Securities code: 002667 securities abbreviation: Anshan Heavy Duty Mining Machinery Co.Ltd(002667) Announcement No.: 2021-144
Anshan Heavy Duty Mining Machinery Co.Ltd(002667)
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.
Anshan Heavy Duty Mining Machinery Co.Ltd(002667) (hereinafter referred to as “the company”) recently received the attention letter on Anshan Heavy Duty Mining Machinery Co.Ltd(002667) issued by the company Department of Shenzhen Stock Exchange (company Department attention letter [2021] No. 459) (hereinafter referred to as “the attention letter”). In response to the relevant issues mentioned in the attention letter, the company replied as follows after self-examination:
On December 15, 2021, Your company disclosed the announcement on the acquisition of 70% equity of Jiangxi Jinhui renewable resources Co., Ltd. (hereinafter referred to as the announcement) that your company plans to acquire Jiangxi Jinhui renewable resources Co., Ltd. (hereinafter referred to as the announcement) with its own and self raised funds of RMB 231 million through Yichun Youli Technology Co., Ltd. (hereinafter referred to as Yichun Youli) “Jinhui regeneration”) 70% shares.
Our ministry is concerned about this. Please verify and explain the following matters:
Question 1. Your company’s report for the third quarter of 2021 shows that as of September 30, 2021, the ending balance of monetary funds of your company is 242 million yuan.
Please your company:
(1) Explain the specific capital source of the acquisition and the impact of the acquisition on the working capital, current ratio and asset liability ratio of the listed company;
reply:
(i) Specific capital source of this acquisition
The listed company intends to pay the consideration of this transaction with its own funds and M & A loans, as follows:
1. Own funds
As of October 31, 2021, the monetary capital of the listed company was 230.9012 million yuan, of which the over raised capital was 29.4467 million yuan, with no restricted part. The company plans to use 115.5 million yuan to pay the first phase of the transaction consideration.
2. Special loan for M & A
For the second phase and subsequent price of this acquisition, the listed company is actively communicating with relevant banks and plans to apply for an M & a loan line of no less than 50% of the transaction consideration and no less than 115.5 million yuan.
（2） The impact of the acquisition on the working capital, current ratio and asset liability ratio of the listed company
The working capital, current ratio and asset liability ratio of the listed company before and after the transaction are as follows:
October 31, 2021
Comparison before and after project transaction
Working capital (10000 yuan) 48043.7633234.32-30.82%
Current ratio 3.512 25-35.90%
Asset liability ratio 22.73% 37.06% 14.33%
Note 1: the data after the transaction of listed companies are prepared assuming that the transaction will be completed on October 31, 2021.
Note 2: the above financial data have not been audited. Note 3: the asset liability ratio is calculated based on the acquisition of M & A loans with an amount of 115.5 million yuan.
After the acquisition, Jinhui regeneration will be included in the consolidated statements of the listed company. As of October 31, 2021, the current assets of Jinhui regeneration are RMB 48.5822 million and the current liabilities are RMB 77.1122 million. The transaction consideration of the listed company to be paid with its own funds is RMB 115.5 million. After the merger, the working capital of the listed company will be reduced by RMB 148.0944 million and the current ratio will be reduced by 35.90%.
As of October 31, 2021, Jinhui’s total renewable assets were 178.8596 million yuan and total liabilities were 133.6451 million yuan. Part of the funds for this acquisition will come from the M & A loans provided by the bank. Due to borrowing, the non current liabilities of the parent company of the listed company are expected to increase by at least 115.5 million yuan. The above reasons will lead to an increase of at least 14.33% in the asset liability ratio of listed companies.
After this transaction, the working capital and current ratio of the listed company have decreased and the asset liability ratio has increased, but the overall situation remains within a reasonable range. This transaction has not had a significant adverse impact on the capital structure and operating capacity of the listed company.
(2) In combination with your company’s monetary capital, liabilities, funds required for daily operation and the current situation that the net cash flow of operation is negative, explain whether the self owned funds of the listed company can meet the operation needs and whether new debt financing is required after the payment of the acquisition consideration. If so, explain the estimated financing scale and financial burden. If not, explain whether the company has liquidity risk, And supplement relevant risk tips.
reply:
As of October 31, 2021, the asset liquidity of the listed company is as follows:
Project October 31, 2021
Quick assets before the completion of the transaction (10000 yuan) 4796385
Including: monetary capital (10000 yuan) 2309012
Quick assets after transaction completion (RMB 10000) 3868508
Including: monetary capital (10000 yuan) 1163801
Current liabilities (10000 yuan) 2659207
Including: accounts payable (10000 yuan) 311768
Notes payable (10000 yuan)-
Payroll payable (10000 yuan) 90757
Tax payable (10000 yuan) 80988
The quick ratio after the completion of the transaction is 145.48%
Note: quick assets = current assets – inventory
After the purchase consideration of this transaction is paid, the quick ratio of the listed company is 145.48%, the asset liquidity is good, and its own funds can meet the business needs without new debt financing.
