Reply to the inquiry letter on the examination of the application documents for the initial public offering and listing on the gem of Guangdong Hongming intelligent Co., Ltd
Sponsor (lead underwriter)
Address: No. 1, Keyuan South Road, Guancheng District, Dongguan
April, 2002
Shenzhen Stock Exchange:
We have received the inquiry letter on the examination of the application documents for the initial public offering and listing on the gem of Guangdong Hongming intelligent Co., Ltd. (audit letter [2021] No. 010891) (hereinafter referred to as the “audit inquiry letter”) issued by your exchange on July 20, 2021. Guangdong Hongming intelligent Co., Ltd. (hereinafter referred to as “Hongming”, “issuer”, “company”) and Dongguan Securities Co., Ltd. (hereinafter referred to as “sponsor”), Beijing Zhide law firm (hereinafter referred to as “issuer’s lawyer”), Zhitong accounting firm (special general partnership) (hereinafter referred to as “reporting accountant”) and other relevant parties, based on the principles of diligence and good faith, After careful verification and Discussion on the opinions put forward in the audit inquiry letter one by one, the reply is as follows, please review.
Unless otherwise specified, the abbreviation used in this reply has the same meaning as that in the prospectus of Guangdong Hongming intelligent Co., Ltd. for initial public offering and listing on the gem (draft application).
Review the questions listed in the inquiry letter in bold (BOLD)
Reply to the questions listed in the inquiry letter
The contents of application documents such as supplementary disclosure and revised prospectus in the reply are in italics (BOLD)
catalogue
catalogue 31. About the historical evolution 52. About business and Technology 353. On horizontal competition 804. Related parties and related transactions 905. About business qualification and legal compliance 1246. With regard to house leasing 1347. About production capacity and raised funds 1418. About the previous IPO application 1489. On revenue recognition 17110. With regard to the main business income 21311. About distribution and export 23212. On the financial leasing model 26013. About major customers 28114. With regard to procurement and suppliers 31015. About the main business cost and gross profit margin 34316. With regard to period costs 38217. With regard to accounts and notes receivable 40118. With regard to inventory 41919. About fixed assets and construction in progress 43920. With regard to advances and contractual liabilities 44521. On government subsidies and tax incentives four hundred and forty-eight
22. On financial internal control 46123. With regard to fund flow verification 46624. Financial information and operating conditions after the audit deadline four hundred and seventy-seven
The application materials show:
(1) Yuan Xiaoqiang and Shenzhen Yuto Packaging Technology Co.Ltd(002831) took shares in the issuer in 2016, of which yuan Xiaoqiang was the director of the issuer and Shenzhen Yuto Packaging Technology Co.Ltd(002831) was the largest customer of the issuer from 2018 to 2020, with sales accounting for 11.80%, 7.85% and 10.54%;
(2) Jin Jian transferred 4.5% of the equity of the issuer to Hanhe Qisong in April 2018, and Wang Baizhao transferred 4.5% of the equity to Haode Qisong. Hanhe Qisong and Haode Qisong are limited partnerships funded by Jin Jian and CAI Tiehui; Wang Baizhao’s equity transfer is the cancellation of the agent holding relationship.
Please explain to the issuer:
(1) Yuan Xiaoqiang’s investment background and source of funds, and whether yuan Xiaoqiang and its related parties have related relationships, business or capital transactions with the issuer, the actual controller of the issuer and its related parties, Dong Jiangao, customers, suppliers and their shareholders;
(2) In history, the reasons why Jin Jian and CAI Tiehui entrusted Wang Baizhao and Dai Feifei to hold shares on behalf of them, whether there are violations of laws and regulations and risks, and whether there are disputes or potential disputes over the above holding and the dissolution of the holding relationship; The reasons and background for the establishment of Hanhe Qisong and Haode Qisong, and whether the shares of the platform held by the actual controller and the equity of the issuer held by the partnership platform are held on behalf;
(3) The capital contribution background of Shenzhen Yuto Packaging Technology Co.Ltd(002831) , whether the orders between the issuer and Shenzhen Yuto Packaging Technology Co.Ltd(002831) , whether there are factors or potential arrangements affecting the independence of the issuer, and whether there is a disguised transfer of interests;
(4) The background, reasons, pricing basis and fairness, capital source and legal compliance of the issuer’s previous capital increase and equity transfer, whether the payment has been completed, whether there are violations of laws and regulations, whether both parties have expressed their true intention, whether there are entrusted shareholding, trust shareholding, interest transfer or other interest arrangements, and whether there are disputes or potential disputes;
(5) The income tax paid by the controlling shareholder and the actual controller and the withholding and payment by the issuer involved in the previous equity transfer, capital increase, capital increase, profit distribution and overall change, whether there is any violation of tax laws and regulations, and whether it constitutes a major illegal act;
(6) Whether the previous share changes in the reporting period involve share based payment, and if so, explain the accounting treatment.
