About Guangzhou Wahlap Technology Corporation Limited(301011)
Reply to the examination and inquiry letter of applying for issuing convertible corporate bonds to unspecified objects
Snzzz [2022] No. 21006410110
catalogue
Text of the report 1. Notice on Guangzhou Wahlap Technology Corporation Limited(301011) applying for issuing convertible corporate bonds to unspecified objects
Review the reply to the inquiry letter 2-30
About Guangzhou Wahlap Technology Corporation Limited(301011)
Applying for issuing convertible corporate bonds to unspecified objects
Review the reply to the inquiry letter
Snzzz [2022] No. 21006410110 Shenzhen Stock Exchange listing Audit Center:
According to the requirements of audit inquiry letter on Guangzhou Wahlap Technology Corporation Limited(301011) applying for issuing convertible corporate bonds to unspecified objects (audit letter [2022] No. 020064) issued by your office, as the accountant of Guangzhou Wahlap Technology Corporation Limited(301011) (hereinafter referred to as “issuer” or “company”) applying for issuing convertible corporate bonds to unspecified objects, we hereby explain the corresponding parts of your questions as follows:
1. during the reporting period, the gross profit margin of the issuer’s animation IP derivatives was 34.67%, 31.98%, 33.23% and 38.27% respectively, higher than the issuer’s comprehensive gross profit margin; The net cash flows from operating activities were 43.975 million yuan, 1149513 million yuan, 412635 million yuan and -4.6771 million yuan respectively. At the end of each reporting period, the company’s consolidated asset liability ratio was 43.36%, 49.56%, 52.29% and 37.91% respectively, which was higher than the average level of the same industry in the last three years; The book value of goodwill is 535037 million yuan, which is formed by the company’s acquisition of 100% equity of Guangzhou Keyun; The book balance of accounts receivable was 1086702 million yuan, 1285356 million yuan, 2760141 million yuan and 2822724 million yuan respectively, accounting for 25.38%, 26.41%, 66.19% and 73.70% of the operating revenue, showing an upward trend.
The issuer is requested to supplement: (1) explain the rationality and sustainability of the high gross profit rate of animation IP derivatives in combination with the issuer’s use right of IP derivatives, whether it is exclusive authorization, the content and validity period of authorization agreement, market development trend, pricing of similar products and comparable companies in the same industry; (2) In combination with the development of the industry, the company’s revenue recognition policy, credit policy and the situation of comparable companies in the same industry, explain the reasons for the negative net cash flow of the company’s operating activities in the latest period, whether it has seasonal characteristics, whether there are adverse changes in the company’s operating environment, whether it affects the company’s sustainable operation ability, and whether the company has a reasonable asset liability structure and normal cash flow level, Whether there is enough cash flow to pay the principal and interest of corporate bonds; (3) Explain and disclose the adequacy of the provision for goodwill impairment in combination with the specific methods and parameters of goodwill impairment test and the performance of the underlying assets in the reporting period, and whether there is a risk of further goodwill impairment in the future; (4) Combined with the types of main customers, business conditions, credit policies, account age and collection conditions, and the situation of comparable companies in the same industry, explain the reason and rationality of the increasing proportion of accounts receivable in operating revenue year by year, and whether the provision for bad debts is sufficient.
The issuer is requested to disclose the above risks.
The sponsor and accountant are requested to check and express clear opinions.
reply:
1、 In combination with the issuer’s use right of IP derivatives, whether it is exclusive authorization, the content and validity period of the authorization agreement, the market development trend, the pricing of similar products and the situation of comparable companies in the same industry, this paper explains the rationality and sustainability of the high gross profit margin of animation IP derivatives
(I) the use right of IP derivatives owned by the issuer, whether it is exclusive authorization, the content and validity period of the authorization agreement
1. All IP derivatives owned by the issuer have the exclusive right to purchase in China
Animation IP derivatives business is a business model that combines animation IP image card and animation cartoon equipment, which is first launched in China by the issuer drawing on the advanced experience of Japan’s ACG industry. The issuer’s animation IP image card not only has the high collection and social attributes of the traditional “set exchange card”, but also can deeply interact with the animation and cartoon equipment integrating AR and other advanced technologies, giving consumers an immersive experience. During the reporting period, the compound growth rate of the sales revenue of the issuer’s animation IP derivatives business was 63.34%, which was deeply loved by consumers.
In the animation IP derivatives sales business model, the issuer mainly obtains the animation IP derivatives authorization by purchasing the animation equipment IP suite from the upstream animation IP entertainment content development manufacturer. The authorization document signed by both parties clearly stipulates the core elements such as authorized commodity name, authorized use area and authorization period. The authorization period is generally 1-2 years, and the cooperation document shall be renewed one month before expiration. During the reporting period, the issuer’s animation IP derivatives business mainly involves the authorization of 7 animation IP derivatives, all of which have obtained the exclusive procurement right in China. The details are as follows:
Serial number animation IP derivative name IP suite supplier whether it has domestic independence, whether it is within the validity period of the procurement right to cooperate with the supplier
1 BETSON, my underground city of the world, is a cooperative enterprise established by the issuer
2 “Baoke dream plus Aole” marvelous started cooperation in 2020
3 “the transformation of Altman series into IGS is the war established by the issuer”, that is, cooperation
4 Bandai Namco is the cooperation of the issuer since its establishment
5 “Super Dragon Ball hero” Bandai Namco is a cooperative company established by the issuer
6 “mecha hero” IGS is the cooperation of the issuer since its establishment
7 the IGS of “mecha transformation into go” is a cooperative enterprise established by the issuer
2. The cooperation relationship between the issuer and the main IP licensors is stable and there is no dispute
The publisher’s suite suppliers are mainly animation IP entertainment content developers, who have IP copyright or are granted copyright; While selling the kit, the kit supplier authorizes the purchaser of the kit to use the kit for R & D and sales of complete game and entertainment equipment within the agreed area, and promises to protect the issuer from claims by third parties.
