Shanghai Stock Exchange document szkss (refinancing) [2022] No. 68
— inquiry letter on the examination of Bozhon Precision Industry Technology Co.Ltd(688097) application documents for issuing shares to specific objects Bozhon Precision Industry Technology Co.Ltd(688097) , Huatai United Securities Co., Ltd.:
In accordance with the securities law, the measures for the administration of securities issuance and registration of companies listed on the science and Innovation Board (for Trial Implementation), the rules for the examination and approval of securities issuance and listing of companies listed on the science and Innovation Board of Shanghai Stock Exchange and other relevant laws and regulations, as well as the relevant provisions of the exchange, the examination and approval authority of the exchange reviewed the application documents of Bozhon Precision Industry Technology Co.Ltd(688097) (hereinafter referred to as the issuer or company) for issuing shares to specific objects, and formed the first round of questions.
1. About the fund-raising project
According to the application materials: (1) the issuer intends to use the raised funds of 746 million yuan and 480 million yuan to invest in the production expansion construction project of automation equipment in the new energy industry and the upgrading project of automation equipment in the consumer electronics industry (hereinafter referred to as the new energy project and consumer Electronics Project), of which the equipment purchase cost is 6263838 million yuan and 4209767 million yuan respectively; (2) The issuer intends to use the raised capital of 225 million yuan to invest in the new R & D center project for the construction of advanced laboratories, the introduction of high-precision R & D and testing equipment, and the R & D of new products and technologies including semiconductor equipment; (3) In the new energy project, at present, only Contemporary Amperex Technology Co.Limited(300750) one customer of power lithium battery generates income, which has been paid attention by the sponsor; (4) As of September 30, 2021, the book values of the issuer’s machinery and equipment and electronic equipment were RMB 410595 million and RMB 176639 million respectively.
Please explain: (1) up to now, the company has signed cooperation agreements or intended orders with relevant vehicle enterprises on lithium battery equipment, as well as the transformation of sales orders, and explain the rationality and feasibility of the company’s investment in lithium battery production equipment in combination with the situation of technology, personnel, market, customers and orders; (2) In combination with the differences in products, application fields and production processes, explain the differences and connections between the former project and the current project, and whether they are essentially the same project; (3) In combination with the company’s current fixed assets scale and existing production capacity scale, explain the rationality that the equipment purchase of this raised investment project is much higher than the existing assets scale, and explain the digestion measures of under construction and new production capacity in combination with orders in hand, intentional contracts, market space, market competition pattern, etc; (4) The specific content, calculation basis, capital investment direction and price fairness of each construction investment project in new energy projects and consumer electronics projects, the content, quantity and purpose of the equipment to be invested, the matching relationship with the new production capacity, the difference with the company’s existing equipment and whether it is universal, and further analyze the rationality of the content and scale of the newly purchased equipment, Whether the project construction funds will be used to supplement the working capital; (5) Whether there is a significant difference between the content, quantity, purpose and price fairness of the software and hardware equipment to be purchased for the new R & D center project, and the specific composition of R & D expenses and the composition of R & D expenses of the issuer during the reporting period; (6) The current progress of each raised investment project, the investment before the issuer’s board of directors deliberates the issuance plan, and whether the raised funds are used to replace the investment before the board of directors deliberates.
The recommendation institution and the reporting accountant are requested to verify the above matters and express clear opinions.
2. About the previous fund-raising project
According to the application documents and public information: (1) the issuer’s initial public offering in May 2021 proposed to raise a total of 1110 million yuan, and the actual net amount of raised funds was 406698500 yuan. As of September 30, 2021, the total amount of raised funds used had been 348414800 yuan; (2) The issuer shall reduce the investment amount of the raised funds of all IPO raised investment projects. If the actual net amount of the raised funds is lower than the total planned investment of the raised investment projects, the company will solve the deficiency through self raised funds.
The issuer is requested to explain: the use content, amount and proportion of the funds raised by the previous raised investment projects up to now, the subsequent use plan and expected progress of the funds, the project construction progress and subsequent construction, and whether there is any delay in each project.
The reporting accountant is requested to verify the above matters and express clear opinions.
