Reply report on the examination and inquiry letter of Zhuhai Enpower Electric Co.Ltd(300681) application for issuing shares to specific objects
Sponsor (lead underwriter)
(address: No. 6666, ecological street, Changchun)
February, 2002
Shenzhen Stock Exchange:
According to the requirements of the examination and inquiry letter on Zhuhai Enpower Electric Co.Ltd(300681) application for issuing shares to specific objects (examination and inquiry letter [2022] No. 020022) (hereinafter referred to as “examination and inquiry letter”) issued by Shenzhen Stock Exchange (hereinafter referred to as “Shenzhen Stock Exchange” or “your exchange”) on January 26, 2022, Zhuhai Enpower Electric Co.Ltd(300681) (hereinafter referred to as ” Zhuhai Enpower Electric Co.Ltd(300681) “, “issuer” or “company”) and Northeast Securities Co.Ltd(000686) (hereinafter referred to as “sponsor”), Lixin Certified Public Accountants (special general partnership) (hereinafter referred to as “accountant”) and Beijing Guofeng law firm (hereinafter referred to as “lawyer”) checked and implemented relevant issues, and modified and supplemented the application materials. We hereby reply to the implementation of the audit inquiry letter and the amendment of the prospectus one by one in writing, and submit it to your office for review.
explain:
1. Unless the context otherwise requires, the abbreviations or terms used in this reply report have the same interpretation as the prospectus for the issuance of A-Shares to specific objects and listing on the gem (hereinafter referred to as the “prospectus”). The contents related to the supplementary disclosure or modification of the Prospectus have been listed in bold italics in the prospectus and this reply report.
2. There may be slight difference between the sum of individual data in some tables of this reply report and the total of tables, which is caused by rounding in the calculation process.
3. The font in this reply report represents the following meanings:
Review the questions listed in the inquiry letter in bold (BOLD)
Reply to the questions listed in the audit inquiry letter
Changes to the prospectus and other application documents (in BOLD)
catalogue
Question 1 4 question 2 14 question 3 14 question 4 46 question 5 56 question 6 121 question 7 138 other questions 143 question 1
At the end of each reporting period, the book value of the company’s inventory was 196507000 yuan, 1760505 yuan, 243101400 yuan and 494637500 yuan respectively, showing an upward trend; According to the application materials, the increase of inventory balance in the latest period was mainly due to the increase of orders, the extension of delivery time of some raw materials, and the increase of prepayment and stock volume.
The issuer is requested to supplement the reasons and rationality for the increase of inventory balance, whether it matches the income scale, explain the reasons for the high inventory balance by product type, whether there is inventory backlog, etc., combined with the provision policy for inventory falling price reserves, stock age distribution and proportion, future sales and price changes, listed companies in the same industry, etc, Explain the adequacy of the provision for inventory falling price.
The issuer is requested to disclose relevant risks.
The sponsor and accountant are requested to check and express clear opinions.
[reply]
1、 The issuer is requested to supplement the reasons and rationality for the increase of inventory balance, whether it matches the income scale, explain the reasons for the high inventory balance by product type, whether there is inventory backlog, etc
(I) reasons and rationality for the increase of inventory balance
At the end of each reporting period, the composition of the company’s inventory balance is as follows:
Unit: 10000 yuan
Project 2021-09-30 2020-12-31 2019-12-31 2018-12-31
Book balance proportion book balance proportion book balance proportion book balance proportion book balance proportion
Raw materials 24045.77 47.54% 12128.47 47.44% 11483.59 59.80% 12669.40 64.47%
Goods issued 9967.07 19.71% 3915.30 15.31% 3435.80 17.89% 2916.81 14.84%
Inventory 7733.76 15.29% 5756.16 22.52% 2661.58 13.86% 2867.90 14.59%
Products in process 6452.06 12.76% 2436.74 9.53% 820.20 4.27% 384.17 1.95%
Semi finished products 2377.94 4.70% 1328.72 5.20% 803.07 4.18% 812.42 4.13%
Total 50576.61 100.00% 25565.38 100.00% 19204.24 100.00% 1965 0.70 100.00%
It can be seen from the above table that the company’s inventory of raw materials, issued goods and inventory goods accounts for a relatively high proportion. At the end of each reporting period, the company’s inventory balance was 196507000 yuan, 192042400 yuan, 255653800 yuan and 505766100 yuan respectively. From the end of 2019 to the end of September 2021, the company’s inventory balance continued to grow, mainly reflected in the growth of raw materials, delivered goods and inventory goods. The main reason is that benefiting from the rapid development of downstream new energy vehicle industry, the company’s business scale continues to expand, and the downstream market demand drives the company’s sales orders to increase continuously, resulting in a corresponding increase in inventory; At the same time, due to the mismatch between the supply and demand of international bulk commodities, chips and other materials caused by covid-19 epidemic, the company increased the procurement reserve of core raw materials, and the inventory scale increased accordingly. The specific conditions are as follows: 1. The strong demand in the downstream market led to the increase of orders on hand
(1) The downstream new energy vehicle industry is developing rapidly and the market demand is strong
The company’s products are mainly used in new energy vehicles and other fields, and are one of the core parts of new energy vehicles. The company is in the midstream of the new energy vehicle industry and is closely related to the development of the downstream new energy vehicle industry. Under the strong support of national policies, the Shanxi Guoxin Energy Corporation Limited(600617) automobile industry has developed rapidly in recent years. With a perfect and competitive supply chain system, it stands out in the global trend of automobile electrification and has become one of the main new energy vehicle markets in the world.
This has brought new opportunities for Shanxi Guoxin Energy Corporation Limited(600617) automobile power system core parts enterprises, and Chinese enterprises are expected to win through R & D and innovation.
Affected by the macro environment, the growth rate of production and sales of new energy vehicles slowed down in 2019, and the industry entered a period of adjustment. Since 2020, the Shanxi Guoxin Energy Corporation Limited(600617) automobile industry has grown rapidly again, with booming production and sales; In 2021, the production and sales of new energy vehicles reached 3.545 million and 3.521 million respectively, an increase of 159.52% and 157.57% respectively over 2020.
China Shanxi Guoxin Energy Corporation Limited(600617) automobile production and sales
From 2018 to 2021
400 354.5 352.1
three hundred and fifty
three hundred
250 216.6215.7
two hundred
150 127 125.6 124.2120.6 136.6 136.7
one hundred
fifty
0
2018 2019 2020 January September 2021 2021
Output (10000 vehicles) sales (10000 vehicles)
Data source: China Automobile Industry Association
At present, China Shanxi Guoxin Energy Corporation Limited(600617) automobile is in the stage of accelerated penetration. According to the data released by the passenger Federation, the penetration rate of China Shanxi Guoxin Energy Corporation Limited(600617) automobile in 2017 was only 2.2%. By 2021, the retail penetration rate of new energy passenger vehicles in China has reached 14.8%, and the single month penetration rate in December has reached 22.6%. The single month data has reached the development goal of “new energy vehicle sales will reach about 20% of the total new vehicle sales in 2025” proposed in the new energy vehicle industry development plan (2021-2035). According to the prediction of the passenger Federation, the sales volume of new energy passenger vehicles was originally expected to be 4.8 million in 2022, but now it has also been adjusted to more than 5.5 million. The penetration rate of new energy passenger vehicles is expected to reach about 25% in 2022. In 2022, the number of new energy vehicles is expected to exceed 6 million, and the penetration rate of new energy vehicles is about 22%.
As local governments have successively issued a number of preferential policies to actively introduce the new energy vehicle industry, the upstream and downstream enterprises of the new energy vehicle industry are in the period of rapid expansion of production capacity, and the company’s core parts industry of new energy vehicle power system will also usher in the opportunity of rapid market development.
(2) Expansion of business scale and increase of orders on hand
The company adopts order production mode and organizes inventory management according to customer orders. In order to meet the changing market demand to the greatest extent, the procurement department continuously adjusts the supply plan with external suppliers according to the rolling monthly demand forecast and weekly production scheduling plan of the sales center and the planning management department, supplemented by an appropriate amount of core material safety inventory, so as to ensure the delivery demand of new energy vehicle customers efficiently and flexibly.
With the rapid development of the downstream new energy vehicle industry, strong market demand and the continuous expansion of the company’s business scale, the company achieved operating revenue of 420.9669 million yuan and 45.5224 million yuan respectively in 2020 and January September 2021, with a year-on-year increase of 32.18% and 85.53% respectively. Meanwhile, the company’s orders on hand continued to increase. As of January 31, 2022, the amount of orders on hand was about 1.345 billion yuan. In order to meet the rapidly growing market demand, the company has actively increased production, and the capacity utilization rate has increased from 40.32% in 2019 to 82.18% from January to September 2021. Affected by this, as of September 30, 2021, the total amount of goods in stock, goods issued and products in process of the company was 24.1529 million yuan, an increase of 99.48% over the end of 2020; The balance of raw materials of the company was 240.4577 million yuan, an increase of 98.26% over the end of 2020.
To sum up, benefiting from the rapid development of the downstream new energy vehicle industry, the company’s business scale continues to expand, the downstream market demand drives the company’s sales orders to increase, and the inventory increases accordingly.
2. Shortage of raw materials and rising prices
The raw materials of the company’s products are mainly electronic devices, structural parts, PCB boards, connectors, silicon steel sheets, enamelled wires, reducer assemblies, etc. Among them, electronic components account for a high proportion of the cost, mainly including various chips, power semiconductors, capacitors, etc. As of September 30, 2021, the balance of raw materials in the company’s inventory was 240.4577 million yuan, an increase of 119.173 million yuan or 98.26% over the end of 2020. The details are as follows:
(1) Chip and power semiconductor are in short supply
Affected by the global chip shortage and other factors, the prices of chips, power semiconductors and other materials required by the company’s production have increased significantly. Moreover, the supply cycle of some raw materials has also been extended, such as the supply cycle of imported chips, IGBT and MOSFET has increased from the original 3 months to 10-12 months. In order to ensure normal production and operation, the company actively expands procurement channels and increases the reserves of the above raw materials. As of September 30, 2021, the balance of electronic device raw materials in the company’s inventory was 159964100 yuan, an increase of 115.97% over the end of 2020.
(2) Price rise of bulk raw materials
During the reporting period, the price trend chart of copper and aluminum bulk commodities that are greatly related to the company’s raw materials is as follows: the price trend of copper and aluminum bulk commodities
90,000.00
80,000.00
70,000.00
60,000.00
50,000.00
40,000.00
30,000.00
20,000.00
10,000.00
–
1-1-2018 1-1-2019 1-1-2020 1-1-2021
Aluminum commodity price copper commodity price
Data source: Shanghai futures exchange contract closing price
As can be seen from the above figure, affected by covid-19 epidemic, the second quarter of 2020
