Inquiry letter on the second round of examination of Zhong Fu Tong Group Co.Ltd(300560) application for issuing convertible corporate bonds to unspecified objects audit letter [2022] No. 020068 Zhong Fu Tong Group Co.Ltd(300560) :
In accordance with the relevant provisions of the securities law, the measures for the administration of securities issuance and registration of companies listed on the gem (for Trial Implementation) (hereinafter referred to as the registration measures), and the rules for the examination and approval of securities issuance and listing of companies listed on the gem of Shenzhen Stock exchange, the issuance and listing examination authority of the exchange examined the application documents of Zhong Fu Tong Group Co.Ltd(300560) (hereinafter referred to as the issuer or company) for issuing convertible corporate bonds to unspecified objects, And form the following audit questions.
1. According to the reply materials, the channel sales business adopts the net method to recognize the income. The main issuer does not assume the inventory risk and delivery obligation of relevant goods as the main responsible person, cannot control the goods before transferring the goods to the customer, does not have full pricing power over the goods, and the sales price of some goods has been locked by the supplier. Therefore, the issuer recognizes the difference between the sales price and the purchase price as the channel sales income, That is, the net amount method is used to recognize the income. As of September 30, 2021, the issuer’s receivables from suppliers Hangzhou Gaoyi Technology Co., Ltd. (hereinafter referred to as Hangzhou Gaoyi) and Hangzhou tianhuiheng e-commerce Co., Ltd. (hereinafter referred to as Hangzhou tianhuiheng) were 7.373 million yuan and 2.4 million yuan, which were the commission income agreed in the agreement signed with the channel sales business supplier.
The issuer is requested to supplement: (1) in combination with the specific contents of the procurement contract, explain the time point of the transfer of ownership and delivery of goods, whether the control right obtained is actually obtained after signing the procurement contract, and whether the net amount method is used to confirm whether the income meets the relevant requirements of the accounting standards; (2) The gross profit margin of the issuer’s trading business is 100%. Please explain whether the calculation of the gross profit margin is reasonable and accurate, and the specific situation of calculating the gross profit margin according to the total amount method; (3) Please explain the specific situation that some commodities are locked by suppliers, including but not limited to commodity category, supplier name, locking reason, the difference between locked purchase price and sales price, the total amount of procurement and sales involved and the proportion in trade business; (4) Please explain the commission agreement with the two suppliers of Hangzhou Gaoyi and Hangzhou tianhuiheng and the issuer, including but not limited to the Commission proportion, payment time point, whether the customer pays the goods directly to the supplier, whether the issuer only collects commissions from the above two suppliers, whether the issuer has the above commission agreement with other suppliers, if so, please explain the specific situation, whether there is any difference in the Commission proportion, if not, Please explain the reasons and rationality of differentiated purchase contracts between different suppliers.
The sponsor and accountant are requested to check and give clear verification opinions.
2. According to the reply materials, in 2020 and the first three quarters of 2021, the issuer’s channel sales business had 5 customers and 29 suppliers. Among them, 4 suppliers were established in 2020 and 2 became the top five suppliers in the last year. The supply channel resources of the issuer are mostly higher-level channel providers, so it has a certain purchase price advantage, and there is a certain profit space while meeting the price requirements of customers for products. In addition, two delivery methods are adopted: customer self delivery and supplier direct delivery.
The issuer is requested to supplement: (1) please explain whether it belongs to the high-level channel mentioned in the issuer’s reply one by one according to the customer’s situation, and explain the reason and rationality of becoming a high-level channel immediately after its establishment. If it does not belong to the high-level channel, please explain the reason and rationality of large-scale purchase from it; (2) The main customers mainly purchase electronic products such as computers and mobile phones. Please explain the rationality of the issuer’s decentralized purchase through multiple suppliers in combination with the specific purchased products; (3) When the concentration of customers is much higher than that of suppliers, suppliers are scattered in Jiangsu, Zhejiang, Hebei and other provinces across the country. Explain the sales amount and proportion of the two delivery modes respectively, and the freight bearing mode and contract agreement under the two modes of customer self delivery and supplier delivery.
