China Jushi FY2016: Markets, customers and suppliers

Consolidated revenue was CNY 7,446,333,673.92, up 5.55%, while consolidated operating cost was CNY 4,116,424,876.34, down 2.26%. Management attributes the revenue increase to higher sales volume and the cost decline to lower production costs. The glass-fiber-and-products row reports CNY 7,303,899,973.47 of revenue, CNY 4,053,817,412.36 of cost and a 44.50% gross margin, up 4.35 percentage points. The report links faster glass-fiber sales to recovering wind-energy and thermoplastic demand and structural, regional or seasonal shortages in some products. It does not provide actual production or sales tonnage in this management table, so these figures cannot establish realized price per tonne. The geographic main-business rows show domestic revenue of CNY 3,818,606,578.99 at a 38.95% margin and overseas revenue of CNY 3,553,087,337.73 at a 50.33% margin. Their total differs from the glass-fiber product row; the stated overseas share of 48.20% concerns main-business sales. The regional figures are not an allocation of glass-fiber revenue to be forced into the product total. The other-product perimeter needs comparison with the financial notes. Higher reported overseas margin alone does not identify which factory, customer or product supplied the sales.

Revenue / 2016 / consolidated

RMB 7,446,333,673.92

Cost of sales / 2016 / consolidated

RMB 4,116,424,876.34

Revenue / 2016 / glass fiber products

RMB 7,303,899,973.47

Cost of sales / 2016 / glass fiber products

RMB 4,053,817,412.36

Gross margin / 2016 / glass fiber products

44.5 percent

Revenue / 2016 / domestic main business

RMB 3,818,606,578.99

Cost of sales / 2016 / domestic main business

RMB 2,331,251,981.89

Gross margin / 2016 / domestic main business

38.95 percent

Revenue / 2016 / overseas main business

RMB 3,553,087,337.73

Cost of sales / 2016 / overseas main business

RMB 1,764,836,216.21

Gross margin / 2016 / overseas main business

50.33 percent

The financial note says all businesses form one reportable segment under the company’s internal management and reporting system. Its supplementary product table reports external revenue of CNY 7,371,693,916.72 and total cost of CNY 4,096,088,198.10, including glass-fiber-product cost of CNY 4,053,817,412.36 and other-product cost of CNY 42,270,785.74. The geographic table has the same revenue total, split into domestic CNY 3,818,606,578.99 and foreign CNY 3,553,087,337.73. Its costs of CNY 2,331,251,981.89 and CNY 1,764,836,216.21 sum to CNY 4,096,088,198.10, matching the product-table total. The geographic table nevertheless prints a total of CNY 4,118,394,387.32, which exceeds its own two rows and the product-table total by CNY 22,306,189.22. The geographic cost total also differs from consolidated income-statement operating cost. These are visually confirmed source values, without an explanatory bridge disclosed in the compared tables. The English account therefore preserves the separate source measures and does not manufacture comparable regional margins or silently correct a cost total. A foreign-revenue classification is not automatically exports from China, since the group also has overseas activities. The issuer describes customers as dispersed and says it has no dependence on a major customer; that statement does not disclose the identity or order book of every customer.

Supplementary product total cost / 2016 / financial note products

RMB 4,096,088,198.1

Supplementary geographic total cost / 2016 / financial note geography

RMB 4,118,394,387.32

Supplementary geographic total cost / 2016 / financial note domestic

RMB 2,331,251,981.89

Supplementary geographic total cost / 2016 / financial note foreign

RMB 1,764,836,216.21

The cost-analysis table identifies CNY 1,168,653,022.39 of materials for glass fiber and products and labels that amount as 28.39% of total cost. The reported percentage is consistent, after rounding, with consolidated operating cost; using the glass-fiber product cost instead would produce a different percentage. The source label and percentage are retained without silently changing the denominator. Separately, the top five suppliers accounted for 23.16% of annual purchases. Their disclosed purchases were 99,380.91 ten-thousand CNY, equivalent to CNY 993.8091 million. The report explicitly assigns zero related-party purchases to this top-five subset. That does not establish zero related-party purchases across the group. Purchasing concentration is a share of annual procurement, not a share of sales or a list of five identified suppliers. Joint negotiation and separate contracting across the four manufacturing bases were intended to manage input costs; they do not prove that all price or supply risk was eliminated.

