Beijing Tianyuan law firm
Notice on Poco Holding Co.Ltd(300811) issuing convertible corporate bonds to unspecified objects
Supplementary legal opinions (II)
Beijing Tianyuan law firm
10th floor, The Pacific Securities Co.Ltd(601099) insurance building, No. 28, Fengsheng Hutong, Xicheng District, Beijing
Postal Code: 100032
Beijing Tianyuan law firm
About Poco Holding Co.Ltd(300811)
Issuing convertible corporate bonds to unspecified objects
Supplementary legal opinions (II)
Jtgz (2021) No. 431-3 to: Poco Holding Co.Ltd(300811)
According to the entrustment agreement of special legal counsel signed between Beijing Tianyuan law firm (hereinafter referred to as the firm) and Poco Holding Co.Ltd(300811) (hereinafter referred to as the issuer or the company), the firm acted as the special Chinese legal counsel for the company’s issuance of convertible corporate bonds to unspecified objects (hereinafter referred to as the issuance) and issued legal opinions.
The exchange has complied with relevant laws and regulations such as the securities law of the people’s Republic of China, the company law of the people’s Republic of China, the measures for the administration of law firms engaging in securities legal business, and the rules for the practice of securities legal business of law firms (for Trial Implementation) The provisions of the regulations and other normative documents have issued the legal opinion on Poco Holding Co.Ltd(300811) issuing convertible corporate bonds to unspecified objects (hereinafter referred to as the legal opinion) jtgz (2021) No. 431 for this issuance Jtgz (2021) No. 431-1 lawyer work report on Poco Holding Co.Ltd(300811) issuing convertible corporate bonds to unspecified objects (hereinafter referred to as lawyer work report) Jtgz (2021) No. 431-2 “supplementary legal opinion on Poco Holding Co.Ltd(300811) issuing convertible corporate bonds to unspecified objects (I)” (hereinafter referred to as “supplementary legal opinion I”) and other legal documents, The aforementioned legal opinions, lawyer work report and supplementary legal opinions I (hereinafter collectively referred to as the original lawyer’s documents) have been submitted to Shenzhen Stock Exchange (hereinafter referred to as Shenzhen Stock Exchange) as legal documents along with other application materials of the issuer for this issuance.
According to the requirements of the inquiry letter on the examination of Poco Holding Co.Ltd(300811) application for issuing convertible corporate bonds to unspecified objects (audit letter [2021] No. 020253) (hereinafter referred to as the inquiry letter) issued by Shenzhen Stock Exchange on September 29, 2021, our lawyers have checked the relevant legal issues mentioned in the inquiry letter, and now issue this supplementary legal opinion.
This supplementary legal opinion is a supplement to the original lawyer’s document and constitutes an integral part of the above-mentioned document. The premise and statement of legal opinion in the original lawyer’s document of the office are applicable to this supplementary legal opinion. Unless otherwise specified, the definitions of relevant terms in this supplementary legal opinion are the same as those in the original lawyer’s document; If the original lawyer’s document is inconsistent with this supplementary legal opinion, this supplementary legal opinion shall prevail. This supplementary legal opinion is only for the purpose of this issuance of the company, and shall not be used for any other purpose without the written consent of the exchange. The exchange agrees to take this supplementary legal opinion as the necessary legal document for this issuance application, report it together with other application materials, and bear corresponding legal liabilities according to law.
Based on the above, the office and the handling lawyer issue this supplementary legal opinion in accordance with relevant laws and regulations and in accordance with the recognized business standards, ethics and diligence spirit of the lawyer industry.
catalogue
Text 5 I. reply to question 1 of the inquiry letter 5 II. Reply to question 3 of the inquiry letter 13 III. reply to question 4 of the inquiry letter 16 IV. reply to question 5 of the inquiry letter nineteen
Text
1、 Reply to question 1 of the inquiry letter
Question 1 of the inquiry letter: the issuer’s main products are alloy soft magnetic powder, alloy soft magnetic powder core and related inductive element products, and mainly alloy soft magnetic powder core. The main raw materials of the issuer’s products include iron, silicon, aluminum, iron and other major raw materials. In the last three years and the first period, the comprehensive gross profit margin of the issuer’s main business was 40.76%, 42.14%, 38.88% and 34.12% respectively, showing a downward trend.
In the last three years, the issuer realized operating income of 3241694 million yuan, 4025433 million yuan, 4968261 million yuan and 3183854 million yuan, net profit of 689863 million yuan, 84.595 million yuan, 1065265 million yuan and 524035 million yuan, and net cash flow from operating activities of 283381 million yuan, 482753 million yuan, 349671 million yuan and -7.9086 million yuan respectively, At the end of the same period, the book value of the company’s accounts receivable was 1152855 million yuan, 1527457 million yuan, 2038678 million yuan and 2230249 million yuan respectively. At the end of the last year, the accounts receivable increased by 33.39% compared with the beginning of the period, higher than the growth rate of operating income of the current year.