Ask the sponsor and the issuer’s lawyer to express clear opinions.
[reply]
1、 Yuan Xiaoqiang’s investment background and source of funds, and whether yuan Xiaoqiang and its related parties have related relationships, business or capital transactions with the issuer, the actual controller of the issuer and its related parties, Dong Jiangao, customers, suppliers and their shareholders
[description]
(I) yuan Xiaoqiang’s investment background and source of funds
Yuan Xiaoqiang served as the executive partner of Shenzhen Tongda equity investment fund partnership (limited partnership), controlling Hangzhou Xinxin Xusheng investment partnership (general partnership) and Xinyu Xinxin Shengli investment partnership (limited partnership). Yuan Xiaoqiang has invested directly or as an investment partnership in Jiangxi 3L Medical Products Group Co., Ltd., Guangdong Hongming intelligent Co., Ltd., Xiamen jinhuifeng new packaging materials Co., Ltd., Beijing Seeyon Internet Software Corp(688369) ( Beijing Seeyon Internet Software Corp(688369) . SH), and has rich experience in enterprise management consulting, strategic planning and capital market investment.
Around 2012, Jin Jian, the actual controller of Hongming shares, went to Xiamen to visit the customer Xiamen Jihong Technology Co.Ltd(002803) (hereinafter referred to as ” Xiamen Jihong Technology Co.Ltd(002803) ). After being introduced by the customer, he met yuan Xiaoqiang, who was conducting investment research in Xiamen Jihong Technology Co.Ltd(002803) .
At this time, after years of development, the company’s business scale continues to expand, and it has the demand to enter the capital market to promote the development of the enterprise. After the two sides knew each other, Jin Jian often consulted yuan Xiaoqiang on matters related to the standardized operation of the enterprise, and often invited yuan Xiaoqiang to the company for on-site guidance. Based on the understanding of the packaging equipment industry, the two sides had many exchanges on the industry development prospects and enterprise development strategies, and agreed that the packaging equipment industry will enter a period of rapid development. Through in-depth understanding of the packaging equipment industry and Hongming Co., Ltd., Yuan Xiaoqiang recognized the development prospect of the company and generated the willingness to invest in Hongming Co., Ltd. the two sides gradually reached an investment cooperation relationship in the process of long-term exchanges.
After friendly negotiation, on September 18, 2016, Hongming Co., Ltd. held a shareholders’ meeting and agreed that Yuan Xiaoqiang would invest RMB 7058820 in the company at the price of 10.00 yuan per registered capital, of which 705882 yuan would be included in the paid in capital of the company and the remaining 6352938 yuan would be included in the capital reserve of the company. Yuan Xiaoqiang’s investment in Hongming shares is the accumulation of his own funds, and his shares of the issuer are owned by him. There is no entrusted shareholding, trust shareholding or other interest arrangements.
Before and after taking shares, Yuan Xiaoqiang mainly provided reasonable suggestions for the issuer in terms of enterprise strategic planning and Corporate Governance:
1. Because the actual controller of the issuer had little understanding of the capital market in the early stage, Yuan Xiaoqiang planned the basic path of IPO and listing for the issuer in combination with the market situation and the business characteristics of the issuer;
2. Guide the issuer to focus on the development of its main business and encourage the issuer to strengthen R & D investment;
3. Urge the issuer to build its own plant to lay the foundation for sustainable and stable development, and suggest the issuer to obtain the use right of state-owned construction land in Dongguan and Yancheng respectively;
4. Promote the democratization of corporate governance and the improvement of the issuer’s decision-making mechanism;
5. Guide the issuer to properly deal with related party transactions, recommend the cancellation of related parties in the same industry, upstream and downstream, and urge the issuer to improve and implement the review mechanism of related party transactions.
