Stock abbreviation: Shanxi Yongdong Chemistry Industry Co.Ltd(002753) Stock Code: Shanxi Yongdong Chemistry Industry Co.Ltd(002753) Shanxi Yongdong Chemistry Industry Co.Ltd(002753)
SHANXIYONGDONGCHEMISTRYINDUSTRYCO., LTD.
(gaoqu village, Xishe Town, Jishan County, Yuncheng City, Shanxi Province)
Convertible corporate bonds
Prospectus
Sponsor (lead underwriter)
(22F, office building 1, Huamao center, No. 81 Jianguo Road, Chaoyang District, Beijing)
Signing date of the prospectus: April 2022
Statement
All directors, supervisors and senior managers of the company promise that the prospectus and its abstract do not contain any false records, misleading statements or major omissions, and ensure that the information disclosed is true, accurate and complete. The person in charge of the company, the person in charge of accounting and the person in charge of the accounting organization shall ensure that the financial and accounting reports in the prospectus and its abstract are true and complete.
Any decision made by the securities regulatory authority and other government departments on this issuance does not indicate that it makes a substantive judgment or guarantee on the value of the securities issued by the issuer or the income of the investors. Any statement to the contrary is a false statement.
According to the provisions of the securities law of the people's Republic of China, after the securities are issued according to law, the issuer shall be responsible for the changes in the operation and income of the issuer, and the investors shall be responsible for the investment risks caused by the changes.
Tips on major issues
This important notice only reminds investors of the risk factors and other important matters that need special attention. Please carefully read all the contents of the "risk factors" section of the prospectus.
1、 On the credit rating of convertible corporate bonds issued by the company this time
The company hired Lianhe credit to conduct credit rating for the convertible bonds issued this time. On January 5, 2021, Lianhe credit issued the credit rating report, which rated the main credit rating of the company as AA -, and the credit rating of the convertible bonds issued this time as AA -.
After the convertible corporate bonds issued this time are listed, during the duration of the bonds, united credit will track and rate the credit status of the bonds regularly or irregularly, and issue a tracking and rating report. Regular follow-up rating shall be conducted at least once a year during the duration of the bond.
2、 On the guarantee of convertible bonds issued by the company this time
According to Article 20 of the measures for the administration of securities issuance by listed companies, "a guarantee shall be provided for the public issuance of convertible corporate bonds, except for companies with audited net assets of no less than 1.5 billion yuan at the end of the most recent period". As of December 31, 2020, the audited net assets of the company were 1.935 billion yuan, higher than 1.5 billion yuan. Therefore, the company does not need to provide guarantee for the issuance of convertible corporate bonds in this public offering.
3、 The company specially draws investors' attention to the following risks in the "risk factors"
(I) risks caused by changes in national industrial policies
As a well-known large-scale enterprise in China's carbon black industry, the company benefits from the current industrial policies of China's carbon black industry and ranks among the top in the same industry in terms of production scale, technical level and profitability. However, if the national policy guidance on carbon black industry changes in the future, it may have an adverse impact on the company's production and operation.
(II) price fluctuation risk of raw materials
The company's main products are carbon black products and coal tar processing products. Its main raw materials are coal tar and other raw oil, accounting for about 80% of the total operating cost. In recent years, affected by the tightening of China's environmental protection policies and the adjustment of China's steel and coking industrial policies, although the company maintains a relatively stable supply-demand relationship with large raw oil suppliers, it is not ruled out that the cost of carbon black increased due to the rise in the price of raw materials cannot be digested or transferred in time, which may have a significant impact on the company's future operating benefits.
(III) risk of stability of coke oven gas supply
The company uses coke oven gas to save production costs. At present, all coke oven gas of the company is supplied by Shanxi Yongxiang coal coke Group Co., Ltd., and the company has a certain dependence on the purchase of Yongxiang coal coke oven gas. If the company cannot maintain a low coke oven gas purchase price and a relatively stable coke oven gas supply in the future, and instead uses some or all of the natural gas and other fuels with relatively high purchase price, it will have a great impact on the company's production cost, gross profit margin, net profit margin and other indicators.
(IV) safety production risk
Coal tar and other raw materials required by the company's production are flammable, and some processes in the production process are in high temperature and high pressure environment. Therefore, the company has the possibility of safety accidents due to improper storage and operation of goods, equipment failure or natural disasters, thus affecting the normal progress of production and operation.
