About Shenyang fuchuang precision equipment Co., Ltd
Initial public offering of shares and listing on the science and Innovation Board
Implementation letter of Audit Center’s opinions
of
Reply Report
Sponsor (lead underwriter)
(North block, Zhuoyue Times Square (phase II), No. 8, Zhongxin Third Road, Futian District, Shenzhen, Guangdong Province) Shanghai Stock Exchange:
We have received the letter of implementation of the opinions of the audit center on the initial public offering and listing on the science and Innovation Board of Shenyang fuchuang precision equipment Co., Ltd. (hereinafter referred to as the “implementation letter”) issued by your firm on April 15, 2022. As the sponsor and lead underwriter, Citic Securities Company Limited(600030) has carefully implemented the issues listed in the implementation letter with the issuer, the issuer’s lawyer and the reporting accountant one by one. The reply is as follows, please review.
explain:
1、 Unless otherwise specified, the abbreviations or terms in this reply report have the same meanings as those in the prospectus (last draft).
2、 The font in this reply report represents the following meanings:
Bold (not bold): implement the issues listed in the letter
Arial (not bold): question reply
Italics (BOLD): amendments and supplements to the prospectus (last draft)
Italics (not bold): references to the prospectus (draft of the meeting)
catalogue
Question 1 3 question 2 5 question 3 twenty
Question 1. The issuer is requested to comprehensively sort out the contents of the “tips on major issues”, highlight the significance, strengthen the risk orientation, delete the expressions that are not highly targeted, sort them according to the importance, and supplement and improve the following contents in accordance with the provisions of the standards for the contents and forms of information disclosure by companies offering securities to the public No. 41 – prospectus of science and Innovation Board Companies: (1) there is a great dependence on the first largest customer, customer a; (2) Additionally disclose the risk of the issuer being replaced by other suppliers in combination with the certification procedures of customer a supplier and the situation of other suppliers.
reply:
1、 Comprehensively sort out the contents of the “tips on major events”, highlight the significance, strengthen the risk orientation, delete the expressions that are not highly targeted, and sort them by importance
The issuer adjusted the disclosure order of various risks in “I. special risk tips” of “tips on major matters” in the prospectus according to the importance in accordance with the standards for the contents and forms of information disclosure by companies offering securities to the public No. 41 – prospectus of Kechuang board company, Disclosed in sequence: “(I) the company has the risk of great dependence on the first largest customer customer a; (II) the risk of the company being replaced by other suppliers of the first largest customer a; (III) the risk of international trade friction; (IV) the risk of market competition; (V) the risk that the company’s R & D can not keep up with the process evolution and the renewal and iteration of semiconductor equipment; and (VI) the risk of changes in tax incentives and financial subsidies.”
In addition, the issuer improved the disclosure of “(V) the risk that the company’s R & D cannot keep up with the process evolution and semiconductor equipment renewal iteration”, as follows:
“(V) the risk that the company’s R & D cannot keep up with the process evolution and semiconductor equipment renewal iteration
Following the law of “next generation technology, next generation process and next generation equipment”, semiconductor equipment and precision parts of semiconductor equipment must keep up with the downstream demand and constantly develop and upgrade. At present, wafer manufacturing and semiconductor equipment have evolved to 7 nm and more advanced processes, which constantly puts forward higher requirements for the company’s R & D ability. In addition, for the same generation process, semiconductor equipment enterprises will continue to upgrade products and improve wafer manufacturing efficiency. The company must timely develop matching precision parts or continuously optimize the original products.
If the company’s product research and development can not meet the evolution of customers’ process in time, and can not keep up with the renewal and iteration of customers’ products, the company’s industry status and future business performance will be adversely affected.
”
2、 Great dependence on the first largest customer a
The issuer has updated and disclosed in “I. special risk tips” of “tips on major issues” in the prospectus as follows:
“(I) there is a risk that the company will rely heavily on customer a, the largest customer
……”
3、 Additionally disclose the risk of the issuer being replaced by other suppliers in combination with the certification procedure of customer a supplier and the situation of other suppliers
The issuer has supplemented and disclosed the following in “I. special risk tips” of “tips on major matters” in the prospectus:
“(II) the risk of the company being replaced by other suppliers of the first largest customer customer a
To realize mass production and supply of the company’s largest customer, customer a, first needs to pass the quality system certification and special process certification of customer a. the cycle of the above two certifications is about one year. Only after passing the above two rounds of certification can we obtain the qualification of specific first article trial production; Secondly, the batch production qualification of the product can only be obtained after the specific first sample is delivered and accepted by customer a. The first article trial production and acceptance cycle vary greatly, generally about half a year. At present, the suppliers of similar products in customer a include international manufacturers such as JINGDING precision and chaokelin, and there are no other domestic suppliers.
