China Securities Co.Ltd(601066)
About Guizhou Zhenhua E-Chem Inc(688707)
2021 continuous supervision and tracking report
On September 14, 2021, Guizhou Zhenhua E-Chem Inc(688707) (hereinafter referred to as ” Guizhou Zhenhua E-Chem Inc(688707) ” and “the company”) was listed on the science and Innovation Board of Shanghai Stock Exchange. In accordance with the measures for the administration of the registration of initial public offering of shares on the science and Innovation Board (for Trial Implementation), the measures for the administration of the recommendation business of securities issuance and listing and the rules for the listing of shares on the science and Innovation Board of Shanghai Stock Exchange, China Securities Co.Ltd(601066) (hereinafter referred to as ” China Securities Co.Ltd(601066) securities” and “recommendation institution”) as the recommendation institution of Guizhou Zhenhua E-Chem Inc(688707) continuously supervises Guizhou Zhenhua E-Chem Inc(688707) , The continuous supervision period is from September 14, 2021 to December 31, 2024.
In 2021, the continuous supervision of Guizhou Zhenhua E-Chem Inc(688707) by China Securities Co.Ltd(601066) securities is summarized as follows:
1、 Continuous supervision
No. work content and continuous supervision
Establish, improve and effectively implement the continuous supervision system, and formulate the corresponding work plan for the specific continuous supervision work, and formulate the corresponding work plan for the recommendation institution
According to the relevant provisions of the CSRC, before the recommendation institution has signed recommendation 2 with Guizhou Zhenhua E-Chem Inc(688707) Guizhou Zhenhua E-Chem Inc(688707) , the recommendation institution shall sign a continuous supervision agreement with the listed company to clarify the dual agreement, which defines the rights and obligations of both parties during the continuous supervision period, and report to Shanghai Securities for supervision
Exchange filing
Through daily communication, regular or 3 through daily communication, regular return visit, on-site inspection, due diligence and irregular return visit, the sponsor understands the operation of continuous supervision materials carried out by Zhenhua new inspection, and carries out continuous supervision on Guizhou Zhenhua E-Chem Inc(688707) company
During the period of continuous supervision, if a listed company makes a public statement on the illegal matters of Guizhou Zhenhua E-Chem Inc(688707) in 2021 in accordance with the relevant provisions, it shall report to the Shanghai Stock Exchange before disclosure. There are no illegal and illegal situations that require the recommendation institution stock exchange to report according to the relevant provisions and make a public statement after being reviewed by the Shanghai Stock Exchange
Announce on designated media
During the period of continuous supervision, the listed company or relevant parties violate the regulations
In case of violation of laws and commitments, it shall report to the Shanghai Stock Exchange within five working days from the date of discovery or within the continuous supervision period of Guizhou Zhenhua E-Chem Inc(688707) in 2021 within five working days from the date of discovery. The contents of the report include the matters of the listed company or relevant parties
Specific circumstances of violations of laws and regulations, breach of commitments and other matters,
Supervision measures taken by the sponsor, etc
6 supervise the listed company and its directors, supervisors and senior managers. During the continuous supervision, the recommendation institution shall supervise and abide by laws, regulations, departmental rules and Guizhou Zhenhua E-Chem Inc(688707) of Shanghai Stock Exchange and its directors, supervisors and senior managers
Business rules and other normative documents issued by the Shanghai Stock Exchange, and earnestly fulfill the commitments made by the managers in compliance with laws, regulations and departmental rules, as well as the business rules and other normative documents issued by the Shanghai Stock Exchange
Supervise listed companies to establish, improve and effectively implement corporate governance, and the sponsor shall urge Guizhou Zhenhua E-Chem Inc(688707) to improve the corporate governance system in accordance with relevant 7 systems, including but not limited to the provisions of the general meeting of shareholders, the board of directors and supervisors, and strictly implement the rules of procedure of the meeting and the corporate governance system of directors, supervisors and senior managers
Code of conduct, etc
Supervise the listed companies to establish, improve and effectively implement the internal control system. The recommendation institution has verified the design, implementation and effectiveness of Guizhou Zhenhua E-Chem Inc(688707) ‘s internal control system, including but not limited to the financial management system, accounting system and accounting system. 8. The internal audit system, as well as the use of raised funds, related party transactions and investigation, Guizhou Zhenhua E-Chem Inc(688707) ‘s internal control system is consistent with the external guarantee, foreign investment, derivative transactions The relevant laws and regulations of subsidiaries have been effectively implemented, and the procedures and rules of major business decisions such as the control of subsidiaries can ensure the standardized operation of the company
