China Merchants Securities Co.Ltd(600999) about the IPO of Yidong Electronic Technology Co., Ltd. and its listing on the gem
of
Recommendation work report
Sponsor (lead underwriter)
(No. 111, Fuhua 1st Road, Futian street, Futian District, Shenzhen)
China Merchants Securities Co.Ltd(600999)
About Yidong Electronic Technology Co., Ltd
Initial public offering and listing on the gem
Recommendation work report
Shenzhen Stock Exchange:
Yidong Electronic Technology Co., Ltd. (hereinafter referred to as “Yidong Electronics”, “issuer” or “company”) intends to apply for IPO and listing on GEM (hereinafter referred to as “this securities offering” or “this offering”), And has hired China Merchants Securities Co.Ltd(600999) (hereinafter referred to as ” China Merchants Securities Co.Ltd(600999) “) as the sponsor of IPO and listing on GEM (hereinafter referred to as “sponsor” or “this sponsor”). In accordance with the company law of the people’s Republic of China (hereinafter referred to as the “company law”), the securities law of the people’s Republic of China (hereinafter referred to as the “Securities Law”), and the measures for the administration of the registration of initial public offerings on the gem (for Trial Implementation) (hereinafter referred to as the “measures for the administration of the registration of initial public offerings on the gem”) The measures for the administration of securities issuance and listing recommendation business (hereinafter referred to as the “measures for the administration of recommendation”) Relevant laws and administrative regulations such as the Shenzhen Stock Exchange gem stock issuance and listing review rules (hereinafter referred to as “gem stock issuance and listing review rules”) and the Shenzhen Stock Exchange gem stock listing rules (hereinafter referred to as “gem stock listing rules”) According to the regulations of China Securities Regulatory Commission (hereinafter referred to as “CSRC”) and Shenzhen Stock Exchange (hereinafter referred to as “Shenzhen Stock Exchange”), the recommendation institution and its recommendation representatives are honest, trustworthy, diligent and responsible, and issue this recommendation work report (hereinafter referred to as “this report”) in strict accordance with the business rules, industry practice norms and ethics formulated according to law, And ensure the authenticity, accuracy and completeness of this report.
Unless otherwise specified in this report, relevant terms have the same meaning as in the prospectus of Yidong Electronic Technology Co., Ltd. on initial public offering and listing on GEM (Registration draft).
catalogue
catalogue two
1、 Project operation process three
2、 Problems existing in the project and their solutions nine
3、 Special financial verification and other verification matters 67 I. project operation process (I) project audit process of the sponsor
Stage I: project application and approval review stage
Before the formal agreement is signed, the project team shall file an application for project approval, and the quality control department of the investment bank headquarters of the sponsor shall review the application for project approval of the sponsor projects and evaluate all the sponsor projects before application for project approval. The project approval committee is the project approval decision-making body, which makes decisions on whether to apply for the project approval of investment banking projects, so as to ensure the overall quality of the project and achieve the purpose of controlling project risks.
The quality control department of the investment bank headquarters is responsible for organizing and holding the application and project initiation meeting. Each application and project initiation meeting is attended by 5 project initiation committee members. If 4 votes (including) or more are “agreed”, it shall be deemed that the application and project initiation is passed. If 2 votes (including) or more are “opposed”, it shall be deemed that the application and project initiation is rejected. In other cases, it shall be deemed as “suspended”, and the chairman has one vote of veto.
Phase II: project management and quality control
During the implementation of the project, the quality control department of the headquarters of the investment bank shall timely participate in the progress of the project, so as to manage and control the project and further ensure and improve the project quality.
The quality control department of the headquarters of investment bank aims to intervene in the early and medium term of project implementation, take pre risk control measures on the one hand, and give technical guidance to the project on the other hand. The personnel of the quality control department of the investment bank headquarters are responsible for the due diligence review and the process control of project implementation, and participate in the formulation of the overall project plan as appropriate.
