Securities code: Uroica Precision Information Engineering Co.Ltd(300099) securities abbreviation: Uroica Precision Information Engineering Co.Ltd(300099) Uroica Precision Information Engineering Co.Ltd(300099)
And
Citic Securities Company Limited(600030)
About Uroica Precision Information Engineering Co.Ltd(300099)
Reply report to the examination and inquiry letter of applying for issuing shares to specific objects (Revised Version)
Sponsor (lead underwriter)
(North block, Zhuoyue Times Plaza (phase II), No. 8, Zhongxin Third Road, Futian District, Shenzhen, Guangdong Province) March, 2002
Shenzhen Stock Exchange:
We have received the inquiry letter on the examination of Uroica Precision Information Engineering Co.Ltd(300099) application for issuing shares to specific objects (audit letter [2022] No. 020019) (hereinafter referred to as “audit inquiry letter”) issued by your exchange on January 25, 2022, Uroica Precision Information Engineering Co.Ltd(300099) (hereinafter referred to as ” Uroica Precision Information Engineering Co.Ltd(300099) “, “company”, “listed company” and “issuer”) together with Citic Securities Company Limited(600030) (hereinafter referred to as ” Citic Securities Company Limited(600030) ” or “sponsor”), Beijing Deheng Law Firm (hereinafter referred to as “issuer’s lawyer”) Zhitong accounting firm (special general partnership) (hereinafter referred to as “accountant”) and other intermediaries have carefully discussed and verified the questions raised in the audit inquiry letter, implemented the relevant questions requiring the issuer and relevant intermediaries to make written explanations and verification one by one, and replied to the questions raised in the audit inquiry one by one based on the principles of diligence, responsibility, honesty and trustworthiness, The specific contents are as follows. Please review them. explain:
1、 Unless otherwise specified, the abbreviations or proper terms used in the reply report of this audit inquiry letter have the same meanings as those in the prospectus for offering A-Shares to specific objects in Uroica Precision Information Engineering Co.Ltd(300099) 2021 (Revised Version). In the reply report to the audit inquiry letter, there is a difference in the mantissa between the sum of the total and the sub item values, which is caused by rounding.
2、 The font in the reply report of this audit inquiry letter represents the following meanings:
Bold (not bold): review the questions listed in the inquiry letter
Song typeface (bold, not bold): reply to the questions listed in the audit inquiry letter
Italics (BOLD): involving the modification and update of application documents such as the prospectus and the previous reply report
catalogue
catalogue two
Question 1 three
Question 2 twenty-nine
Question 3 fifty-three
Question 4 ninety
Question 5 one hundred
Question one
In March 2014, the issuer privately issued shares to Tian bin and other seven counterparties and paid cash to acquire 53.21% equity of Beijing Fuhua Yuqi Information Technology Co., Ltd. (hereinafter referred to as “Fuhua Yuqi”). Tian bin and others made performance commitments from 2013 to 2016, and the completion rate of performance commitments was 82.63%. In November 2017, the issuer increased its investment in Fuhua Yuqi by 70 million yuan and held 63.99% of the equity of Fuhua Yuqi after the capital increase. The minority shareholder Tian bin and others promised to ensure that the cumulative net profit from 2018 to 2020 will not be less than 105 million yuan, and the cumulative net profit in 2021 and 2022 will not be less than 92.4 million yuan. If Fuhua Yuqi fails to realize the above profits, Tian bin and others promise to compensate in cash first, and the insufficient part will be compensated by the equity of Fuhua Yuqi held by them. At the same time, the agreement also stipulates the compensation measures for the recovery of Fuhua Yuqi’s accounts receivable and notes receivable balance. Tian bin and others voluntarily restricted the sale of 50% of all shares of the issuer held by them and pledged them to a third party designated by the issuer. During the reporting period, Tian bin continued to reduce the issuer’s shares, 520700 shares from December 31, 2018 to December 31, 2019, 1181900 shares from December 31, 2019 to December 31, 2020, and 2660236 shares from December 31, 2020 to November 31, 2020. The issuer recently held a meeting of the board of directors to change the performance commitment clause of the capital increase agreement to “ensure that the cumulative net profit for eight years from 2018 to 2025 after the completion of this capital increase is not less than 197.4 million yuan”. The issuer provided several loans to Fuhua Yuqi from 2017 to 2019, and the loan balance was 41.87 million yuan as of September 30, 2021. From 2018 to 2020, Fuhua Yuqi achieved net profits of -268842 million yuan, – 210118 million yuan and -133109 million yuan respectively.
