Code: 603713 Short Name: Milkyway
Milkyway Chemical Supply Chain Service Co.,ltd
2021 annual report summary
Since 1998
2022.03.25
Chapter 1 Notice
1 The summary is on basis of the full text of the annual report. In order to fully understand the
operating results, financial position and future development plan of the company, investors are
encouraged to read the full text of the annual report on www.sse.com.cn.
2 The board of directors, the board of supervisors as well as the directors, supervisors and senior
managers of the Company guarantee the authenticity, accuracy and completeness of the contents
of the annual report, free from false records, misleading statements or major omissions, and bear
individual and joint legal liabilities.
3 All directors of the company attend the board meeting.
4 Baker Tilly China Certified Public Accountants (special general partnership) issued the standard
unqualified opinion audit report for the company.
5 Profit distribution plan or reserve fund to increase capital stock plan adopted by resolution of the
board of directors during the reporting period.
Chapter 2 Company general information
1. Company profile
Company stock profile
Class Stock exchange Shor name of Code Previous record
stock
Renminbi ordinary Shanghai Stock
Milkyway 603713 None
shares A shares Exchange
Contacts Board Secretary Securities affairs representative
Name Miao Leiming Rao Yingying
Address Building 39, Jinxiu Shenjiang Building 39, Jinxiu Shenjiang
Jinqiao Huahong Innovation Park, Jinqiao Huahong Innovation Park,
Lane 2777 jinxiu East Road, Lane 2777 jinxiu East Road,
Pudong New Area, Shanghai Pudong New Area, Shanghai
Phone 021-80228498 021-80228498
E-mail ir@mwclg.com ir@mwclg.com
2. Overview of business during the reporting period
In 2021, the market of logistics in China reached 335.2 trillion yuan, with a year-on-year
growth of 9.2% calculated at comparable prices and an average annual growth of 6.2% in two
years. The growth rate returned to the average level of normal years. The structure of logistics
demand changes synchronously with the adjustment of economic structure and industrial
upgrading. Overall, there was industrial logistics made teady progress, international import
logistics encounted considerable downward pressure, and consumption logistics obtained teady
growth. Industrial upgrading creadted increasing number of high-tech manufacturing logistics
demand, which presented a growing trend and leading effect. According to hazardous Chemical
Logistics Branch of China Federation of Logistics and Purchasing, the market of the national
chemical logistics industry will exceed 2 trillion yuan by the end of 2021, and the third-party
chemical logistics take 40%, meaning 800 billion yuan.
Since the explosion of Wenling tank truck and the Lebanese port incident on June 13, 2020,
the government has further strictly controlled and supervised the safe operation of dangerous
goods. The market was highly tightening and strictly controlled. In July 2020, the Office of the
Security Commission of The State Council held an meeting, which assigned safety improvement
task to chemical parks and hazardous chemical enterprises, and initiated the special rectification
work of illegal "small chemical industry".From July 1 to December 31, local public security and
traffic control departments carried out a series of traffic safety special rectification actions of
hazardous chemicals transport. In September 2020, the Security and Commission Office of The
State Council deployed the third round of special investigations on dangerous chemical safety
risks and hidden dangers. At the same time of the steady development of industry supervision, and
the market is moving towards the clean-up stage of compliance. While steadily pushibging the
industry supervision, security control is put in the first place and the market is moving towards the
compliance cleaning stage.
On September 22, 2020, at the seventy-fifth Session of the United Nations General Assembly,
the Chinese government proposed that "China will enhance its national contribution, adopt more
effective policies and measures, strive for the peak of carbon dioxide emissions by 2030, and
achieve carbon neutrality by 2060." On March 5, 2021, in the 2021 Government work report of
The State Council, Premier Li Keqiang emphasized the solid efforts to peak carbon emissions and
neutralize, carbon emissions, formulation of action plan to peak carbon emissions by 2030, and
optimization of industrial structure and energy structure. The promotion of carbon neutrality, as
another development requirement of environmental protection, will accelerate the adjustment of
transportation structure in chemical logistics industry from road to rail and water, and promote the
development of multimodal transportation. At the same time, this transformation will introduce the
logistics demand related to LNG, new energy and other clean energy, and brings the development
opportunities for hazardous waste discharge and disposal related fields of chemical enterprises.
China's initiative to jointly build the Silk Road Economic Belt and the 21st Century Maritime
Silk Road (hereinafter referred to as the Belt and Road) has attracted great attention from the
international community and received positive response from many countries. The Belt and Road
initiative aims to enhance coordination of economy and policy among countries, improve
connectivity, and carry out bilateral, multilateral and close cooperations with high quality in a
larger scope. It will enable countries to achieve shared benefits through consultation and
collaboration and jointly build a new system of global economic governance. The proposal and
implementation of the "Belt and Road" will promote the trade of chemicals in the countries along
the "Belt and Road", thus bringing broad development space to the global chemical logistics
industry.