The sponsor and accountant are requested to check and give clear verification opinions.
3. According to the reply materials, in 2020 and the first three quarters of 2021, the issuer’s sales to Fujian Zhengji Technology Co., Ltd. (hereinafter referred to as “Fujian Zhengji”), the largest customer of channel sales business, were 3547661 million yuan and 7098306 million yuan respectively, and to Yizhong group (Heilongjiang) special equipment Technology Co., Ltd. (hereinafter referred to as “Yizhong equipment”), the second largest customer 533617 million yuan. The two companies were established in 2020. As of September 30, 2021, the issuer has withdrawn bad debt reserves of 170211 million yuan and 710400 yuan for Fujian Zhengji and Yizhong equipment accounts receivable respectively. In addition, by querying the industrial and commercial registration information, Wu Sufan, the major shareholder and general manager of Fujian Zhengji, who holds 90% of the shares of Fujian Zhengji, is the minority shareholder of Fujian Ford agriculture and Forestry Technology Development Co., Ltd. (hereinafter referred to as Ford agriculture and Forestry), which holds 26.14% of the shares of the issuer, with a shareholding of 0.739%. Fujian Zhengji has less than 50 employees and only 4 insured people. Meanwhile, according to the application documents, Fujian Zhengji needs to pay the company the full price of the goods received by telegraphic transfer or transfer before the specified date (generally 3-6 months after the date of signing the contract).
Please supplement the issuer’s explanation: (1) the reason and rationality of Fujian Zhengji and Yizhong equipment becoming the top two customers of the issuer’s channel sales business just after its establishment in 2020. Fujian Zhengji is the largest customer in 2020, and continues to expand its procurement of the issuer in 2021, which is still the largest customer in the reporting period. Please explain the main purpose and end customers of Fujian Zhengji’s large purchase of computers, mobile phones and other equipment from the issuer, Explain the rationality of large-scale procurement and whether it has real procurement intention and commercial essence in combination with its own scale and number of employees; (2) According to the application materials, Fujian Zhengji’s credit policy of cash on delivery is different from that of other customers. Most of them pay in stages according to the way of advance payment and progress payment. Please explain the reasons for the difference between Fujian Zhengji’s credit policy and other customers, withdraw bad debt reserves for Fujian Zhengji’s accounts receivable during the reporting period, and explain whether there is any payment beyond the credit period, Explain whether there is a risk of default or failure to pay when due in combination with the operation and performance ability of Fujian Zhengji; (3) Combined with the relationship between Wu Sufan, the actual controller of Fujian Zhengji, and the issuer, this paper explains whether the transaction between the issuer and Fujian Zhengji is a related party transaction from the perspective of substance over form, whether the issuer’s sales price and credit policy are fair, whether there is a significant unfairness, the necessity and rationality of Fujian Zhengji’s procurement from the issuer, and whether there is a transfer of interests to Fujian Zhengji. The sponsor and accountant are requested to verify and give verification opinions prudently.
4. According to the reply materials, in the first three quarters of 2021, the issuer purchased computers and mobile phones from the supplier Fuzhou green gold supply chain Technology Co., Ltd. (hereinafter referred to as “green gold supply chain”) for a total amount of 1571373 million yuan. The green gold supply chain was a newly established company in 2020 and became the second largest supplier of the issuer the following year.
