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深华发B:2021年第一季度报告全文--英文版2022-04-26  

                                                               Shenzhen Zhongheng Huafa Co., Ltd.
                                                First Quarterly Report 2021




    Shenzhen Zhongheng Huafa Co., Ltd.

         First Quarterly Report 2021




                 April 2021




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                                                        Shenzhen Zhongheng Huafa Co., Ltd.
                                                                 First Quarterly Report 2021




                           Section I. Important Notes

Board of Directors and the Supervisory Committee of Shenzhen Zhongheng
Huafa Co., Ltd (hereinafter referred to as the Company) and its directors,
supervisors and senior executives should guarantee the reality, accuracy and
completion of the quarterly report, there are no any fictitious statements,
misleading statements or important omissions carried in this report, and shall
take legal responsibilities, individual and/or joint.
All Directors are attended the Board Meeting for Quarterly Report deliberation.
Li Zhongqiu, person in charge of the Company, Yang Bin, person in charger of
accounting works and Wu Ai’jie, person in charger of accounting organ
(accounting officer) hereby confirm that the Financial Statement of this
Quarterly Report is authentic, accurate and complete.




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                                                                                                    Shenzhen Zhongheng Huafa Co., Ltd.
                                                                                                             First Quarterly Report 2021



                           Section II. Basic situation of the Company

I. Main accounting data and financial indexes

Whether it has retroactive adjustment or re-statement on previous accounting data
□Yes √ No

                                                                               At the same period of last     Changes of this period over
                                                     Current period
                                                                                         year                   same period of last year

Operating income (RMB)                                      190,936,203.57                   87,800,584.55                       117.47%

Net profit attributable to shareholders of
                                                              5,557,677.31                      -400,741.17                     1,489.06%
the listed company (RMB)

Net profit attributable to shareholders of
the listed company after deducting                            5,476,703.89                      -208,179.52                     2,735.02%
non-recurring gains and losses (RMB)

Net cash flow arising from operating
                                                             -5,125,776.38                    7,931,308.59                      -164.63%
activities (RMB)

Basic earnings per share (RMB/Share)                                  0.0197                       -0.0014                      1,507.14%

Diluted earnings per share (RMB/Share)                                0.0197                       -0.0014                      1,507.14%

Weighted average ROE                                                  1.64%                         -0.12%                         1.76%

                                                                                                              Changes of this period-end
                                               At the end of the reporting
                                                                                At the end of last year       over same period-end of last
                                                          period
                                                                                                                         year

Total assets (RMB)                                          637,523,241.97                627,779,621.06                           1.55%

Net assets attributable to shareholder of
                                                            341,806,414.60                336,248,737.29                           1.65%
listed company (RMB)
Items and amount of non-recurring gains and losses
√ Applicable □ Not applicable
                                                                                                                                   In RMB

                                                                       Amount from year-begin to
                                  Item                                                                                Note
                                                                                period-end

Gains/losses from the disposal of non-current asset (including the
                                                                                             -6,163.53
write-off that accrued for impairment of assets)

Governmental subsidy reckoned into current gains/losses (not
including the subsidy enjoyed in quota or ration according to
                                                                                             6,000.00
national standards, which are closely relevant to enterprise’s
business)

Gain or loss on the investment or management of assets                                     71,186.44


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                                                                                                       Shenzhen Zhongheng Huafa Co., Ltd.
                                                                                                                First Quarterly Report 2021

Other non-operating income and expenditure except for the
                                                                                               10,677.58
aforementioned items

Less: impact on income tax                                                                       727.07

Total                                                                                          80,973.42                  --

Concerning the extraordinary profit (gain)/loss defined by Q&A Announcement No.1 on Information Disclosure for Companies
Offering Their Securities to the Public --- Extraordinary Profit/loss, and the items defined as recurring profit (gain)/loss according to
the lists of extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their
Securities to the Public --- Extraordinary Profit/loss, explain reasons
□ Applicable √ Not applicable
In reporting period, the Company has no particular about items defined as recurring profit (gain)/loss according to the lists of
extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to
the Public --- Extraordinary Profit/loss


II. Total number of shareholders at the end of this report period and top ten shareholders

1. Total number of common shareholders at the end of this report period and top ten common shareholders

                                                                                                                                   In shares


                                                                          Total preference shareholders
Total common stock shareholders in                                        with voting rights recovered at
                                                                 22,456                                                                   0
reporting period-end                                                      end of reporting period (if
                                                                          applicable)

                                                           Top ten shareholders

                                                                                    Amount of            Number of share pledged/frozen
    Shareholder’s       Nature of         Proportion of    Amount of shares
                                                                                  restricted shares
        name            shareholder         shares held           held                                   State of share        Amount
                                                                                        held

Wuhan                Domestic                                                                          Pledged                 116,100,000
Zhongheng            non-state-owned              42.13%         119,289,894                       0
                                                                                                       Frozen                  119,289,894
Group                legal person

SEG (HONG                                                                                              Pledged                            0
                     Overseas legal
KONG) CO.,                                          5.85%         16,569,560                       0
                     person                                                                            Frozen                             0
LTD.

GOOD HOPE                                                                                              Pledged                            0
CORNER               Overseas legal
                                                    2.50%           7,072,000                      0
INVESTMENTS person                                                                                     Frozen                             0
LTD.

Changjiang                                                                                             Pledged                            0
Securities
                     Overseas legal
Brokerage                                           1.89%           5,355,249                      0
                     person                                                                            Frozen                             0
(Hongkong) Co.,
Ltd.


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                                                                                               Shenzhen Zhongheng Huafa Co., Ltd.
                                                                                                        First Quarterly Report 2021

Guoyuan                                                                                        Pledged                              0
Securities        Overseas legal
                                              1.37%           3,870,117                    0
Brokerage (Hong person                                                                         Frozen                               0
Kong) Limited

                  Overseas nature                                                              Pledged                              0
Li Zhongqiu                                   1.00%           2,830,000                    0
                  person                                                                       Frozen                               0

China Merchants                                                                                Pledged                              0
                  State-owned legal
Securities Hong                               0.79%           2,230,608                    0
                  person                                                                       Frozen                               0
Kong Co., Ltd.

