Securities code: 000014 securities abbreviation: Shahe Industrial Co.Ltd(000014) Announcement No.: 2022-04 Shahe Industrial Co.Ltd(000014)
Announcement on the reply to the letter of concern of Shenzhen Stock Exchange
The company and all members of the board of directors guarantee that the information disclosed is true, accurate and complete without false records, misleading statements or major omissions.
Shahe Industrial Co.Ltd(000014) (hereinafter referred to as “the company” or “our company”) received the attention letter on Shahe Industrial Co.Ltd(000014) issued by Shenzhen Stock Exchange on January 27, 2022 (company Department attention letter [2022] No. 65). The board of directors of the company carefully examined the issues raised in the attention letter, The auditor PricewaterhouseCoopers Zhongtian Certified Public Accountants (special general partnership) (hereinafter referred to as “PricewaterhouseCoopers”) issued the special instructions on the reply to the letter of concern on Shahe Industrial Co.Ltd(000014) in the form of e-mail. As the audit of the company’s 2021 financial statements is still in progress, PricewaterhouseCoopers only made special instructions on some issues, The company will urge PwC to complete the special description of other issues. The written replies to the questions mentioned in the letter of concern are as follows:
Question 1: in combination with the differences in the composition of your company’s main business income and the gross profit margin of your main business in the first three quarters and the fourth quarter of 2021, explain the main reasons and rationality for your company’s net profit to turn losses in the fourth quarter before and after deduction, and whether the gross profit margin of your main business in the fourth quarter deviates from the average level of the same industry. The annual audit accountant shall check and give opinions.
reply:
The composition of the company’s main business revenue and gross profit margin in the first three quarters and the fourth quarter of 2021 are analyzed as follows:
(1) Analysis on the composition of main business income (Unaudited)
Unit: 10000 yuan
The proportion of the first three quarters of 2021 to the fourth quarter of 2021 and the proportion of the annual revenue in 2021
Main business 1516.50 100.00% 61191.91 100.00% 62708.41 100.00%
Including: real estate sales 1384.29 91.28% 61151.21 99.93% 62535.50 99.72%
–Xinxiang century village 35.46 2.34% 0.33 0.00% 35.79 0.06%
–Xinxiang century new town 1279.91 84.40% 27088.12 44.27% 28368.03 45.24%
Including: century new town phase I 574.12 37.86%, 63.93 0.10%, 638.05 1.02%
Century new town phase II 109.89 7.25% 168.93 0.28% 278.82 0.45%
Century new town phase III 7-10# 595.90 39.29% 21.50 0.04% 617.40 0.98%
Century new town phase III 18-19# — 26833.76 43.85% 26833.76 42.79%
–Changsha Shahe City 68.92 4.54% 34062.76 55.67% 34131.68 54.43%
Including: shahecheng phase I — 9.14 0.02% 9.14 0.01%
Shahecheng phase II — 0.09 0.00% 0.09 0.00%
Shahecheng phase III 33.76 2.23% 15.20 0.03% 48.96 0.08%
Shahecheng phase IV II 35.16 2.32% 7.34 0.01% 42.50 0.07%
Shahecheng phase IV phase I — 34030.99 55.61% 34030.99 54.27%
The company is a typical real estate development enterprise focusing on residential development, and its main business income is mainly real estate sales income. In 2021, facing the impact of covid-19 pneumonia epidemic, the company made overall plans, did a good job in epidemic prevention and control and company operation, concentrated efforts, improved quality and efficiency, steadily and orderly promoted the project construction, and completed the important nodes of the project construction on schedule. Among them, Changsha shahecheng phase IV phase I project was mainly started in August 2019, and the project was completed and filed in November 2021, Centralized delivery and occupation in December 2021; Xinxiang century new town phase III 18-19# project was mainly started in July 2018, completed and filed in November 2021, and delivered in December 2021.
The annual real estate sales revenue of the company is 625355000 yuan, accounting for 99.72% of the annual main business revenue, of which: the real estate sales revenue in the first three quarters of 2021 is 13842900 yuan, accounting for 91.28% of the main business revenue in the first three quarters; In the fourth quarter of 2021, the real estate sales reached 611512100 yuan, accounting for 99.93% of the main business income in the fourth quarter. The real estate sales revenue in the fourth quarter of 2021 increased by 8.65% compared with the first three quarters of 2021, mainly because Changsha Shahe City Phase IV phase I project and Xinxiang century new town phase III 18-19# project were delivered and occupied in December 2021, so the real estate sales revenue in the fourth quarter increased significantly compared with the first three quarters.
The revenue recognized by the completed projects in the fourth quarter of 2021 accounted for 97.33% of the annual real estate sales revenue in 2021, which had a significant impact on the operating revenue and net profit of the current year, resulting in a large difference between the operating revenue and net profit before and after deduction in the fourth quarter and the first three quarters.
(2) Analysis of gross profit margin of main business the gross profit margin of main business of the company in the first three quarters and the fourth quarter of 2021 is as follows (Unaudited):
Unit: 10000 yuan
The first three quarters of 2021, the fourth quarter of 2021 and the whole year of 2021
Operating cost gross profit margin operating cost gross profit margin operating cost gross profit margin
Main business 1146.68 24.39% 38450.26 37.16% 39596.94 36.86%
Including: real estate sales 908.56, 34.37%, 38408.42, 37.19%, 39316.98, 37.13%
–Xinxiang century village 12.00 66.16% – 100.00% 12.00 66.47%
–Xinxiang century new town 841.23 34.27% 18217.51 32.75% 19058.74 32.82%
–Changsha Shahe City 55.33 19.72% 20190.91 40.72% 20246.24 40.68%
The gross profit margin of the company’s main business in the fourth quarter of 2021 increased by 12.77% compared with the first three quarters, mainly due to ① the low proportion of real estate sales revenue in the first three quarters of 2021 and the high proportion of property management and other low gross profit margin business revenue, resulting in the low gross profit margin in the first three quarters of 2021. ② The first three quarters of Changsha Shahe City were mainly parking space sales and carry forward, with a low gross profit margin. The sales revenue of Xinxiang century village project in the first three quarters of 2021 was 354600 yuan, with a gross profit margin of 66.16%, all of which were parking space sales revenue. Due to the early construction time of Xinxiang century village, the sales cost corresponding to the sales revenue of the project was low, so the sales gross profit margin was high.
Gross profit margin of comparable companies in the same industry in the latest year:
Gross profit margin of sales (%)
Company name, stock code, latest year and region
Arithmetic average of 2021 interim report and 2020 Annual Report
Shenzhenye a 00000 6 Sz 58.01% 58.52% 58.27% Hunan Province
Shenzhen Tagen Group Co.Ltd(000090) 000090. Sz 47.27% 29.81% 38.54% Hunan Province
Jinke Property Group Co.Ltd(000656) 000656. Sz 31.82% 23.82% 27.82% central China
Yango Group Co.Ltd(000671) 000671. Sz 24.48%, 16.59%, 20.54% central China
Cccg Real Estate Corporation Limited(000736) 000736. Sz 35.68%, 31.79%, 33.74% central China
Poly Developments And Holdings Group Co.Ltd(600048) 600048. SH 30.05% 37.73% 33.89% Henan Province
Wolong Real Estate Group Co.Ltd(600173) 600173. SH – 52.19% central China
Gemdale Corporation(600383) 600383. SH 12.82% 34.60% 23.71% central China
Bright Real Estate Group Co.Limited(600708) 600708. SH 8.40%, 18.84%, 13.62% central China
Huay Uan Property Co.Ltd(600743) 600743. SH – 27.99% central China
OCT a 000069 SZ 12.24% 55.47% 33.86% central China
Average 28.97%, 35.21%, 33.10%
Note: data source of gross profit margin of comparable companies in the same industry in 2020 annual report and 2021 interim report: Hithink Royalflush Information Network Co.Ltd(300033) financial data terminal
The company’s main real estate development projects are located in Hunan Province and Henan Province, belonging to central China. The above comparable companies in the same industry are selected from 110 listed companies in the real estate development industry based on Shanghai and Shenzhen A shares. The gross profit margin of the main business disclosed by region includes Hunan Province, Henan province or central China. After the arithmetic average of the gross profit margin of the above comparable companies in the same industry in the latest year, the highest value of the gross profit margin is 58.27%, the lowest value is 13.62%, and the average value is 33.10%. In the fourth quarter of 2021, the gross profit margin of the company’s main business was 37.16%, which was within the range of the highest value and the lowest value, which was 4.06% higher than the average level of comparable companies in the same industry. Mainly because the plots taken from Xinxiang century new city and Changsha Shahe City were constructed in stages according to the development situation, and the land acquisition cost was low, the gross profit margin was slightly higher than the average level of comparable companies in the same industry.
Combined with the above analysis of the composition of main business income and the gross profit margin of main business, in the fourth quarter of 2021, Changsha Shahe City Phase IV phase I project and Xinxiang century new town phase III 18-19# project completed the completion filing, met the delivery conditions agreed in the house purchase contract, and delivered them to the house purchase owners in a centralized manner, realizing a sales revenue of 608647500 yuan, accounting for 97.06% of the total main business income in 2021, Among them, 324 sets were delivered for Changsha Shahe City Phase IV project, with a sales revenue of 340309900 yuan; 378 sets of Xinxiang century new town phase III 18-19# project were delivered, and the sales revenue was 268337600 yuan. The expenses and non recurring profits and losses of the company during the fourth quarter of 2021 have not changed significantly compared with the first three quarters, while the first project of Changsha shahecheng phase IV and the new