The issuer has a long cooperation time with major kit suppliers such as Bandai Namco, IGS, BETSON and marvelous. The cooperation relationship between the two sides is good and stable. There is no dispute between the issuer and its partners or other subjects due to the purchase and use of relevant kits.
In conclusion, the issuer has the exclusive domestic procurement right of major animation IP derivatives, and the authorization is within the validity period. The cooperation relationship between the issuer and the main IP licensors is stable and there is no dispute.
(II) market development trend
1. Animation IP derivatives market has a large scale and rapid growth
Animation IP derivative products business is the issuer’s integration of “set exchange card”, “animation cartoon equipment” and “tide play” and other elements
In 2020, the scale of the global collective exchange card game market reached US $11.130 billion. It is expected that the market will continue to grow to US $31.26 billion by 2027, corresponding to a compound growth rate of 15.90% from 2020 to 2027. According to the 2021 annual development report of Guangdong game industry issued by Guangdong Game Industry Association, the total revenue of game and entertainment equipment in Guangdong Province in 2021 was 10.37 billion yuan, accounting for 98.60% of the national game and entertainment market. It was gradually weakened by the impact of covid-19 epidemic and showed a trend of rising against the trend. According to the data of Frost & Sullivan consulting agency, the scale of China’s tide game market is expected to be 47.8 billion yuan in 2022, and the compound annual growth rate of China’s tide game market is expected to be 29.80% from 2019 to 2024.
2. High quality IP has become a precious resource, and creating game and entertainment equipment with strong IP attribute has become a trend
IP has become the source of cultural creativity in the culture and entertainment industry, the core element running through the culture and entertainment industry chain, and links entertainment, animation, movies, toys and other different fields. After years of operation, a successful IP has accumulated a large fan base, which has great attraction to entertainment consumption industries such as entertainment, animation, film and so on. In the field of game and entertainment equipment industry, creating equipment with strong IP attribute plays a great role in marketing. Using the value of successful IP will become a key element for the development of commercial game and entertainment industry in the future and drive the commercial game and entertainment industry towards the era of copyright operation. 3. Integrate VR, AR, Mr and other advanced technologies to improve the level of human-computer interaction and comprehensively enhance consumers’ sense of immersive experience
Game and entertainment industry is an emerging industry combining advanced equipment manufacturing industry, information industry and cultural industry. It belongs to an industry driven by technology, creativity and content. In the notice of opinions on promoting the transformation and upgrading of the culture and entertainment industry, the Ministry of culture clearly proposed to encourage game and entertainment equipment manufacturers to actively introduce advanced technologies such as somatosensory, multi-dimensional special effects, virtual reality and augmented reality, and speed up the research and development of game and entertainment equipment that is intellectualized, fitness and skilled and suitable for different ages. With the innovation of technology and the encouragement of policies, the manufacturers of commercial game entertainment mechanism will strengthen the research and development of game entertainment equipment in the field of VR and AR technology. VR, AR, Mr and other virtual reality technologies realize the deep integration of the digital world and the real world, show people a new form of content expression, and make the entertainment equipment more authentic and interactive. Using high-tech means to enrich people’s entertainment forms and improve the expressiveness and appeal of cultural creativity. New technologies such as VR, AR and MR will bring new potential equipment demand, which will give rise to higher economic added value and greater market space for the game and entertainment industry.
To sum up, the animation IP derivatives market has a large scale and rapid growth. It has become a trend to integrate VR, AR, Mr and other advanced technologies, improve the level of human-computer interaction and create game entertainment equipment with strong IP attributes.
(III) Pricing of similar products and comparable companies in the same industry
Animation IP derivatives business is the business model first launched by the issuer in China, and there are few similar products in the market. Comparable listed / proposed listed companies in the same industry, Shiyu technology, Zhongshan Jinma, IGS, Wandai nanmenggong, Alpha Group(002292) and bubble Mart did not disclose relevant similar product data.
The product forms of animation IP derivative business mainly include animation IP image card and animation cartoon equipment. Among them, animation IP image card has human-computer interaction function and can be used with animation cartoon equipment. The sales price of animation IP derivatives is determined by the issuer according to the market conditions after analyzing and calculating the purchase cost of animation image products, the company’s equipment launch cost and operation cost.
To sum up, the sales price of the issuer’s animation IP derivatives is determined according to the market conditions after the analysis and calculation of the procurement cost of animation image products, the company’s equipment launch cost and operation cost. At present, there are few comparable companies operating similar businesses in the industry.
(IV) rationality and sustainability of higher gross profit margin of animation IP derivatives
1. Rationality of higher gross profit margin of animation IP derivatives
During the reporting period, the gross profit margin of the issuer’s animation IP derivatives sales was 31.98% and