LI SHERYN         Overseas nature                                                              Pledged                              0
                                              0.51%           1,446,100                    0
ZHAN MING         person                                                                       Frozen                               0

Shengyin                                                                                       Pledged                              0
                  Overseas legal
Investment Co.,                               0.50%           1,408,600                    0
                  person                                                                       Frozen                               0
Ltd.

                  Domestic nature                                                              Pledged                              0
# Xu Xinfen                                   0.45%           1,288,000                    0
                  person                                                                       Frozen                               0

                                      Top ten shareholders with unrestricted shares held

                                                                                                           Type of shares
        Shareholder’s name                  Amount of unrestricted shares held
                                                                                                        Type           Amount

                                                                                               RMB common
Wuhan Zhongheng Group                                                         119,289,894                              119,289,894
                                                                                               share

                                                                                               Domestically
SEG (HONG KONG) CO., LTD.                                                      16,569,560 listed foreign                    16,569,560
                                                                                               shares

                                                                                               Domestically
GOOD HOPE CORNER
                                                                                  7,072,000 listed foreign                   7,072,000
INVESTMENTS LTD.
                                                                                               shares

                                                                                               Domestically
Changjiang Securities Brokerage
                                                                                  5,355,249 listed foreign                   5,355,249
(Hongkong) Co., Ltd.
                                                                                               shares

                                                                                               Domestically
Guoyuan Securities Brokerage
                                                                                  3,870,117 listed foreign                   3,870,117
(Hong Kong) Limited
                                                                                               shares

                                                                                               Domestically
Li Zhongqiu                                                                       2,830,000 listed foreign                   2,830,000
                                                                                               shares

                                                                                               Domestically
China Merchants Securities Hong
                                                                                  2,230,608 listed foreign                   2,230,608
Kong Co., Ltd.
                                                                                               shares


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                                                                                                Shenzhen Zhongheng Huafa Co., Ltd.
                                                                                                         First Quarterly Report 2021

                                                                                                Domestically
LI SHERYN ZHAN MING                                                                 1,446,100 listed foreign              1,446,100
                                                                                                shares

                                                                                                Domestically
Shengyin Investment Co., Ltd.                                                       1,408,600 listed foreign              1,408,600
                                                                                                shares

                                                                                                RMB common
# Xu Xinfen                                                                         1,288,000                             1,288,000
                                                                                                share

                                        Among the top ten shareholders, Li Zhongqiu is the actual controller of Wuhan Zhongheng
                                        New Science & Technology Industrial Group Co., Ltd. and is a party acting in
Explanation        on         associated concert.Shengyin Investment Co., Ltd. is an overseas wholly-owned subsidiary of Wuhan
relationship among the aforesaid Zhongheng group.
shareholders                            The Company neither knew whether there exists associated relationship among the other
                                        shareholders, nor they belong to consistent actors that are prescribed in Measures for the
                                        Administration of Disclosure of Shareholder Equity Changes of Listed Companies.

Explanation on top 10 common
shareholders     involving        margin N/A
business (if applicable)
Whether top ten common shareholders or top ten common shareholders with un-restrict shares held have a buy-back agreement

dealing in reporting period

□ Yes √ No

The top ten common shareholders or top ten common shareholders with un-restrict shares held of the Company have no buy-back

agreement dealing in reporting period.



2. Total shareholders with preferred stock held and shares held by top ten shareholders with preferred
stock held

□ Applicable √ Not applicable




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                                                                                        Shenzhen Zhongheng Huafa Co., Ltd.
                                                                                                 First Quarterly Report 2021




                                        Section III. Significant Events

I. Particulars about material changes in items of main accounting statement and financial
index and explanations of reasons

√Applicable □Not applicable

          Item          March 31, 2021         January 1, 2021     Y-o-y             Reasons of changes
                                                                  changes
Other receivables               2,060,681.11       4,466,949.96   -53.87%   Decrease in current accounts
Inventory                 103,732,453.57          70,502,773.52   47.13%    Stocking in this period
Other current assets                                                        The tax to be deducted is deducted for
                                1,129,263.49       4,255,643.19   -73.46%
                                                                            the current period.
Long-term prepaid                                                           Cloud service fee amortization
                                  19,361.35           77,445.31   -75.00%
expenses
Short-term loans                                                            Short-term bank loans were increased
                           20,921,296.00          12,527,808.00   67.00%
                                                                            in the current period.
Contract liabilities                                                        The deposit received in advance has
                                 171,293.92          287,140.66   -40.34%
                                                                            decreased during the period.
Employee                                                                    The prepaid wages and expenses are
compensation                    3,106,406.38       5,737,366.59   -45.86%   paid in the current period
payable
Other payables             18,556,536.88          27,608,281.01   -32.79%   Decrease in current accounts
Interest payable                                                            Short-term loans increased in the
                                  63,086.88           26,335.66   139.55%
                                                                            current period.
          Item          January to March       January to March    Y-o-y             Reasons of changes
                                       2021                2020   changes
Operating income          190,936,203.57          87,800,584.55   117.47%   Increase in orders this period
Operating cost            160,692,426.33          73,672,446.25   118.12%   Increase in orders this period
Sales expense                   9,604,962.16       3,448,537.85   178.52%   Increase in orders this period
R&D expenses                                                                Increased in R&D investment in this
                                1,990,208.94         908,285.77   119.12%
                                                                            period
Other income                                                                Amortization of deferred income for
                                 119,520.00           64,770.00   84.53%
                                                                            the current period
Investment income                                                           Increase in financial income during
                                  71,186.44           37,415.02   90.26%
                                                                            the current period
Non-operating                                                               Government subsidy income from the
                                  19,464.75            5,492.44   254.39%
income                                                                      previous period
Non-operating                                                               Liquidated damages occurred in the
                                   8,950.00          263,835.56   -96.61%
expenses                                                                    previous period