(II) whether yuan Xiaoqiang and his related parties have any related relationship, business or capital transactions with the issuer, the actual controller of the issuer and its related parties, directors, supervisors, customers, suppliers and their shareholders
According to the company law, accounting standards for Business Enterprises No. 36 – disclosure of related parties and Shenzhen Stock Exchange GEM Listing Rules, Yuan Xiaoqiang’s related parties are as follows:
Sn related party name related relationship status
1. Yuan Xiaoqiang, director of Hangzhou Xinxin Xusheng investment partnership, holds 99% of the capital contribution
(general partnership)
2. Yuan Xiaoqiang, partner director of Shenzhen Tongda equity investment fund, holds 90% of the capital contribution and serves as the executive director
Enterprise (limited partnership)
3. Yuan Xiaoqiang, director of Xinyu xinshengli investment partnership, holds 63.17% of the capital contribution
(limited partnership)
Yuan Xiaoqiang, a director of Dalian Shengqiang Computer Co., Ltd., holds 50% of the equity of the company and holds the business license of hanging director and general manager in October 2002
5. Hangzhou Xinxin Xusheng investment partnership controlled by Yuan Xiaoqiang, director of Xiamen jinhuifeng new packaging materials Co., Ltd. continues to exist
An enterprise with 20% capital contribution from a limited company (general partnership)
6 Xiamen jinhuifeng new packaging Co., Ltd., a related party of Yuan Xiaoqiang, director of Xiamen jinshunxin industry and Trade Co., Ltd
Materials Co., Ltd. holds 100%
7 Xiamen jinhuifeng new packaging Co., Ltd., a related party of Yuan Xiaoqiang, director of Xiamen Chengke industry and Trade Co., Ltd
Materials Co., Ltd. holds 100%
8 yuan Xiaoqiang, a director of Qingdao shuoteman import and Export Co., Ltd., once held 49% equity and served as a supervisor, which was approved to be cancelled in August 2017
9. Yuan Xiaoqiang, director of Xiamen Weishen Asset Management Co., Ltd., once held 20% of the equity and was approved to be cancelled in June 2019
10 yuan Minggui’s director yuan Xiaoqiang’s father retired
11 Zheng Huiqiu director yuan Xiaoqiang’s mother retired
12 yuan Shuying’s director yuan Xiaoqiang’s daughter studies
13 yuan Xiaojie director yuan Xiaoqiang sister retired
14 yuan Xiaofeng director yuan Xiaoqiang sister retired
15. The spouse of Tan Wei and Yuan Xiaofeng works for non issuers and related parties
According to the flow of Yuan Xiaoqiang and its main related parties, the issuer, the actual controller of the issuer and its related parties, Dong Jiangao and the statement issued by Yuan Xiaoqiang, during the reporting period, Yuan Xiaoqiang had capital exchanges with the issuer, which was yuan Xiaoqiang’s entrustment to pay the individual income tax of the joint-stock reform on behalf of the issuer.
According to the list of customers and suppliers of Xiamen jinhuifeng, Xiamen jinshunxin and Xiamen Chengke during the reporting period, the interview records and unrelated statements of the issuer’s main customers and suppliers, Xiamen jinhuifeng and the issuer have three overlapping suppliers, namely Dongguan securities, ZhengTu Xinshi (Jiangsu) Technology Co., Ltd. (hereinafter referred to as “ZhengTu Xinshi”) Dongguan Gaopin Measurement Technology Service Co., Ltd. (hereinafter referred to as “Gaopin measurement”), the main information of the three overlapping suppliers and the main transactions with the issuer and Xiamen jinhuifeng are as follows:
Sequence overlapping supply and Hongming stock owner and Xiamen Jinhui No. should be the business name. The business scope should be the main transaction content of the peak