(V) risk control by actual controller
As of September 30, 2021, the actual controllers of the issuer, Liu Dongliang and Jin Caihong, jointly hold 30.33% of the shares of the issuer. Although the company has established a relatively perfect internal control system and corporate governance structure, including the formulation of rules and regulations such as the articles of association, the rules of procedure of the general meeting of shareholders, the rules of procedure of the board of directors, the rules of procedure of the board of supervisors, the decision-making system of connected transactions and the working system of independent directors, so as to prevent the actual controller from manipulating the company in terms of institutional arrangement. Although the actual controller of the company has not infringed the interests of other shareholders by using its controlling position since its establishment, the controlling shareholders and actual controllers of the company can affect the production and operation and major decisions of the company by exercising their voting rights and management rights, which may affect the interests of the company and other shareholders of the company.
(VI) bad debt risk of accounts receivable
At the end of 2018, 2019, 2020 and September 2021, the book balance of the company's accounts receivable was 4053313 million yuan, 4768124 million yuan, 5056583 million yuan and 7056398 million yuan respectively, accounting for 15.67%, 16.69%, 21.15% and 25.81% of the current operating revenue respectively. Among them, the book balance of accounts receivable aged within one year accounted for 95.88%, 96.68%, 96.83% and 97.57% of the book balance of accounts receivable respectively, The balance of accounts receivable aged more than one year accounts for a relatively small proportion. If the company's short-term accounts receivable increase significantly or the financial situation of major debtors deteriorates, the company will face bad debt risk.
(VII) falling price risk of inventories
At the end of 2018, 2019, 2020 and September 2021, the company's inventory book balance was 247067700 yuan, 219691800 yuan, 282141700 yuan and 406412700 yuan respectively, accounting for 23.50%, 15.44%, 18.56% and 24.98% of current assets respectively.
The company's inventories are mainly raw materials, semi-finished products, goods in stock and goods issued, accounting for more than 90% of the inventory balance at the end of each reporting period. If the market price of raw materials and products fluctuates against the company, the company will face a certain risk of inventory falling price. At the same time, with the continuous expansion of the company's business scale, the company will also face the risk of increased occupation of inventory funds. The above factors will have an adverse impact on the company's business performance.
(VIII) risks in the implementation of investment projects with raised funds
The main purpose of the funds raised by the company's public issuance of convertible corporate bonds is "coal tar fine processing and special carbon black comprehensive utilization project". The investment project of the raised funds belongs to the main business scope of the company and is closely related to the development strategy of the company. Although the company has conducted sufficient feasibility analysis on the construction scale, product scheme and technical scheme of the raised capital investment project, due to the large investment scale, if there are industrial policy regulation, local government macro-control, weak project implementation organization and management and other situations, there are certain uncertainties in the implementation progress and implementation effect of the raised capital investment project.
(IX) risk of changes in enterprise tax preference
According to the reply on the filing of the second and third batch of high-tech enterprises in Shanxi Province in 2020 (gxhz [2021] No. 36) issued by the office of the national leading group for the identification and management of high-tech enterprises, the company has passed the identification of national high-tech enterprises. The certificate number is gr202014001090 and is valid for three years (20202022).
According to the measures for the administration of the recognition of high-tech enterprises (gkfh [2016] No. 32), the guidelines for the administration of the recognition of high-tech enterprises (gkfh [2016] No. 195), the enterprise income tax law of the people's Republic of China and the regulations for the implementation of the enterprise income tax law of the people's Republic of China, the enterprise income tax of high-tech enterprises is levied at a reduced rate of 15%. If the national tax policy changes in the future, or the company is not recognized as a high-tech enterprise again, it will have a certain impact on the company's operating performance.
(x) risk of principal and interest payment
During the duration of the convertible bond, the company shall pay the interest and the due principal of the non convertible part of the convertible bond according to the agreed terms of issuance of the convertible bond, and fulfill the resale requirements put forward by the investors when the resale conditions are triggered. Under the influence of uncontrollable factors such as national policies, regulations, industry and market, the company's business activities may not achieve the expected income, so as to obtain sufficient funds, which will affect the company's ability to pay the principal and interest of convertible bonds in full and on time and the acceptance ability of investors' resale requirements.