According to the application materials, the issuer’s credit policy for green gold supply chain procurement is to pay the total price of the delivered goods at one time no later than the payment date agreed in the purchase order. In addition, Chen Rongjie, the issuer’s actual controller, and Fujian Rongjia Technology Co., Ltd. (hereinafter referred to as Fujian Rongjia), who acted in concert, pledged 52.18 million shares to the green gold supply chain to guarantee the purchase contract without involving the financing amount. Based on the closing price of 19.4 yuan / share on March 31, 2022, the market value of this part of shares is as high as 1.012 billion yuan. According to the issuer’s interim announcement in the last two years, in January 2021, Chen Rongjie and Fujian Rongjia pledged their equity to the green gold supply chain for personal asset investment and asset investment. Previously, in 2020, Chen Rongjie and Fujian Rongjia pledged their equity to Rongjin (Fuzhou) Supply Chain Management Co., Ltd. (hereinafter referred to as Rongjin supply chain) and Fuzhou financial holding Supply Chain Management Co., Ltd. (hereinafter referred to as financial holding supply chain), The pledge is also used for personal asset investment and asset investment. According to the industrial and commercial registration information, both Rongjin supply chain and lvjin supply chain are companies with 100% shareholding of the financial holding supply chain, which were established in 2020, and the financial holding supply chain was established in February 2019.
The issuer is requested to add: (1) in combination with the amount of the purchase contract signed with the green gold supply chain, please explain the reason and rationality of the issuer’s actual controller and its concerted action to guarantee by means of share pledge, whether it has significantly exceeded the amount of the purchase contract, whether the issuer has financial problems such as tight capital chain, and only guarantee the green gold supply chain, the second largest supplier, The reason and rationality of not providing guarantee to other suppliers, and whether it complies with the company’s internal trading habits and business practices; (2) According to the application materials, the payment time provided by the green gold supply chain for the issuer is better than the requirements of other suppliers. Please specify the time of the credit policy between the issuer and the green gold supply chain, and specify the payment date arrangement, contract signing date and delivery arrangement agreed in the purchase order; (3) The final sales customers, gross profit and payment collection of computer mobile phones purchased from the green gold supply chain. During the reporting period, whether the issuer has other capital transactions and arrangements with the green gold supply chain and its related parties in addition to purchasing computer mobile phones from the green gold supply chain. If so, please explain the specific situation and rationality; (4) Whether the pledge purpose of Chen Rongjie and Fujian Rongjia is inconsistent before and after information disclosure, the specific situation of the financing amount and purpose pledged to Rongjin supply chain and financial holding supply chain, the reason and rationality of the subsequent change of the pledgee to green gold supply chain and purchasing from green gold supply chain, Chen Rongjie and Fujian Rongjia successively pledged to financial holding supply chain and its two wholly-owned subsidiaries, Explain whether the green gold supply chain is financing listed companies in a disguised form.
The sponsor, accountant and lawyer of the issuer shall be invited to check and give verification opinions prudently. 5. By consulting the industrial and commercial registration information, the issuer’s multiple suppliers and customers have or may have the same control. Among the suppliers, Jiangsu Agra Financial Data Service Co., Ltd., the largest supplier, and Jiangsu Zhanxiang Industrial Co., Ltd., the fourth largest supplier in 2021, both controlled Su Wuxing holding investment Group Co., Ltd., and the purchased goods include air conditioners, In 2020, the largest suppliers Hangzhou Gaoyi and Hangzhou tianhuiheng were registered in 419 and 315 podium buildings, No. 36-1 Huzhou street, Gongshu District, Hangzhou respectively. The purchased goods were mobile phones. In 2020, the seventh largest supplier Hefei Xinning Supply Chain Management Co., Ltd, In 2021, the fifth largest supplier Hefei Wanxin Supply Chain Management Co., Ltd. and the ninth largest supplier Anhui Wanxin Supply Chain Service Co., Ltd. are controlled by Anhui Shanghai Xinhua Media Co.Ltd(600825) Co., Ltd., and the procurement contents are all kinds of electrical appliances; Between suppliers and customers, Ren Chuanbao and Shi Xinjing, the controlling shareholders of Beijing Wanhang Chengxin Technology Co., Ltd. (hereinafter referred to as Wanhang Chengxin), the issuer’s fourth largest customer in 2021, hold 66.5% and 33.5% respectively, and 51% and 49% of Zhuozhou Tairui Technology Co., Ltd. (hereinafter referred to as Tairui Technology), the issuer’s sixth largest supplier in 2021, The registered addresses of the issuer’s third largest customer in 2021, Fujian Teddy Sen Technology Co., Ltd. (hereinafter referred to as Fujian Teddy SEN) and the eleventh largest supplier in 2021, Fujian Guangtong Industry Co., Ltd. (hereinafter referred to as Fujian Guangtong) are 203, No. 21, Sanxi street, Sanxi Township, Minqing City, Fuzhou City, Fujian Province and No. 1, Qianguang village, Sanxi Township, Minqing City, Fuzhou City, Fujian Province, respectively.
