Securities abbreviation: Shanghai Pharmaceuticals Holding Co.Ltd(601607) securities code: Shanghai Pharmaceuticals Holding Co.Ltd(601607) Shanghai Pharmaceuticals Holding Co.Ltd(601607)
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Anxin Securities Co., Ltd
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Reply to the letter on making preparations for the meeting of the stock issuance and Examination Committee of Shanghai Pharmaceuticals Holding Co.Ltd(601607) non-public Development Bank
Sponsor (lead underwriter)
March, 2002
China Securities Regulatory Commission:
On March 5, 2022, your Association issued the letter on making preparations for the meeting of the stock issuance and Examination Committee of Shanghai Pharmaceuticals Holding Co.Ltd(601607) non-public Development Bank (hereinafter referred to as the "notification letter"). According to the requirements of the notification letter, Shanghai Pharmaceuticals Holding Co.Ltd(601607) (hereinafter referred to as " Shanghai Pharmaceuticals Holding Co.Ltd(601607) ," issuer "or" company ") has met with Anxin Securities Co., Ltd. (hereinafter referred to as" Anxin securities "or" sponsor "), Guohao law firm (Shanghai) (hereinafter referred to as" issuer lawyer "or" lawyer ") PricewaterhouseCoopers Zhongtian Certified Public Accountants (special general partnership) (hereinafter referred to as the "accountant") and other relevant intermediaries have carefully conducted supplementary investigation and verification on the questions raised in the notification letter one by one, and replied to the notification letter of your association one by one and expressed clear opinions. Please review.
The financial statements of the issuer from 2018 to 2020 have been audited by PricewaterhouseCoopers Zhongtian Certified Public Accountants (special general partnership), and the financial statements of the issuer from January to June 2021 have not been audited.
Unless otherwise specified, the terms, names and abbreviations used in this reply are the same as those in the due diligence report of Anxin Securities Co., Ltd. on Shanghai Pharmaceuticals Holding Co.Ltd(601607) 2021 non-public development of A-share shares, and the corresponding fonts are as follows:
The questions listed in the notification letter are bold and bold
Reply to question
In this reply, there are differences in the mantissa between the sum of some totals and the direct addition of each addend. These differences are caused by rounding.
catalogue
Question 1: about strategic investors Yunnan Baiyao Group Co.Ltd(000538) intends to participate in the applicant's non-public offering as a strategic investor. After the issuance, Yunnan Baiyao Group Co.Ltd(000538) is expected to hold 18.02% of the applicant's equity and become the second largest shareholder of the applicant. According to the application materials, Yunnan Baiyao Group Co.Ltd(000538) can bring relevant strategic resources for the applicant to expand business. According to the applicant's prediction, if the above strategic cooperation can be successfully implemented, it is expected that the proportion of R & D investment, sales revenue and profitability of the issuer will be greatly improved in the next three years, the product echelon and business layout will be more perfect, and the competitiveness of new products to achieve the company's medium and long-term innovation and development strategic objectives will be gradually built Yunnan Baiyao Group Co.Ltd(000538) overlaps with the business scope of the issuer. The applicant is requested to: (1) further explain whether Yunnan Baiyao Group Co.Ltd(000538) meets the relevant requirements for strategic investors in the Q & A on issuance supervision, whether it can significantly improve the profitability or sales performance of listed companies, in combination with whether Yunnan Baiyao Group Co.Ltd(000538) can bring international and Chinese leading core technology resources or international and Chinese leading markets, channels, brands and other strategic resources, The necessity and commercial rationality of introducing Yunnan Baiyao Group Co.Ltd(000538) as a strategic investor; (2) Further explain whether the strategic investment