In the first half of 2021, with the acceleration of global vaccination and the improvement of the epidemic situation, the world economy has gradually recovered, but it has shown a significant differentiation and imbalance. A few major economies such as China and the United States have led the world economic recovery. Many emerging markets and Developing economic systems are still suffering from the COVID-19 and their economic recovery speed is slow. In order to stimulate economic development and resist the impact of the epidemic, developed countries led by the United States have implemented loose monetary policies, which has made the global inflation situation more severer, commodity prices was continuing to rise, and the weak dollar trend has also led to a greater appreciation of the RMB. 2021 is the first year of the "14th Five-Year Plan". China is accelerating the construction of a new development model with the domestic cycle as the main body and the domestic and international dual cycles mutually promoting each other. The performances of coordinating epidemic prevention and control and economic and social development have been continuously expanded and consolidated. The domestic GDP growth in the first of the year has increased by 12.7% year-on-year, in the second quarter,of which has grown by 7.9% year-on-year, 1.3% month-on-month, and an average growth rate of 5.5% in two years. Economic operating continue to remain stable recovery, reinforce in stability, improve in stability.

In the first half of 2021, the company accelerated the implementation of group development and the "talent development strategy", adhere to the business concept of steady and scientific development, and pay more attention to the annual business operating targets in order to promote high-quality development. The company is guided by technological innovation and product research and development, increases R&D investment, enhances the company's core competitiveness, further optimizes product structure, increases market development efforts, and implements a differentiated competition strategy. During the reporting period, the company's production and operation grew steadily, corporate management continued to strengthen, financial status remained stable, and sustainable development capabilities were consolidated and enhanced. The company achieved operating income of RMB 659.3901 million, an increase of 70.75% over the same period of the previous year, and realized net profit attributable to shareholders of listed companies of RMB 43,819,100, an increase of 1.20% over the same period of the previous year (if the special bonus and equity incentive costs of 5.325 million were deducted RMB, an actual increase of 13.47%). As of June 30, 2021, the company’s total assets were RMB 1,105,895,600, an increase of 17.70% over the beginning of the year, and the owner’s equity attributable to shareholders of the listed company was RMB 698,223,900. The company’s financial status is good. During the reporting period, operating income and net profit failed to achieve the same proportional growth, mainly due to the increase in the price of bulk metal materials and the appreciation of the renminbi. The adjustment of sales prices has a certain degree of delay, and the company's gross profit margin has declined to a certain extent; in addition; The company increased investment in R&D and management. R&D expenses increased by RMB 9,404,900 or 57.65% over the same period of the previous year, and administrative expenses increased by RMB 12,597,400 or 97.04%.

1、Take multiple measures at the same time to resolve the huge pressure from the sharp rise in raw materials and the appreciation of the RMB.

In the first half of 2021, the average exchange rate of RMB against the US dollar was about 6.46, which was about 8.89% higher than the exchange rate in the first half of 2020; the average domestic copper spot price was 66,636 yuan/ton, a year-on-year increase of 49.2%; the average aluminum spot price was 17,421 yuan/ Ton, up 31.6% year-on-year; the average spot price of zinc was 21,843 yuan/ton, up 29.1% year-on-year; the average import price of iron ore was 1075.8 yuan/ton, up 67.3% year-on-year, plastic materials, packaging materials, etc. also rose tremendously. The appreciation of the renminbi and the sharp rise in the price of bulk raw materials have brought great operating pressure to the company. The company has adopted various methods such as increasing product sales prices, optimizing design to reduce costs, locking foreign exchange and locking copper in forward contracts, and improving production efficiency and management level. The pressure on the appreciation of the renminbi and rising prices of raw materials has been effectively resolved. At present, the company has passed the lowest period of gross profit margin. In the second half of the year, the company's gross profit margin will rebound significantly, and the company's performance is expected to continue to grow.

2、Increase investment in research and development, and make breakthroughs in new application fields and important customers, adding further development potential.

The company continued to increase investment in talents and R&D. R&D expenses increased by RMB 9,404,900 or 57.65% over the same period of the previous year, and administrative expenses increased by RMB 12,597,400 or 97.04%. Accelerated the promotion of a new generation of high-performance V6 servo system in new application areas, strengthened cooperation with high-end customers, and achieved remarkable performances. It has become a supplier of Apple mobile phone production and testing equipment. Stepper motors have reached a batch order cooperation with Hikvision and Uniview. And Keli continues to expand in market segments such as smart home, medical equipment, 3D printing, smart security, robotics, electronic manufacturing equipment, lithium battery manufacturing equipment, CNC machine tools, textile machinery, and industrial automation equipment. With the further cooperation In-depth, which will bring huge development space for the company.

3、Increase investment and greatly increase the production capacity of all business division.

Since this year, the company's orders for various products have risen sharply, especially after a large number of orders piled up after the Spring Festival, and the delivery date had to be sharply delayed. In order to meet the market demand and promote the company's rapid development, the company stepped up its investment and successively set up new production bases in Yongzhou, Dongguan and Shenzhen, which greatly improved the company's production capacity of various products. Shaded Pole Motor Business Division,Universal Motor  Business Division, Motion Control Business Division, Industrial Control Business Division, Intelligent Control Business Division, Pump Division and other six business divisions are advancing side by side. The production capacity of each product has increased by about 50% year-on-year, and the company's production scale and delivery guarantee capabilities have been greatly expanded and promoted.

4、Overcome the impact of the epidemic, make great effort to expand the market, and breakthrough the orders of  production and sales.

With the acceleration of vaccination, although the COVID-19 is gradually under control, there are still adverse effects in the post-epidemic period. The company actively expands domestic and foreign markets, strengthens in-depth cooperation with core customers, optimizes customer structure, and strives to expand market share. While maintaining the basic stability of export sales, the domestic market continued to grow substantially. During the reporting period, the company achieved sales revenue of 659,390,100 yuan, increased by 70.75% year-on-year, and production and sales break a new spot.

5、Leverage the capital market to boost the company's high-quality development.

In the first half of 2021, the company launched equity incentives and employee stock ownership plans. Although certain incentive costs will have an impact on the company's relevant operating performance in each period, it has greatly mobilized the cohesion of employees, the stability of a team, and is effective to stimulate the activity of the management team, thereby improving the company's operating efficiency and enhancing the company's intrinsic value. The company’s non-public issuance of shares was successfully completed in July. 26,041,666 shares were actually issued. The total amount of funds raised was 499,999,987.20 yuan. After deducting various issuance costs, the actual net funds raised were 488,296,174.56 yuan. The company will speed up the construction progress of "intelligent motor and drive control system construction project", seize industry development opportunities, accelerate the implementation of new products, meet the increasing market demand of downstream and potential customers, further expand market share, and achieve high-quality development of the company.

The above content is extracted from the company's disclosed semi-annual report.