Stock Code: 000020 200020 Public Notice No.: 2019-05

Short Form of the Stock: SHEN HUAFA-A SHEN HUAFA- B

Shenzhen Zhongheng Huafa Co. Ltd.Summary of Annual Report 2018

I. Important Notice

The summary is abstract from full-text of annual report for more details of operating results financial condition and future

development plan of the Company; investors should found in the full-text of annual report that published on media appointed by

CSRC.

Objection statement of directors supervisors and senior executives

Name Position Content and reason

Statement

Other directors attending the Meeting for annual report deliberation except for the followed

Name of director absent Title for absent director Reasons for absent Attorney

Prompt of non-standard audit opinion

□ Applicable √ Not applicable

Profit distribution pre-plan of common stock or capitalizing of common reserves pre-plan deliberated by the Board in the reporting

period

□ Applicable √ Not applicable

The Company has no plan of cash dividends carried out bonus issued and capitalizing of common reserves either.Profit distribution pre-plan of preferred stock deliberated and approved by the Board in the reporting period

□Applicable □Not applicable

II. Basic information of the company

1. Company profile

Short form of the stock Shen HuafaA Shen HuafaB Stock code 000020 200020

Stock exchange for listing Shenzhen Stock Exchange

Person/Way to contact Secretary of the Board Rep. of security affairs

Name Yang Bin Niu Zhuo

Office add.

33/F No. 2 Building of Dachong Business

Center Nanshan District Shenzhen

33/F No. 2 Building of Dachong Business

Center Nanshan District Shenzhen

Fax. 0755-86360206 0755-86360206

Tel. 0755-86360201 0755-86360201

E-mail huafainvestor@126.com.cn huafainvestor@126.com.cn

2. Main business or product introduction in the reporting period

After years of development the company has gradually formed two main businesses in industry and property management. Among

them the industrial business mainly includes injection molding polylon (light-weight packaging materials) and complete machine

production and sales of liquid crystal display property management business is mainly the lease of its own property.

3. Main accounting data and financial indexes

(I) Main accounting data and financial indexes for recently three years

Whether it has retroactive adjustment or re-statement on previous accounting data

□Yes √ No

In RMB

2018 2017 Changes over last year 2016

Operating income 637046707.03 858040132.74 -25.76% 619167770.74

Net profit attributable to

shareholders of the listed company

3295022.72 974409.39 238.16% 5457710.33

Net profit attributable to

shareholders of the listed company

after deducting non-recurring gains

and losses

1535043.65 2079588.86 -26.19% 5109926.82

Net cash flow arising from

operating activities

-21894459.66 11723254.36 -286.76% -18693296.58

Basic earnings per share

(RMB/Share)

0.0116 0.0034 241.18% 0.0193

Diluted earnings per share

(RMB/Share)

0.0116 0.0034 241.18% 0.0193

Weighted average ROE 1.02% 0.30% 0.72% 1.72%

End of 2018 End of 2017

Changes over end of

last year

End of 2016

Total assets 617090153.46 629762731.38 -2.01% 632475542.40

Net assets attributable to

shareholder of listed company

323968000.74 320672978.02 1.03% 319698568.63

(2) Quarterly main financial index

In RMB

First quarter Second quarter Third quarter Fourth quarter

Operating income 171620013.62 169364829.62 148975383.05 147086480.74

Net profit attributable to

shareholders of the listed company

307367.89 2485765.71 -2295638.52 2797527.64

Net profit attributable to

shareholders of the listed company

after deducting non-recurring gains

and losses

5469.74 2047997.28 -3406233.82 2887810.45

Net cash flow arising from

operating activities

337819.42 -27009145.05 -27365096.05 32141962.02

Whether there are significant differences between the above-mentioned financial index or its total number and the relevant financial

index disclosed in the company’s quarterly report and semi-annual report

□Yes √ No

4. Shares and shareholders

(1) Particulars about common stock shareholders preference shareholders with voting rights recovered

and top ten shareholders

In Share

Total common

stock

shareholders in

reporting

period-end

25862

Total common

stock

shareholders at

end of last month

before annual

report disclosed

24818

Total preference

shareholders

with voting

rights recovered

at end of

reporting period

0

Total preference

shareholders with

voting rights

recovered at end of

last month before

annual report

disclosed

0

Top ten shareholders

Full name of

Shareholders

Nature of

shareholder

Proportion of

shares held

Amount of

shares held

Amount of restricted shares held

Number of shares

pledged/frozen

State of share Amount

Wuhan

Zhongheng

Group

Domestic

non-state-ow

ned legal

person

41.21% 116681094 0

Pledged 116100000

Frozen 116489894

SEG (HONG

KONG) CO.

LTD.

Overseas

legal person

5.85% 16569560 0

Pledged 0

Frozen 0

GOOD HOPE

CORNER

INVESTMENT

S LTD

Overseas

legal person

4.49% 12700000 0

Pledged 0

Frozen 0

Changjiang

Securities

Brokerage

(Hongkong)

Co. Ltd.