agreement defines the advantages of strategic investors and their synergy with listed companies, the cooperation mode, cooperation field, cooperation objectives, cooperation period, the number of shares to be subscribed by strategic investors, pricing basis, arrangements for participating in the operation and management of listed companies, shareholding period and future exit arrangements Liability for breach of contract for failure to perform relevant obligations; (3) Further explain the basis and rationality of the above prediction; (4) Explain whether there are similarities and differences between the two sides in the disease field focused by products in the pharmaceutical industry, whether there are overlapping channels in the field of pharmaceutical circulation, whether there is business competition with Yunnan Pharmaceutical Co., Ltd. and whether the introduction of war investment has an adverse impact on the applicant's existing business, resulting in damage to the interests of the issuer 4 question 2: about marketing fees. According to the application materials, during the reporting period, the market promotion degree of the applicant accounted for more than 40% of the sales expenses, mainly including conference expenses, forum expenses, market research and promotion, advertising of retail drugs, etc. The applicant is requested to: (1) explain the detailed composition of sales expenses and the changes during the reporting period, and conclude the situation of Companies in the contract industry, and explain whether the proportion of marketing expenses is different from that of comparable companies in the same industry. If so, please explain the reasons and rationality; (2) In combination with the punishment of the accounting information quality inspection of the Ministry of Finance and the untrue attached materials related to the disbursed promotion conference expenses, research expenses, travel expenses, academic activity expenses and so on, explain whether there are commercial bribery and other acts in the process of marketing and product sales, and whether there are illegal and illegal business acquisition Question 3: about Shanghai Shangshi group finance company. On March 29, 2019, the applicant disclosed the announcement on renewing the financial service agreement and related / connected transactions with Shanghai Shangshi Group Finance Co., Ltd., which agreed that the maximum daily deposit balance of the applicant in Shangshi finance shall not be higher than RMB 3 billion and the comprehensive trust balance obtained shall not be higher than RMB 4 billion. The applicant is requested to list and explain the deposit and loan balances of the real finance in the reporting period on a monthly basis, whether the deposit balance is higher than the loan balance, whether there are mortgage, pledge, freezing and other rights restrictions on the relevant deposits, and whether the real finance approves the amount and purpose of the applicant's deposit withdrawal, quota management and other restrictions, In combination with the above situation, explain whether there is non operational occupation or disguised occupation of the applicant's funds by related parties 47 question 4: about accounts receivable. During the reporting period, the turnover rate of accounts receivable of the applicant was 4.33, 4.17, 3.83 and 3.78 respectively, showing a downward trend year by year; The proportion of bad debt provision is 4.33%, 4.18%, 3.59% and 3.56%, showing a downward trend year by year. The applicant is requested to: (1) explain the reason and rationality of the decline of the expected credit loss rate of accounts receivable in the whole duration of less than 6 months, 6-12 months and 1-2 years in 2020 compared with the end of 2019 in combination with the industry and production and operation of the main accounts receivable customers; (2) Explain whether there are large accounts receivable unrelated to the applicant's main businesses such as pharmaceutical manufacturing, distribution and retail. If so, explain the business type, business model, main customers, aging, overdue, provision for bad debts, and whether it involves financing trade business.
