Securities code: 000668 securities abbreviation: Rongfeng Holding Group Co.Ltd(000668) Announcement No.: 2022-017 Rongfeng Holding Group Co.Ltd(000668)
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.
Rongfeng Holding Group Co.Ltd(000668) (hereinafter referred to as “the company”) received the attention letter on Rongfeng Holding Group Co.Ltd(000668) issued by Shenzhen Stock Exchange on January 26, 2022 (company Department attention letter [2022] No. 51) (hereinafter referred to as “the attention letter”). After receiving the attention letter, the company attached great importance to it and immediately organized relevant parties to analyze and verify the problems raised in the attention letter item by item, The answers to the questions mentioned in the letter of concern are as follows:
Recently, according to the performance forecast announcement of 2021 disclosed by your company, your company expects the net profit attributable to the shareholders of the listed company in 2021 (hereinafter referred to as “net profit”) to be 22 million yuan to 280 million yuan, an increase of 1049.13% to 1307.98% over the same period of the previous year, The net profit after deducting non recurring profits and losses (hereinafter referred to as “net profit after deducting non recurring profits and losses”) is a loss of 70 million yuan to 130 million yuan, a decrease of 119.60% to 307.84% compared with the same period of the previous year. The operating revenue is expected to be 430 million yuan, and the operating revenue after deducting is expected to be 424 million yuan. The performance in 2021 increased significantly compared with the same period of the previous year, mainly due to: (1) the accumulated transaction amount received by the company for the sale of the equity of Chongqing Rongfeng Jilian Real Estate Development Co., Ltd. (hereinafter referred to as “Chongqing Rongfeng”) reached 55.33% of the total transaction consideration, reaching the time point of revenue recognition; (2) The company completed the major asset restructuring of acquiring the equity of Anhui Weiyu Medical Device Technology Co., Ltd. (hereinafter referred to as “Weiyu medical”) in October 2021, and the fourth quarter performance of Weiyu medical was included in the scope of consolidated statements. The net profit after deducting non-profit in 2021 is negative, mainly due to the deduction of the income related to the equity transfer of Chongqing Rongfeng. Our department is concerned about this. Please verify and explain the following matters:
1. The report of the third quarter of 2021 disclosed by your company shows that your company achieved an operating revenue of 51.3936 million yuan, a net profit of -45.3346 million yuan and a net profit of -48.2925 million yuan after deduction in the first three quarters of 2021, with a year-on-year change of 16.8%, – 117.94% and – 66.28% respectively. In combination with the performance forecast of your company in 2021, your company increased revenue by nearly 400 million yuan in the fourth quarter, and the net profit increased by about 200 million yuan to 300 million yuan, but the net profit loss expanded after deduction.
(1) Please explain the specific composition of the main business income in the fourth quarter of 2021, whether the gross profit margin of the main business deviates from the average level of the same industry, the main reasons for the expansion of the net profit loss after deduction, and the rationality of the deviation between the change of net profit after deduction and the change of operating income.
reply:
1、 Analysis of the company’s main business composition and gross profit margin in the fourth quarter of 2021
(I) main business composition of the company in the fourth quarter of 2021 (Unaudited)
Unit: Yuan
Project operating income operating cost gross profit margin
Real estate business 1248286.81 648164.29 48.08%
Property management, leasing and others 12465912.96 12701717.71 – 1.89%
Medical device business 367244103.13 291892259.28 20.52%
Total 380958302.90 3052424141.28
(II) whether the gross profit margin of main business deviates from the average level of the same industry
1. The gross profit margin of the company’s real estate sales business in the fourth quarter of 2021 was about 48.08%, which was at the upper middle level of the same industry in the region.
