About Shenzhen Laibao High-Tech Co.Ltd(002106)
Inquiry letter of 2021 Annual Report
Annual report inquiry letter [2022] No. 38 of the company Department Shenzhen Laibao High-Tech Co.Ltd(002106) board of directors:
In the process of reviewing your company’s 2021 annual report (hereinafter referred to as “annual report”), our department has paid attention to the following matters:
1. In 2019, 2020 and 2021, the net profit attributable to the shareholders of the listed company (hereinafter referred to as “net profit”) was 282 million yuan, 438 million yuan and 491 million yuan respectively, the net cash flow from operating activities was 616 million yuan, 241 million yuan and 639 million yuan respectively, and the cash received by sellers of goods and services accounted for 98.60%, 89.80% and 104.87% of operating income respectively. Please your company:
(1) Explain the reasons for the continuous large difference between net profit and net cash flow from operating activities in recent three years.
(2) Combined with the industry situation, explain the reasons and rationality of the changes in sales collection in recent three years.
2. During the reporting period, your company achieved an operating revenue of 7.682 billion yuan, a year-on-year increase of 13.79%, of which the operating revenue of full fit products was 6.97 billion yuan, a year-on-year increase of 14.28%. In operating income, sales accounted for 89.95% of the total revenue from Chinese mainland. Please explain the reasons for the increase of operating revenue during the reporting period in combination with the sales of different types of full fit products in this year, and ask the annual audit accountant to explain the audit procedures for overseas revenue and whether the relevant revenue recognition is true, accurate and complete.
3. At the end of the reporting period, the book value of your company’s inventory was 832 million yuan, a year-on-year increase of 27.38%, the inventory falling price reserve was 520354 million yuan, and the provision proportion of inventory falling price reserve was 5.89%. Among them, the book values of inventory goods, raw materials and issued goods were 324 million yuan, 255 million yuan and 134 million yuan respectively, with a year-on-year increase of 37.85%, 5.15% and 41.05%. The inventory falling price reserves were 190771 million yuan, 240699 million yuan and 200000 yuan respectively, and the withdrawal proportion of inventory falling price reserves was 5.56%, 8.62% and 0.15% respectively. Your company explained that the increase of inventory in this year was mainly due to the increase of some customers’ requirements for delayed delivery and goods issued. Please your company:
(1) Explain the reasons for the increase of inventory and issued goods at the end of the reporting period.
(2) Explain whether the customer’s delayed delivery is consistent with the operation of the industry, and whether the delayed delivery affects the revenue recognition of your company.
(3) Analyze and explain whether the amount of inventory falling price reserves withdrawn at the end of the reporting period is reasonable in combination with the specific composition of your company’s inventory, stock age, storage status, prices of relevant products in the last two years, production and sales, changes in orders on hand and the withdrawal of inventory falling price reserves of Companies in the same industry.
(4) Your company said in the annual report, “in terms of medium and large-size capacitive touch screens, display panel manufacturers continue to increase the promotion and application of touch screens with on cell and in cell structures to notebook computers, automobiles and other markets, and the technical performance continues to improve, which poses increasing competitive pressure on the medium and large-size touch screen market with existing plug-in structures such as G-G, OGS, OGM and GF2.” Please explain whether the technical change trend of the above industry has an impact on the provision for inventory falling price at the end of the reporting period in combination with the composition of your company’s products.
The annual audit accountant is requested to check and comment on the above issues.
4. According to the annual report, in June 2018, your company invested RMB 125 million in Chongqing Shenhua film Cecep Solar Energy Co.Ltd(000591) Technology Co., Ltd. (hereinafter referred to as “Chongqing Shenhua”) for joint venture construction of 306mw copper indium gallium selenium (CIGS) film Cecep Solar Energy Co.Ltd(000591) battery module industrialization project (hereinafter referred to as “CIGS project”), and other investors are the controlling shareholders of the company and its related parties. Since your company invested in Chongqing Shenhua, CIGS project has not been put into operation. At present, the project is at a standstill and will not be continued. During the reporting period, Chongqing Shenhua made an impairment provision of 1.418 billion yuan for CIGS project, resulting in the insolvency of Chongqing Shenhua’s assets, and the fair value of your company’s investment in other equity instruments decreased by 125 million yuan accordingly. Please your company:
(1) Explain the approval procedures of the company’s investment in Chongqing Shenhua, whether the feasibility of the project is fully demonstrated during the initial investment, and the reasons why CIGS project has not been put into operation.
(2) Please explain the reason and rationality of withdrawing large amount of impairment reserves for the project up to this year in combination with the previous evaluation results of assets involved in CIGS project and the situation of construction and operation. (3) On June 11, 2018, the company signed an entrusted management agreement with Chongqing Shenhua on the entrusted production management of CIGS project, and the company was entrusted to entrust the management of Chongqing Shenhua CIGS project. The annual report shows that during the reporting period, the personnel sent by the company to Chongqing Shenhua have been supporting the company’s production and did not provide custody services to Chongqing Shenhua. According to the entrusted management agreement signed by both parties and the importance of CIGS project in Chongqing Shenhua’s business, please explain whether your company actually has the control over Chongqing Shenhua through entrusted management of CIGS project, the reasons for accounting the investment in other equity instruments, and whether the relevant accounting treatment is in line with the provisions of the accounting standards for business enterprises.