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                                                                                       Shenzhen Zhongheng Huafa Co., Ltd.
                                                                                                First Quarterly Report 2021

Income tax expense          1,360,875.84         -85,032.71 -1700.41% Increase in profit for the period
           Item         January to March   January to March    Y-o-y              Reasons of changes
                                   2021               2020    changes
Cash received from                                                       Increase in sales collection in this
the sale of goods                                                        period
                         118,847,638.92      86,584,529.58    37.26%
and the provision of
labor services
Cash paid for                                                            Increase in orders this period
purchasing goods
                          90,764,568.41      56,760,923.41    59.91%
and receiving labor
services
Cash paid to and for                                                     Increase in orders this period
                          18,034,045.23        8,467,600.61   112.98%
employees
Taxes paid                  8,114,109.92       2,351,100.26   245.12%    Increase in orders this period

Cash received from                                                       Margin interest increased in this
                              71,186.44          37,415.02    90.26%
investment income                                                        period
Net cash received                                                        Disposal of old equipment in the
from the disposal of                                                     previous period
fixed assets,
                              13,000.00          91,000.00    -85.71%
intangible assets and
other long-term
assets
Cash paid for the                                                        Purchase production equipment in
purchase and                                                             this period
construction of fixed
                            1,624,675.50        467,211.58    247.74%
assets, intangible
assets and other
long-term assets
Other cash paid                                                          Bank wealth management decreased
relating to investing                  -     25,000,000.00 -100.00% in this period
activities
Cash received from                                                       Increase in short-term loans
                          20,710,525.00        6,725,056.80   207.96%
loans
Other cash paid                                                          Increase acceptance margin in this
relating to financing       6,408,886.53                  -              period
activities
Influence on cash                                                        The impact of exchange rate
and cash equivalents                                                     fluctuations in the current period
                            -124,286.41          32,336.78    484.35%
due to fluctuation in
exchange rate




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                                                                                 Shenzhen Zhongheng Huafa Co., Ltd.
                                                                                          First Quarterly Report 2021

II. Analysis and explanation of significant events and their influence and solutions

√ Applicable □Not applicable
(i) The Company signed Asset Exchange Contract with Wuhan Zhongheng New Science & Technology Industrial
Group Co., Ltd (hereinafter referred to as Wuhan Zhongheng Group) on 29 April 2009 (details were referred to in
the announcement dated 30 April 2009), and pursuant to the contract, since part of the assets of the Company
(namely two parcel of industrial lands located at Huafa road, Gongming town, Guangming new district, Shenzhen
(the property certificate No. were SFDZ No.7226760 and SFDZ No.7226763, No. of parcels were A627-005
andA627-007, and the aggregate area was 48,200 sq.m) were the lands listed in the first batch of plan for 2010
Shenzhen urbanization unit planning preparation plan. For promotion of such urbanization project and joint
cooperation, the Company has not completed the transfer procedures in respect of the aforesaid land.


The Company convoked the first extraordinary meeting of the Board in 2015 on February 16, 2015 and the first
extraordinary general meeting of the Board in 2015 on March 4, 2015, which considered and approved the
“Motion on promoting and implementing the urban renewal project for the renewal units of Huafa area at
Gongming street, Guangming new district, Shenzhen”, specified that the Company and Wuhan Zhongheng Group
shall obtain the corresponding compensatory consideration for removal from the respectively owned project plots
and the respectively contributed and constructed above-ground buildings before the land development, it is
estimated that the compensatory consideration obtained by the Company accounts for 50.5% of the total
consideration and Wuhan Zhongheng Group accounts for 49.5% by calculation.


The sixth extraordinary meeting of the board of directors in 2015 and the third extraordinary general meeting of
2015 have considered and adopted the “Proposal on the project promotion and implementation of urban renewal
and the progress of related transactions of ‘the updated units at Huafa Area, Gong Ming Street, Guangming New
District, Shenzhen’”, the company has signed the “Agreement on the cooperation of urban renewal project of the
updated units at Huafa Area, Gong Ming Street, Guangming New District, Shenzhen”, “Contract for the
cooperative venture of reconstruction project for Huafa Industrial Park, Gong Ming Street, Guangming New
District” and “Agreement on housing acquisition and removal compensation and resettlement” with Wuhan
Wuhan Zhongheng Group, Shenzhen Vanke Real Estate Co., Ltd. (hereinafter referred to as “Shenzhen Vanke”),
and Shenzhen Vanke Guangming Real Estate Development Co., Ltd. (hereinafter referred to as “Vanke
Guangming”).


On 12 September 2016, Shenzhen Vanke applied for arbitration in respect of “Agreement on the cooperation of
urban renewal project of the updated units at Huafa Area, Gong Ming Street, Guangming New District, Shenzhen”
against the Company and Wuhan Zhongheng Group. Shenzhen Court of International Arbitration (SCIA) has
given a ruling in August 2017. On August 29, 2018, the court accepted the compulsory execution application of
Shenzhen Vanke. In October 2019, as a number of outsiders filed an “execution objection” and applied for “no
execution” to Shenzhen Intermediate People’s Court, the Shenzhen Intermediate People’s Court ruled to terminate
the enforcement procedure on March 20, 2020. If the “execution objection” and “no execution” proposed by

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                                                                                  Shenzhen Zhongheng Huafa Co., Ltd.
                                                                                           First Quarterly Report 2021
outsiders are rejected according to law, Shenzhen Vanke may continue to apply to the Shenzhen Intermediate
People’s Court to resume execution. In mid April 2020, Heng semiconductor sued the company in Shenzhen
intermediate people's court, requiring the company to transfer the above two pieces of land and compensate for the
economic loss of 52 million yuan. As of the disclosure date of this report, the case has not yet been
concluded.Progress of the case found more in the Notices released on Juchao website dated 14 Sept. 2016, 1 Nov.
2016, 16 Nov. 2016, on 18 Feb. 2017, 24 March 2017, 25 April 2017, 1 July 2017, 18 August 2017, 9 Feb. 2018,
25 Aug. 2018 and 7 Sept. 2018 respectively.