Question 2. The announcement shows that as of October 31, 2021, the ending balance of Jinhui renewable’s total assets is 167 million yuan and the ending balance of total liabilities is 129 million yuan, including short-term loans of 18.93 million yuan and long-term loans of 47.41 million yuan. Jinhui renewable asset liability ratio was 77.24%.
Please your company:
(1) Explain the necessity of this acquisition, whether it is conducive to improving the financial situation of the listed company, and the impact of this transaction on the financial security of your company;
reply:
（1） Necessity of this acquisition
The company is mainly engaged in the R & D, manufacturing, sales and service of mining, construction and road construction machinery and equipment. Its main products are vibrating screen and precast concrete component production line and trade business. The company’s original business (vibrating screen and PC component) remains stable.
China’s new energy industry has very good development prospects. In order to better develop the new energy industry, the state has issued a series of policies, including comprehensive policies and industrial policies, and pay more attention to the interactive development of the new energy industry chain. In this context, the management of the company is firmly optimistic about the development prospect of the new energy industry and focuses on the layout of relevant industrial assets in order to seek new business growth points of the company.
At present, the target company has developed into a company integrating R & D, production and sales, specializing in non-metallic tantalum niobium lithium ore The combination, separation, extraction and comprehensive utilization of waste rock (tailings) treatment is to realize a production-oriented, environmental protection and scientific and technological national high-tech enterprise of circular economy. The target company can strengthen the company’s processing capacity in the beneficiation of non-metallic tantalum, niobium and lithium, which is an essential link to improve the company’s layout in the whole lithium battery upstream industrial chain
Through this transaction, the company will improve the layout of the upstream industrial chain of new energy, implement the strategic deployment, improve the overall profitability, optimize the allocation of resources, improve the return to shareholders, comply with the company’s development strategy, improve operating efficiency, promote the coordinated development of the company, and then enhance the company’s sustainable profitability.
（2） This acquisition is conducive to improving the financial situation of the listed company and will not have a significant adverse impact on financial security
1. This transaction is conducive to optimizing the capital structure and improving the asset quality of listed companies
The company plans to use its wholly-owned subsidiary Yichun Youli Technology Co., Ltd. with its own and self raised funds of RMB (corresponding to 70% of the shares held by the target company). After the acquisition, the target company will become the holding subsidiary of the company and be included in the scope of the company’s consolidated statements, realizing Anshan Heavy Duty Mining Machinery Co.Ltd(002667) The controlling position of the underlying assets is in line with the company’s long-term development strategy, so that the listed company and the underlying assets can develop faster and better.
As of October 31, 2021, the total assets of Anshan Heavy Duty Mining Machinery Co.Ltd(002667) after the transaction increased by 264.8924 million yuan, an increase of 27.09%; The total liabilities increased by 238308200 yuan or 107.24% compared with that before the transaction; The asset liability ratio increased from 22.73% to 37.06%, an increase of 14.33%. The details are shown in the table below:
October 31, 2021
project
Changes before and after the transaction
Total liabilities (10000 yuan) 22222.8646053.6823830.82
Total assets (10000 yuan) 97780.16124269.4026489.24
Asset liability ratio 22.73% 37.06% 14.33%
Although the Anshan Heavy Duty Mining Machinery Co.Ltd(002667) asset liability ratio has increased after the acquisition, it will not have a significant adverse impact on the listed company itself or financial security. In the future, with the increase of the profits of the acquired assets, the financial situation of the listed company can be further improved.
2. This transaction is conducive to improving the financial situation and enhancing the sustainable profitability
After the completion of this transaction, Jinhui regeneration will be included in the consolidated financial statements of the listed company, and the net profit attributable to the owner of the parent company will be further increased.
After the completion of this transaction, the simulated gross profit margin and net profit margin of the listed company have increased, and the overall profitability has been enhanced. The net profit attributable to the owner of the parent company in 2020 and January October 2021 has increased by 8.6744 million yuan and 5.8427 million yuan respectively, with an increase of 166.24% and 25.77% respectively.
The target company estimates that in 2022 The net profit of the subject matter in 2023 and 2024 (calculated by deducting non recurring profits and losses) shall not be less than 53 million yuan, 55 million yuan and 52 million yuan respectively, and the total shall not be less than 160 million yuan. Relevant performance compensation measures shall be taken to provide a strong guarantee for further improving the profitability of the listed company. (2) Explain the subsequent debt repayment arrangement of Jinhui regeneration and its impact on the performance and cash flow of listed companies.
reply:
1. Subsequent repayment arrangement of Jinhui regeneration
As of October 31, 2021, the balance of Jinhui renewable short-term loans was 18.932 million yuan, including 6.7 million yuan of mortgage loans, 12.2 million yuan of guaranteed loans and 32000 yuan of undue interest payable; The balance of long-term loans is 48.41 million yuan, including mortgage loans of 47.41 million yuan and guaranteed loans of 1 million yuan. After the maturity of the above loans, the target company will maintain the existing liability structure by means of renewal of loans according to the actual production and operation needs.
2. Impact on performance and cash flow of listed companies
The performance of the target company in the forecast period is as follows:
