Reply to the third round examination inquiry letter on the application documents for initial public offering and listing on the gem of Guangdong Ruide Intelligent Technology Co., Ltd
Sponsor (lead underwriter)
October, 2001
About Guangdong Ruide Intelligent Technology Co., Ltd
Application documents for initial public offering and listing on GEM
Reply to the inquiry letter of the third round of audit
Shenzhen Stock Exchange:
According to the requirements of the third round examination and inquiry letter on the application documents for initial public offering and listing on the gem of Guangdong Ruide Intelligent Technology Co., Ltd. (audit letter [2021] No. 010866) (hereinafter referred to as the “inquiry letter”) issued by your exchange on July 19, 2021, Guoyuan Securities Company Limited(000728) (hereinafter referred to as ” Guoyuan Securities Company Limited(000728) ” or “sponsor” ）As the sponsor of Guangdong Ruide Intelligent Technology Co., Ltd. (hereinafter referred to as “the company”, “the issuer” or “Ruide intelligent”) for initial public offering and listing on the gem, it has reported to Zhonghua Certified Public Accountants (special general partnership) (hereinafter referred to as “the reporting accountant”) together with the issuer and the issuer ）, based on the principles of diligence, honesty and trustworthiness, we carefully checked, discussed and replied to the questions raised in the inquiry letter one by one. Please review the specific circumstances below.
Unless otherwise specified, the definitions of abbreviations or terms in this reply report are consistent with those in the prospectus of Guangdong Ruide Intelligent Technology Co., Ltd. for initial public offering and listing on the gem (application draft).
The font of this reply report represents the following meanings:
Questions in bold letters
Responses to the questions listed in the inquiry letter in arial (not bold)
Italics (BOLD) replies to the questions listed in the inquiry letter and application documents related to the amendment of the prospectus
In the reply to this inquiry letter, if there is any difference in the mantissa between the sum of the total and the sub item values, it is caused by rounding.
catalogue
catalogue 2 question 1: during the reporting period, the operating revenue grew slowly and the net profit increased rapidly 3 question 2. Chip supply and performance forecast 12 question 3. About transportation costs 18 question 4. About the collection of accounts receivable after the period twenty-one
Question 1: during the reporting period, the operating revenue grew slowly and the net profit increased rapidly
The declaration document shows:
(1) In each period of the reporting period, the operating revenue of the issuer was 831.453 million yuan, 942.8839 million yuan and 1090.2041 million yuan respectively, with an increase of 13.41% and 15.62% in 2019 and 2020 respectively. The net profit attributable to the parent company after deduction was 29.4797 million yuan, 47.7608 million yuan and 65.5039 million yuan respectively, with an increase of 62.01% and 37.15% in 2019 and 2020 respectively. The growth rate of net profit far exceeded the growth rate of operating revenue.
(2) In 2020, the issuer’s sales revenue to the top two customers Zhejiang Supor Co.Ltd(002032) and pure rice showed a downward trend, with a decrease of 20.2071 million yuan and 18.2981 million yuan respectively compared with the sales amount of the previous year. The sales revenue to Guangdong Xinbao Electrical Appliances Holdings Co.Ltd(002705) increased rapidly, with an increase of 33.3921 million yuan.
Please the issuer:
(1) In combination with the slow growth of operating revenue, analyze and disclose whether the issuer’s main business has growth, the reasons for the decrease of sales amount to the top two customers in 2020, whether the issuer’s share of Zhejiang Supor Co.Ltd(002032) and pure rice similar products has decreased, and whether it will continue to decrease in combination with the sales of the above customers and orders on hand from January to June 2021.
(2) Analyze and explain the reasons for the rapid increase of Guangdong Xinbao Electrical Appliances Holdings Co.Ltd(002705) sales amount and whether the sales are mainly concentrated in the fourth quarter.
(3) Analyze and explain the reasons why the growth of net profit far exceeded the growth of operating revenue during the reporting period.
The sponsor and the reporting accountant are requested to express clear opinions.