(ii) On 31 December 2015, the 88,750,047 shares held by Wuhan Zhongheng Group, are pledge to China
Merchants Securities Assets Co., Ltd. with due date of 31 December 2016. On 1 Feb. 2016, Wuhan Zhongheng
Group pledge the 27,349,953 shares held to China Merchants Securities Assets Co., Ltd. with due date of 31
December 2016. The above-mentioned pledged shares are deferred by Wuhan Zhongheng Group; pledge expired
on 31 December 2017. The trading day for repurchase put off to the date when pledge actually removed. Till end
of this period released, controlling shareholder still not removed the pledge and the Company has apply by letter,
relevant Notice of Presentment on Stock Pledge from Controlling Shareholder was released. Found more in notice
released on Juchao website date 2 Feb. 2018.


Wuhan Zhongheng Group received the first-instance judgment of Guangdong Higher People’s Court to the
“pledged securities repurchase dispute” case sued by China Merchants Securities Asset Management Co., Ltd. in
March 2021. Wuhan Zhongheng Group refused to accept the judgment and has appealed to the Supreme People's
Court, the judgment of first instance has not yet taken effect. For details, please refer to the company
announcement issued by the company on www.cninfo.com.cn on March 19, 2021.


(iii) The controlling shareholder Wuhan Zhongheng Group holds 119,289,894 shares of the Company’ stock,
accounting for 42.13% of the total share capital of the Company, of which 116,489,894 shares were judicially frozen
by Shenzhen Intermediate People's Court (hereinafter referred to as "Shenzhen Intermediate Court") on September
27, 2016, which were frozen again by the Shenzhen Intermediate People's Court on December 14, 2018, with a
frozen period of 36 months; the remaining 2,800,000 shares were frozen by the Shenzhen Intermediate People's
Court on May 29, 2019, and were frozen again by the Higher People’s Court of Guangdong Province on July 5,
2019. For details, please refer to the company’s announcements published on Juchao Website dated October 27,
2016, January 11, 2019, May 31, 2019 and August 7, 2019.


(iv) On September 29, 2016, the company and its controlling shareholder, Wuhan Zhongheng Group, signed the
“Agency Contract” with V&T Law Firm. On October 8, 2016, the three parties also signed the “Supplemental
Agreement for Agency Contract”, it was agreed that V&T acted as an agent for the company and Wuhan
Zhongheng Group to deal with the arbitration case with Shenzhen Vanke. After losing the lawsuit, due to
differences in the payment of attorney fees, V&T sued our company and Wuhan Zhongheng Group to the
Shenzhen Court of International Arbitration, and applied to the court to seize a bank account under our company’s

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                                                                                              Shenzhen Zhongheng Huafa Co., Ltd.
                                                                                                       First Quarterly Report 2021
name and part of our company dormitories, please refer to “Other Announcements on the Progress Involving
Litigation and Arbitration” (Announcement Numbers: 2018-43, 2019-02) released by our company on Juchao
Website dated November 14, 2018 and March 6, 2019. 02. In November 2019, the Shenzhen Court of
International Arbitration ruled that the company and Wuhan Zhongheng Group paid the corresponding fees.
According to the “Agency Contract” and “Supplemental Agreement for Agency Contract” signed by the three
parties, the loss of the arbitrament in this case was borne by Wuhan Zhongheng Group, so it had no impact on the
company’s profit. For details, see the company’s “Other Announcements on the Progress Involving Litigation and
Arbitration” (Announcement No.: 2019-34) released on Juchao Website dated November 25, 2019.


       Summary of important issues                        Disclosure date                    Interim report disclosure index

Implementation progress of shares buy-back
□ Applicable    √ Not applicable

Implementation progress of the reduction of repurchases shares by centralized bidding
□ Applicable √ Not applicable


III. Commitments completed in Period and those without completed till end of the Period
from actual controller, shareholders, related parties, purchaser and companies

□ Applicable    √ Not applicable
The Company has no commitments completed in Period and those without completed till end of the Period from actual controller,
shareholders, related parties, purchaser and companies.


IV. Financial asset investment

1. Securities investment

□ Applicable   √ Not applicable
No security investment in the Period.


2. Derivative investment

□ Applicable   √ Not applicable

No derivative investment in the Period.


V. Progress of investment projects with raised funds

□ Applicable   √ Not applicable


VI. Prediction of business performance from January – June 2021

Estimation on accumulative net profit from the beginning of the year to the end of next report period to be loss probably or the
warning of its material change compared with the corresponding period of the last year and explanation on reason

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                                                                                              Shenzhen Zhongheng Huafa Co., Ltd.
                                                                                                       First Quarterly Report 2021
□ Applicable   √ Not applicable


VII. Major contracts for daily operations

□ Applicable   √ Not applicable


VIII. Trust financing

□ Applicable   √ Not applicable
No trust financing in the Period.


IX. Guarantee outside against the regulation

□Applicable √Not applicable
The Company had no guarantee outside against the regulation in the period.


X. Non-operational fund occupation from controlling shareholders and its related party

□ Applicable √ Not applicable
The Company had no non-operational fund occupation form controlling shareholders and its related party in the period.