As the safety and environmental supervision requirements becoming stricter, which pushes
downstream chemical enterprises moving from the city into industrial park, chemical enterprises
are increasingly demanding for the specialization and safety of logistics. Comprehensive chemical
enterprises prefer to choose professional third-party logistics service providers. At the same time,
small and non-standard chemical enterprises were gradually phased out by the supervision and
operating pressure. The industry concentration is expected to improve rapidly.
2.1 Business Scope
Milkyway is a leading chemical supply chain service provider in China, which provides
one-stop integrated logistics services with freight forwarding, warehousing and transportation as
its core business. It has gradually extended to chemical distribution based on integrated logistics
services to provide integrated chemical goods and trade services. Its service modules are
developing collaboratively to meet the diversified online and offline needs of customers from
different industries and regions. Since its establishment, Milkyway has engaged in its main
business and is committed to providing customers with one-stop chemical supply chain solutions
worldwide.
⑴ One-stop integrated logistics service
The one-stop integrated logistics service covers whole-process logistics services from the
client to the customer. According to business entrustment from chemical industry customers,
Milkyway picks up goods from domestic and overseas consignors, organizes domestic and
international transportation to deliver goods to locations designated by domestic and overseas
consignees. Milkyway ensures high efficiency and security for the flow of goods, information and
capital in the logistics chain.
Global forwarding business (MGF)
Milkyway provides one-stop transportation service (by sea, air or rail) for general dangerous
goods worldwide. Our freight forwarding business covers a series of activities related to
international transportation, including traditional import and export cargo collection, booking,
consignment, warehousing, packaging, loading/unloading, transit, distribution, submission and
declaration for inspection, and cargo insurance, as well as international multimodal transportation,
third-party logistics, contract logistics and other emerging businesses.
Global shipping and tank container (MTT)
Milkyway provides diversified and flexible leasing and transportation services for domestic
and foreign trade through various types of tank containers; self-built tank yard network provides
professional 24-hour container tank technical services, including tank storage, cleaning, heating,
repair, and modification, technical support, etc.; provide transportation and supporting logistics
solutions for LNG tank containers and special chemical tankers.
Global engineering logistics and dry bulk (MPC)
Global engineering logistics, which integrates various transportation modes, specializes in
delivering professional logistics services for large-scale general contracting projects, and
providing customized integrated logistics solutions from factory to site, with service covering
fields like oil and gas, petrochemicals, renewable energy, nuclear power, infrastructure,
engineering and plant construction, mining and metallurgy. Based on a global network of vessel
resources, the dry bulk service offers stable, flexible and diverse customized shipping solutions for
global trade in bulk commodities such as coal, ore, grain and fertilizer.
Regional warehousing and distribution integration (MRW)
Milkyway operated 550,000 sq.m of professional chemical warehouses, providing customers
with chemical storage, inventory management and operation, as well as value-added services such
as cargo sorting, sub-assembly, packaging change, labeling and palletization. The business mainly
consists of two main components, namely, a distribution center providing cargo storage,
distribution, and in-plant logistics, and foreign trade warehousing related to export
containerization for freight forwarding.
Regional domestic trade delivery (MRT)
Based on its own transport capacity and purchased capacity, Milkyway establishes domestic
transportation delivery services for all types of chemical products. According to the special
requirements for transportation of different chemical goods, Milkyway provides transportation
vehicles with special functions and special loading equipment to meet various purposes. It offers
nationwide road transportation of various chemical goods in containers, inbound and outbound
services at ports, and multimodal freight forwarding services by domestic waterway, railroad and
air transport between domestic ports. It aims to create a three-tier network transportation capacity
consisting of intra-city distribution, inter-city express transportation and trunk express
transportation. Also, Milkyway provides nationwide chemical contract logistics, reverse logistics,
and small express transportation services.
⑴ Chemical trading service
Unique distribution (MCD)
Milkyway is leading the digital transformation of global chemical enterprises and aims to
build an integrated logistics and trade service system covering all scenarios. For the chemical
trading service, Milkyway leverages its rich experience in chemical supply chain operation and
networked logistics infrastructure to establish a one-stop integrated logistics service system, with
online services diverting traffic for offline services, and offline services supporting online services.