...... After the issuance, Yunnan Baiyao Group Co.Ltd(000538) is expected to hold 18.02% of the equity of the applicant and become the second largest shareholder of the applicant. According to the application materials, Yunnan Baiyao Group Co.Ltd(000538) can bring relevant strategic resources for the applicant to expand business. According to the applicant's prediction, if the above strategic cooperation can be successfully implemented, it is expected that the proportion of R & D investment, sales revenue and profitability of the issuer will be greatly improved in the next three years, the product echelon and business layout will be more perfect, and the competitiveness of new products to achieve the company's medium and long-term innovation and development strategic objectives will be gradually built Yunnan Baiyao Group Co.Ltd(000538) overlaps with the business scope of the issuer. The applicant is requested to: (1) further explain whether Yunnan Baiyao Group Co.Ltd(000538) meets the relevant requirements for strategic investors in the Q & A on issuance supervision, whether it can significantly improve the profitability or sales performance of listed companies, in combination with whether Yunnan Baiyao Group Co.Ltd(000538) can bring international and Chinese leading core technology resources or international and Chinese leading markets, channels, brands and other strategic resources, The necessity and commercial rationality of introducing Yunnan Baiyao Group Co.Ltd(000538) as a strategic investor; (2) Further explain whether the strategic investment agreement defines the advantages of strategic investors and their synergy with listed companies, the cooperation mode, cooperation field, cooperation objectives, cooperation period, the number of shares to be subscribed by strategic investors, pricing basis, arrangements for participating in the operation and management of listed companies, shareholding period and future exit arrangements Liability for breach of contract for failure to perform relevant obligations; (3) Further explain the basis and rationality of the above prediction; (4) Explain whether there are similarities and differences between the two sides in the disease field focused by products in the pharmaceutical industry, whether there are overlapping channels in the field of pharmaceutical circulation, as well as the division of sales channels with Yunnan Pharmaceutical Co., Ltd., whether there is business competition in the introduction of war investment, and whether it has an adverse impact on the applicant's existing business, resulting in damage to the interests of the issuer.
The recommendation institution, the applicant's lawyer and the reporting accountant shall explain the verification basis, method and process, and express clear verification opinions.
reply:
1、 In combination with whether Yunnan Baiyao Group Co.Ltd(000538) can bring international and Chinese leading core technology resources or international and Chinese leading market, channel, brand and other strategic resources, further explain whether Yunnan Baiyao Group Co.Ltd(000538) meets the relevant requirements of strategic investors in the Q & A on issuance supervision, and whether it can significantly improve the profitability or sales performance of listed companies, The necessity and commercial rationality of introducing Yunnan Baiyao Group Co.Ltd(000538) as a strategic investor (I) Yunnan Baiyao Group Co.Ltd(000538) meet the relevant requirements for strategic investors in the Q & A on issuance supervision
Yunnan Baiyao Group Co.Ltd(000538) has strong brand and market influence, advanced mechanism experience and business innovation and transformation ability, strong financial strength, as well as important strategic resources such as China's leading OTC channels, traditional Chinese medicine resources and development system. The details are as follows:
1. Yunnan Baiyao Group Co.Ltd(000538) has leading brand value and strong market influence
Yunnan Baiyao Group Co.Ltd(000538) was founded in 1902. It is a century old Chinese brand and a well-known trademark in China. It is among the first batch of national innovative enterprises Yunnan Baiyao Group Co.Ltd(000538) was selected into Forbes Global 2000, Asia's top 50 best listed companies and fortune China's top 500, ranking first in the list of Chinese brands released by Interbrand, Hurun and brandztm, ranking 34th among the world's top 50 pharmexec pharmaceutical companies in 2021, and ranking first among the only five China Meheco Group Co.Ltd(600056) companies on the list.
Yunnan Baiyao Group Co.Ltd(000538) was listed on the Shenzhen Stock Exchange as the first listed company in Yunnan in 1993. It has many well-known brands in the field of traditional Chinese medicine and medicine, especially in the field of great health. Its products sell well in China, Southeast Asia, and gradually enter developed countries such as Europe, America and Japan. The " Yunnan Baiyao Group Co.Ltd(000538) " brand has great market influence and ranks first among the pharmaceutical companies in the list of the top 100 most valuable Chinese brands released by brandztm for nine consecutive years. The brand value reached US $2.946 billion in 2020.