XI. Registration form for receiving research, communication and interview in the report
period

√ Applicable □ Not applicable

                                                                                          Main content
                      Reception                          Type of                                           Index for the interview
      Date                              Method                               Object      and information
                       location                          investors                                               and research
                                                                                            provided

                                                                                        Understand the
                                                                                        company's
                                                                                        production and
                  Office of the                                                         operation
                  BOD locates in    Telephone                                           situation,
January 5, 2021                                      Individual       Individual                           N/A
                  6/F, Huafa        communication                                       litigation
                  Building                                                              progress and the
                                                                                        progress of
                                                                                        urban renewal
                                                                                        projects




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                                                                                     Shenzhen Zhongheng Huafa Co., Ltd.
                                                                                              First Quarterly Report 2021




                                           Section IV. Financial Statement

I. Financial statement

1. Consolidate balance sheet

Prepared by Shenzhen Zhongheng Huafa Co., Ltd.
                                                      March 31, 2021
                                                                                                                 In RMB

                      Item                          March 31, 2021                        March 31, 2020

Current assets:

       Monetary fund                                                 57,688,251.58                         60,968,053.58

       Settlement provisions

       Capital lent

       Trading financial assets

       Derivative financial assets

       Note receivable                                                9,506,829.34                         20,240,464.79

       Account receivable                                        141,260,234.64                          128,063,911.79

       Receivable financing                                           9,727,239.72                         10,057,385.11

       Accounts paid in advance                                      35,287,786.09                         39,643,255.11

       Insurance receivable

       Reinsurance receivables

       Contract reserve of reinsurance
receivable

       Other account receivable                                       2,060,681.11                          4,466,949.96

          Including: Interest receivable

                  Dividend receivable

       Buying back the sale of financial
assets

       Inventories                                               103,732,453.57                            70,166,013.49

         Contractual assets

       Assets held for sale

       Non-current asset due within one
year

       Other current assets                                           1,129,263.49                          4,255,643.19


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                                                           Shenzhen Zhongheng Huafa Co., Ltd.
                                                                    First Quarterly Report 2021

Total current assets                      360,392,739.54                      337,861,677.02

Non-current assets:

     Loans and payments on behalf

     Debt investment

     Other debt investment

     Long-term account receivable

     Long-term equity investment

     Investment in other equity
instrument

     Other non-current financial assets

     Investment real estate                46,792,579.70                        47,224,662.27

     Fixed assets                         181,745,798.39                      193,605,444.53

     Construction in progress                740,000.00                            740,000.00

     Productive biological asset

     Oil and gas asset

      Right-of-use assets

     Intangible assets                     40,383,028.86                        40,820,657.80

     Expense on Research and
Development

     Goodwill

     Long-term expenses to be
                                               19,361.35                            77,445.31
apportioned

     Deferred income tax asset              7,383,734.13                         7,383,734.13

     Other non-current asset                   66,000.00                            66,000.00

Total non-current asset                   277,130,502.43                      289,917,944.04

Total assets                              637,523,241.97                      627,779,621.06

Current liabilities:

     Short-term loans                      20,921,296.00                        12,527,808.00

     Loan from central bank

     Capital borrowed

     Trading financial liability

     Derivative financial liability

     Note payable                          37,089,784.05                        37,416,381.20

     Account payable                      120,547,983.80                        98,318,239.88

     Accounts received in advance


14
                                                           Shenzhen Zhongheng Huafa Co., Ltd.
                                                                    First Quarterly Report 2021

      Contractual liability                  171,293.92                            287,140.66

     Selling financial asset of
repurchase

     Absorbing deposit and interbank
deposit

     Security trading of agency

     Security sales of agency

     Wage payable                           3,106,406.38                         5,737,366.59

     Taxes payable                         11,965,705.78                        14,204,642.62

     Other account payable                 18,556,536.88                        27,608,281.01

          Including: Interest payable          63,086.88                            26,335.66

                     Dividend payable

     Commission charge and
commission payable

     Reinsurance payable

     Liability held for sale

     Non-current liabilities due within
                                           12,000,000.00                        12,000,000.00
one year

     Other current liabilities              9,369,289.56                        18,322,972.81

Total current liabilities                 233,728,296.37                      226,127,947.79

Non-current liabilities:

     Insurance contract reserve

     Long-term loans                       58,000,000.00                        61,000,000.00

     Bonds payable

          Including: Preferred stock

                     Perpetual capital
securities

      Lease liability

     Long-term account payable

     Long-term wages payable

     Accrual liability                         64,411.00                            64,411.00

     Deferred income                        3,924,120.00                         4,043,640.00

     Deferred income tax liabilities

     Other non-current liabilities

Total non-current liabilities              61,988,531.00                        65,108,051.00



15
                                                                                      Shenzhen Zhongheng Huafa Co., Ltd.
                                                                                               First Quarterly Report 2021

Total liabilities                                                 295,716,827.37                         291,530,883.77

Owner’s equity:

     Share capital                                                283,161,227.00                         283,161,227.00

     Other equity instrument

        Including: Preferred stock

                     Perpetual capital
securities

     Capital public reserve                                       146,577,771.50                         146,577,771.50

     Less: Inventory shares

     Other comprehensive income

     Reasonable reserve

     Surplus public reserve                                           77,391,593.25                         77,391,593.25

     Provision of general risk

     Retained profit                                             -165,324,177.15                         -170,881,854.46

Total owner’ s equity attributable to
                                                                  341,806,414.60                         336,248,737.29
parent company

     Minority interests

Total owner’ s equity                                            341,806,414.60                         336,248,737.29

Total liabilities and owner’ s equity                            637,523,241.97                         627,779,621.06


Legal Representative: Li Zhongqiu


Person in charge of accounting works: Yang Bin


Person in charge of accounting institute: Wu Aijie


2. Balance Sheet of Parent Company

                                                                                                                  In RMB

                    Item                             March 31, 2021                        March 31, 2020

Current assets:

     Monetary funds                                                    1,575,886.56                           966,379.17

     Trading financial assets

     Derivative financial assets

     Note receivable

     Account receivable

     Receivable financing


16
                                                             Shenzhen Zhongheng Huafa Co., Ltd.
                                                                      First Quarterly Report 2021

     Accounts paid in advance                  665,035.03                             73,685.03

     Other account receivable                91,466,272.68                        93,922,057.92

        Including: Interest receivable

                      Dividend receivable

     Inventories                                 14,806.50                            14,806.50

     Contractual assets

     Assets held for sale

     Non-current assets maturing within
one year

     Other current assets

Total current assets                         93,722,000.77                        94,976,928.62

Non-current assets:

     Debt investment

     Other debt investment

     Long-term receivables

     Long-term equity investments           186,618,400.00                      186,618,400.00

     Investment in other equity
instrument

     Other non-current financial assets

     Investment real estate                  23,655,797.76                        23,957,898.42

     Fixed assets                            96,378,435.71                        96,610,714.88

     Construction in progress                  740,000.00                            740,000.00

     Productive biological assets

     Oil and natural gas assets

     Right-of-use assets

      Intangible assets                       4,372,527.09                         4,408,763.52

     Research and development costs

     Goodwill

     Long-term deferred expenses

     Deferred income tax assets               7,443,826.11                         7,443,826.11

     Other non-current assets

Total non-current assets                    319,208,986.67                      319,843,364.57

Total assets                                412,930,987.44                      414,820,293.19

Current liabilities

     Short-term borrowings


17
                                                           Shenzhen Zhongheng Huafa Co., Ltd.
                                                                    First Quarterly Report 2021

     Trading financial liability

     Derivative financial liability

     Notes payable

     Account payable                        9,740,367.33                        10,745,840.16

     Accounts received in advance

     Contractual liability                     70,649.09                            79,195.32

     Wage payable                            818,625.54                          1,476,601.12

     Taxes payable                          8,714,006.22                         7,892,878.33

     Other accounts payable                19,909,799.93                        21,304,919.43

        Including: Interest payable

                    Dividend payable

     Liability held for sale

     Non-current liabilities due within
                                           12,000,000.00                        12,000,000.00
one year

     Other current liabilities                                                       3,959.77

Total current liabilities                  51,253,448.11                        53,208,509.15

Non-current liabilities:

     Long-term loans                       58,000,000.00                        61,000,000.00

     Bonds payable

        Including: preferred stock

                    Perpetual capital
securities

     Lease liability

     Long-term account payable

     Long term employee compensation
payable

     Accrued liabilities                       64,411.00                            64,411.00

     Deferred income

     Deferred income tax liabilities

     Other non-current liabilities

Total non-current liabilities              58,064,411.00                        61,064,411.00

Total liabilities                         109,317,859.11                       114,272,920.15

Owners’ equity:

     Share capital                        283,161,227.00                      283,161,227.00

     Other equity instrument


18
                                                                          Shenzhen Zhongheng Huafa Co., Ltd.
                                                                                   First Quarterly Report 2021

         Including: preferred stock

                 Perpetual capital
securities

       Capital public reserve                           146,587,271.50                          146,587,271.50

       Less: Inventory shares

       Other comprehensive income

       Special reserve

       Surplus reserve                                   77,391,593.25                           77,391,593.25

       Retained profit                                 -203,526,963.42                          -206,656,480.35

Total owner’s equity                                   303,613,128.33                          300,483,611.40

Total liabilities and owner’s equity                   412,930,987.44                          414,756,531.55


3. Consolidated Profit Statement

                                                                                                        In RMB

                    Item                    Current period                        Last period

I. Total operating income                                190,936,203.57                          87,800,584.55

       Including: Operating income                       190,936,203.57                          87,800,584.55

              Interest income

              Insurance gained

              Commission charge and
commission income

II. Total operating cost                                 184,218,871.61                          88,130,200.33

       Including: Operating cost                         160,692,426.33                          73,672,446.25

              Interest expense

              Commission charge and
commission expense

              Cash surrender value

              Net amount of expense of
compensation

              Net amount of withdrawal of
insurance contract reserve

              Bonus expense of guarantee
slip

              Reinsurance expense

              Tax and extras                                 643,046.97                             584,743.27



19
                                                                 Shenzhen Zhongheng Huafa Co., Ltd.
                                                                          First Quarterly Report 2021

                Sales expense                     9,604,962.16                         3,448,537.85

                Administrative expense            9,403,968.16                         8,058,091.66

                R&D expense                       1,990,208.94                          908,285.77

                Financial expense                 1,884,259.05                         1,458,095.53

                     Including: Interest
                                                  1,805,136.09                         2,375,650.33
expenses

                                Interest income    107,550.38                           128,721.93

         Add: other income                         119,520.00                             64,770.00

              Investment income (Loss is
                                                    71,186.44                             37,415.02
listed with “-”)

              Including: Investment income
on affiliated company and joint venture

                     The termination of income
recognition for financial assets measured
by amortized cost(Loss is listed with “-”)

              Exchange income (Loss is
listed with “-”)

              Net exposure hedging income
(Loss is listed with “-”)

              Income from change of fair
value (Loss is listed with “-”)

              Loss of credit impairment
(Loss is listed with “-”)

              Losses of devaluation of asset
(Loss is listed with “-”)

              Income from assets disposal
(Loss is listed with “-”)

III. Operating profit (Loss is listed with
                                                  6,908,038.40                          -227,430.76
“-”)

         Add: Non-operating income                  19,464.75                              5,492.44

         Less: Non-operating expense                  8,950.00                          263,835.56

IV. Total profit (Loss is listed with “-”)      6,918,553.15                          -485,773.88

         Less: Income tax expense                 1,360,875.84                           -85,032.71

V. Net profit (Net loss is listed with “-”)     5,557,677.31                          -400,741.17

     (i) Classify by business continuity

         1.continuous operating net profit
                                                  5,557,677.31                          -400,741.17
(net loss listed with ‘-”)



20
                                                              Shenzhen Zhongheng Huafa Co., Ltd.
                                                                       First Quarterly Report 2021

       2.termination of net profit (net loss
listed with ‘-”)

     (ii) Classify by ownership

       1.Net profit attributable to owner’s
                                               5,557,677.31                          -400,741.17
of parent company

       2.Minority shareholders’ gains and
losses

VI. Net after-tax of other comprehensive
income

     Net after-tax of other comprehensive
income attributable to owners of parent
company

       (i) Other comprehensive income
items which will not be reclassified
subsequently to profit of loss

               1.Changes of the defined
benefit plans that re-measured

               2.Other comprehensive
income under equity method that cannot
be transfer to gain/loss

