The prospectus for gem listing was submitted in March this year and entered a round of inquiry at the end of June. After more than half a year, Hubei Dongtian Micro Technology Co., Ltd. (hereinafter referred to as Dongtian micro) engaged in the R & D, production and sales of precision photoelectric thin film components is still in four rounds of inquiry.
Dongtian micro’s main products are camera filters and optical communication components, which can be widely used in many application terminal fields such as consumer electronic products, vehicle mounted cameras, security monitoring equipment, optical communication signal transmission, data center, etc Shenzhen Txd Technology Co.Ltd(002845) and other well-known camera module manufacturers at home and abroad have established direct, long-term and stable cooperative relations. The terminals are applied to smart phones of well-known brands such as Huawei, Xiaomi, oppo, vivo, voice transmission, Samsung and glory.
From 2018 to the first half of 2021, the operating revenue of Dongtian micro was 136 million yuan, 284 million yuan, 458 million yuan and 212 million yuan respectively, and the net profit attributable to the parent after deduction was 52.666 million yuan, 29.1521 million yuan, 64.9597 million yuan and 35.1857 million yuan respectively.
After several rounds of inquiries, Dongtian micro’s cooperation with the largest customer Ofilm Group Co.Ltd(002456) and its ability to continue operation have been asked many times. However, the company said that it has established a long-term and stable cooperative relationship with Ofilm Group Co.Ltd(002456) , its business has stability and sustainability, and the change of downstream competition pattern will not have a great negative impact on the company.
In addition, as of the fourth round of inquiries, the asset restructuring matters not disclosed by the company were questioned by the regulators.
Ofilm Group Co.Ltd(002456) affects the ability to continue as a going concern?
From 2018 to 2020, Ofilm Group Co.Ltd(002456) was the largest customer of Dongtian micro. The company’s sales revenue of Ofilm Group Co.Ltd(002456) was 36.1209 million yuan, 107 million yuan and 183 million yuan respectively, accounting for 26.49%, 37.76% and 39.99% of the operating revenue respectively; However, the sales revenue of Ofilm Group Co.Ltd(002456) in the first half of 2021 was 56.3926 million yuan, a decrease of 28.03% compared with the first half of 2020 and 46.18% compared with the second half of 2020. As of June 30, 2021, the amount of orders on hand for Ofilm Group Co.Ltd(002456) was 5.9388 million yuan, a significant decrease year-on-year.
In this regard, the regulatory authorities required to analyze the reasons for the significant decline in the issuer’s sales to Ofilm Group Co.Ltd(002456) in 2021 in combination with the main application terminal brands of Ofilm Group Co.Ltd(002456) purchased the issuer’s products; In combination with the latest operation and development trend of Ofilm Group Co.Ltd(002456) , year-on-year and month on month changes of orders on hand, analyze the sustainability of the issuer’s business cooperation with Ofilm Group Co.Ltd(002456) , the subsequent collection of relevant accounts receivable and the adequacy of bad debt provision. In addition, it is also necessary to explain the main projects under cooperation with Ofilm Group Co.Ltd(002456) , and the impact of the decline of Ofilm Group Co.Ltd(002456) performance on the issuer’s operating performance, Whether the sharp decline of Ofilm Group Co.Ltd(002456) performance will change the competition pattern of the whole downstream industry and have a negative impact on the issuer’s business.
In the first half of 2021, due to the termination of cooperation by specific customers, the sharp decline of Huawei’s mobile phone shipment and the sharp decline of mobile phone shipment in the second quarter of 2021, Ofilm Group Co.Ltd(002456) its own operating performance began to decline.
Dongtian micro replied that the company’s sales of Ofilm Group Co.Ltd(002456) decreased significantly in 2021, mainly due to the sharp decline of Ofilm Group Co.Ltd(002456) own revenue scale, resulting in the sharp decline of Ofilm Group Co.Ltd(002456) procurement scale from upstream filter enterprises. The company’s sales through Ofilm Group Co.Ltd(002456) are mainly used in Xiaomi, Huawei, glory and vivo brand mobile phones, accounting for 25% – 30% of the overall procurement proportion of Ofilm Group Co.Ltd(002456) filters.
