In the first half of 2021, with the acceleration of global vaccination and the improvement of the epidemic situation, the world economy gradually recovered, but showed significant differentiation and imbalance, with a few major economies, such as China and the United States, leading the world economic recovery, and many emerging markets and developing economies still suffering from the new crown epidemic and slow economic recovery. In order to stimulate economic development to resist the impact of the epidemic, developed countries, led by the United States, have implemented loose monetary policies, making the global inflation situation grim, commodity prices continue to rise, and the weak dollar trend has also led to a larger appreciation of the yuan. 2021 is the first year of the "14th Five-Year Plan". China has accelerated the construction of a new development pattern with the domestic cycle as the main body and the domestic and international double cycles promoting each other. The results of coordinating epidemic prevention and control and economic and social development have been continuously expanded and consolidated. The GDP in the first half of the year increased by 12.7 year-on-year, including 7.9 year-on-year growth in the second quarter, 1.3 month-on-month growth and 5.5 in the two average, the economic operation continued to recover steadily, with steady reinforcement and steady improvement.

In the first half of 2021, the company accelerated the implementation of group development and "talent development strategy", adhered to the business philosophy of sound and scientific development, closely focused on the annual business objectives, and focused on promoting high-quality development. The company is guided by technological innovation and product research and development, increases investment in research and development, enhances the company's core competitiveness, further optimizes product structure, increases market development efforts, and implements differentiated competition strategies. During the reporting period, the company's production and operation grew steadily, corporate management continued to strengthen, financial conditions remained stable, and sustainable development capabilities were consolidated and enhanced. The company realized operating income of 659.3901 million yuan, an increase of 70.75 over the same period of last year, and realized net profit attributable to shareholders of listed companies of 43.8191 million yuan, an increase of 1.20 over the same period of last year (if the special bonus and equity incentive cost of 5.3125 million yuan are deducted, the actual increase is 13.47). As of June 30, 2021, the total assets of the company are 1,105.896 million yuan, an increase of 17.70 over the beginning of the year, and the owner's equity attributable to shareholders of listed company is 698.2239 million yuan, the company is financially sound. During the reporting period, operating income and net profit failed to achieve the same proportion of growth, mainly due to the impact of rising prices of bulk metal materials and the appreciation of RMB, the adjustment of sales prices was delayed to a certain extent, and the company's gross profit margin declined to a certain extent; in addition, the company increased investment in R & D and management, R & D expenses increased by 9.4049 million yuan, an increase of 57.65 percent, and management expenses increased by 12.5974 million yuan, an increase of 97.04 percent.

1. Take multiple measures to resolve the huge pressure of 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, up about 8.89 percent from the first half of 2020. The average domestic copper in stock price was 66636 yuan/ton, up 49.2 percent from the same period last year. The average price of aluminum in stock was 17421 yuan/ton, up 31.6 percent from the same period last year. The average price of zinc in stock was 21843 yuan/ton, up 29.1 percent from the same period last year. The average import price of iron ore is 1075.8 yuan, up 67.3 per cent year-on-year, plastic materials, packaging materials, etc. also rose significantly. The appreciation of the renminbi and the sharp rise in the prices of bulk raw materials have brought great operating pressure to the company. The company has effectively resolved the pressure of RMB appreciation and rising raw material prices by increasing product sales prices, optimizing design and reducing costs, locking foreign exchange and copper in forward contracts, and improving production efficiency and management levels. 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 rise significantly, and the company's performance is expected to continue to grow.

2, increase investment in research and development, new application areas and important customers have broken through, and then add development momentum.

The company continued to increase investment in talent and research and development, with research and development expenses increasing by 9.4049 million yuan, or 57.65 percent, compared with the same period last year, and management expenses increasing by 12.5974 million yuan, or 97.04 percent. It has accelerated the promotion of a new generation of high-performance V6 servo system in new application fields, strengthened cooperation with high-end customers, and achieved remarkable results. It has become a supplier of Apple mobile phone production and testing equipment, and stepping motors have reached batch cooperation with Hikvision and Univision, continue to expand in smart home, medical equipment, 3D printing, intelligent security, robots, electronic manufacturing equipment, lithium battery manufacturing equipment, CNC machine tools, textile machinery, industrial automation equipment and other market segments, with the further deepening of cooperation, will bring huge development space for the company.

3, increase investment, the production capacity of each division greatly improved.

Since the beginning of this year, the company's orders for various products have risen sharply, especially after the Spring Festival, a large number of orders have piled up, and the delivery time has to be greatly delayed. In order to meet the market demand and promote the rapid development of the company, the company has stepped up its investment expansion, setting up new production bases in Yongzhou, Dongguan and Shenzhen one after another, greatly improving the production capacity of various products of the company. The six major divisions, including shaded pole motor division, series motor division, motion control division, industrial control division, intelligent control division and pump division, have gone hand in hand, with the production capacity of each product increasing by about 50% year, the company's production scale and delivery guarantee capacity have been greatly improved.

4, to overcome the impact of the epidemic, to expand the market, production and sales hit a record high.

With the acceleration of vaccination, although the new crown epidemic is gradually under control, but the post-epidemic period still has adverse effects, the company actively expand domestic and foreign markets, strengthen in-depth cooperation with core customers, optimize the customer structure, try 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 659.3901 million billion yuan, an increase of 70.75 percent over the same period last year, and production and sales reached a record high.

5, the capital market to promote the company's high-quality development.

In the first half of 2021, the company launched equity incentive and employee stock ownership plan. Although certain incentive costs will have an impact on the company's operating performance in related periods, it greatly improves the cohesion of employees and the stability of the team, and effectively stimulates the enthusiasm of the management team, so as to improve the operating efficiency of the company and enhance the intrinsic value of the company. The company's non-public offering of shares was successfully completed in July, with 26,041,666 shares actually issued, with a total amount of 499,999,987.20 yuan raised and a net amount of 488,296,174.56 yuan after deducting various issuance expenses. the company will speed up the construction progress of the "intelligent motor and drive control system construction project", seize the opportunities for industry development, accelerate the landing of new products, meet the growing market demand of downstream customers, further expand market share, and achieve high-quality development of the company.

The above content is extracted from the company has been disclosed in the semi annual report.