Milkyway matches the procurement and sales demands of upstream and downstream chemical
manufacturers and customers, and gradually takes over the sales function of upstream
manufacturers and procurement function of downstream manufacturers. This enables it to serve
downstream customers and consumers for manufacturers, and provide distribution services and
supply chain solutions to chemical industry customers.
2.2 Businss Model
Milkyway is committed to becomming the "Super Chemical Amazon", an industrial internet
e-commerce platform based on the global professional chemical delivery capabilities, connecting
the whole supply chain of logistics, transaction and environmental protection, and providing
high-standard supply chain services for global customers. The one-stop whole supply chain
service provided by Milkyway helps customers integrate and optimize logistics links, shorten the
circulation cycle of goods, improve logistics efficiency, and help customers enhance market
competitiveness. With the increase in customer’ sales, the demand for one-stop supply chain
solutions also increases. Milkyway grows together with customers, and achieve mutual success.
MGF/MPC Service Model:
The reveure of MGF/MPC is mainly from freight farwarding agency fees and related
warehouse&transportation charge. Profit growth is driven by business volume and the increase of
service links. Since the expense of the carrier is included in the cost of the freight forwarding, the
revenue and cost of this service model are both high, and the profit margin is relatively lower.
MTT Service Model
The reveure of MTT mainly comes from the rental os ISO tank&chemical vessel,delivery
charge, as well as related storage& truck fees. The service is provided only for liquid chemical to
reduce unit logitiscs cost by large scale delivery capacity. High level asset utilization,large
volumes driven and VAS will benifit the profit.
MRW Service Model
The revenue of MRW includes storage rent fees, in and out of the warehouse fees,and
additional value-added services (sorting, packaging, product compounding,moving, palletizing,
labeling, fumigation and other service fees). The pricing comprehensively considers construction
cost, lease cost, market price level, other additional costs, management costs, chemical categories,
labor costs and other factors. The increase of goods turnover will effectively enhance revenue and
profit.
MRT Service Model
The pricing of MRT refers to weight, goods category, fuel consumption, personnel, vehicle
depreciation cost. Combining with vehicle type, market price level, bridge fees and taxes per car
per kilometer (car/km), setting the tiered pricing strategy according to distance.
MCD Service Model:
The profit of MCD is mainly created by direct sales (centralized procurement and
distribution)/indirect sales (dealmaking/shop agent operation) of various kinds of chemical
products, supported by competitive prices, professional service, safe one-stop logistics. Including
product price difference, consulting service fees, logistics service fees and other value-added
services. Through logistics service empowerment, business revenue certainty and profit space can
be improved.
3. Main Accounting Data and Financial Indicators
3.1 Main accounting data and financial indicators for the past 3 years
Unit: Yuan Currency: RMB
Year-on-year
FY2021 FY2020 FY2019
change(%)
Total Asset 7,272,525,201.88 3,678,240,679.85 97.72 2,569,123,443.18
Net assets attributable
to shareholders of the 3,152,644,447.94 1,711,372,906.72 84.22 1,434,668,622.92
company
Revenue 8,644,718,998.17 3,426,952,178.37 152.26 2,418,798,183.45
Net profit attributable to
shareholders of the 431,792,852.98 288,498,851.75 49.67 196,058,708.03
company
Net profit attributable to
shareholders of the
company after 410,867,527.67 272,753,479.27 50.64 188,360,253.38
deducting non-recurring
gains and losses
Net cash inflow from
202,545,286.29 338,555,756.01 -40.17 212,514,355.26
operating activities
Weighted average ROE
15.87 18.34 -2.47points 14.62
(%)
Basic EPS (Yuan/share) 2.6646 1.8644 42.92 1.2859
Diluted EPS
2.6646 1.8644 42.92 1.2859
(Yuan/share)
3.2 Main Accounting data by Quarter
Unit: Yuan Currency: RMB
Q1 Q2 Q3 Q4
(Jan-Mar) (Apr-Jun) (Jul-Sep) (Oct-Dec)
Revenue 1,443,832,244.63 2,018,109,387.10 2,487,627,934.29 2,695,149,432.15
Net profit attributable to
shareholders of the 77,649,338.89 105,963,144.34 117,831,142.68 130,349,227.06
company
Net profit attributable to
shareholders of the
company after 76,608,616.99 108,621,326.69 101,490,082.34 124,147,501.64
deducting non-recurring
gains and losses
Net cash
inflow/(outflow) from 149,630,083.64 73,727,181.31 -116,961,191.03 96,149,212.37
operating activities
4. Shareholders Profile
4.1 The total number of shareholders of ordinary shares, preferred stock shareholders whose
voting rights were restored and shareholders with special voting rights at the end of the
previous month of the reporting period and disclosure date.