Supervise listed companies to establish, improve and effectively implement information disclosure
System, review the information disclosure documents and other relevant documents, and the recommendation institution urges Guizhou Zhenhua E-Chem Inc(688707) to strictly implement the information disclosure system of listed companies to Shanghai Stock Exchange. 9. There are sufficient reasons to believe that the documents submitted by listed companies to Shanghai Stock Exchange do not contain false records, misleading statements or duplicates and other relevant documents
Big omission
Information disclosure documents of listed companies and reports to the CSRC
Other documents submitted by Shanghai Stock Exchange shall be examined in advance
Read and urge the company to timely supervise the information disclosure documents with problems
If the company does not make corrections or supplements, the recommendation institution shall timely report the information disclosure of Guizhou Zhenhua E-Chem Inc(688707) to Shanghai Stock Exchange; After reviewing the letter documents of the listed company, if there is no disclosure document that should be disclosed in time, and the prior review is not carried out, the relevant items shall be completed within five trading days after the listed company performs the obligation of information disclosure on the problems reported to the Shanghai Stock Exchange
Review of relevant documents and information disclosure documents with problems
A listed company shall be urged to correct or supplement the documents in a timely manner
If it is not corrected or supplemented, it shall report to the Shanghai Stock Exchange in time
report
Pay attention to the listed company or its controlling shareholders, actual controllers and directors
The directors, supervisors and senior managers were punished by the CSRC in 2021, Guizhou Zhenhua E-Chem Inc(688707) and its controlling shares 11, disciplined by the Shanghai Stock Exchange, or issued a regulatory concern letter by the Shanghai Securities East, the actual controller, directors, supervisors and the Shanghai Stock Exchange, and urged their senior managers not to have such matters
Improve the internal control system and take measures to correct it
Continue to pay attention to the performance of Guizhou Zhenhua E-Chem Inc(688707) and its controlling shares 12 in 2021 by the listed company, its controlling shareholders and actual controllers. If the listed company, its controlling shareholders, actual shareholders and actual controllers do not fail to fulfill their commitments, such as the controllers, they shall make a timely commitment to SSE
Exchange report
Timely media coverage of listed companies
Check market rumors.
After verification, it is found that the listed company was kept in 2021. After verification by the recommendation institution, Zhenhua 13 should timely submit to Shanghai Securities the undisclosed major matters that should be disclosed or the new materials that do not exist with the disclosed information, which are inconsistent with the facts, and timely urge the listed company to truthfully disclose or report the information reported by the exchange
Clarify; Where a listed company does not disclose or clarify, it shall
Report to Shanghai Stock Exchange when necessary
If one of the following circumstances is found, urge the listed company to make an explanation
And make corrections within a time limit and report to the Shanghai Stock Exchange:
(I) suspected of violating the listing rules and other relevant business rules;
(II) professional certificates issued by securities service institutions and their signatories
14. The opinions may contain false records, misleading statements or major legacy. In 2021, Guizhou Zhenhua E-Chem Inc(688707) there was no violation of laws and regulations or other improper circumstances such as relevant omissions; (III) public information
Articles 71 and 72 of the recommendation measures appear in the company
Specified circumstances; (IV) the company does not cooperate with the continuous supervision;
(V) the Shanghai Stock Exchange or the sponsor deems it necessary to report
Other circumstances
Formulate the on-site inspection plan for listed companies and clarify the current situation
On site inspection requirements to ensure the quality of on-site inspection. upper
In case of any of the following circumstances, the recommendation institution or recommendation institution
The representative shall have 15 days from the date of knowing or should have known
Special on-site verification shall be carried out within: (I) there are major financial problems in 2021, and Guizhou Zhenhua E-Chem Inc(688707) there is no suspicion of 15 false; (II) on site inspection of controlling shareholders, actual controllers, directors and special
Supervisors or senior managers are suspected of embezzling the profits of listed companies
Benefits; (III) there may be major breach of guarantee; (IV) capital
There are significant abnormalities in cash flow or cash flow; (V) Shanghai
The stock exchange or the recommendation institution deems it necessary to conduct on-site
Other matters to be verified
2、 Problems found by the recommendation institution and the recommendation representative and their rectification
None.