[reply]
1、 In combination with the slow growth of operating revenue, analyze and disclose whether the issuer’s main business has growth, the reasons for the decrease of sales amount to the top two customers in 2020, whether the issuer’s share of Zhejiang Supor Co.Ltd(002032) and pure rice similar products has decreased, and whether it will continue to decrease in combination with the sales of the above customers and orders on hand from January to June 2021
(i) Analyze and disclose whether the issuer’s main business is growing in combination with the slow growth of operating revenue
The issuer has disclosed the following contents in “IV. sales of the issuer’s products” in “section VI business and technology” of the prospectus:
“(1) the market scale of the issuer’s industry is growing steadily, and the average annual compound growth rate is similar to the growth rate of the company’s operating revenue
In the intelligent controller industry where the issuer is located, due to the low intelligent coverage of the downstream terminal industry, with China’s economic development, social consumption upgrading and related industrial technology upgrading, the application of intelligent controller products continues to expand and extend, and the market demand increases steadily. According to Frost & Sullivan’s data, the scale of China’s intelligent controller market has increased from 1.17 trillion yuan in 2015 to 2.15 trillion yuan in 2019, with an average annual compound growth rate of 16.5%. It is expected that the scale of China’s intelligent controller market will reach 3.8 trillion yuan in 2024 and achieve an annual compound growth rate of 12.5% from 2020 to 2024.
During the reporting period, the issuer’s main business operation was stable, and the operating revenue in 2019 and 2020 increased by 13.41% and 15.62% respectively, which was similar to the market scale growth rate of China’s intelligent controller industry.
From 2018 to 2020, the sales revenue of intelligent controllers in China between the company and comparable companies in the same industry is as follows:
Unit: 100 million yuan
Company name 2020 2019 2018 sales amount increase sales amount increase sales amount
Shenzhen Topband Co.Ltd(002139) 24.9636. 81%18.2421. 22%15.05
Shenzhen H&T Intelligent Control Co.Ltd(002402) 14.1716. 15%12.209. 98%11.10
Wuxi Hodgen Technology Co.Ltd(300279) 15.4011. 45%13.8212. 56%12.28
Shenzhen Longood Intelligent Electric Co.Ltd(300543) 8.2618. 64%6.96-0.99%7.03
Genbyte Technology Inc(003028) 5.1012. 82%4.5220. 28%3.76
Shenzhen Longtech Smart Control Co.Ltd(300916) 3.9654. 00%2.5725. 06%2.06
The average value is 11.9724 98%9.7214. 68%8.54
Issuer 10.6616 20%9.1815. 68%7.93
Note 1: the data of the above comparable companies are from the company’s annual report, prospectus and other public information disclosure documents; Note 2: the sales amount of the issuer during the reporting period and the sales amount of Genbyte Technology Inc(003028) , Shenzhen Longtech Smart Control Co.Ltd(300916) in 2018 and 2019 are related to the main business.
It can be seen from the above table that the growth rate of the issuer’s sales revenue in China in 2019 is basically consistent with the average value of comparable companies in the same industry; The growth rate of the issuer’s sales revenue in China in 2020 is similar to that of comparable companies Shenzhen H&T Intelligent Control Co.Ltd(002402) , Wuxi Hodgen Technology Co.Ltd(300279) , Shenzhen Longood Intelligent Electric Co.Ltd(300543) , Genbyte Technology Inc(003028) .
In conclusion, the income growth rate of the issuer during the reporting period is similar to the market scale of the industry and the growth rate of comparable listed companies in the same industry, which is in line with the steady growth of the industry. With the continuous improvement of market demand, the issuer’s operating revenue will continue to grow. Therefore, the issuer’s main business is growing. ”
(2) The issuer’s strong market competitiveness and customer resource development ability help to improve its sustainable profitability
As one of the pioneer enterprises in the industry, since the company was founded and entered the intelligent controller industry, the company has gradually established its market position in the home appliance industry chain. In the development process, the company attaches importance to the accumulation of independent R & D experience and the improvement of manufacturing process. Through long-term industry exploration, the company has the flexible service ability to quickly respond to the needs of customers in multiple batches, and has established a competitive position in the industry. By comparing the key business data such as the scale of operating income, the number of employees and the number of intellectual property rights of comparable listed companies in the same industry, the company has strong competitiveness. With the continuous expansion of financing channels and business scale, the company’s position in the industry will be further improved in the future. At the same time, the company has been deeply engaged in the industry for more than 20 years and has a number of high-quality customers with good reputation, strong strength, great demand and stable business relations, including well-known brand manufacturers such as Zhejiang Supor Co.Ltd(002032) , Midea, chunmi, Emmett and Xinbao. Years of accumulated rich industry experience and valuable high-quality customer resources have not only brought the company sustained and stable income, but also established a good reputation and brand image, and improved the company’s market popularity. On the basis of deepening cooperation with existing customers, the company makes full use of existing resource advantages and R & D advantages, continuously strengthens market expansion and new customer development, and improves the company’s sustainable profitability.