The company’s real estate business scale is small. At present, it mainly sells the project of Changchun international financial center. The main real estate development enterprises in the project area are selected for comparison. Since the fourth quarter data of comparable companies cannot be obtained, the semi annual data of 2021 are selected for comparison. The gross profit margin of sales is as follows:
Gross profit margin of comparable company stock code region
（2021.6.30）
Jilin Yatai (Group) Co.Ltd(600881) (real estate sector) 600881 Jilin Changchun undisclosed
Changchun High And New Technology Industries (Group) Inc(000661) (real estate sector) 58.92% in Northeast China
Chang Chun Eurasia Group Co.Ltd(600697) (real estate sector) 600697 Changchun, Jilin 30.48%
Poly Developments And Holdings Group Co.Ltd(600048) Jilin region 40.13%
Gemdale Corporation(600383) 600383 northeast 28.27%
Note: the data comes from the above company announcements and periodic reports
The gross profit margin of real estate sales business in the same industry varies due to enterprise scale and statistical caliber. The gross profit margin of the company is at the middle and upper level of the same industry in this region, mainly because the land acquisition time of Changchun International Financial Center project is earlier and the land cost is lower.
2. For house leasing and property management business, the unaudited gross profit margin in the fourth quarter of 2021 was – 1.89%, which was mainly due to the external lease of supporting businesses in Changchun international financial center. The lease period was 25 years, the rent of supporting businesses was low, and the cost of investment real estate was amortized by 20 years, so the gross profit margin was negative. There are differences between such businesses and listed companies in the same industry, and the gross profit margin is not comparable with that in the same industry.
3. For the sales business of medical devices and consumables, the unaudited gross profit margin in the fourth quarter of 2021 was 20.52%.
Select the enterprises of “SW Pharmaceutical Business II” of “SW pharmaceutical biology” of wind Shenyin Wanguo industry classification, and then select some listed companies with large-scale medical device business and business throughout the country, namely Cachet Pharmaceutical Co.Ltd(002462) , Shenzhen Neptunus Bioengineering Co.Ltd(000078) , Jointown Pharmaceutical Group Co.Ltd(600998) , Realcan Pharmaceutical Group Co.Ltd(002589) as comparable listed companies. At the same time, Guoke Hengtai, which is applying for listing, is also selected as a comparable company. Since the fourth quarter data of comparable companies cannot be obtained, the semi annual data of 2021 is selected for comparison. The gross profit margin is as follows:
Company abbreviation: gross profit margin of medical devices
（2021.6.30）
Cachet Pharmaceutical Co.Ltd(002462) (002462) not disclosed
Shenzhen Neptunus Bioengineering Co.Ltd(000078) （000078） 11.39%
Jointown Pharmaceutical Group Co.Ltd(600998) （600998） 7.73%
Realcan Pharmaceutical Group Co.Ltd(002589) （002589） 25.83%
Platform direct selling mode 23.30%
Guoke Hengtai
Distribution mode 10.66%
Weiyu medical 20.52%
Note: the data comes from the prospectus of Guoke Hengtai
The business model of Jointown Pharmaceutical Group Co.Ltd(600998) , Shenzhen Neptunus Bioengineering Co.Ltd(000078) medical devices tends to logistics distribution and product distribution. Weiyu medical mainly focuses on direct sales. While providing products, Weiyu medical provides follow-up services for medical institutions, including the provision of surgical tools, product selection and use method suggestions, disinfection of some products and surgical tools, and use skills of surgical tools. Therefore, the gross profit margin is higher than the former. Realcan Pharmaceutical Group Co.Ltd(002589) focuses on comprehensive services of departments and direct sales of products. The scale of direct sales business is in a leading position in private medical enterprises and undertakes more hospital end services, so its gross profit is higher than that of Weiyu medical.
The business model of Guoke Hengtai and Weiyu medical is relatively similar. The proportion of Weiyu medical direct sales model is higher than that of Guoke Hengtai, so the comprehensive gross profit margin of Weiyu medical is slightly higher than that of Guoke Hengtai.
In conclusion, the gross profit margin level of Weiyu medical does not deviate from the industry average level, which is in line with the company’s business model and reasonable.
Reply of annual auditor:
We are auditing the annual financial statements of the company in 2021. As of February 17, 2022, we have obtained the unaudited financial statements of the company and its subsidiaries, as well as some contracts, vouchers and account books. We have implemented the following procedures:
(1) Check whether the data disclosed in the reply of the company is consistent with the unaudited data provided to us;
(2) Verify whether the comparative data disclosed by the company is consistent with the market data.
Verification conclusion:
After verification, we believe that the gross profit margin of the company’s main business does not significantly deviate from the average level of the same industry.
As the annual review is in progress, the audit conclusion has not been issued, and we are unable to comment on whether there is any difference between the unaudited data and the audited data.
2、 Reasons for the expansion of losses after non deduction
In the fourth quarter, the company’s losses expanded after deducting non profits, mainly due to less operating profits and a large increase in various expenses. The main reasons for the expansion are as follows:
(I) the real estate sales revenue decreased by 82.26% compared with the average value of the first three quarters, affecting the profit of about 3 million;
(II) the annual performance salary of senior managers is 2.1 million yuan in the fourth quarter;
The interest expense was about 22.25 million yuan in the first four quarters, compared with the average of the third quarter, which was about 22.25 million yuan in the first three quarters. In the fourth quarter, the major shareholders increased financial support for Changchun company, and the increased loan scale was about 200 million yuan.
(IV) it is estimated that the asset impairment loss to be accrued is about 20 million yuan.
3、 Reasons and rationality of the deviation between the change of net profit after deduction and the change of operating income
The company completed the acquisition of Weiyu medical in October 2021 and included Weiyu medical in the scope of consolidated statements in the fourth quarter. According to the accounting standards for business enterprises, the consolidated statements of the company include the total operating revenue of Weiyu medical in the fourth quarter of about 367.24 million yuan (Unaudited), but the company only holds 33.74% equity of Weiyu medical, Therefore, the net profit attributable to the parent company of the company only includes 33.74% of the profit and loss of Weiyu medical. In addition, the loss of the company after deducting non-profit in the fourth quarter further expanded, so the change of net profit after deducting non-profit deviates from the change of operating income, which is reasonable.
Reply of annual auditor:
We have implemented the following verification procedures for this item:
(1) Obtain the unaudited consolidated statements of the company and the accounting statements of the parent company, and analyze the profit changes; (2) . check the accounting vouchers, contracts and payment documents of intermediary expenses in the fourth quarter;
(3) . check the documents and bookkeeping vouchers of the company’s accrued performance salary of management personnel in the fourth quarter;
(4) . calculate the unaudited profit of Weiyu medical and check the impact of the net profit attributable to the parent company after deduction on the consolidated profit of the company.
Verification conclusion:
After verification, we believe that it is reasonable for the company to deviate from the change of operating income after deducting non net profit.
(2) In 2020, your company recognized the sales revenue of medical devices as the revenue unrelated to the main business and deducted the relevant revenue. However, most of your company’s revenue in 2021 came from the sales revenue of medical devices generated by Weiyu medical, which was included in the consolidated statement in the fourth quarter. Please explain whether there is any income that should be deducted according to the relevant requirements on deduction of operating income in the guidelines for self discipline supervision of listed companies of Shenzhen Stock Exchange No. 1 – business handling, and check the compliance, accuracy and completeness of deduction of operating income in combination with your company’s main business, production, operation and financial status in 2021.
The annual audit accountant is requested to check and comment on the above matters.
reply:
The “impact of this transaction on the main business of the listed company” in the restructuring report (Second Revision) disclosed by the company on July 7, 2021 is clearly disclosed “After the completion of this transaction, Weiyu medical will become the holding subsidiary of the listed company. The listed company will quickly enter the medical and health industry, comprehensively and deeply layout the fields related to medical orthopaedic implant consumables, and gradually realize the production, distribution and technical services of medical orthopaedic implant consumables to the industrial chain coverage of downstream self built orthopaedic hospitals, so as to realize the transformation of its main business.” Therefore, after the completion of the transaction, the income of Weiyu medical in the fourth quarter became the main business income of the company.