Dongtian micro also said that the company’s business cooperation with Ofilm Group Co.Ltd(002456) is sustainable. Since becoming a qualified supplier of Ofilm Group Co.Ltd(002456) in 2015, it has established a long-term and stable cooperation relationship with Ofilm Group Co.Ltd(002456) with stable product quality, mature coating process and rapid customer demand response ability. The company’s products have not been used in Apple smartphones, Changes in Ofilm Group Co.Ltd(002456) specific customers did not directly affect the stability and sustainability of the company’s business with Ofilm Group Co.Ltd(002456) .
Although Ofilm Group Co.Ltd(002456) is the largest customer of Dongtian micro, the sharp decline in its revenue scale has had a certain negative impact on the company, the change of downstream competition pattern will not have a significant negative impact on the company. On the one hand, the huge market demand trend for terminal mobile camera remains unchanged, on the other hand, except Ofilm Group Co.Ltd(002456) , The company has maintained long-term and stable cooperative relations with major camera module manufacturers in the market, and continues to develop new module customers.
At the same time, Liu Chuang, Zhao Gangke and Zhou Shuhua, deputy general managers of Dongtian micro, have all worked in Ofilm Group Co.Ltd(002456) . Among them, Zhao Gangke and Zhou Shuhua joined the company in January 2019 and June 2018 respectively, and Zhao Gangke also served as the technical director of the company.
The regulatory authorities require to explain whether the senior management of the issuer once worked in Ofilm Group Co.Ltd(002456) involves violation of non competition and confidentiality terms, whether the core technology of the issuer comes from relevant personnel, whether there is infringement of other parties’ intellectual property rights or trade secrets, and whether there is dispute or potential dispute; Before and after the relevant personnel joined the issuer, the reasons for the explosive growth of the issuer’s sales amount of Ofilm Group Co.Ltd(002456) and whether there were commercial bribery, unfair competition or benefit transfer.
According to the reply, in order to improve its management and technical level, Dongtian micro hired Zhou Zhao to work in Dongguan micro science office through market-oriented recruitment; According to the agreement on termination of non competition signed by Zhou Shuhua and Zhao Gangke with Ofilm Group Co.Ltd(002456) respectively, both of them have terminated the non competition agreement with Ofilm Group Co.Ltd(002456) ; And through the verification of the two people’s Bank flow, it was not found that Ofilm Group Co.Ltd(002456) paid non competition compensation to the two people; According to the interview with Liu Chuang, there is no violation of the non competition clause and confidentiality clause between him and Ofilm Group Co.Ltd(002456) .
Dongtian Wei said that according to the written documents issued by Zhao Gangke, Zhou Shuhua and Liu Chuang, the three confirmed that they did not use or partially use their job achievements or trade secrets in their original units, and applied for relevant intellectual property rights or applied to the company’s production and operation activities in the name of the company. If the issuer suffered losses due to the above reasons, It will bear all compensation liabilities to the issuer.
According to the preliminary calculation of Dongtian micro, the company expects the operating revenue to be about 400 million yuan to 410 million yuan in 2021, a year-on-year decrease of 12.66% to 10.48%; It is estimated that the net profit attributable to the parent company in 2021 will be 61 million yuan to 63 million yuan, a year-on-year decrease of 6.10% to 3.02%.
gross profit margin
The prospectus shows that the company and Zhejiang Crystal-Optech Co.Ltd(002273) , Hubei W-Olf Photoelectric Technology Co.Ltd(002962) are the main suppliers of infrared cut-off filters. In 2020, the company, Zhejiang Crystal-Optech Co.Ltd(002273) and Hubei W-Olf Photoelectric Technology Co.Ltd(002962) camera filters accounted for 14.31%, 25.73% and 20.90% of the smartphone market respectively, totaling 60%.
The interface news reporter noted that as of the fourth round of inquiry, information related to Dongtian micro’s gross profit margin was still required to be disclosed.
Source: prospectus
From 2018 to 2020, the Hubei W-Olf Photoelectric Technology Co.Ltd(002962) , Zhejiang Crystal-Optech Co.Ltd(002273) , Hangzhou Mdk Opto Electronic Corporation Limited(688079) gross profit margin of comparable companies in the same industry showed an overall downward trend, while Dongtian micro gross profit margin increased year by year; In the first half of 2021, the gross profit margin of peers continued to decline, while Dongtian micro still increased in the same period. The change trend of the company’s gross profit margin was basically inconsistent with that of peers, which also attracted four questions from the regulators.
