,the Company faced temporary liquidity shortages and instances of debt defaults in 2024.In 2025,with the support from governments at all levels and financial institutions,the Company will take multiple measures to mitigate d
293、ebt risks,and will continue to strengthen its communication with creditors to negotiate solutions such as extension of loan terms and adjustment of repayment plans.At present,financial institutions have established provincial debt committees,which initially agreed not to reduce,delay or cancel loans
294、,while offering interest rate reductions and extensions.The Company will actively cooperate with the internal approval processes of financial institutions,and will promote equity financing and introduce strategic investors.At the same time,the Company will continue to reduce the size of its financia
295、l leasing business and strengthen the disposal of non-core assets to increase cash inflows and enhance liquidity.SHANDONG CHENMING PAPER HOLDINGS LIMITED38IV Management Discussion and AnalysisXI.Outlook on the future development of the Company(Continued)(III)Operation plans for 2025(Continued)3.Stre
296、ngthen procurement management to ensure stable supplyIn 2025,the Company will further refine its procurement management regulations,optimise the procurement management structure and performance evaluation mechanisms,and enhance internal collaboration within the procurement team to comprehensively im
297、prove procurement efficiency.It will streamline procurement processes,innovate procurement models,and align procurement planning with production schedules to ensure supply chain stability while reducing capital occupancy.The Company will expand sourcing channels for raw materials,strengthen supplier
298、 management,and improve communication and coordination with suppliers.It will maintain long-term partnerships with high-quality suppliers,optimise collaboration methods,and ensure the quality of raw materials while reducing procurement costs.4.Strengthen sales management to enhance corporate efficie
299、ncyIn 2025,the Company will continuously optimise and innovate its sales models based on operational conditions,actively expand sales channels,seize market opportunities,and adjust sales strategies promptly to respond to market changes.It will strengthen communication and collaboration between the s
300、ales and production teams,identify issues in products and services through market research and customer feedback,and develop product solutions based on market and customer needs.By aligning with the production department,the Company will develop and produce high-quality products that meet market dem
301、and,creating brand value.It will also optimise its sales management structure,enhance professional training and adjust incentive schemes to improve team capabilities and boost sales performance.(IV)Future capital requirements and source of fundsFuture capital requirements of the Company will mainly
302、focus on:the continuous investment in existing production facilities due to technology upgrade or production expansion;and capital requirement for business expansion and daily operation.The special paper project with annual production capacity of 180,000 tonnes of Zhanjiang Chenming planned and cons
303、tructed by the Company will be partly funded by self-owned funds of the Company,as well as government guide funds,policy support funds and syndicated loans.While focusing on the development of its principal activities of pulp production and paper making,improving its business performance and increas
304、ing its operating cash flow,the Company will expand its financing channels and optimise financing structure through well planned long and short-term bank loans,introduction of third-party strategic investors,equipment financing and other means,thus providing stable financial support for the operatio
305、n and development of the Company.(V)Risk factors likely to be faced and measures to be taken1.Macroeconomic and policy riskThe paper industry is a basic raw materials industry,thus is being supported by national industry policies.Over the years,relevant competent departments issued a series of relev
306、ant policies and regulations,including the Policy on the Development of the Paper Industry,aiming to improve industry structure,enhance product technology standard,energy saving and emission reduction,as well as eliminate outdated production capacity.With the continuous economic development in China
307、,the policies on the paper industry may further adjust in the future.In addition,the fiscal and financial policies,bank interest rate,import and export policy and other policies may be adjusted in the future.All the above industrial policies and related policy adjustments will have an impact on the
308、Companys operation and development.2024 ANNUAL REPORT39IV Management Discussion and AnalysisXI.Outlook on the future development of the Company(Continued)(V)Risk factors likely to be faced and measures to be taken(Continued)1.Macroeconomic and policy risk(Continued)In response to the above risks,the
309、 Company will pay close attention to the national industrial policy,and focus on its principal activities of pulp production and paper making.The Company will strive to its innovation-driven strategy,comprehensively optimise the industrial structure and regional layout,and establish a coordinated an
310、d efficient industry system,to respond to the risks arising from industrial policy adjustments.At the same time,the Company will continuously improve its lean management,broaden financing channels,control costs,and optimise its capital structure,thus improving its operating quality to cope with the
311、risks arising from adjustments of other macroeconomic policies such as fiscal and financial policies.2.Environmental protection riskEstablishing a green paper industry is the strategic direction of industry development.In recent years,environmental protection requirements have become increasingly st
312、ringent.Relevant authorities have successively issued the White Paper on Sustainable Development of the Paper Industry in China,the Guiding Opinions on Accelerating the Establishment and Improvement of a Green,Low-Carbon and Cyclical Economic System,the Opinions on Accelerating the High-Quality Deve