Unit: Share
Total number of shareholders of ordinary shares as at the end of
8,541
the reporting period
Total number of shareholders of ordinary shares at the end of last
7,811
month prior to the disclosure date of this annual report
Total number of shareholders of preferred shares whose voting
Not applicable
rights have been restored at the end of the reporting period
Total number of shareholders of preferred shares whose voting
rights have been restored at the end of last month prior to the Not applicable
disclosure date of this annual report
Top ten shareholders
Number of Pledged, marked
Share
shares or frozen
Name of change Percent Number of
held at the Nature of
shareholder (full during the age restricted
end of the Share shareholde
name) Reporting (%) shares Number
reporting status
Period
period
Domestic
Chen Yinhe 40,300 44,073,299 26.79 0 -
natural person
Domestic
Li Renli 36,000 22,381,009 13.61 0
- natural person
Beijing Legend
Maolin -8,450,273 9,398,996 5.71 0 Others
-
Investment (LP)
Overseas lega
HKEX Group 1,074,490 8,551,673 5.20 0
- l person
Shanghai Yanruo
-522,960 7,003,922 4.26 0 Others
Investment (LP) -
Shanghai Yanhui
-489,500 5,010,500 3.05 0 Others
Investment (LP) -
Shanghai Yanzhi
-492,417 5,007,583 3.04 0 Others
Investment (LP) -
CMB-Penghua
Emerging
Industry Mixed -183,517 3,382,872 2.06 0 - Others
Stock Investment
Fund
CPIC-Dividend-I
ndividual -639,147 3,370,448 2.05 0 - Others
Dividend
CUAM-Social
Security Fund 100,000 3,200,000 1.95 0 - Others
Portfolio 423
Explanation on the related 1. The company’s controlling shareholder and beneficial controller
relations or parties acting in Chen Yinhe and Shen Lei are married, shareholder Li Renli and
concert among the above Shen Lei are mother-child relationship, the company identify the
shareholders three people as beneficial controller, Chen Yinhe and Li Renli are
parties acting in concert. 2. Yanji Investment 100% held by Chen
Yinhe is GP of Yanruo Investment, Yanhui Investment, Yanzhi
Investment, Chen Yinhe is the beneficial controller of the three
partnership. 3. Save as the above, the Company is not aware of any
related relationship or parties acting in concert among the aforesaid
shareholders
Explanation on the preference
shareholders with voting rights
restored and numbers of their
shareholdings Not applicable
4.2 Equity structure chart among the company and the controlling shareholders
4.3 Equity structure chart among the company and the beneficial controller
Chapter 3 Key figures
The company shall, in accordance with the principle of materiality, disclose the major
changes in the company's operating conditions during the reporting period, as well as events that
have had a significant impact on the company's operations during the reporting period and are
expected to have a significant impact in the future.
In 2021, the international environment is still complex and severe, and the domestic epidemic
is frequent and multiple factors are superimposed. The company react actively, continuously
improves operation efficiency, accelerates the improvement of response level, and expands market
share. Multiple financial indicators have achieved growth. Major operating performance data are
as follows:
1. Operating performance:
In 2021, the company’s total profit was 527.85 million, a year-on-year increase of 51.06%;
the net profit attributable to the company's shareholders was 431.79 million, a year-on-year
increase of 49.67%; the weighted average ROE was 15.87%, a year-on-year decrease of 2.47%;
The EPS was 2.66 yuan per share, an increase of 0.80 yuan over last year. Details are as follows:
The company achieved a total revenue of 8,644.72 million, a year-on-year increase of
152.26%. This is because in 2021, the company rapidly develops the chemical trading business
with the integration of material and trading, expands new areas and new customers. The revenue
from trading business reached 3,126.31 million, an increase of 352.59% year-on-year; at the same
time, the freight forwarding business developed rapidly, and its revenue reached 3,114.19 million,
an increase of 185.40% year-on-year; in addition, the revenue contribution of international
engineering logistics, the company's new business segment, was 234.87 million.
The operating cost was 7,757.99 million, a year-on-year increase of 171.80%. The rapid
increase in operating income led to the increase in operating cost. The proportion of trading
business increased and the average gross profit margin was diluted, so the increase in operating
cost was higher than that in operating income.
The sales expenses was 93.61 million, a year-on-year increase of 92.24%. The incremental is
mainly due to the increase in sales personnel.
The G&A expenses was 197.62 million, a year-on-year increase of 53.75%. The incremental
was mainly due to the increase in personnel.