The issuer is requested to supplement: (1) in combination with the performance of Fuhua Yuqi during the reporting period and the performance forecast of the company in 2021, explain the main reasons for the continuous loss of Fuhua Yuqi’s performance and its impact on the overall performance of the company; (2) Combined with the business model of Beijing Fuhua Yuqi and the collection of relevant customers, explain whether the recovery of Fuhua Yuqi’s accounts and notes receivable and the provision for impairment are sufficient; (3) Fuhua Yuqi failed to fulfill its performance commitment for 20182020, and Tian bin and other minority shareholders did not make performance compensation; On the premise of continuous losses of Fuhua Yuqi, the reasons for the issuer’s continued capital increase; The reasons for Tian Bin’s continuous reduction of the issuer’s shares and the purpose of the reduction funds; Whether the foregoing circumstances harm the interests of listed companies and minority shareholders; (4) Explain the realizability of performance commitment after change and relevant measures; The measures taken by the issuer to ensure the relevant parties to fulfill their compensation obligations and their feasibility; Whether there is any change in the commitment of the listed company and other damage to the interests of the listed company; (5) The financial support provided by the issuer to Fuhua Yuqi after its acquisition, whether other shareholders of Fuhua Yuqi provide funds to Fuhua Yuqi in the same proportion, the purpose and flow direction of relevant funds, the causes of non operating transactions between the issuer and Fuhua Yuqi and subsequent repayment, and whether the company takes effective measures to prevent the risk of irrecoverable funds; Whether the controlling shareholder, actual controller or other shareholders illegally occupy the funds of the listed company through Fuhua Yuqi.
The issuer is requested to disclose the relevant risks of (1).
The sponsor is requested to check and give a clear opinion, the accountant checks and gives a clear opinion on (1) (2) (5), and the lawyer of the issuer checks and gives a clear opinion on (3) (4) (5).
reply:
1、 Issuer description
(I) in combination with the performance of Fuhua Yuqi during the reporting period and the performance forecast of the company in 2021, explain the main reasons for the continuous loss of Fuhua Yuqi’s performance and its impact on the overall performance of the company
1. Performance of Fuhua Yuqi during the reporting period and main reasons for losses
During the reporting period, the performance of Fuhua Yuqi is as follows:
Unit: 10000 yuan
Project 20182019 2020 January September 2021
Operating income 6570575104151135387569655
Net profit -268842 -210118 -133109 -161130
Note: the data from 2018 to 2020 have been audited, and the data from January to September 2021 have not been audited.
It can be seen from the above that during the reporting period, Fuhua Yuqi’s performance continued to suffer losses, with net profits of -268842 million yuan, – 210118 million yuan, – 133109 million yuan and -16.113 million yuan respectively. On the whole, it is mainly due to Fuhua Yuqi’s business transformation. In recent years, affected by the cyclical fluctuations in the coal industry, the mixed reform of railways, the changes in the international political and economic situation and other events, Fuhua Yuqi’s external market environment has changed greatly. It has carried out three business transformations successively: from coal mine communication to traditional business, rail transit communication, military communication and focusing on smart mines. In the process of transformation, the decline of original business volume leads to a significant decrease in revenue, and at the same time, it produces more R & D investment and market development expenses; In addition, due to the need to arrange staff to implement Fuhua Yuqi’s project at the customer’s site, due to the frequent occurrence of covid-19 pneumonia in many places and the impact of local epidemic prevention policies, the acquisition and promotion of Fuhua Yuqi’s project have been blocked since 2020, resulting in continuous loss of Fuhua Yuqi’s performance. The specific analysis is as follows:
(1) Changes in the external market environment have hindered the development of Fuhua Yuqi’s business