3、 Major risk matters
(I) risk of intensified market competition
According to the statistics, the company ranked the top 3 in terms of market share of 12% and 68% respectively, with the total market share of 12% and 8% respectively, and the total market share of Yuexin in 2027 and 2027 respectively. First of all, the cathode material enterprises with the highest market share have a relatively close market share, and there are no enterprises with absolutely leading market share. The existing cathode material enterprises have expanded their production capacity, and the market competition is becoming increasingly fierce, which affects the sales price and profit margin of cathode materials. Secondly, in recent years, the cathode material market has developed rapidly, constantly attracting new entrants to break through industry technical and capital barriers and enter the cathode material industry through direct investment, industrial transformation or mergers and acquisitions.
If the company’s capacity expansion progress does not match the capacity expansion speed of the same industry and downstream battery industry, or the product reserve does not keep up with the product layout of the same industry, resulting in the loss of competitiveness of products, or the existing main service market shrinks and fails to open up new markets in time, the company will face the risk of declining market position due to intensified market competition in the future, which will have an adverse impact on the company’s operation.
(II) price fluctuation risk of raw materials
The main raw materials required for the production and operation of the company include ternary precursors (mainly including nickel, cobalt and manganese), lithium carbonate, lithium hydroxide, cobalt tetroxide and other direct materials. The main metal raw materials related to the company’s production and operation include lithium, cobalt, nickel and manganese. Affected by the changes of macroeconomic situation, changes in industry supply and demand pattern and emergencies, the prices of lithium, cobalt, nickel and other main metal raw materials have fluctuated sharply in recent years. If the market price fluctuates sharply due to the supply shortage of main raw materials or the company’s procurement strategy and management system are not effectively implemented, the company may not be able to purchase the main raw materials required for production in time, which will affect the stability of the company’s supply and the sharp rise of the company’s raw material procurement cost, which will have an adverse impact on the company’s production, operation and profitability.
(III) new technology and product development risks
At present, the company’s main research and development directions include the development and basic research of low-cost ternary precursors, cathode materials for sodium ion batteries, ternary materials with large single crystal primary particles, cobalt free nickel manganese binary materials, high-voltage lithium cobalt oxide, phosphorus cathode and other materials. Due to the technology intensive nature of the cathode material industry, there is a risk of R & D failure of new technologies and corresponding new products. The above research projects of the company focus on reducing material costs and new cathode materials, and there are risks that the R & D results of new technologies and corresponding new products fail to pass customer certification, fail to meet customer needs, and relevant performance indicators fail to meet expectations. Once the research and development of new technologies and corresponding new products are less than expected, or there is a breakthrough in the core technology of the company’s industry, but the company cannot grasp the relevant technology in time, it will have a certain adverse impact on the market competitiveness and profitability of the company’s products.
(IV) risk of high concentration of downstream customers
The customer market concentration of the company’s downstream lithium battery industry is high. According to the survey data of high tech lithium battery (GGII), in 2019, 2020 and 2021, the total market shares of the top five power battery enterprises in China were 80.29%, 82.20% and 83.40% respectively. Due to the high concentration of downstream customers and the company’s adherence to the strategy of core high-quality key customers, in the past three years, the sales amount of the company to the top five customers accounted for 93.55%, 89.56% and 95.35% of the current operating revenue respectively, of which the proportion of Contemporary Amperex Technology Co.Limited(300750) sales revenue to the largest customer was 74.44%, 31.22% and 80.27% respectively, which was at a high level. The company has the risk of high concentration of downstream customers. In the future, if the main customers reduce the purchase volume of the company due to unfavorable operation or adjusting the scope of suppliers, or the loss of main customers due to fierce competition, it will have an impact on the company’s sales scale, payment collection speed and gross profit margin, which will have an adverse impact on the company’s operation.
(V) risks with high asset liability ratio
At the end of 2019, 2020 and 2021, the company’s asset liability ratio was 59.34%, 69.93% and 57.89% respectively, at a high level. On the one hand, the high asset liability ratio makes the company face a certain debt repayment risk. On the other hand, with the continuous expansion of the company’s production and operation scale and the continuous increase of capital demand, it also brings certain pressure to the company’s new debt financing.
4、 Major violations
2021, public