313、lopment of the Manufacturing Services Industry,the“14th Five-Year Plan”and Medium and Long-term High-quality Development Outline of the Paper Industry and other policies,which advocate cyclical,low-carbon,green economy to achieve high-quality development of the industry.Such higher national environm
314、ental protection standards further increase the investment in pollution control by enterprises in the industry and increase the operating costs of the Company in the short term.In response to the aforesaid risks,the Company actively implements the national“double carbon”policy.The Company adheres to
315、 the development idea of“placing green development and environmental protection as its priority”.The Company widely adopts new technologies for energy saving and emission reduction,conducts clean production,and strives to achieve its waste emission target.At present,the Company adopts the worlds mos
316、t advanced“ultrafiltration membrane+reverse osmosis membrane”technology to complete the reclaimed water recycling membrane treatment project.The reclaimed water recycle rate reaches more than 75%.The reclaimed water quality meets drinking water standards.At the same time,the Company actively explore
317、s the comprehensive utilisation of innovative resources and industrial recycling development models,and built a circular economy ecological chain of“resources-products-renewable resources”.3.Risk of price fluctuation of raw materialsThe major raw materials of the paper industry are wood pulp and woo
318、d chips.Chinas wood resources are relatively limited,and the dependence on wood pulp and wood chips is high,which makes the development of the paper industry subject to fluctuations in the international price of wood pulp and wood chips.If the price of raw materials fluctuates sharply,it will bring
319、uncertainty to the control of production costs of papermaking enterprises,which will affect the business performance of enterprises.In response to the aforesaid risks,the Company adheres to the strategic layout of the whole pulp and paper integrated industry chain,and has wood pulp production lines
320、in Shouguang,Zhanjiang,Huanggang and other production bases,ensuring the stability of upstream raw materials.At the same time,the Company has established a more comprehensive supply chain management mechanism,practiced source procurement,closely followed the price trends of the raw materials market,
321、and improved its market research and judgment ability,in order to minimise the impact of fluctuations in raw material prices on the Company.SHANDONG CHENMING PAPER HOLDINGS LIMITED40IV Management Discussion and AnalysisXI.Outlook on the future development of the Company(Continued)(V)Risk factors lik
322、ely to be faced and measures to be taken(Continued)4.Risk of intensifying market competitionAlthough the paper industry has accelerated the elimination of outdated production capacity after several rounds of environmental protection policies,the industry structure has been optimised with a further i
323、mproved concentration.However,there remains the phenomena of a large number of enterprises,structural and staged overcapacity of some products,a large number of mid and low-end products,and product homogeneity.During the reporting period,affected by factors such as supply shocks and weak demand,the
324、prices of machine-made paper,especially white cardboard,declined year on year,and market competition further intensified.In response to the aforesaid risks,the Company continues to promote technological innovation,and continuously improves its production equipment,processing design and process level
325、s,in order to realise lean production,improve product quality,and create brand benefits.At the same time,based on the market conditions,the Company produces marketable products to meet the diverse needs,striving to form a high-quality,refined,special,differentiated and personalised product structure
326、,increase the added value of products,and improve the level of corporate profitability.5.Capital riskThe paper industry is capital-intensive.In recent years,the industry has seen concentrated capacity expansion,insufficient downstream demand,and prominent supply-demand imbalances.The prices of major
327、 paper products,especially white cardboard,have continued to decline,leading to reduced profitability for paper enterprises.For enterprises with high debt levels,scenarios such as loan delays by financial institutions or withdrawals of strategic investors during industry downturns may result in temp
328、orary liquidity shortages,leading to debt defaults,account freezes,litigations and other issues that could impact business operations.To address these risks,the Company focuses on its principal responsibilities and operations and strengthens the disposal of assets in its non-principal business to in
329、crease cash inflows.It actively communicates and coordinates with financial institutions to renew expiring loans wherever possible without loan cancellations or delays and provide support such as extended loan terms,reduced interest rates and extended interest settlement cycles,in order to alleviate
330、 the operational burden on the Company.Additionally,the Company accelerates internal management adjustments and optimisations,facilitates corporate reform and innovation,and leverages its basic strengths,in order to achieve sustained and stable operations.6.Risk of the financial leasing businessThe
331、Company may suffer from loss if the lessees of its financial leasing business cannot make full rental payment on time due to any reason and there are abuses on equipment or any other short-term behaviour.Although the risk of such rental being unrecoverable is minimal,the Company will also make bad d
332、ebt provision as required under its accounting policy.If such amounts cannot be recovered on time,the Company may be exposed to risk of bad debts.At present,the Company focuses on the development of its principal activities,i.e.pulp production and paper making,and continues to reduce the size of the
333、 financial leasing business.During the reporting period,some financial leasing customers experienced operational difficulties,leading to unexpected situations such as litigations and seizures.The Company increased the provision ratio for bad debts related to these financial leasing customers out of prudence.As at the end of the reporting period,the balance of financial leases of Chenming Leasing d
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