3. Benefit calculation
According to the application documents: (1) after the new energy project is fully completed for the first time, it can realize an annual sales revenue of 2134 million yuan and a net profit of 333893400 yuan. The financial internal rate of return on investment (after tax) of the project is 17.13% and the static full investment payback period (after tax) is 7.69 years; (2) After the consumer electronics project is completed for the first time, it can realize an annual sales revenue of 996 million yuan and a net profit of 207568700 yuan. The financial internal investment rate of return (after tax) of the project is 20.98% and the investment payback period (after income tax) is 6.58 years. The issuer is requested to explain: (1) the data details and calculation process of benefit calculation, the determination basis and rationality of key measurement indicators such as sales volume, unit price and various costs in benefit calculation, and whether the rationality of gross profit margin in the prediction period has been fully considered; (2) Combined with the profit calculation of the raised investment project and the depreciation and amortization of long-term assets, explain the impact of the raised investment project on the company’s financial situation, asset structure and operating performance.
The reporting accountant is requested to verify the above matters and express clear opinions.
4. On replenishing liquidity and liquidity risk
According to the application documents: (1) at the end of each reporting period, the asset liability ratio of the company was 59.50%, 44.11%, 58.60% and 61.29% respectively, the short-term loan amount was 439092500 yuan, 434685500 yuan, 757304200 yuan and 1113716500 yuan respectively, and the long-term loan amount was 10000 yuan, 22593000 yuan, 230529200 yuan and 173822800 yuan respectively; (2) In each period of the reporting period, the net cash flow from the company’s operating activities was 794069900 yuan, 2008576 million yuan, – 212638400 yuan and -81822070 yuan respectively; (3) At the end of each reporting period, the book value of the company’s accounts receivable was 9915633 million yuan, 8837093 million yuan, 13605139 million yuan and 12615267 million yuan respectively; (4) The issuer has not paid cash dividends in the last three years; (5) The subsidiary Shanghai Xinxiang (defendant) had a dispute over the sales contract. In the first instance, the court ruled that Shanghai Xinxiang returned the payment of 8.2 million yuan to the plaintiff and compensated for economic losses; (6) The total amount of supplementary working capital and deemed supplementary working capital in this raised investment project is 504959700 yuan, accounting for 29.70% of the funds raised this time.
The issuer is requested to: (1) settle the situation of comparable companies in the contract industry, analyze the rationality of the large difference between cash flow and net profit of operating activities in the latest year and the first period, and explain whether it is consistent with the overall situation of the industry; (2) Explain whether the issuer has liquidity risk and relevant countermeasures in combination with the increase of asset liability ratio, the significant increase of short-term loans, negative operating cash flow, the significant increase of accounts receivable, three-year non dividend, contract disputes and other factors; (3) The amount of non capital expenditure in this raised investment project, and calculate the specific amount of the actual supplementary working capital in this raised investment project and its proportion in the total amount of funds to be raised, as well as whether it exceeds 30%.
The recommendation institution and the reporting accountant are requested to check and give clear opinions according to question 4 of the examination and answer of securities issuance and listing of listed companies on the science and innovation board.
5. On financial investment
According to the application documents, on December 23, 2021, Bozhong industry, a subsidiary of the issuer, participated in Suzhou Jianuo Environmental Technology Co., Ltd., with an investment amount of 22.596 million yuan and a shareholding ratio of 2.99%. The issuer believes that this investment is not a financial investment.
The issuer is requested to explain: (1) the investment in Jianuo environmental protection is not defined as the basis for financial investment; (2) Whether the financial investment with large amount is held at the end of the most recent period, the amount of financial investment newly invested and proposed to be invested by the issuer within six months before the date of the resolution of the board of directors, and whether the relevant financial investment has been deducted from the total amount of funds raised this time.
The recommendation institution and the reporting accountant are requested to check and give clear opinions according to question 5 of the examination and answer of securities issuance and listing of listed companies on the science and innovation board.
6. About operation
6.1 according to the application documents: (1) during the reporting period, the gross profit margin of the company’s main business was 41.78%, 45.91%, 42.90% and 33.59% respectively. The decline in gross profit margin was mainly due to the increase in direct labor costs, the decline in the exchange rate between the US dollar and RMB and the high actual input costs of some new models; (2) The company’s net profit attributable to the parent company after deducting non profits in 2019 and 2020 decreased by 7.72% and 29.00% respectively year-on-year; (3) During the reporting period, the company’s sales revenue to Apple accounted for 47.21%, 42.71%, 36.54% and 32.25% of the current operating revenue respectively.