The issuer is requested to supplement: (1) whether the above-mentioned suppliers and customers are controlled by the same controller or have an associated relationship, the reason and rationality for the issuer to purchase the same or similar goods from the above-mentioned suppliers separately, and the reason and rationality for purchasing and selling from suppliers and customers under the same control respectively; (2) Sales amount of all customers, corresponding suppliers and their purchase amount under the total channel sales method; (3) According to the application materials, in 2020, the issuer purchased protective fences from first heavy equipment and sold them to Wanhang Chengxin. In 2021, the issuer purchased and sold them to first heavy equipment from Teri technology. First heavy equipment is both the issuer’s customer and supplier. Meanwhile, Wanhang Chengxin and Teri technology are controlled by the same controller. Please explain the necessity of the above transaction, whether there is real goods circulation and whether the transaction has commercial substance; (4) In 2021, the issuer purchased polycrystalline battery chips from Fujian Guangtong and sold them to Fujian Teddy son. According to Baidu map, the registered addresses of Fujian Guangtong and Fujian Teddy son are less than 500 meters. The issuer is requested to supplement the authenticity, necessity and rationality of purchasing and selling from the above companies, whether there is real goods circulation and whether the transaction has commercial substance; (5) In addition to the above circumstances, in combination with the channel sales business customers, suppliers’ registered addresses, actual controllers, major shareholders, equity structure and the mutual employment of senior executives, whether there are cases where senior executives hold positions with each other or have similar registered addresses, explain whether there are other situations of the same control or association relationship, and explain the specific circumstances and rationality; (6) Whether the channel sales business customers, supplier shareholders or senior executives have an associated relationship with the issuer and its holding and participating companies, and explain the specific situation and rationality; (7) In combination with the self delivery or supplier delivery of channel sales business, the time point of delivery and confirmation of receipt, the time point of purchase fund payment and sales fund channel, freight documents and warehousing records, and the gross profit margin calculated according to the total amount of channel sales business, explain whether the relevant channel purchase and sales business involves the real flow of goods and whether the channel sales business has commercial essence, Whether it involves financial assistance or non operating funds; (8) Combined with the procurement payment and sales collection cycle of channel sales business, calculate the demand of channel sales business for the working capital of the issuer. Under the condition of large short-term debt repayment pressure of the issuer and shortage of book capital, whether the rationality of carrying out channel sales business has an adverse impact on the normal production and operation of the issuer.
The sponsor and accountant are requested to verify and give clear verification opinions. The sponsor and accountant are requested to explain whether the procurement and sales links of channel sales business involve real goods circulation, financial assistance and occupation of non operating funds, and the verification proportion, and to prudently give verification opinions on whether the verification basis supports the verification conclusion. 6. In 2019, the CSRC approved the issuer’s application for non-public offering of shares. Fujian Rongjia, controlled by Chen Rongjie, was the only subscription object, fully subscribed for the non-public offering of shares and raised 450 million yuan. On August 10, 2020, Fujian Rongjia completed the payment, and the new shares were listed on August 26. On October 13, 2020, the issuer disclosed