               3.Change of fair value of
investment in other equity instrument

               4.Fair value change of
enterprise's credit risk

               5. Other

         (ii) Other comprehensive income
items which will be reclassified
subsequently to profit or loss

               1.Other comprehensive
income under equity method that can
transfer to gain/loss

               2.Change of fair value of
other debt investment

               3.Amount of financial assets
re-classify to other comprehensive
income

               4.Credit impairment
provision for other debt investment

               5.Cash flow hedging reserve


21
                                                                                              Shenzhen Zhongheng Huafa Co., Ltd.
                                                                                                       First Quarterly Report 2021

              6.Translation differences
arising on translation of foreign currency
financial statements

              7.Other

     Net after-tax of other comprehensive
income attributable to minority
shareholders

VII. Total comprehensive income                                          5,557,677.31                                 -400,741.17

         Total comprehensive income
                                                                         5,557,677.31                                 -400,741.17
attributable to owners of parent Company

       Total comprehensive income
attributable to minority shareholders

VIII. Earnings per share:

        (i) Basic earnings per share                                            0.0197                                       -0.0014

       (ii) Diluted earnings per share                                          0.0197                                       -0.0014

Enterprise combine under the same control in the Period, the combined party realized net profit of 1,585,431.59Yuan before
combination, and realized-1,894,884.83 Yuan at last period for combined party


Legal Representative: Li Zhongqiu


Person in charge of accounting works: Yang Bin


Person in charge of accounting institute: Wu Aijie


4. Profit Statement of Parent Company

                                                                                                                              In RMB

                    Item                               Current period                                 Last period

I. Operating income                                                     10,890,563.23                                7,437,448.02

       Less: Operating cost                                              1,783,550.06                                  613,839.48

            Taxes and surcharge                                           277,510.56                                   257,246.31

            Sales expenses

            Administration expenses                                      2,938,581.71                                3,553,655.31

            R&D expenses

            Financial expenses                                           1,709,732.01                                2,015,272.00

                 Including: interest
                                                                         1,709,745.85                                2,015,830.25
expenses

                           Interest income                                      503.64                                       3,734.78



22
                                                               Shenzhen Zhongheng Huafa Co., Ltd.
                                                                        First Quarterly Report 2021

         Add: other income

              Investment income (Loss is
listed with “-”)

              Including: Investment income
on affiliated Company and joint venture

                     The termination of
income recognition for financial assets
measured by amortized cost (Loss is
listed with “-”)

              Net exposure hedging income
(Loss is listed with “-”)

              Changing income of fair
value (Loss is listed with “-”)

              Loss of credit impairment
(Loss is listed with “-”)

              Losses of devaluation of asset
(Loss is listed with “-”)

              Income on disposal of assets
(Loss is listed with “-”)

II. Operating profit (Loss is listed with
                                                4,181,188.89                           997,434.92
“-”)

         Add: Non-operating income                     0.35

         Less: Non-operating expense                8,500.00

III. Total Profit (Loss is listed with “-”)   4,172,689.24                           997,434.92

         Less: Income tax                       1,043,172.31                           249,358.73

IV. Net profit (Net loss is listed with
                                                3,129,516.93                           748,076.19
“-”)

         (i) continuous operating net profit
                                                3,129,516.93                           748,076.19
(net loss listed with ‘-”)

         (ii) termination of net profit (net
loss listed with ‘-”)

V. Net after-tax of other comprehensive
income

         (i) Other comprehensive income
items which will not be reclassified
subsequently to profit of loss

                 1.Changes of the defined
benefit plans that re-measured



23
                                                                          Shenzhen Zhongheng Huafa Co., Ltd.
                                                                                   First Quarterly Report 2021

              2.Other comprehensive
income under equity method that cannot
be transfer to gain/loss

              3.Change of fair value of
investment in other equity instrument

              4.Fair value change of
enterprise's credit risk

              5. Other

       (ii) Other comprehensive income
items which will be reclassified
subsequently to profit or loss

              1.Other comprehensive
income under equity method that can
transfer to gain/loss

              2.Change of fair value of
other debt investment

              3.Amount of financial
assets re-classify to other
comprehensive income

              4.Credit impairment
provision for other debt investment

              5.Cash flow hedging
reserve

              6.Translation differences
arising on translation of foreign
currency financial statements

              7.Other

VI. Total comprehensive income                             3,129,516.93                           748,076.19

VII. Earnings per share:

       (i) Basic earnings per share                             0.0111                                0.0026

     (ii) Diluted earnings per share                            0.0111                                0.0026


5. Consolidated Cash Flow Statement

                                                                                                      In RMB

                   Item                   Current period                          Last period

I. Cash flows arising from operating
activities:

     Cash received from selling                        118,847,638.92                           86,584,529.58

24
                                                              Shenzhen Zhongheng Huafa Co., Ltd.
                                                                       First Quarterly Report 2021

commodities and providing labor
services

       Net increase of customer deposit
and interbank deposit

        Net increase of loan from central
bank

       Net increase of capital borrowed
from other financial institution

       Cash received from original
insurance contract fee

       Net cash received from reinsurance
business

       Net increase of insured savings
and investment

       Cash received from interest,
commission charge and commission

       Net increase of capital borrowed

       Net increase of returned business
capital

       Net cash received by agents in sale
and purchase of securities

       Write-back of tax received              1,717,004.00

       Other cash received concerning
                                               1,009,951.00                         1,372,807.06
operating activities

Subtotal of cash inflow arising from
                                             121,574,593.92                        87,957,336.64
operating activities

       Cash paid for purchasing
commodities and receiving labor               90,764,568.41                        56,760,923.41
service

       Net increase of customer loans and
advances

       Net increase of deposits in central
bank and interbank

       Cash paid for original insurance
contract compensation

       Net increase of capital lent

       Cash paid for interest, commission
charge and commission



25
                                                             Shenzhen Zhongheng Huafa Co., Ltd.
                                                                      First Quarterly Report 2021

         Cash paid for bonus of guarantee
slip

       Cash paid to/for staff and workers    18,034,045.23                         8,467,600.61

