Zhongxinghua Certified Public Accountants (special general partnership) zh o n g Xi n GH u a C Er Ti fi ed Pu B Li C a c o u n TA n TS LLP address (LOC a t ion): 20 / F, floor 20, Tower B, Lize s oho, 20 Lize ROA D, f e ngtai District, No. 20, Lize Road, Fengtai District, Beijing, Beijing P R China Tel (t e l): 0 1 0 - 5 1 4 2 3 8 1 8 fax (f a x): 0 1 0 - 5 1 4 2 3 8 1 6 zhongxinghua Certified Public Accountants (special general partnership)
Please do a good job in Hengyi Petrochemical Co.Ltd(000703) public issuance of convertible bonds
Verification opinions on the reply to the letter of preparation for the meeting of the IEC
China Securities Regulatory Commission:
According to the requirements of the letter on making preparations for the meeting of the issuance and Examination Committee of Hengyi Petrochemical Co.Ltd(000703) public offering of convertible bonds (hereinafter referred to as the "notification letter") issued by your association on January 20, 2022, As the audit institution of Hengyi Petrochemical Co.Ltd(000703) (hereinafter referred to as " Hengyi Petrochemical Co.Ltd(000703) ", "the company", "the applicant" and "the issuer"), zhongxinghua Certified Public Accountants (special general partnership) (hereinafter referred to as the accountant or US), together with the issuer and relevant intermediaries, carefully verified the issues related to the feedback based on the principles of diligence, honesty and trustworthiness, The overall implementation of the feedback is now replied in writing one by one as follows.
Question 2
About trade business. The applicant is engaged in the trading business of crude oil, refined oil and other oil products and PX (xylene), PTA (purified terephthalic acid), MEG (ethylene glycol) and other chemical products, with overlapping customers and suppliers. Please explain: (1) whether the amount and proportion of Futures (including speculation and hedging transactions), forward and general trade businesses in the trade business, the products and customers and suppliers involved respectively, whether the trade business is clearly distinguished and risk isolated from petrochemical, polyester and other businesses, whether there is trade without real trading background, and whether there is a situation called trade but actually financing; (2) Whether there are overlapping customers and suppliers in businesses other than trade and the specific situation, whether all the products purchased from overlapping suppliers are used for trade sales, and whether there are reselling with customers of the same supplier; (3) Whether the risk management and internal control system related to trade business are sound and effectively implemented, and whether the relevant risks have been fully revealed. The recommendation institution and the reporting accountant shall explain the verification basis and process, and express clear verification opinions.
Applicant's reply:
1、 The amount and proportion of Futures (including speculation and hedging transactions), forward and general trade businesses in trade business, the products and customers and suppliers involved respectively, whether the trade business is clearly distinguished and risk isolated from petrochemical, polyester and other businesses, whether there is trade without real trading background, and whether there is a situation called trade but actually financing during the reporting period, The company's trade business includes the following three types: ① trade based on raw material / product inventory management; ② Trade based on the purpose of obtaining spot market information and income; ③ Trade based on entrusted management. The correspondence between the above three trade purposes and futures, forward and general trade is as follows:
Specific description of trade mode and trade purpose
In the trading business, it refers to the futures trading that obtains the information and income of the spot market, trades in the futures market and delivers at maturity
Futures trade note
In the trade business, it refers to the trade business in which the time interval between the signing date of the contract and the business execution date agreed in the contract is more than 30 days
Raw material / product inventory management in trade business, obtaining spot goods and other trade business
General trade market information and income, entrusted management
Note: futures transactions that are closed through reverse transactions at maturity or before maturity, if they meet the relevant accounting standards for hedging, are included in the cost of corresponding hedging forward trade; Those that do not meet the relevant accounting standards for hedging are included in non recurring profit and loss accounts such as investment income, and do not belong to trade business income / cost.
As mentioned in the above table, futures trade and forward trade mainly involve trade business "for the purpose of obtaining spot market information and income". Among them, the forward trade in the trade business refers to the trade business with an interval of more than 30 days between the signing date of the contract and the business execution date agreed in the contract; Futures trading in trading business refers to futures trading traded in the futures market and delivered at maturity; Other trade businesses belong to general trade.