If the company’s product quality and R & D level cannot meet the requirements of customer a in the future, or due to the intensification of international trade friction or the improvement of the process level of domestic suppliers, the company may have the risk that some products will be replaced by existing suppliers or new domestic suppliers of customer a. “
Question 2. The issuer is requested to further explain: (1) the current situation of the business, the details of the accumulated investment, the amount, the future planning and the relationship with the existing business in combination with the situation of the company’s purchase of houses in 2021 for the capacity construction of new business of precision parts in special fields; (2) In December 2017, Ningbo Xiangpu, the second largest shareholder of the company, signed two equity transfer agreements on the same day. The reasons and rationality of the large difference in transfer prices; (3) Reasons for the difference between the growth ratio of net profit and operating revenue in 2021.
The recommendation institution and the reporting accountant are requested to check and express clear opinions.
reply:
1、 Combined with the situation of the company’s purchase of houses in 2021 for the capacity construction of new business of precision parts in special fields, explain the current situation of the business, the details of cumulative investment, amount, future planning and its relationship with existing business
(I) development context of precision parts business in special field and its relationship with existing business
Stage business development context, main products and Revenue Formation
Since 2013, the company has relied on independent research and development in the early stage and “02
The main products of precision machinery manufacturing and surface treatment formed by “major projects” are special field structures. From 2013 to 2019, special processes, welding and other processes began to expand products with good parts and components.
Realize the market prospect of precision parts in the special field and high value-added precision parts in the special field. During this period, the overall business income was dense, and the parts were small batch business. The company’s parts and components products in this field have passed the customer low. In addition to the sales commitment in 2016 and 2017, the company has completed the customer certification of special e, customer F and other customers, formed small batch sales, received the qualification in the special field of structural parts related to customer e, and gradually accumulated relevant process experience. In addition to orders, other annual revenue bases consider entering special fields with higher added value, and the cost of parts is less than 2 million yuan.
From 2017 to 2019, the company handled relevant special procedures
Qualification in the field of application and preliminary necessary qualification.
With the policy promotion and the national “14th five year plan”, customers
B and other large state-owned special field manufacturers have limited production capacity,
Start cultivating qualified suppliers to provide supporting capacity. The company participates in the first product development project of a product with higher added value, which is dedicated to customer B. through the parts in this field, the company also actively expands the process scheme review, first piece processing, delivery and evaluation of products in other special fields from 2020 to 2021. After entering a series of processes such as higher added value determination, in 2020, the company participated in the precision bidding of customer B in 2020 and 2021. After winning the bid, the company began to supply specific models of products to customer B. With the continuous deepening of business cooperation with customers in the field of precision parts and special parts, the revenue of RMB 159.5 million is continuously increased in the field of precision parts and special parts, respectively. 202844 million yuan, accounting for each phase of business. By the end of 2020, the company has been selected as the leader of customer B’s “a certain industry’s revenue proportion is less than 3%, and the product specialization strategic supplier cultivation project”, and the single-phase response business has begun to enter a high-speed growth position. Through one-year feasibility demonstration and preliminary preparation, the company has achieved long-term development.
In December 2021, the company established a new subsidiary in a joint venture with other investors
The company Shenyang qianghang undertakes the special field products of customer B
Production and processing business.
In addition, the company also actively expands its business in other special fields,
Relevant products have passed the certification of customers in corresponding special fields.
(II) investment in precision parts business in special fields
1. Investment of original plant
The company has not yet entered the customer B supplier system in the early stage, and there is less demand for products. The company mainly uses the original Shenyang plant located at No. 18, Feiyun Road, Hunnan District, Shenyang, the rented plant located at No. 18-10, Changqing South Street, Hunnan District, Shenyang (expired at the end of October 2021 and not renewed) and a small amount of special equipment for the production of corresponding products. As the company won the bid for customer B product in 2020, the corresponding business demand has increased rapidly, and the original plant capacity has been seriously insufficient.
2. Investment of new plant in Shenyang
Shenyang new plant, located at No. 22, Feiyun Road, Hunnan District, Shenyang, will be used as the production base of precision parts in the company’s special field (not involving a specific part product in the special field) (the special equipment of the original plant is planned to be moved into the new plant, and the new plant also includes the production capacity of precision parts of semiconductor equipment). By the end of 2021, the new plant in Shenyang has been converted to fixed assets, and some machinery and equipment have not arrived or completed installation and commissioning. The details are as follows: unit: 10000 yuan
End of 2021
Input project name quantity paid amount
Type (excluding tax) fixed assets construction in progress prepayment original value process balance
Building Shenyang new factory building 110083511110349 — Building
Horizontal boring and milling machining center 1 341.15 —
Bench boring and milling machining center 1 443.99 443.99 —
Metal laser sintering system 2 111391111391 —
– laser additive processing machine 1 779.29 779.29 —
– Metal 3D printing equipment 1 852.91 852.91 —
Precision abrasive flow polishing machine 1 390.94 434.38 —
Four axis machining center 9 251362 – 332777-
Five axis machining center 5 122995 – 235163-
CNC horizontal boring and milling machine 2 378.58 – 630.97-
Vacuum electron beam welder 1 785.84 — 785.84
Worktable boring and milling machining center 5 712.27 — 712.27
Five axis linkage machining center