The issuer is requested to supplement: (1) explain the reason and rationality of the decline of the issuer’s gross profit margin year by year in combination with the development of the issuer’s industry, product pricing, cost fluctuation and the situation of comparable companies in the same industry; Analyze the sensitivity of raw material price fluctuation to the issuer’s performance in combination with the price fluctuation of raw materials in the recent year, and explain the countermeasures; (2) In combination with the issuer’s main business composition, business model, main customers, credit policies, bad debt provision policies, etc., as well as the situation of comparable companies in the same industry, explain the reasons why the issuer’s increase in the amount of accounts receivable is higher than that of operating revenue, and the adequacy of bad debt provision; (3) The main reason for the negative net cash flow from the issuer’s operating activities in the latest period; Whether the scale of operating cash flow matches the net profit and operating income in the same period, and the rationality of large difference; Up to now, whether the issuer’s cash flow level complies with the provisions of Q & A on securities issuance and listing of companies listed on GEM; (4) Whether the issuer has a certain adverse impact in the future, and whether the above repayment measures constitute a certain adverse impact.
The issuer is requested to fully disclose the relevant risks of (1) (4).
The sponsor and accountant shall be invited to check and give clear opinions, and the lawyer of the issuer shall be invited to check and give clear opinions on (3).
reply:
Our lawyers’ verification and corresponding opinions on the above issues are as follows:
(I) verification procedure
Our lawyers have mainly performed the following verification procedures:
1. Consult the issuer’s 2021 semi annual report and verify the issuer’s net cash flow, net profit and operating income in the latest operating activities.
2. Interview the issuer’s chief financial officer to understand the reasons for the negative net cash flow of the issuer’s recent operating activities, and understand the company’s measures to improve cash flow and solvency.
3. Visit the issuer’s important end customers to understand the settlement mode of end customers.
4. Check the semi annual report of 2021 of Listed Companies in the same industry, check their asset liability ratio and current ratio, and compare them with the issuer’s data.
5. Check the credit contract signed by the issuer and verify the credit line of the issuer.
6. Check the instructions and commitments issued by the issuer.
(II) verification
1. The main reason for the negative net cash flow from the issuer’s operating activities in the latest period
According to the issuer’s 2021 semi annual report, the cash flow generated by the issuer’s latest operating activities is as follows:
Unit: 10000 yuan
Project from January to June 2021
Cash received from selling goods and providing labor services 1620671
Project from January to June 2021
Tax refund received 16.56
Cash received from other operating activities 546.49
Subtotal of cash inflow from operating activities 1676976
Cash paid for purchasing goods and receiving labor services 763865
Cash paid to and for employees 645497
Taxes paid 255207
Other cash paid related to operating activities 914.93
Subtotal of cash outflow from operating activities 1756062
Net cash flow from operating activities -790.86
From January to June 2021, the net cash flow generated by the issuer’s operating activities was -7.9086 million yuan, which was mainly due to the high proportion of receivables settled by acceptance bills, the time difference between collection time and payment time, and the large amount of cash outflow from operating activities. The details are as follows:
(1) The company’s accounts receivable and acceptance bills account for a relatively high proportion, and the mismatch between the collection time point and the payment time point leads to a negative net cash flow from operating activities under the condition of the growth of the company’s business scale
A. The company’s accounts receivable and acceptance bills account for a relatively high proportion
According to the audit report and 2021 semi annual report of the issuer during the reporting period, during the reporting period, the operating income of the issuer was mainly generated by alloy soft magnetic particle core, and there was no significant change in the product structure of the company. The company’s customers are mainly the first-class suppliers of leading enterprises in photovoltaic power generation, variable frequency air conditioning, UPS power supply and other industries, and there is no significant change during the reporting period. The settlement cycle of the company’s main customers is mainly 90-120 days (excluding 120 days), and the bank acceptance bill is mainly used for payment settlement. Considering that the acceptance risk of the above bills is relatively low and can be transferred to upstream suppliers through bill endorsement in the company’s raw material procurement, during the reporting period, in order to maintain long-term cooperation with major customers, the company accepted customers to settle the corresponding payment with acceptance bills on the premise of ensuring the relative stability of working capital. Affected by the above settlement methods, the cash received by the company from selling goods and providing labor services in each period of the reporting period is less than the current operating income.
B. There is a time difference between the time point of sales collection and the time point of purchase payment, and the scale of cash payment is large
In the composition of the issuer’s operating costs, the relatively high energy and power, purchased nitrogen and labor costs need to be settled in cash, which is a rigid expenditure. When the bill settlement accounts for a relatively high proportion of the company’s sales receipts, the scale of the acceptance bills endorsed and transferred by the company in each period is limited, while the scale of cash paid for purchasing goods and receiving labor services and paid to and for employees is relatively large. Therefore, there is a large time difference between the cash outflow from operating activities and the cash inflow from operating activities, As a result, the net operating cash flow of the company is negative during business growth.
(2) From January to June 2021, the growth rate of cash outflow from operating activities was significantly higher than that of operating income
According to the issuer’s 2021 semi annual report, from January to June 2021, the comparison between the increase of cash outflow from the company’s main operating activities and the increase of operating income in the same period is as follows:
Unit: 10000 yuan
Change range of the project from January to June 2021 to January to June 2020 (%)
Operating income 31838541962546 62.23%
Cash paid for purchasing goods and receiving labor services 763865372769 104.92%
Cash paid to and for employees 645497360778 78.92%
Taxes paid 255207143290
