About the annual report inquiry letter of Xinghui environmental protection materials Co., Ltd., gem annual report inquiry letter [2022] No. 9, the board of directors of Xinghui environmental protection materials Co., Ltd.:
Our department paid attention to the following situations in the post review of your 2021 annual report:
1. Your company’s main business is the R & D, production and sales of polystyrene. During the reporting period, styrene accounted for 85.90% of your company’s total procurement. The total procurement amount of the top five suppliers was 13868657 million yuan, accounting for 85.04% of the total annual procurement. Please provide additional information about your company’s transactions with the top five suppliers during the reporting period, including but not limited to the transaction amount, main products, procurement mode, pricing method, whether there is a relationship, whether there is a change from the previous year, etc., explain whether your company has a significant dependence on individual suppliers, conclude the situation of Companies in the contract industry, and explain the reasons for your company’s high concentration of suppliers and commercial rationality.
2. At the end of the reporting period, the balance of your company’s prepayment was 827173 million yuan, an increase of 71.202 million yuan over the beginning of the period, an increase of 618.32%, accounting for 26.61% of current assets, mainly due to the increase of the company’s prepayment for raw materials during the reporting period. The total amount of the top five prepayments at the end of the period was 796257 million yuan, accounting for 96.26%. Please supplement and disclose the top five prepayments of your company, including the counterparty, transaction amount, transaction time, transaction background, whether it is a related party, etc., and the situation of Companies in the contract industry, explain the reasons and rationality of the substantial increase of prepayments of your company, whether it conforms to industry practices, whether there are transactions without commercial substance, and whether it occupies the funds of listed companies. Ask the accountant to check and give clear opinions. 3. The annual report shows that at the end of the reporting period, your company’s assets totaled 8879696 million yuan, including 3108913 million yuan of current assets and 5770783 million yuan of non current assets; The total liabilities are 1196518 million yuan, of which the balance of notes payable is 44.5 million yuan, and the balance of short-term loans and long-term loans are zero. At the end of the reporting period, the book values of fixed assets and intangible assets with limited ownership or use right of your company were 12 Beingmate Co.Ltd(002570) 0 yuan and 51959700 yuan respectively. The reason for the restriction was that you issued bills and provided mortgage guarantee for loans.
(1) Please verify whether there is any mortgage guarantee for your company’s loan in combination with your company’s loan situation, and explain whether the bill margin scale at the end of the reporting period matches the scale of the above-mentioned restricted assets, and whether the margin ratio is in line with market practice.
(2) Please supplement and disclose the details of your company’s mortgage guarantee with fixed assets and intangible assets, including but not limited to the specific assets involved, the time of providing the guarantee, the purpose of the guarantee, the amount of the guarantee, the guarantee period, etc., and verify whether there are other external guarantees except for issuing bills and providing mortgage guarantee for the loan of your company in combination with the above reply. If so, Whether the corresponding review procedures and information disclosure obligations are fulfilled.
4. In 2021, your company realized a net profit after tax of 2920644 million yuan. After withdrawing the statutory surplus reserve and the undistributed profit at the end of last year, the remaining profit available for distribution to shareholders was 4370328 million yuan. Your company’s profit distribution plan for 2021 is to distribute cash dividends of RMB 22.00 (including tax) for every 10 shares to all shareholders, with a total of RMB 426167200 distributed. Please verify and explain the following items:
(1) The monetary capital of your company at the end of 2021 was 1369475 million yuan, accounting for 15.42% of total assets and 44.05% of current assets. Please explain whether this profit distribution plan matches your company’s performance growth and whether this profit distribution will cause liquidity risk in combination with the company’s main business model and main business development, the funds required for daily operation, the construction of raised investment projects and future major capital expenditure arrangements, the source of funds for this profit distribution, the company’s cash flow and asset structure changes before and after this profit distribution, Whether it conforms to the company’s long-term development strategy, whether it will have an impact on the company’s sustainable operation, and fully prompt relevant risks.
(2) Your company’s shares were listed and traded on the exchange on January 13, 2022. After the initial public offering, the actual controllers Chen Yansheng, Chen dongqiong, Chen chuanghuang and their concerted actors Chen Yueping held a total shareholding ratio of 64.43%. Please explain the basis and rationality of determining the profit distribution proportion in combination with the shareholding ratio and financial status of major shareholders, the planning process, proposal and deliberation of this profit distribution, the scale and share price of your company’s share capital, the specific time and amount of your company’s profit distribution in recent five years, and the use of dividend funds of controlling shareholders, actual controllers and their concerted actors, The reasons and necessity of high proportion dividends in the year of listing, whether there is a situation of transferring benefits to major shareholders through high proportion dividends, and whether it is conducive to protecting the interests of small and medium-sized investors.
(3) On January 22, 2022, your company disclosed the announcement on using part of the over raised funds to permanently supplement the working capital. In order to meet the daily business needs of the company, your company used the over raised funds of RMB 58 million to permanently supplement the working capital, accounting for 29.82% of the total over raised funds. This matter has been deliberated and approved by the first extraordinary general meeting of shareholders of your company in 2022. Please explain whether the raised funds are indirectly used for profit distribution and whether there are violations in the use of the raised funds in combination with the actual use of the funds and the reply to the above questions.
(4) Please verify your company’s media interviews and institutional research within one month before the disclosure of the profit distribution plan, whether there is any disclosure of the profit distribution plan to specific investors, and whether there is any speculation about the stock price by using the profit distribution plan.
Please make a written statement on the above issues, submit the relevant explanatory materials to our department for disclosure before March 24, 2022, and send a copy to the listed company supervision division of Guangdong securities regulatory bureau.
This is to inform you.
Gem company management department March 19, 2022