（11） Interest rate risk
This convertible bond adopts fixed interest rate. Affected by the overall operation of the national economy, national macroeconomic policies and changes in the international environment, the market interest rate is likely to fluctuate. During the duration of the bond, when the market interest rate rises, the value of the convertible bond may decrease accordingly, causing losses to investors. The company reminds investors to fully consider the risks that may be caused by market interest rate fluctuations in order to avoid and reduce losses.
（12） Risk that convertible bonds cannot be converted into shares at maturity
The stock price is not only affected by the company's profitability and business development, but also affected by macroeconomic policies, social situation, exchange rate, investors' preferences and psychological expectations. If the convertible bonds fail to be converted into shares during the conversion period due to the above factors, the company needs to pay the principal and interest of the convertible bonds that have not been converted into shares, thus increasing the company's financial expenses and production and operation pressure.
Although during the duration of the convertible bonds issued this time, when the closing price of the company's shares is lower than 90% of the current conversion price for at least 10 trading days in any 20 consecutive trading days, the board of directors of the company has the right to propose a downward correction plan for the conversion price and submit it to the general meeting of shareholders of the company for deliberation and voting. However, the revised conversion price shall not be lower than the higher of the average trading price of the company's shares 20 trading days before the date of the shareholders' meeting and the average price of the previous trading day. At the same time, the revised conversion price shall not be lower than the latest audited net assets per share and par value of shares. If the price of the company's shares continues to fall after the issuance of convertible bonds, there is a risk that the company fails to correct the conversion price down in time or even if the company continues to correct the conversion price down, the company's stock price is still lower than the conversion price, resulting in significant adverse changes in the conversion value of the convertible bonds issued this time, which may lead to the resale of the convertible bonds or the failure to convert the shares at the expiration of the holding period.
（13） Risk of price fluctuation of convertible bonds
Convertible bond is a kind of hybrid securities with bond characteristics and stock options. It is a compound derivative financial product with the dual characteristics of stocks and bonds. Its secondary market price is affected by many factors, such as market interest rate, remaining maturity of bonds, conversion price, company stock price, redemption terms, resale terms and downward correction terms of conversion price, investors' expectations and so on. Investors of convertible bonds need to have certain professional knowledge. In the process of listing, trading and stock conversion of convertible bonds, the price may fluctuate abnormally or deviate seriously from its investment value, which may make investors unable to obtain the expected investment income.
（14） Risk of diluting immediate return
This public offering of convertible bonds will help the company expand its production capacity, enhance its profitability and improve its anti risk ability. With the availability of the funds raised by the issuance of convertible bonds and the smooth conversion of shares, the scale of the company's share capital and net assets will increase accordingly. With the successful completion and operation of the investment project of the funds raised by the convertible bonds, the economic benefits of the investment project of the funds raised will be gradually released during the duration of the convertible bonds. Therefore, after the completion of this offering, if investors convert shares during the conversion period, the company's earnings per share and return on net assets will be diluted to a certain extent. Therefore, the company may face the risk of diluting earnings per share and return on net assets during the conversion period. The controlling shareholders, actual controllers, all directors and senior managers of the company have made relevant commitments and actively taken corresponding measures to make up for the possible diluted immediate return.
(fifteen) the risk of New Coronavirus epidemic
Since the beginning of 2020, the New Coronavirus epidemic has spread across the globe. Although from the current situation, China's epidemic has been effectively controlled step by step, there is still a risk of further aggravation of the overseas epidemic. If the epidemic can not be contained in the short term, it will have a substantial impact on the global real economy. Shrinking demand, economic turmoil and market panic will lead to the decline of product sales and prices, which may lead to the decline of the company's performance and the risk that the raised investment projects cannot be implemented on schedule.
（16） International trade friction risk
During the reporting period, the international environment has become increasingly complex, and the trade frictions between China and the United States have gradually increased. The United States, Brazil, India, the European Union and other countries or regions have launched "double anti" investigations on China's tire exports, or restricted the export of Chinese tires by raising the access threshold. The products exported by Chinese tire enterprises to the United States face high tariffs, which limits the export business of tire enterprises of downstream customers of the company to a certain extent. The company's overseas markets are mainly concentrated in East Asia, Southeast Asia and other countries and regions