To sum up, the market demand of the company’s industry continues to grow, the industry status is gradually improved, the customer cooperation is stable for a long time, the market development ability is continuously strengthened, and the company’s main business is growing.
（2） Reasons for the decrease of sales amount to the top two customers in 2020
In 2020, the company’s sales amount of Zhejiang Supor Co.Ltd(002032) was 289.364 million yuan, a decrease of 20.2071 million yuan or 6.53% compared with 2019. The main reasons for the decrease of the company’s sales amount were: affected by the decline of offline channel traffic caused by covid-19 epidemic situation, Zhejiang Supor Co.Ltd(002032) the operating revenue of electrical appliances in 2020 was 12.915 billion yuan, a decrease of 4.51% compared with 2019, The decline in the operating revenue of Zhejiang Supor Co.Ltd(002032) electrical appliances reduced Zhejiang Supor Co.Ltd(002032) demand for intelligent controllers, resulting in a decrease in the company’s sales amount of Zhejiang Supor Co.Ltd(002032) .
In 2020, the company’s sales amount of pure rice was 86.184 million yuan, a decrease of 18.2981 million yuan or 17.52% compared with 2019. The main reasons for the decrease of the company’s sales amount are: on the one hand, In 2020, pure rice adjusted the product structure of kitchen appliances according to the market demand (increasing low unit price products and reducing the output of high unit price products), resulting in the reduction of the unit price of intelligent controllers sold by the company (in 2020, the company’s sales unit price decreased by 15.65% compared with 2019), resulting in a decrease in sales amount; on the other hand, in 2020, due to the adjustment of the assembly manufacturers of individual models of pure rice products, the corresponding assembly manufacturers of intelligent controllers provided by the company no longer assemble such models of pure rice products, resulting in the company’s involvement in this model during the transition period of adjusting the assembly manufacturers of pure rice The purchase order of intelligent controller corresponding to the product is reduced; In addition, with the continuous expansion of the business scale of pure rice, pure rice gradually introduces other suppliers from the perspective of the stability and security of the intelligent controller supply chain system, which also has a certain impact on the company’s acquisition of pure rice orders.
（3） Does the issuer’s share of Zhejiang Supor Co.Ltd(002032) and pure rice similar products decrease
During the reporting period, the company’s share of similar products sold in Zhejiang Supor Co.Ltd(002032) and pure rice is as follows:
No. customer name the proportion of products sold by the company to its similar products purchased during the reporting period
1 Zhejiang Supor Co.Ltd(002032) Zhejiang Zhejiang Supor Co.Ltd(002032) home appliance manufacturing Co., Ltd. and Zhejiang Shaoxing Zhejiang Supor Co.Ltd(002032) household appliances Co., Ltd. account for about 35%, 38%, 41% and 40%.
Chunmi Technology (Shanghai) Co., Ltd. and Wuhu chunmi Electronic Technology Co., Ltd. account for 2% of pure meters, and the proportion of subdivided categories is about 100%, 90%, 70% and 70%; the proportion of Guangdong chunmi Electric Appliance Technology Co., Ltd. in 2020 and the first half of 20201 is 100% and 70%.
Note: the proportion of products sold by the company to its procurement of similar products comes from the interview records of the sponsor and the reporting accountant with the above customers.
It can be seen from the above that the company’s share of Zhejiang Supor Co.Ltd(002032) similar products is relatively stable. The company’s share of similar products of pure rice decreased during the reporting period, mainly because: as the core component of household appliances, with the continuous expansion of the business scale of pure rice, pure rice gradually introduced other suppliers from the perspective of the stability and security of the intelligent controller supply chain system, resulting in the decrease of the company’s share of similar products.
（4） Combined with the above customers from January to June 2021