The trading amount, main products, main customers and suppliers involved in futures, forward and general trading business in trading business are as follows:
Unit: 10000 yuan
Type of project January September 2021 2020 2019 2018
The main products are PTA and MEG
Main customers: Fujian Zhongying Chemical Co., Ltd., Qingdao Pingdu jiaderui Trading Co., Ltd., Zhejiang Hangshi Shancheng Industrial Co., Ltd., Wanxiang Group and its subordinate enterprises, main customers of income / cost, Xiamen Jianfa raw material trading Co., Ltd., etc
Main suppliers of cargo Trading: Ningbo PENGYUAN Zhihe Trading Co., Ltd., Shanghai Shanshan Trading Co., Ltd., previous period Products Co., Ltd., Donghai Capital Management Co., Ltd. and previous period Capital Management Co., Ltd
Trade income 6754.36 15306.53 3807.26-
Type of project January September 2021 2020 2019 2018
Accounting for 0.18%, 0.41%, 0.14% - proportion of trade business
The main products are PTA and MEG
Main customers: Xiamen Itg Group Corp.Ltd(600755) , Shanghai textile Investment Trading Co., Ltd., Wanxiang Group Co., Ltd
Company and its subordinate enterprises, Zhejiang Zhongnan petrochemical energy Co., Ltd. and Xiamen Xiangyu Co.Ltd(600057) materials
Included in the main customers of trade business and Liuliu Group Co., Ltd
Main suppliers of revenue / cost: Rongsheng Petro Chemical Co.Ltd(002493) , Wanxiang Group and its subordinate enterprises, Shanghai textile investment
Futures Trading Co., Ltd., Shanghai yaoyu Energy Co., Ltd. and Xiamen Xiamen C&D Inc(600153) Co., Ltd
Company, etc
Trade income 925283.98 628779.26 260705.96 579502.93
Accounting for 24.36%, 16.96%, 9.47% and 13.91% of trade business
The main products are Px, PTA and MEG
Main customers: Xiamen Itg Group Corp.Ltd(600755) , Wanxiang Group and its subordinate enterprises, Xiamen Xiangyu Co.Ltd(600057) Logistics Group Co., Ltd., Zhejiang Zhongnan petrochemical energy Co., Ltd. and Zhongji Ningbo Jiyuan trading business main customers and Group Co., Ltd
Main suppliers of revenue / cost: Rongsheng Petro Chemical Co.Ltd(002493) , Wanxiang Group and its subordinate enterprises, Shanghai textile investment general trade Co., Ltd., Xiamen Xiangyu Co.Ltd(600057) Logistics Group Co., Ltd. and Zhejiang Huarui Group Co., Ltd
Trade income 2866596.19 3063098.14 2488610.17 3585438.25
Accounting for 75.46%, 82.63%, 90.39% and 86.09% of trade business
In addition to the trade based on entrusted management, the company's trade business is clearly distinguished from petrochemical, polyester and other businesses.
In terms of production and operation, different subjects, departments and teams are mainly responsible, and corresponding risk isolation measures have been established. The relevant trade business is in the charge of the company's special subjects, departments and teams, and an independent assessment and risk management system has been established; In terms of financial accounting, the financial department mainly calculates the income and cost of productive and trading businesses by "focusing on the differentiation of business entities and supplemented by the differentiation of material codes". The company does not have trade without real transaction background, and there is no situation that the name of trade is actually financing.
2、 Whether there are overlapping customers and suppliers in businesses other than trade and the specific situation, whether all the products purchased from overlapping suppliers are used for trade sales, and whether there are reselling with customers of the same supplier
During the reporting period, the counterparties of both customers and suppliers with large transaction volume with the company are as follows:
Customer / supplier name purchase content sales content is trade business
Before the crude oil and refining products of Vitol Asia Ltd of Brunei PMB petrochemical project are put into operation, they are trading business; Purchase and sell crude oil from it after it is put into operation
Customer / supplier name purchase content sales content is trade business
Refined oil is not a trade business
Brunei shell purchases crude oil and sells refined oil from Brunei shell, which is not a trading business
Yancoat international crude oil and chemical light oil are
It is mainly based on the purchase of raw materials required for production, which does not belong to Rongsheng Petro Chemical Co.Ltd(002493) PTA, PX and other PTA and MEG trade businesses; At the same time, there are sporadic transactions based on production scheduling, which belong to trade business
Xiamen Itg Group Corp.Ltd(600755) PTA, Meg, etc. PTA, Meg, etc. are
Xiamen Xiangyu Co.Ltd(600057) PTA, Meg, etc. PTA, Meg, etc. are
Shanghai textile Investment Trading Co., Ltd. PTA, Meg, etc
Wanxiang Group PTA