Overseas

legal person

1.89% 5355249 0

Pledged 0

Frozen 0

Guoyuan

Securities

Brokerage

(Hong Kong)

Overseas

legal person

1.36% 3845117 0

Pledged 0

Frozen 0

Limited

Li Senzhuang

Domestic

natural

person

0.36% 1022260 0

Pledged 0

Frozen 0

LI SHERYN

ZHAN MING

Overseas

natural

person

0.36% 1009900 0

Pledged 0

Frozen 0

Han Yaming

Domestic

natural

person

0.31% 864200 0

Pledged 0

Frozen 0

BINGHU LIU

Domestic

natural

person

0.30% 840313 0

Pledged 0

Frozen 0

Wu Jinmin

Domestic

natural

person

0.28% 788352 0

Pledged 0

Frozen 0

Explanation on associated

relationship among the

aforesaid shareholders

Among the top ten shareholders Wuhan Zhongheng Group neither bears associated relationship

with other shareholders nor belongs to the consistent actor that are prescribed in Measures for the

Administration of Disclosure of Shareholder Equity Changes of Listed Companies. The Company

neither knew whether there exists associated relationship among the other tradable 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 involving

margin business (if

applicable)

N/A

(2) Total preferred stock shareholders of the Company and shares held by top ten shareholders with

preferred stock held

□ Applicable √ Not applicable

The Company had no shareholders with preferred stock held in the reporting.

(3) Property right and controlling relationships between the actual controllers of the Company and the

Company is as follows:

Li Zhongqiu Li Li (Son of Li Zhongqiu)

Wuhan Zhongheng New Science & Technology Industrial Group

Co. Ltd.

Shenzhen Zhongheng Huafa Co. Ltd.

51%

49%

41.21%

. Corporate bonds

Whether or not the Company public offering corporation bonds in stock exchange which undue or without payment in full at

maturity on the approval date for annual report disclosed

No

III. Discussion and analysis of business

1. Introduction of operation in the reporting period

Whether the company needs to comply with the disclosure requirements of the particular industry

No

In 2018 the international environment was complicated the downward pressure on China’s economy increased

and the economic growth slowed down. Facing the unfavorable market environment the company has actively

taken measures to adjust its management concept and operating strategies and expand its main business which

were supplemented with assessment and incentive mechanism. At the same time some assets were cleaned and

disposed of to maximize the benefits of assets and achieve better returns. In 2018 the company achieved

operating revenue of 637046700 Yuan a decrease of 25.76% on a year-on-year basis and net profits of

3295000 Yuan increased slightly compared with the same period last year.

●Video service business achieved annual operating revenue of 292748400 Yuan a decrease of 38.75% on a

year-on-year basis operation profit amounted as 3387600 Yuan with 10.82% up from a year earlier. During the

reporting period the Video Business Division adjusted the product structure and optimized the sales ratio of each

brand of products. The proportion of AOC series brands decreased due to the Group's adjustment the Great Wall

brand accounted for 22.41% and the proportion of VSCN domestic sales rose to 24.54% the increased VSCN

export sales accounted for 4.91% ACER accounted for 18.89% and Changhong and Skyworth brands were

newly increased. In 2018 it achieved sales volume of 703900 units outperforming the annual profit target.●Injection molding business achieved annual operating revenue of 220923600 Yuan a decrease of 12.46% over

the same period last year operation profit amounted as 443500 Yuan a declined over same period last year. With

the unceasingly fierce competition in the market the profit margin of injection molding has been greatly reduced

but all the staff of the business division adjusted the sales strategy in time actively seized the market share and

expanded the production workshop purchased new type of production lines and more than 10 existing automatic

equipment such as automatic gumming robots injection molding machines etc. have been put into production in

November 2018 and the annual output is expected to increase by 2.3 million sets.●Polylon business achieved annual operating revenue of 68365100 Yuan a decrease of 16.01% over the same

period last year net profit amounted as -770000 yuan an increase of 7.49% from a year earlier. EPS Business

Division actually sold 3873 tons in 2018. The EPS Business Division won the title of “Excellent Scientific andTechnological Innovation Enterprise of China Plastics Processing Industry” due to its outstanding achievements in

promoting industrial technology advancement and promoting the transformation of scientific and technological

achievements. In 2018 the main projects won the bidding by several hundred percents the electric heating P3

packaging won 100% bidding the fuel gas and K series packaging won 100% bidding the T3 structural parts won

100% bidding the freezer Dafuhao won 100% bidding and the dual variable temperature freezer won 100%

bidding.●The property rental business achieved annual operating revenue of 34369800 Yuan a decrease of 5.45% over

the same period last year. The company’s own property Huafa Building has been included in the urban renewal

project the lessees had great changes and the rental income decreased relatively. Gongming Huafa Electronic

City was still in the stage of renovation and transformation and no rental income was generated in the current year.

Therefore in 2018 the company’s overall rental income decreased somewhat compared with the previous year.

2. Whether the main business had major change in the reporting period

□ Yes √ No

3. About the industries products or regions accounting for over 10% of the company’s operating income

or operating profit

□ Applicable √ Not applicable

4. Whether the characteristics of management seasonal or cyclical need special attention

□ Yes √ No

5. In the reporting period note of major changes in operating income operating cost total net profit

attributable to common stock shareholders of listed company or composing the previous reporting period

□ Applicable √ Not applicable

6. Particular about suspended and delisting

□ Applicable √ Not applicable

7. Related matters relating to financial reports

(1) Particulars about the changes in aspect of accounting policy estimates and calculation method

compared with the financial report of last year

√Applicable □ Not applicable

The “Notice on Revising and issuing the Format of General Enterprise Financial Statement for 2018” (CK[2018]

No.15) issued by Ministry of Finance on 15 June 2018 the format of financial statement for enterprise who

implemented the accounting standards shall be prepared for 2018 and later years in line with the above mentioned

Notice.

(2) Major accounting errors within reporting period that needs retrospective restatement

□ Applicable √ Not applicable

No major accounting errors within reporting period that needs retrospective restatement for the Company in the period.

(3) Compare with last year’s financial report; explain changes in consolidation statement’s scope

□ Applicable √ Not applicable

No changes in consolidation statement’s scope for the Company in the period.