The quality control department of the investment bank headquarters is responsible for organizing the on-site verification of the IPO project. The on-site verification includes reviewing the project due diligence working paper, judging whether the basis of relevant professional opinions and recommended documents is sufficient and whether the project team is diligent and responsible, and finally issuing the on-site verification report. The company’s core department, risk management department and legal compliance department also participate in the on-site verification if necessary.
After the project team replies, the quality control department is responsible for organizing and holding the preliminary review meeting of the project to discuss the problems existing in the project with the project team, and the core department and risk management department of the company participate in the meeting.
The quality control department shall issue a quality control report according to the discussion results of the preliminary review meeting, the completion of the due diligence work of the project team and the completeness of the working paper. The review procedure of the kernel meeting can be started only after passing the acceptance.
Phase III: the core review phase of the project
The project core review system implemented by the sponsor is formulated according to the core review requirements of the CSRC on the issuance and underwriting business of the sponsor (lead underwriter), and is the review before the formal application of China Merchants Securities Co.Ltd(600999) all sponsor projects.
The core Department of the sponsor is responsible for organizing the members of the core group of equity investment banking business to hold core meetings in accordance with the measures for the management of the core Committee of China Merchants Securities Co.Ltd(600999) investment banking business and its annex rules of procedure of the core group of equity business. Each core meeting is attended by 9 core members, If more than 7 members (including 7) agree and the chairman / vice chairman or members of the risk management department do not exercise one vote of veto or one vote of suspension, it shall be deemed as approved and the final approval opinion shall be formed. （2） Application and approval process of Yidong electronic IPO project
The main process of applying for the establishment of Yidong electronic IPO project is as follows:
Application for project initiation date: April 30, 2020
Application and evaluation time: May 11, 2020
Members of the decision-making body applying for project approval, managing director and senior business personnel of the investment banking department and auditors of the quality control department (III) implementation process of Yidong electronic IPO project
1. Composition of executive members of Yidong electronic IPO project
The executive members of Yidong electronic IPO project are as follows:
Sponsor representatives: Zhang Yi, Liu Guanghu
Project Co organizer: Shi Zhongshan
Project team members Li Zhen, Wang Daifei and Lin Chen
2. Mobilization time of Yidong electronic IPO project team
For the issuer’s issuance and listing, the project team enters the site in stages, and the working hours are as follows:
Phase time
Due diligence stage: April 2017 to June 2020
Counseling stage: January 2020 to July 2020
The production stage of application documents is from April 2020 to September 2020
Internal verification phase may 2020 to September 2020
3. Main process of due diligence
The sponsor accepts the employment of Yidong electronics as the sponsor and lead underwriter of its IPO. In this recommendation work, the issuer was carefully and independently investigated in accordance with the requirements of the measures for the administration of securities issuance and listing recommendation business, the guidelines for the due diligence of sponsors, the guidelines for the working paper of securities issuance and listing recommendation business and other relevant laws and regulations. For this due diligence, all members of the project team confirm that they have fulfilled their due diligence obligations.
The investigation of the sponsor is conducted in accordance with the company law, securities law, measures for the administration of initial registration on GEM and other current effective laws, regulations, departmental rules and normative documents in China. Our investigation scope of Yidong electronic IPO project includes: basic information of the issuer, business and technology, horizontal competition and related party transactions, investigation of directors, supervisors, senior managers and core technicians, organization and internal control, finance and accounting, use of raised funds, dividend distribution, future sustainable development ability of the company The company may have risks and other issues that need attention. During the investigation, we have implemented necessary verification and inquiry procedures, including but not limited to the following methods:
(1) Successively issue due diligence outlines to the issuer and its functional departments, the issuer’s shareholders and related parties, investigate and understand the issuer’s management center, technology center, production center, sales center and other departments, collect documents and data related to the project, and consult and analyze them;
(2) Many interviews with the company’s directors, general manager, deputy general manager, financial director, Secretary of the board of directors and other senior managers;
(3) Communicated with the lawyer of the issuer and the handling personnel of the audit institution and made relevant inquiries and investigations;
(4) Field investigation of the issuer’s main production and business premises and the implementation place of the raised funds investment project;
(5) Site visits and letters to the issuer’s main suppliers and customers;
(6) Obtain the certificate of no violation from the industrial and commercial, tax, social security, customs and other institutions where the issuer is located;
(7) Inquire and interview the issuer’s related parties, the issuer’s controlling shareholders, actual controllers and their related parties.