2. Yunnan Baiyao Group Co.Ltd(000538) has advanced mechanism experience and business innovation and transformation ability, and has strong financial strength
In the process of "mixed reform + absorption and merger" in the early stage, Yunnan Baiyao Group Co.Ltd(000538) gradually implemented the professional manager system, based on the principle of maximizing shareholder value, and continuously improved the market-oriented selection and employment, contractual management, differentiated salary and market-oriented exit mechanism of professional managers, so as to fully mobilize the enthusiasm of directors, supervisors and key employees of the enterprise and stimulate the internal vitality of the enterprise. At the same time, Yunnan Baiyao Group Co.Ltd(000538) through the implementation of employee stock ownership, stock option incentive and other ways, employees and enterprises will form a community of interests to ensure the long-term and stable development of the enterprise. Through a series of system and mechanism reforms mentioned above, Yunnan Baiyao Group Co.Ltd(000538) has successfully explored and accumulated relevant advanced experience. In the field of general health, Yunnan Baiyao Group Co.Ltd(000538) deeply explored the four fields of oral care, scalp care, plant beauty and personal health care, and carried out continuous business innovation transformation and product cultivation. Since its listing in 2005, Yunnan Baiyao Group Co.Ltd(000538) toothpaste has become the benchmark of Yunnan Baiyao Group Co.Ltd(000538) general health business in terms of product innovation and channel promotion. In recent years, Yunnan Baiyao Group Co.Ltd(000538) is committed to realizing the leap iteration from "traditional medicine and health enterprise" to "global leading provider of comprehensive solutions for health services", with continuous growth in operating performance, stable asset structure and good financial condition. As of September 30, 2021, Yunnan Baiyao Group Co.Ltd(000538) asset liability ratio was 26.95%, current ratio reached 3.56 and monetary capital balance was 18.685 billion yuan, With strong financial strength, it can bring strong financial support for this strategic cooperation and guarantee Shanghai Pharmaceuticals Holding Co.Ltd(601607) promoting innovation and transformation.
To sum up, Yunnan Baiyao Group Co.Ltd(000538) intends to subscribe for Shanghai Pharmaceuticals Holding Co.Ltd(601607) non-public offering shares as a strategic investor, which will not only bring Yunnan Baiyao Group Co.Ltd(000538) successful experience in mixed ownership reform and business transformation as a state-owned enterprise, but also bring strong financial support to Shanghai Pharmaceuticals Holding Co.Ltd(601607) long-term innovation and research and development, It can greatly promote and accelerate the realization of the strategic goal of Shanghai Pharmaceuticals Holding Co.Ltd(601607) innovation, transformation and development.
3. Yunnan Baiyao Group Co.Ltd(000538) has strong OTC channels, traditional Chinese medicine resources, development system and other strategic resources
(1) OTC channel resources
Yunnan Baiyao Group Co.Ltd(000538) has OTC sales channels covering the whole country. Its marketing network covers 32 provinces, more than 2800 counties and more than 40000 villages and towns. Its OTC channels cover 64000 single high-quality pharmacies and 400000 diagnosis and treatment institutions and pharmacies, especially in areas with better development of chain pharmacies such as East China, Hunan, Hubei and Yunnan, Strong market control ability has realized "one province, one policy" or even "one chain, one policy" Yunnan Baiyao Group Co.Ltd(000538) has also carried out extensive cooperation with major e-commerce such as Alibaba, jd.com and pinduoduo to expand online OTC sales channels and achieve efficient reach to consumers through customized digital marketing.
In addition, Yunnan Baiyao Group Co.Ltd(000538) also has a national large-scale health product sales team covering the terminal and with perfect layout, and has the ability to layout OTC channels in the national market. Taking the pharmaceutical business division as an example, it has a professional OTC channel sales team of about 1300 people and an academic team of about 950 people. It has a distribution of sales resources in all regions above the county level, and has accumulated more than 200 million C-end user data. Its core product aerosol accounts for more than 95% of the market share of the industry as of December 31, 2021, ranking first in the market; Band aids account for more than 65% of the market share, ranking first in the market; Plaster accounts for about 20% of the market share, ranking second in the market; Toothpaste accounts for about 23.90% of the market share, ranking first in the market.
(2) Resources and development system of traditional Chinese Medicine
Yunnan Baiyao Group Co.Ltd(000538) is a century old Chinese brand in the field of traditional Chinese medicine and great health. It has been deeply cultivated in the field of traditional Chinese medicine for decades, paying special attention to the breeding and planting of traditional Chinese medicine