The issuer is requested to: (1) quantitatively analyze the reasons and rationality of the decline in gross profit margin, explain whether the change trend of gross profit margin is consistent with that of comparable companies in the same industry, whether there is a risk of continuous decline in gross profit margin, whether it has a significant adverse impact on the issuer’s current raised investment project and future profits, the countermeasures and effectiveness to be taken by the issuer, and whether the risk of decline in gross profit margin has been fully disclosed in the prospectus; (2) Explain the reasons for the decline of the company’s operating performance and the proposed solutions in combination with the latest financial data; (3) Explain the impact of external environment such as Sino US trade friction on the company’s production and operation and countermeasures. The recommendation institution, the reporting accountant and the lawyer of the issuer are requested to verify the above matters and express clear opinions.
6.2 according to the application documents: (1) the balance of accounts receivable of the issuer has increased significantly in the last year and at the end of the last period, and the large balance of accounts receivable aged 1-2 years at the end of the last period is due to the change of settlement method of Guangda group; (2) At the end of each reporting period, the book value of the company’s inventory was 756727 million yuan, 495436 million yuan, 12336018 million yuan and 28758024 million yuan respectively. The inventory is mainly composed of issued goods, products in process, raw materials and inventory goods.
Please explain to the issuer: (1) up to now, the payment collection of Guangda group, whether there are similar situations in other apple designated OEM factories and Apple’s industrial chain manufacturers during the reporting period, and whether the change of settlement method is in line with industry practice; (2) Whether the issuer’s credit policy towards major customers has changed, and the post period collection of accounts receivable in the latest year and at the end of the first period; (3) The order coverage of the issuer’s products in process and goods issued at the end of the last year and the end of the last year; The realization of sales after the delivery period of goods at the end of the most recent period, combined with the average acceptance cycle of products, explain whether there are long-term uncollected delivery goods and their reasons; Composition of goods issued with a stock age of more than one year at the end of the latest period, whether there is impairment risk and quality disputes, etc.
The recommendation institution and the reporting accountant are requested to verify the above matters and give clear opinions, explaining the verification method, verification process, verification proportion and verification conclusion of the issued goods.
7. Others
7.1 according to the application materials: (1) on June 17, 2021, the company was required to stop production and business and fined 48000 Yuan due to fire problems in the staff dormitory; (2) On July 26, 2021, the company was fined 128000 yuan by Huanggang customs for failing to provide import license, and Wujiang Customs issued a statement.
Please explain to the issuer: (1) the company’s rectification of the above administrative punishment; (2) The reasons why the administrative punishment is made by Huanggang customs but issued by Wujiang customs, and whether the authority issuing the explanation is the competent subject; (3) Whether the company has other similar illegal import and export situations; (4) Based on the above situation, explain whether the relevant matters constitute major violations.
The lawyer of the issuer is requested to check the above matters and give clear opinions.
7.2 according to the application documents, the issuer’s new R & D center project is in the process of environmental impact assessment, and the relevant approval documents have not been obtained. There is no need to obtain environmental impact assessment for new energy projects and consumer electronics projects.
The issuer is requested to explain: (1) the specific progress and subsequent arrangements of the application for EIA approval of the new R & D center project, and whether there is significant uncertainty in obtaining the EIA approval; (2) New energy projects and consumer electronics projects do not need specific basis for environmental impact assessment, and whether the environmental impact assessment procedures have not been performed is in compliance.
The lawyer of the issuer is requested to check the above matters and give clear opinions.
7.3 the issuer shall supplement whether the issuer and its holding and participating subsidiaries are engaged in real estate business.
The lawyer of the issuer is requested to check the above matters and give clear opinions.
The issuer is requested to distinguish between “disclosure” and “explanation”. In addition to applying for exemption, the disclosure content should be added to the prospectus. The explanation content is the content of inquiry reply and need not be added to the prospectus; If the amendment of the prospectus and other application documents is involved, the updated place shall be indicated in bold in regular script, and the amendment description and difference comparison table shall be submitted together; The recommendation institution is requested to carefully check and check the contents of the issuer’s reply item by item, and write the general opinion that “the institution has checked the company’s reply in this reply material to confirm and ensure its authenticity, completeness and accuracy” after the issuer’s reply.
Shanghai Stock Exchange
April 10, 2002
Key words: inquiry letter on refinancing of science and Innovation Board
Issued by the listing examination center of Shanghai Stock Exchange on April 10, 2022