The main process of due diligence for Yidong electronic IPO project includes but is not limited to the following aspects:
Investigation scope and main work contents
Investigation of the issuer’s basic information: the issuer’s restructuring, establishment, historical evolution, sponsors, major equity changes and major asset restructuring
Investigation scope and main work contents
Condition group; Understand the issuer’s standardized operation in establishment, equity change and asset reorganization; And collect relevant data
Investigate and understand the basic information of the issuer’s major shareholders, previous capital contributions of shareholders and relevant agreements with the issuer; Pledge, freezing and other restrictions on the rights of the issuer’s shares held by major shareholders; Changes of major shareholders and actual controllers in the last three years or potential changes in the future, and collect relevant data
Consult the issuer’s employee roster, labor contract, payroll and social security expense list, investigate with relevant competent departments, understand the issuer’s implementation of national employment system, labor protection system, social security system and medical security system, and collect relevant data
Investigate and understand the basic information of the issuer’s holding subsidiaries; Asset ownership and independence; Independence of business, personnel, finance and institutions; The commercial credit of the issuer; And collect relevant data
Collect the development plan, laws, regulations and normative documents on industry management formulated by the competent department of the industry, and understand the industry supervision system and policy trend; Investigate the characteristics and development trend of the industry, the market position, technical level and characteristics of the issuer’s products or services, the competition in the same industry and the situation of Listed Companies in the same industry, and collect relevant data
Investigate the basic information of the issuer’s main business and main products, and the main composition of its main business income; Investigate the issuer’s production process, process and business model; On site verification of main environmental pollutants, main treatment facilities and treatment capacity involved in production and operation; On site investigation of the issuer’s procurement, production, marketing business and technology, technology and R & D; Visited and confirmed the issuer’s main customers and suppliers; Verified the main fixed assets, intangible assets and other resource elements that have a significant impact on the issuer’s main business; Understand the market supply and demand of the issuer’s main raw materials, important auxiliary materials and required energy and power; Check the R & D capability, core technology and incentive measures of the issuer, and collect relevant data
Interview with the issuer’s senior management and core technical personnel to understand the issuer’s technical source, core competitiveness, employment experience of senior management and core technical personnel, non competition, the issuer’s management’s understanding and planning on R & D, procurement, production, sales, finance, etc., and further understand the industry characteristics, product technology, etc
Horizontal competition and customs: investigate the basic information, relationship and horizontal competition of the issuer’s related parties, understand the impact of related party transactions and horizontal competition on the issuer and solutions, and collect relevant data
The directors, supervisors and senior managers shall inquire about the resumes of directors, supervisors, senior managers and core technical personnel, the issuer’s instructions and other document level management personnel, interview with the above personnel, and understand the qualifications, professional ethics, part-time work and foreign investment of the above personnel; Consult the minutes of the previous “three meetings” of the issuer to understand the changes of the directors and senior executives of the issuer during the reporting period; And collect relevant data
Check the issuer’s organization chart, meeting notices of previous general meetings, board of directors and board of supervisors, meeting organization and internal records, meeting resolutions, meeting proposals and resolution announcements, internal control system, control report of internal control assurance reporting department, corporate governance system and other documents, and sample test the operation of the issuer’s internal control system, Understand the soundness of the issuer’s organizational structure, operation, internal control environment, occupation of shareholders’ funds, etc
Review the financial reports audited by certified public accountants and relevant financial data, tax data and evaluation reports