Reported material cost / 2016 / glass fiber products

RMB 1,168,653,022.39

Reported material cost share / 2016 / source total cost label

28.39 percent

Top-five supplier purchases / 2016 / consolidated top five

RMB 993,809,100

Top five suppliers share of purchases / 2016 / consolidated top five

23.16 percent

Related purchases within top five suppliers / 2016 / consolidated top five related subset

RMB 0

Domestic sales mainly used direct selling with a smaller agency channel; overseas sales combined trading subsidiaries, distributors and direct selling. The report says overseas sales companies operated across fourteen countries and regions, with an exclusive distributor in Germany and customer relationships across more than one hundred countries and regions. Those are issuer descriptions of the marketing network, not fourteen production bases or a verified named customer roster. It separately describes four major manufacturing bases. The report lists management-system certifications and product qualifications from classification or testing bodies, including marine-related bodies, and chemical-compliance tests. The list does not supply the complete product and validity scope of each certificate; testing or a certification count cannot establish approval for every application. Product development in wind energy, thermoplastics and electronic materials is discussed separately from actual orders and quantified product sales.

Closing supplier prepayments were CNY 156,316,847.92, of which CNY 153,053,413.18 was within one year. The top-five recipients represented CNY 107,242,692.44, or 68.61%, of the closing prepayment total. The list includes refractory materials, GT COMMODITIES LLC, industrial-zone development, the Jiaxing gas network and equipment suppliers. The balance demonstrates advances to these counterparties, without establishing what every payment purchased, the timing of delivery or a factory’s exact fuel or commodity volume. Separately, trade payables comprise CNY 333,733,793.70 for raw materials, CNY 462,968,707.80 for equipment and CNY 101,570,508.49 for construction, among other categories. These liabilities are not annual procurement expenditure or construction cash payments. The significant payables aged more than one year are described by the issuer as not yet contractually due. Age alone therefore is not evidence of payment default. The prepayment-concentration measure differs from the annual top-five-supplier procurement share already discussed; the two denominators remain separate.

Supplier prepayments closing balance / 2016 / consolidated

RMB 156,316,847.92

Supplier prepayments aged within one year / 2016 / consolidated

RMB 153,053,413.18

Top-five supplier prepayment balance / 2016 / consolidated top five

RMB 107,242,692.44

Top-five share of supplier prepayments / 2016 / consolidated top five

68.61 percent

Trade payable category / 2016 / consolidated raw materials

RMB 333,733,793.7

Trade payable category / 2016 / consolidated equipment

RMB 462,968,707.8

Trade payable category / 2016 / consolidated construction

RMB 101,570,508.49

The related-party note distinguishes subsidiaries, associates, shareholder subsidiaries and other related parties. Its customer list must not be read as a list of factories owned by China Jushi. Sales of inventory products to Zhejiang Hengshi Fiber Base were CNY 588,018,369.72 in 2016, compared with CNY 409,064,874.53 in 2015; the same customer also bought raw materials of CNY 14,616,900.08 and water and power of CNY 4,332,496.45. These are separate transaction categories, not three disclosures of the same product sale. Other inventory-product sales included CNY 24,734,510.56 to Zhongfu Lianzhong and CNY 68,345,835.85 to CNBM International Trading. They document disclosed commercial relationships, without establishing exclusive supply, new orders, shipment specifications or customer ownership by the issuer. The management discussion separately reports related sales within the top-five customer subset; that subset cannot replace the full related-transaction note or be added to it as another sale. Prior-only rows and blank current cells remain unfilled rather than being treated as new 2016 transactions. Smaller transactions are retained in the underlying source without expanding research into each customer.

Related-party product sales / 2016 / zhejiang hengshi

RMB 588,018,369.72

Related-party material sales / 2016 / zhejiang hengshi

RMB 14,616,900.08

Related-party utility sales / 2016 / zhejiang hengshi

RMB 4,332,496.45

Related-party product sales / 2016 / zhongfu lianzhong

RMB 24,734,510.56

Related-party product sales / 2016 / cnbm international trading

RMB 68,345,835.85