First of all, the cyclical fluctuations in the coal industry promote the transformation of Fuhua Yuqi to the field of rail transit information and communication business. Fuhua Yuqi is mainly engaged in the R & D, production and sales of mine communication and information system products. Its downstream customers are mainly distributed in the coal field. The periodic fluctuation of the coal industry has a great impact on Fuhua Yuqi’s business. Fuhua Yuqi began to develop its rail transit information and communication business around 2015 and won the bid for train WiFi projects of many railway bureaus across the country. From 2016 to 2017, Fuhua Yuqi achieved new breakthroughs in high-speed rail WiFi integrated server equipment and solutions, and obtained the first successful application in the standard high-speed rail car “Fuxing”, which brought good performance expectations to Fuhua Yuqi. Secondly, the mixed ownership reform in the national railway field has a great adverse impact on Fuhua Yuqi’s own rail transit information and communication business. In 2018, China National Railway Group Co., Ltd. carried out mixed ownership reform, and introduced Zhejiang Geely Holding Group Co., Ltd. and Shenzhen Tencent computer system Co., Ltd. as shareholders to form guotie Jixun Technology Co., Ltd., which has strong technical and resource advantages and undertakes more businesses related to high-speed railway wireless WiFi products. This change makes the main product of Fuhua Yuqi rail transit information and communication business, high-speed rail wireless WiFi, lose a large market share. In the same year, the national development and Reform Commission took the lead in introducing measures to reduce Telecom charges, such as canceling China’s long-distance and roaming charges of mobile phones and reducing traffic charges. The three major telecom operators have implemented the work of “raising speed and reducing charges”, the demand of high-speed rail passengers for WiFi has decreased, and the market situation of high-speed rail wireless WiFi communication has also changed. In 2018 and 2019, Fuhua Yuqi’s rail transit information and communication business revenue decreased by 82.05% and 60.44% respectively compared with the previous year. It failed to achieve the expected revenue during the reporting period.
(2) Changes in the international political and economic situation affect the normal business of Fuhua Yuqi
In 2018, Z company, an important technology module supplier of tunnel 3G wireless communication system independently developed by Fuhua Yuqi, was included in the export control list of the United States. The company reached an agreement with the U.S. Department of Commerce and accepted the inspection of U.S. compliance management. The normal development of its own business was greatly affected, and the companies in its upstream and downstream industrial chain were also greatly impacted. Fuhua Yuqi, as a downstream customer of company Z, was affected by this, and its procurement business could not be carried out normally. In this case, Fuhua Yuqi was unable to provide a full set of products to downstream customers as scheduled, and was forced to stop the follow-up sales of tunnel 3G wireless communication products. In this context, Fuhua Yuqi’s original plan of relying on Z company’s products to develop the downstream information and communication market failed to be realized, and the revenue of mine communication products in 2019 decreased by about 93.14% compared with the previous year. This process consumes a large cost and affects the performance of Fuhua Yuqi.
(3) Some projects cannot be carried out smoothly due to the epidemic
Fuhua Yuqi’s main products are various communication systems. While selling equipment, technicians are required to go to the project customer’s site to provide installation, commissioning and technical services. Covid-19 pneumonia epidemic since early 2020
Constant repetition, especially for the operation of Fuhua Yuqi, which is located in Fengtai area of Beijing, has had a great impact on the company
The personnel are isolated from time to time or the project company is not allowed to enter due to the epidemic situation, resulting in great restrictions on the movement of personnel
The epidemic prevention and control measures also further increased the difficulty of personnel mobility in other places, and the on-site work could not be carried out in time, resulting in the project promotion not reaching the expectation. Fuhua Yuqi has many military base communication projects in Inner Mongolia, Shanxi and other places
And mine communication projects are delayed or cancelled, which has an adverse impact on the performance.
2. The company’s performance forecast in 2021 and the impact of Fuhua Yuqi’s loss on the company’s overall performance
(1) Performance forecast of the company in 2021
The performance forecast of the company in 2021 is as follows:
The same period of last year in 2021
Net profit attributable to shareholders of listed companies: 190 million yuan – 200 million yuan profit: 1191051 million yuan
Year on year growth: 59.5% 52%-67. 92%
Profit: 1797212 million yuan – 18.972 million yuan 120000
Net profit after deducting non recurring profit and loss: 114359 million yuan
Year on year growth: 57.7% 16%-65. 90%
Note: the data source is “yuroca precision”