For example, in a round of inquiries, the regulators required to analyze and disclose the reasons why the change trend of the issuer’s gross profit margin in 2019 and 2020 was inconsistent with comparable companies in the same industry, whether the issuer’s industry faced the risk of increased competition, and whether there was a risk of decline in the gross profit margin.
Dongtian explained that there are many kinds of smart phone parts, and the product price and gross profit margin of different products are different due to differences in functions, technologies, specifications and customer groups, resulting in differences in the gross profit margin of Companies in the industry.
At the same time, Toyoda said that there is also a risk of intensified competition in the industry. In recent years, the market demand for optical components is strong, especially the smart phone brand manufacturers continue to make optical innovation, the mobile phone multi camera penetration rate continues to improve, the manufacturing prospect of optical components is broad, the investment willingness of enterprises inside and outside the industry is enhanced, and the industry competition is becoming increasingly fierce, Fierce market competition may lead to an increase in the overall production capacity of the industry and a decline in the average profit level.
Subsequently, in the second round of inquiries, the regulators required to analyze whether the decline in the purchase price of raw materials would be transmitted to the product price of the issuer and then affect the gross profit margin of the issuer in combination with the pricing mechanism of the issuer and customers.
Dongtian micro’s main raw materials include blue glass, mirror base, etc. From 2018 to the first half of 2021, the total purchase amount of the above main raw materials in each period was 32.6106 million yuan, 75.0272 million yuan, 138 million yuan and 52.7953 million yuan respectively, accounting for 40.72%, 49.92%, 57.05% and 54.53% of the total purchase amount of the current period respectively.
According to the reply, the market supply of the main raw materials of the filter is sufficient and the competition is fierce. The procurement department of the company will inquire and negotiate with the main raw material suppliers at the end of each quarter to determine the purchase price of raw materials in the next quarter. Usually, each negotiation will reduce the purchase price of raw materials, Therefore, after the decline of the purchase price of main raw materials is transmitted to the selling price of the issuer’s products, it will have an impact on the issuer’s gross profit margin. If the decline of the purchase price of raw materials leads to the decline of the product cost more than the decline of the product price, it will be conducive to the increase of the issuer’s gross profit margin, otherwise it will lead to the decline of the issuer’s gross profit margin.
Three rounds of inquiries are required to analyze the reasons why the gross profit margin of the issuer’s camera filter is higher than that of Zhejiang Crystal-Optech Co.Ltd(002273) and Hangzhou Mdk Opto Electronic Corporation Limited(688079) in 2019 and 2020, and further analyze and improve the reasons for the increase of the issuer’s gross profit margin during the reporting period and the reasons why the change trend of the gross profit margin is inconsistent with that of comparable companies in the same industry.
It is reported that Zhejiang Crystal-Optech Co.Ltd(002273) is an enterprise specializing in the design, R & D and manufacturing of the optical optoelectronic industry, focusing on providing a full range of optical optoelectronic related products and services for industry-leading customers. Optical components are the main business of Zhejiang Crystal-Optech Co.Ltd(002273) , including infrared cut-off filters and their assembly products.
According to the reply, from 2018 to the first half of 2021, the gross profit margin of Dongtian micro camera filter was 25.34%, 30.05%, 30.04% and 31.04% respectively. The reason why the gross profit margin of Zhejiang Crystal-Optech Co.Ltd(002273) optical components business was higher than that of Zhejiang Crystal-Optech Co.Ltd(002273) from January to June 2019 to 2021 is that first, the business model of Zhejiang Crystal-Optech Co.Ltd(002273) and its main customers affected its gross profit margin level; Second, Zhejiang Crystal-Optech Co.Ltd(002273) there are many kinds of optical components and products with low gross profit margin; And the company benefited from a significant increase in the sales proportion of high-strength ultra-thin blue glass infrared cut-off filters, and the gross profit margin in the first half of 2021 was further higher than Zhejiang Crystal-Optech Co.Ltd(002273) .
The camera filter of Hangzhou Mdk Opto Electronic Corporation Limited(688079) was not used in Apple mobile phones. The sharp decline in gross profit margin in 2019 was mainly caused by business changes such as its product structure and purchased coating products. Compared with products with higher comparability, the gross profit margin of the company’s ordinary optical glass infrared cut-off filter in 2019 and 2020 was basically the same as that of Hangzhou Mdk Opto Electronic Corporation Limited(688079) .
difference between two financial data disclosures
In addition, the listing standard of Dongtian micro has also changed.
