Securities code: 300056 securities abbreviation: Xiamen Zhongchuang Environmental Technology Co.Ltd(300056) Announcement No.: 2022-031 Xiamen Zhongchuang Environmental Technology Co.Ltd(300056)
Reply to gem concern letter [2022] No. 97
The company and all members of the board of directors guarantee that the contents of the announcement are true, accurate and complete without false records, misleading statements or major omissions.
Xiamen Zhongchuang Environmental Technology Co.Ltd(300056) received the attention letter on Xiamen Zhongchuang Environmental Technology Co.Ltd(300056) issued by the management department of GEM companies of Shenzhen Stock Exchange on January 29, 2022 (GEM attention letter [2022] No. 97, hereinafter referred to as the “attention letter”). The company has carefully checked the relevant issues involved in the letter of concern one by one, and the reply announcement is as follows:
1. According to the performance forecast, your company plans to fully withdraw the impairment of Xiangsheng environmental protection’s goodwill with a book value of 276.77 million yuan. In October 2019, your company acquired 51% equity of Xiangsheng environmental protection through asset replacement, with a transaction price of 460 million yuan. The counterparties Chen Rong, Zhang Bingguo and Liao Yuhua promised that the net profit of Xiangsheng environmental protection in 2020, 2021 and 2022 would not be less than 80 million yuan, 96 million yuan and 104 million yuan respectively. In 2020, the net profit of Xiangsheng environmental protection was 45.9675 million yuan, and your company made a provision for goodwill impairment of 57.9723 million yuan. On March 29, 2021, your company paid 90 million yuan to Hangzhou Yitong investment partnership (limited partnership) (hereinafter referred to as “Hangzhou Yitong”) to purchase the equity of Xiangsheng environmental protection, holding 63.71% of the equity of Xiangsheng environmental protection in total.
(1) Please supplement and disclose the main parameters of the goodwill impairment test of Xiangsheng environmental protection, including income, gross profit margin, period expense rate, discount rate and other information in the forecast period, and in combination with your company’s previous reply to our relevant inquiry letter, the business development, operation status, industry change trend of Xiangsheng environmental protection after it is included in the scope of the company’s consolidated statements Analyze and explain the valuation basis of the company’s previous acquisitions of Xiangsheng environmental protection equity, whether the setting of previous evaluation parameters is reasonable and prudent, the reasons and rationality of major changes (if applicable) before and after, the reasons and rationality of the changes of relevant factors that the company failed to foresee in the previous transactions and replies, and whether the relevant information disclosure and replies are true Accuracy;
Company reply:
1、 This goodwill impairment test is a preliminary estimation, and the main parameters are described as follows:
(1) Prediction of main business income and main business cost
1) Forecast of main business income
From the revenue structure of Xiangsheng environmental protection in 2020 and 2021 (see the list in reply 1 (4) below for details), the revenue source of Xiangsheng environmental protection is mainly composed of zinc ingot, crude lead, disposal fee, zinc sheet, etc. Zinc ingot is the main product of Xiangsheng environmental protection; Crude lead is a by-product. Since the lead furnace of Xiangsheng environmental protection was demolished in January 2021, it will be directly sold in the following years; The disposal fee is the disposal fee charged by Xiangsheng environmental protection Dayao Fire Law for the disposal of hazardous waste; Zinc sheet is the income from sporadic sales; The sales of zinc oxide is mainly due to the fact that Xiangsheng environmental protection received the notice of ordering rectification issued by Ji’an Yongfeng Ecological Environment Bureau on April 24, 2021. Since then, Xiangsheng environmental protection has sold some raw materials due to the closure of environmental protection rectification.
On November 29, 2021, Xiangsheng environmental protection received the reply on the request for resumption of the electrodeposited zinc production line of Jiangxi Xiangsheng Environmental Protection Technology Co., Ltd. from the ecological environment bureau of Yongfeng County, Ji’an City, and agreed in principle to the resumption of the electrodeposited zinc production line of Xiangsheng environmental protection. Therefore, the electrolytic zinc production line of Xiangsheng environmental protection can resume normal operation in 2022. The hazardous waste disposal rotary kiln has not been transformed at present. It is expected to complete the transformation and resume production in the fourth quarter of 2022. To sum up, this preliminary estimate estimates the main business income in the forecast period according to the production and operation of Xiangsheng environmental protection in the historical year, customer distribution, asset capacity allocation, etc. Considering the industry development situation, market competition, China’s policy orientation, economic and environmental impact, combined with Xiangsheng environmental protection’s marketing strategy and other factors, it is considered that the main business income of Xiangsheng environmental protection will increase to a certain extent in 2022 compared with that in 2021 due to the short operation time of hazardous waste disposal rotary kiln and its great impact on electrolytic zinc business, However, it cannot return to the historical normal level; In 2023, Xiangsheng’s environmental protection business will basically return to normal. However, due to the impact of competition in the hazardous waste disposal market, inter provincial transfer restrictions and environmental protection regulatory requirements, the income scale of Xiangsheng environmental protection will still be lower than the best level in history for a long time.