       Taxes paid                             8,114,109.92                         2,351,100.26

       Other cash paid concerning
                                              9,787,646.74                        12,446,403.77
operating activities

Subtotal of cash outflow arising from
                                            126,700,370.30                        80,026,028.05
operating activities

Net cash flows arising from operating
                                             -5,125,776.38                         7,931,308.59
activities

II. Cash flows arising from investing
activities:

       Cash received from recovering
investment

       Cash received from investment
                                                 71,186.44                            37,415.02
income

       Net cash received from disposal of
fixed, intangible and other long-term            13,000.00                            91,000.00
assets

       Net cash received from disposal of
subsidiaries and other units

       Other cash received concerning
                                                                                  25,000,000.00
investing activities

Subtotal of cash inflow from investing
                                                 84,186.44                        25,128,415.02
activities

       Cash paid for purchasing fixed,
                                              1,624,675.50                           467,211.58
intangible and other long-term assets

       Cash paid for investment

       Net increase of mortgaged loans

       Net cash received from
subsidiaries and other units obtained

       Other cash paid concerning
                                                                                  25,000,000.00
investing activities

Subtotal of cash outflow from investing
                                              1,624,675.50                        25,467,211.58
activities

Net cash flows arising from investing
                                             -1,540,489.06                          -338,796.56
activities

III. Cash flows arising from financing


26
                                                                            Shenzhen Zhongheng Huafa Co., Ltd.
                                                                                     First Quarterly Report 2021

activities

     Cash received from absorbing
investment

       Including: Cash received from
absorbing minority shareholders’
investment by subsidiaries

     Cash received from loans                               20,710,525.00                          6,725,056.80

     Other cash received concerning
financing activities

Subtotal of cash inflow from financing
                                                            20,710,525.00                          6,725,056.80
activities

     Cash paid for settling debts                           15,419,668.00                         20,548,487.80

     Cash paid for dividend and profit
                                                             1,780,079.26                          2,393,884.15
distributing or interest paying

     Including: Dividend and profit of
minority shareholder paid by
subsidiaries

     Other cash paid concerning
                                                             6,408,886.53
financing activities

Subtotal of cash outflow from financing
                                                            23,608,633.79                         22,942,371.95
activities

Net cash flows arising from financing
                                                            -2,898,108.79                         -16,217,315.15
activities

IV. Influence on cash and cash
equivalents due to fluctuation in                             -124,286.41                             32,336.78
exchange rate

V. Net increase of cash and cash
                                                            -9,688,660.64                          -8,592,466.34
equivalents

     Add: Balance of cash and cash
                                                            30,050,989.33                         36,645,061.61
equivalents at the period -begin

VI. Balance of cash and cash
                                                            20,362,328.69                         28,052,595.27
equivalents at the period -end


6. Cash Flow Statement of Parent Company

                                                                                                         In RMB

                  Item                     Current period                           Last period

I. Cash flows arising from operating
activities:


27
                                                          Shenzhen Zhongheng Huafa Co., Ltd.
                                                                   First Quarterly Report 2021

     Cash received from selling
commodities and providing labor           12,621,650.08                         9,931,734.48
services

     Write-back of tax received

     Other cash received concerning
                                           4,883,321.54                         3,939,188.22
operating activities

Subtotal of cash inflow arising from
                                          17,504,971.62                        13,870,922.70
operating activities

     Cash paid for purchasing
commodities and receiving labor
service

     Cash paid to/for staff and workers     964,773.82                            622,769.26

     Taxes paid                             773,606.33                          1,239,019.63

     Other cash paid concerning
                                           5,419,192.42                         7,205,331.06
operating activities

Subtotal of cash outflow arising from
                                           7,157,572.57                         9,067,119.95
operating activities

Net cash flows arising from operating
                                          10,347,399.05                         4,803,802.75
activities

II. Cash flows arising from investing
activities:

     Cash received from recovering
investment

     Cash received from investment
income

     Net cash received from disposal of
fixed, intangible and other long-term
assets

     Net cash received from disposal of
subsidiaries and other units

     Other cash received concerning
investing activities

Subtotal of cash inflow from investing
activities

     Cash paid for purchasing fixed,
intangible and other long-term assets

     Cash paid for investment

     Net cash received from



28
                                                          Shenzhen Zhongheng Huafa Co., Ltd.
                                                                   First Quarterly Report 2021

subsidiaries and other units obtained

     Other cash paid concerning
investing activities

Subtotal of cash outflow from investing
activities

Net cash flows arising from investing
activities

III. Cash flows arising from financing
activities

     Cash received from absorbing
investment

     Cash received from loans

     Other cash received concerning
financing activities

Subtotal of cash inflow from financing
activities

     Cash paid for settling debts         3,000,000.00                          2,000,000.00

     Cash paid for dividend and profit
                                          1,710,249.49                          2,015,830.25
distributing or interest paying

     Other cash paid concerning
financing activities

Subtotal of cash outflow from financing
                                          4,710,249.49                          4,015,830.25
activities

Net cash flows arising from financing
                                          -4,710,249.49                        -4,015,830.25
activities

IV. Influence on cash and cash
equivalents due to fluctuation in
exchange rate

V. Net increase of cash and cash
                                          5,637,149.56                            787,972.50
equivalents

     Add: Balance of cash and cash
                                            737,682.09                          2,046,143.44
equivalents at the period -begin

VI. Balance of cash and cash
                                          6,374,831.65                          2,834,115.94
equivalents at the period -end




29
                                                                             Shenzhen Zhongheng Huafa Co., Ltd.
                                                                                      First Quarterly Report 2021

II. Explanation on financial statement adjustment

1. Financial statement adjustment at the beginning of the first year when implementation of new leasing
rules from 2021

□Applicable √Not applicable


2. Retrospective adjustment of the comparative data for initial new leasing rules from 2021

□Applicable √Not applicable


III. Audit report

Whether the 1st quarterly report has been audited or not
□Yes √ No
1Q report of the Company is unaudited.




30