The listing standard selected in the first application document of Dongtian micro is “the estimated market value is not less than 1 billion yuan, the net profit in the latest year is positive and the operating income is not less than 100 million yuan”. The updated application document changes the listing standard to “the net profit in the last two years is positive and the cumulative net profit is not less than 50 million yuan”.
In this regard, the regulators asked Dongtian micro to explain the reasons for the company’s modification of the selected listing standards and whether it still meets the original listing standards.
Dongtian micro said that the reason why listing standard 2 was applied in the initial declaration document was that the reporting periods of the company when it first declared in March 2021 were 2017, 2018, 2019 and January September 2020. The net profits attributable to the owners of the parent company in the last two years (2018 and 2019) (whichever is lower before and after deducting non recurring profits and losses) were 5.2666 million yuan and 1.85 million yuan respectively, If it fails to meet the requirements of listing standard I, the accumulated net profit in the last two years shall not be less than 50 million yuan.
At the same time, the company also said that according to its own operation, financial data, the latest private equity financing, valuation of comparable companies and other comprehensive analysis and evaluation, it still meets the listing standard II.
The interface news reporter also noted that in the fourth round of inquiry, the regulators mentioned an issue not involved in previous rounds, which originated from the previous asset restructuring of Dongtian micro.
The prospectus shows that at present, Gao Denghua and Xie Yun are the controlling shareholders and actual controllers of Dongtian micro, each directly holding 26.88% and 20.62% of the shares of the company, and controlling 9.02% of the shares of the company through Dongguan smile and Xinyu Ruitian. Therefore, Gao Denghua and Xie Yun jointly control 56.52% of the voting rights of the company.
In May 2019, the listed company Shenzhen Hekeda Precision Cleaning Equipment Co.Ltd(002816) (002816. SZ) plans to purchase 100% equity of Dongtian Co., Ltd. jointly held by Gao Denghua, Xie Yun, Shuangcheng Ruijian and Dongguan smile by issuing shares. The overall valuation of Dongtian Co., Ltd. in this restructuring transaction is RMB 351 million.
In June 2019, Shenzhen Hekeda Precision Cleaning Equipment Co.Ltd(002816) announced the termination of the above major asset restructuring. Dongtian micro said that the main reason was that Shenzhen Hekeda Precision Cleaning Equipment Co.Ltd(002816) did not reach an agreement with the actual controller of the company on the core terms of the transaction.
Image source: Shenzhen Hekeda Precision Cleaning Equipment Co.Ltd(002816) announcement
According to the proposal on issuing shares to purchase assets and related party transactions disclosed by Shenzhen Hekeda Precision Cleaning Equipment Co.Ltd(002816) , the main financial data (Unaudited) of Dongtian micro in 2017, 2018 and January March 2019 are disclosed in the transaction plan, but there are some differences between the financial data disclosed in the transaction plan and the relevant data disclosed in the prospectus of Dongtian micro.
Therefore, the regulators require Dongtian micro to explain the main differences and reasons between the main financial data and indicators of the issuer involved in the previous restructuring and the contents of this declaration.
Dongtian micro explained that the financial data in the transaction plan is mainly the financial data after the initial adjustment of the issuer’s original statements by Lixin, an accountant hired by the listed company Shenzhen Hekeda Precision Cleaning Equipment Co.Ltd(002816) , while the financial data in the issuer’s prospectus is the data fully audited by Tianjian Institute, resulting in certain differences, as follows:
Photo source: reply to four rounds of inquiry
It is worth noting that the difference in the operating revenue of Dongtian micro in the financial data of the first quarter of 2019 is more than 10 million yuan (the operating revenue of the first quarter of 2019 disclosed in the prospectus is 47.2266 million yuan, and the operating revenue of the first quarter of 2019 disclosed in the transaction plan is 59.1769 million yuan), Dongtian micro said that the company and the sponsor could not obtain the adjustment details of financial data disclosed by Lixin on the transaction plan, and could not accurately know the reasons for the differences.
However, the operating income of the company’s original report for the first quarter of 2019 was 50.6599 million yuan, which was slightly different from the reported report of 3.4333 million yuan. It was said that the main reason for the difference was due to the cut-off adjustment.
(interface News)