2) Prediction of main business cost
The main business cost of Xiangsheng environmental protection is mainly composed of raw material cost, labor cost, depreciation expense, manufacturing expense, etc.
In this forecast, the output of intermediate product zinc oxide is estimated according to the volume of hazardous waste disposal in each year, and then the cost level of zinc ingot is determined after calculating the volume of zinc oxide to be purchased. With the increase of zinc ingot output, the quantity of zinc oxide to be purchased increases, which will gradually dilute the gross profit margin until the balance of production capacity is reached.
Lead silver slag is a by-product extracted by Xiangsheng environmental protection in the production of zinc ingots, and its cost is distributed between zinc ingots.
According to the above analysis, the main business income, main business cost and gross profit margin in the forecast period are as follows:
Monetary unit: 10000 yuan
Product / annual project 2022 2023 2024 2025 2026 sustainability
Income 20936 27549 30061 32237 32241 32241
Total cost 18040 23325 24997 26849 26799 26799
Gross profit margin 13.83%, 15.33%, 16.84%, 16.71%, 16.88%, 16.88%
Revenue growth rate 37.71%, 31.59%, 9.12%, 7.24%, 0.01%, 0.00%
Income 19427 25255 27198 29141 29141
Cost 16974 21944 23528 25268 25218 zinc ingot
Gross profit margin 12.63% 13.11% 13.49% 13.29% 13.46% 13.46%
Revenue growth rate 76.51%, 30.00%, 7.69%, 7.14%, 0.00%, 0.00%
Revenue 88 442 885 973 973 973
cost
Disposal fee
Gross profit margin 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Revenue growth rate of 94.9% – 20.00% 0.00%
Income 1421 1852 1978 2123 2127 2127
Cost 1066 1381 1469 1581 1581 lead silver slag
Gross profit margin 24.98% 25.41% 25.71% 25.53% 25.68% 25.68%
Revenue growth rate 1010.90%, 30.33%, 6.80%, 7.33%, 0.19%, 0.00%
(2) Forecast of other business profits
Other business profits of Xiangsheng environmental protection in the historical year are mainly generated from the sales of tailings and mechanical materials. After analysis, the above businesses have a positive relationship with the main business of Xiangsheng environmental protection. It is predicted that the year-on-year changes with the change of the scale of the main business.
The profit forecast of other businesses in future years is as follows:
Unit: 10000 yuan
The project will last for 2022, 2023, 2024, 2025 and 2026
Profit from other business 27 36 39 42 42
(3) Forecast of taxes and surcharges
Taxes and surcharges mainly include urban construction tax, education surcharge, local education surcharge and other taxes related to operating income, as well as real estate tax, land tax, stamp tax, environmental protection tax and other taxes. Among them, the urban construction tax rate is 5%, the education surcharge rate is 3%, and the local education surcharge rate is 2%, based on the value-added tax payable.
This time, the output tax and input tax of value-added tax are calculated according to the sales revenue and cost respectively, and the value-added tax payable is calculated. Then the taxes are calculated and determined according to the tax rates of urban construction tax, education surcharge and local education surcharge, and the real estate tax, land use tax, stamp tax and environmental protection tax are added as the calculation amount of taxes and surcharges.
Taxes and surcharges in each year of the forecast period are as follows:
Unit: 10000 yuan
The project will last for 2022, 2023, 2024, 2025 and 2026
Operating income 20981 27609 30128 32309 32313 32313
Taxes and surcharges 117.7 127.6 131.4, 134.7 134.7 134.7
Proportion 0.56% 0.46% 0.44% 0.42% 0.42% 0.42%
(4) Forecast of period cost
The expenses during the period mainly include sales expenses, management expenses and R & D expenses.
1) Sales expenses are mainly composed of transportation expenses and advertising expenses. Generally speaking, the expenses will have a basically synchronous growth trend with the expansion of enterprise scale and business expansion. According to the nature of sales expenses, considering that advertising expenses are incidental expenses and only have expenses in 2018, it is not calculated in the prediction period. Considering that the freight is mainly the sales of zinc sheets, Xiangsheng environmental protection currently focuses on the sales of zinc ingots, and the sales of zinc sheets will not be considered in the prediction period, so the freight will not be calculated.
2) Management expenses mainly consist of employee salary, office expenses, travel expenses, business entertainment expenses, communication expenses, depreciation and amortization, taxes, intermediary expenses, etc. According to the nature of management expenses, different methods are used for prediction. For the depreciation cost, the scale of fixed assets for the management of Xiangsheng environmental protection is predicted after simulated calculation according to the financial depreciation method; For other cost items, the trend prediction analysis method is mainly used.
3) It is mainly composed of employee compensation, amortization expenses and other materials. According to the nature of R & D expenses, different methods are used for prediction. The depreciation cost is predicted after the scale of R & D fixed assets of Xiangsheng environmental protection is simulated and calculated according to the financial depreciation method
