Sichuan Zhongtai United Design Co., Ltd. (24 / F, unit 1, building 2, No. 99, Jinhui West 1st Street, high tech Zone, Chengdu)
About the initial public offering of Sichuan Zhongtai Joint Design Co., Ltd. and its listing on the gem
Reply to inquiry letter on examination of application documents
Sponsor (lead underwriter)
(address: No. 1, Keyuan South Road, Guancheng District, Dongguan City)
Shenzhen Stock Exchange:
We have received the examination and inquiry letter on the application documents of Sichuan Zhongtai Joint Design Co., Ltd. for initial public offering and listing on the gem (examination and inquiry letter [2021] No. 010791) (hereinafter referred to as “examination and inquiry letter”) issued by your office on July 8, 2021. Sichuan Zhongtai United Design Co., Ltd. (hereinafter referred to as “the company”, “the company”, “joint stock company”, “Zhongtai design”) and Dongguan Securities Co., Ltd. (hereinafter referred to as “sponsor”, “lead underwriter”, “Dongguan securities”), Beijing Deheng Law Firm (hereinafter referred to as “issuer lawyer”, “Deheng”) Daxin Certified Public Accountants (special general partnership) (hereinafter referred to as “accountant”, “Daxin”) and other relevant parties have checked the questions listed in the audit inquiry letter item by item. The reply is as follows. Please review.
Unless otherwise specified, the abbreviation used in this reply is the same as the interpretation in the prospectus of Sichuan Zhongtai Joint Design Co., Ltd. for initial public offering and listing on the gem (application draft).
Review the questions listed in the inquiry letter in bold (BOLD)
Answer to question
Modification and supplement of this feedback (BOLD)
Amendments and supplements to the prospectus (BOLD)
catalogue
Question 1 About the main business 3 question 2 About qualification and copyright 50 question 3 About revenue recognition 67 question 4 About operating income 83 question 5 About customers 107 question 6 About the cost of main business 116 question 7 About suppliers 131 question 8 About gross margin 144 question 9 About accounts and notes receivable 165 question 10 About period expenses 195 question 11 About history and shareholders 212 question 12 About employees 239 question 13 About subsidiaries and branches 252 question 14 About design outsourcing 262 question 15 About production safety responsibility 270 question 16 About housing 273 question 17 About financial internal control 280 question 18 About cash flow statement 291 question 19 About capital flow verification two hundred and ninety-eight
Question 1 About main business
The application materials show:
(1) The issuer’s business undertaking mode is divided into three modes: public bidding, internal bidding by customers and customer entrustment.
(2) During the reporting period, the issuer’s main business income in Southwest China was 264035200 yuan, 319153000 yuan and 341986700 yuan respectively, accounting for 91.63%, 91.06% and 87.21% of the main business income in the same period respectively.
(3) The real estate industry in the issuer’s downstream industry has strong periodicity and is obviously affected by the macroeconomic situation and industrial policy regulation.
Please the issuer:
(1) Supplement whether the revenue amount, contract quantity and project acquisition method of orders under each business undertaking mode during the reporting period comply with laws and regulations and the procurement policies of relevant customers, and whether there are situations in which public bidding procedures should be performed but not performed; Whether there are significant differences in service prices under each business undertaking mode and whether there are abnormalities in the gross profit margin of orders. If so, explain the reasons; Basic information and number of main competitors in the bidding project, and whether there is bidding failure or bid flow; Whether the project contracting process is legal and compliant, whether there are collusion, bid encirclement, concealed bidding and other situations, whether there are commercial bribery or commercial bribery in disguised form, whether it is subject to administrative punishment, and whether it constitutes a major violation of laws and regulations.
(2) Supplement the formulation policies and determination methods of relevant business prices according to the business category, and whether the collection proportion of design fees fluctuates greatly and is consistent with the general laws of the industry; Supplementary disclosure of the number of customers / projects and contract price changes of architectural design business during the reporting period, whether there is an expectation that the price will be reduced year by year, and whether the external business environment has changed significantly.
(3) Supplement the income composition divided by the customer’s industry during the reporting period, and the reasons and rationality for the growth of operating income under the stricter regulation policy environment during the reporting period; Quantitative analysis shows the specific impact of China’s macroeconomic situation, long-term regulation of the real estate industry, public budget tightening, urbanization and other factors on the issuer’s project contracting, business operation, liquidity and fund recovery during the reporting period, as well as the issuer’s countermeasures; Whether the main business is growing.
(4) Supplement the details of changes, delayed development, contract suspension or termination in the signed business contract during the reporting period, including reasons, project name, contract signing date, original project commencement and completion date, whether to provide corresponding design services according to the contract, contract amount, fund recovery The contract stipulates the protection terms and implementation of the issuer’s rights, and adds whether the above situation has a significant adverse impact on business operation and sustainable development.
(5) Conclude the main financial data, market share or market share of the company in the contract industry, and supplement the current competition pattern and development trend of China State Construction Engineering Corporation Limited(601668) design industry; In combination with the market scale and competition status of key business areas, disclose the position in the industry, main competitive advantages and sustainability, main bottlenecks and response plans for future development, and whether there are situations such as weak overall competitiveness and poor wind resistance.
(6) Supplement the main business income and proportion realized by the issuer in Sichuan during the reporting period; The reason and rationality of high regional concentration, whether it is consistent with companies in the same industry, and the impact of sales regional concentration on the operation and development of the issuer; In combination with the proportion of the issuer’s income from Southwest China and the situation of orders on hand during the reporting period, explain whether the issuer has the ability to expand the national business, the main difficulties and risks faced by the issuer in developing the national market project, and the countermeasures to be taken.
The sponsor, the issuer’s lawyer and the reporting accountant are requested to check and express clear opinions.
[issuer’s reply]
1、 Supplement whether the revenue amount, contract quantity and project acquisition method of orders under each business undertaking mode during the reporting period comply with laws and regulations and the procurement policies of relevant customers, and whether there are situations in which public bidding procedures should be performed but not performed; Whether there are significant differences in service prices under each business undertaking mode and whether there are abnormalities in the gross profit margin of orders. If so, explain the reasons; Basic information and number of main competitors in the bidding project, and whether there is bidding failure or bid flow; Whether the project contracting process is legal and compliant, whether there are collusion, bid encirclement, concealed bidding and other situations, whether there are commercial bribery or commercial bribery in disguised form, whether it is subject to administrative punishment, and whether it constitutes a major violation of laws and regulations.
(I) supplement by business category whether the revenue amount, contract quantity and project acquisition method of orders under each business undertaking mode during the reporting period comply with laws and regulations and the procurement policies of relevant customers, and whether there are situations in which public bidding procedures should be performed but not performed
During the reporting period, the issuer obtained business mainly through bidding mode and customer entrustment. The issuer’s main business income is divided as follows according to the business undertaking mode:
Unit: 10000 yuan
20212020 2019
project
Amount proportion amount proportion amount proportion amount proportion
Customer entrustment 2650416 64.11% 2247798 57.32% 2111684 60.25%
Bidding mode 1483829 35.89% 1673719 42.68% 1393123 39.75%
Total 4134245 100.00% 3921517 100.00% 3504808 100.00%
During the reporting period, the revenue amount, contract quantity and other details of the businesses undertaken by the company in different ways by product category are as follows:
Unit: 10000 yuan
Year 2021
Product category business acquisition method
Proportion of revenue amount to the number of revenue contracts recognized in the current year
The client entrusted 2297645 55.58% 373 residential building design
Bidding mode 1288457 31.17% 203
The client entrusts 339567 8.21% 50 public building design
Bidding mode 195371 4.73% 21
Consulting and other client entrustment 132.04 0.32% 3
Total 4134245 100.00% 650
Product category business acquisition method 2020
Proportion of revenue amount to the number of revenue contracts recognized in the current year
The client entrusted 2032197 51.82% 270 residential building design
1572940% bidding mode
The client entrusted 4.94% of 36 public building designs in 193613
Bidding mode 100783 2.57% 17
Consulting and other client entrustment 219.88 0.56% 42
Total 3921517 100.00% 485
Product category business acquisition method 2019
Proportion of revenue amount to the number of revenue contracts recognized in the current year
The client entrusted 1868489 53.31% 218 residential building design
Bidding mode 1279139 36.50% 95
The client entrusted 162729 4.64% 41 public building design
Bidding mode 113984 3.25% 13
Consulting and other client entrustment 804.67 2.30% 115