Ask the annual audit accountant to check and comment on question (2) (3).
5. During the reporting period, your company and Zhengzhong Investment Group Co., Ltd. (hereinafter referred to as “Zhengzhong group”) signed the cooperation agreement on Laibao vacuum urban renewal unit project, Xili street, Nanshan District, Shenzhen (hereinafter referred to as “agreement”), and your company cooperated with Zhengzhong group and its related parties to carry out the urban renewal and reconstruction project of Nanshan factory (hereinafter referred to as “transformation project”). The subject matter of the reconstruction project is an industrial land held by the company in Nanshan District, Shenzhen and the upper factory building (hereinafter referred to as “Nanshan factory”). According to the agreement, the project company designated by Zhengzhong group will renovate the company’s Nanshan factory in the way of demolition and reconstruction. Referring to the two consulting reports on the market value of the land use right of Nanshan factory and the value of industrial R & D houses and underground parking spaces obtained by replacement issued by Shenzhen Shilian land and Real Estate Appraisal Co., Ltd. (hereinafter referred to as “Shilian appraisal”), the agreement stipulates that the project company shall deliver 2027519 square meters of newly-built properties and 50 parking spaces after renovation to your company, and pay 150 million yuan of demolition compensation to the company. Please your company:
(1) Explain the reason and rationality of not evaluating the value of land use right and the value of industrial R & D house and underground parking space obtained by replacement in the form of evaluation report. The World Federation is invited to evaluate, verify and comment.
(2) According to the consulting report, the value of land use right and the value of industrial R & D houses and underground parking spaces obtained by replacement are estimated by the surplus method and the income method respectively.
Please explain the reasons and rationality of using different methods to estimate the value of the above assets.
(3) Explain whether the existing development cooperation mode involves the transfer of land use right in combination with the ownership of land use right and overlying real estate after the completion of the reconstruction project; If so, please indicate whether the compensation method and standard for demolition determined in the agreement consider the premium income of land value; If not, please explain the reason.
(4) In combination with the demolition compensation methods and standards agreed in the agreement, the reconstructed assets and the recovered asset value after reconstruction, explain whether the reconstruction project damages the interests of the listed company.
6. At the end of the reporting period, the monetary capital balance of your company was 2.318 billion yuan, a year-on-year increase of 15.74%. Among them, the RMB translation balance of foreign currency monetary items was 862 million yuan, a year-on-year increase of 74.26%. Please explain the reason why the growth rate of the balance of foreign currency monetary items is significantly higher than that of monetary funds, and the measures you have taken or plan to take to deal with the exchange rate risk.
7. The annual report shows that from 2019 to 2021, your company’s sales to the top five customers accounted for 86.73%, 86.29% and 86.66% of the annual sales respectively. Please supplement the main products sold to the top five customers in the past three years and the collection of accounts receivable over the years, and analyze and explain the reasons for the high concentration of customers in combination with the situation of the industry and comparable companies, whether there is a significant difference from the overall situation of the industry, and the measures taken by your company to prevent the risk of customer dependence.
8. The annual report shows that the closing book value of your company’s accounts receivable is 1.968 billion yuan, accounting for 37.77% of current assets. Please explain your company’s collection of the above funds up to now.
9. The annual report shows that your company has accrued 41.82 million yuan of incentive fund in 2020, including 7.59 million yuan in 2021; In 2021, 49.6 million yuan of incentive fund was withdrawn, of which 39.68 million yuan was proposed to be used for medium and long-term incentive funds. Please your company:
(1) Explain the determination standard of the amount issued in the current year.
(2) The relevant accounting treatment for the accrual and distribution of incentive funds, the basis for including the full amount of incentive funds accrued in the current year into the current management expenses, and whether they comply with the provisions of the accounting standards for business enterprises. The annual audit accountant shall check and give opinions.
10. During the reporting period, the investment income obtained by your company from the disposal of financial assets measured at fair value and whose changes are included in the current profit and loss is 4.155 million yuan. Please explain the specific investment products and income generation of the financial assets involved in the investment income.
11. The annual report shows that the controlling shareholder of your company is China energy conservation and emission reduction Co., Ltd., but it is determined that there is no actual controller. Please your company:
(1) In combination with the shareholding ratio of shareholders, the composition of the board of directors and the main body of recommendation and nomination, the voting situation of the general meeting of shareholders, the unanimous action agreement or agreement between shareholders, the voting right entrustment arrangement, etc., explain whether the basis for your company to determine that there is no actual controller is sufficient.
(2) In combination with the operation of the three sessions, the decision-making mechanism and effectiveness of major issues during the reporting period, explain whether the absence of actual controller has an impact on your corporate governance and daily production and operation. If so, please explain the countermeasures.
12. According to the annual report, your company disclosed the investment of 321568 million yuan in the project of new display panel R & D and test center in the use of raised funds, and the cumulative investment by the end of the reporting period was 522622 million yuan; The amount of the project under construction increased by 5028000 yuan at the end of the period, and the change of the important part of the project under construction increased by 5028000 yuan at the end of the period. Please verify the reasons for the inconsistency between the two disclosures.
Please make a written statement on the above issues, submit the relevant explanatory materials to our department and disclose them to the public before April 6, 2022, and send a copy to the dispatched office at the same time.
We are writing to inform you that
Shenzhen Stock Exchange
Listed company management Department II
April 2, 2022