The financial expenses was 53.72 million, a year-on-year increase of 75.84%, mainly due to the
increase in interest expenses.
The R&D expenses was 28.31 million, a year-on-year increase of 10.60%.
2. Financial Performance
At the end of the reporting period, the company's total assets were 7,272.53 million, a
year-on-year increase of 97.72%; total liabilities were 4,052.93 million, a year-on-year increase of
113.46%; equity attributable to shareholders of the parent company was 3,152.64 million, a
year-on-year increase of 84.22%; asset-liability ratio was 55.73%, increased by 4.11% The
detailed composition of asset and liability is as follows:
⑴Composition of total assets: ⑴At the end of the reporting period, the balance of current
assets was 4,453.64 million, 61.24% of the total assets, mainly including: 2,663.49 million in
notes receivable and accounts receivable, 638.16 million in cash and cash equivalents, and 390.64
million in prepayments. ⑴1,367.58 million in Fixed assets and construction in progress, 18.80% of
the total assets. Fixed assets and construction in progress increased by 63.78% year-on-year, the
incremental is mainly due to the M&A last year and warehouses under construction. ⑴Intangible
assets are mainly land use rights. At the end of the reporting period, the balance of intangible
assets was 558.89 million, 7.68% of the total assets. Intangible assets increased by 16.42% year on
year, the incremental is mainly due to the M&A ⑴Goodwill mainly refers to the difference
between the investment cost and the fair value of the identifiable net assets of the merged
enterprise in acquisition. At the end of the reporting period, the goodwill was 610.34 million, an
increase of 137.00 million compared to last year.
⑴Composition of total liabilities: ⑴ Current liabilities was RMB 3,278.72 million, 80.90% of
the total liabilities, an increase of 1,689.15 million year-on-year, mainly due to the increase in
accounts payable and notes payable, short-term loans and other current liabilities. ⑴Non-current
liabilities was 774.21 million, 19.10% of total liabilities, an increase of 465.10 million
year-on-year, mainly due to the increase in long-term borrowings, lease liabilities and deferred tax
liabilities.
3.Cashflow
The company's cash and cash equivalents balance in 2021 was 631.02 million, an increase of
510.76 million year-on-year. The details are as follows:
⑴In 2021, the net cash inflow from operating activities was 202.55 million, a year-on-year
decrease of 136.01 million, mainly due to the increase in working capital as revenue increased.
⑴In 2021, the net cash outflow from investment activities was 1,440.35 million, a year-on-year
increase of 1,136.72 million, mainly due to the increase in M&A payments and infrastructure
projects.
⑴In 2021, the net cash inflow from financing activities was 1752.36 million, a year-on-year
increase of 1787.00million, mainly due to the increase in cash inflows from non-public issuance of
shares.
Chapter 4 2022 Target： Algorithm governance, Ecological alliance
Milkyway is committed to building a global point-to-point chemical supply chain service
capability, with a large number of SKUs and compliance delivery network to efficiently meet
customer needs. Milkyway will take various forms of terminal as the strategic commanding point
of vertical integration to solve roaring cross-industry competition, promote the strategic iteration,
and prosper trading and environmental protecting business.
1. Fundamental work, specifying strategic goals to match core capabilities
Improving science and technology innovation for digital governance, by increasing
investment in IT system and innovation: MCP cloud architecture upgrade, BI Combat center 2.0,
VR viewing and unmanned warehousing project. Unification of organizational reform, market
coordination, strategy implementation and other supportive centers; Enhancing safety and quality,
improving real-time VMI; Developing data analysis of pre-finding and post events; Construction
of drone inspection station.
2.Future oriented, planning 3-5 years in advance, preparing for great 2030
Taking various forms of terminal as the strategic commanding point to solve cross-industry
competitions; launching ‘Jin Chan project’ and insisting on the ‘undervalue principle’ when
implementing asset lightweight strategy; Marketization of internal capabilities, as the third growth
pole; Promoting ‘Spark Plan’ and globalization strategy.
3.Balance profit and loss to ensure high quality annual growth
Focusing on the strategic target customers: chip and semiconductor, biomedicine,
consumption upgrade, aerospace, clean energy and so on. Increasing the business scale of MPC,
Prospering MCD and e-commerce. Adjusting market strategy to enhance customer engagement
and experience; Involving partners as new elements to solidify ecosphere, to concentrate chemical
supply chain and to realize organic growth.
4.Creating success based on cultural convergence and multiple capabilities
Cultural convergence is the only way to reduce cost and increase success. Talents and system
will remain the top priority in the long run. Milkyway will persistently cultivate engineers and
safety culture and build CEO,CSO plan and COE team.
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