Stock abbreviation: Jiangsu Huahong Technology Co.Ltd(002645) Stock Code: Jiangsu Huahong Technology Co.Ltd(002645) Jiangsu Huahong Technology Co.Ltd(002645)
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Shenwan Hongyuan Group Co.Ltd(000166) securities underwriting and recommendation Co., Ltd
about
Jiangsu Huahong Technology Co.Ltd(002645)
Meeting of the issuance and Examination Committee for public issuance of convertible bonds
Reply to the letter of preparation
Sponsor (lead underwriter)
(room 2004, 20th floor, Dacheng International Building, No. 358, Beijing South Road, high tech Zone (new urban area), Urumqi, Xinjiang) April 2002
China Securities Regulatory Commission:
According to the requirements of the letter on making preparations for the meeting of the issuance and Examination Committee of Jiangsu Huahong Technology Co.Ltd(002645) public offering of convertible bonds (hereinafter referred to as the "notification letter") recently issued by your association, Shenwan Hongyuan Group Co.Ltd(000166) securities underwriting and recommendation Co., Ltd. (hereinafter referred to as " Shenwan Hongyuan Group Co.Ltd(000166) underwriting and recommendation" or "recommendation agency") as a recommendation agency for Jiangsu Huahong Technology Co.Ltd(002645) (hereinafter referred to as " Jiangsu Huahong Technology Co.Ltd(002645) ," company "," listed company "," applicant "or" issuer ") to publicly issue convertible corporate bonds, has worked with the issuer The lawyer of the issuer, Jiangsu century Tongren law firm (hereinafter referred to as "lawyer" and "century Tongren"), and the accountant of the issuer, notary Tianye Certified Public Accountants (special general partnership) (hereinafter referred to as "accountant" and "notary Tianye"), have carefully checked and implemented the issues listed in the notification letter one by one based on the principles of diligence, honesty and trustworthiness. The reply is as follows, please review.
1. The abbreviation in the reply to this notification letter has the same meaning as the abbreviation of the prospectus for the public offering of convertible corporate bonds.
2. In this reply, if the mantissa of the total is inconsistent with the mantissa of the total of the listed values, it is caused by rounding.
catalogue
Question 1 3 question 2 forty-three
Question 1: impairment of goodwill. By the end of 2020, the issuer's goodwill balance was 1.016 billion yuan, including 579 million yuan for the acquisition of Wilman and 408 million yuan for the acquisition of Xintai technology. There was no provision for impairment during the reporting period. During the performance commitment period from 2015 to 2017, Wilman basically completed the performance commitment. Since 2018, it has not completed the total profit predicted at the time of acquisition in 2015. From 2018 to January September 2021, Wilman's revenue completion ratio was 73.44%, 81.60%, 81.89% and 94.82% respectively, and the profit completion ratio was 74.24%, 72.96%, 68.04% and 41.34% respectively.
During the goodwill impairment test in the reporting period, in terms of operating income, Wilman's absolute income in the reporting period basically completed the prediction level of the goodwill impairment test in the previous year, and the prediction of income growth rate did not significantly deviate from the level of the company in the latest year. However, according to the measurement results of income growth rate at the end of each year, Wilman's income prediction level in the perpetual period increased year by year and was higher than that at the time of acquisition. In terms of profitability, during the goodwill impairment test of each period from 2018 to 2020, the gross profit margin and profit margin did not significantly deviate from the average level of the company in the last year or the past three years. However, according to the data from 2017 to 2021 (Unaudited), the gross profit margin decreased period by period (from 30.62% to 23.35%), and the actual profit margin also decreased period by period (from 20.27% to 10.46%), In the goodwill impairment test at the end of each year, the predicted gross profit margin does not reflect this trend, which leads to the deviation between the actual profit margin and the predicted profit margin.
The issuer is requested to: (L) explain whether the company has not hired an appraisal company to carry out the appraisal of the purchase price allocation, but whether the accounting treatment is reasonable based on the cost method that does not form the appraisal conclusion (i.e. the appraiser does not think it is an appropriate method) in the appraisal report for the purpose of pricing issued by Tianjian, and whether it leads to the situation that the off book intangible assets (such as technology, trademark, customer, order contract, etc.) that should be identified and measured are not separately identified; (2) Explain the basis on which Wilman's revenue growth exceeded that of comparable companies before 2014, and the estimated revenue growth from 2015 to 2017 also exceeded the industry growth predicted by Galaxy Securities in the evaluation, and explain the reasons and rationality for Wilman's exceeding the industry growth for a long time; (3) Explain whether the estimated net profit margin used in the goodwill impairment test in 2019 and 2020 is higher than the actual one when the actual profit margin does not meet the standard and decreases year by year, and whether it is prudent and reasonable; (4) Explain whether the after tax discount rate of goodwill impairment test is 1-2% lower than that at the time of acquisition, and whether it is prudent and reasonable. On the premise that the actual profit does not reach the expected target, the discount rate of goodwill impairment in 2020 is lower than that in 2019; (5) Explain whether the goodwill is impaired according to the actual income and profit and the after tax discount rate at the time of acquisition, and the impact on the issuer's weighted average return on net assets in the last three years; (6) Combined with the development of the industry, explain whether the industry development has cyclical or volatile characteristics, and the impact of relevant cyclical or volatile characteristics on the issuer's income and profit forecast; (7) Combined with the later realization of the weekly income of the industry, explain the reason, rationality and realizability of the income prediction level in the perpetual period rising year by year and higher than the prediction level at the time of acquisition; (8) Combined with the differences between the predicted profit margin and the actual profit margin, the predicted gross profit margin and the actual gross profit margin, explain the reasons and rationality of the differences; (9) Explain the prediction of main parameters such as revenue, gross profit margin, period expense rate and discount rate in the goodwill impairment test and their cautious rationality, and further analyze whether the process and results of the goodwill impairment test for the acquisition of Wilman in the reporting period are cautious and reasonable, and whether the provision for goodwill impairment is sufficient and cautious in combination with the difference between the predicted value of gross profit margin and profit margin and the actual value after the period, Whether it complies with the relevant provisions of accounting standards for Business Enterprises No. 8 - asset impairment and accounting supervision risk tips No. 8 - goodwill impairment, and whether it affects this issuance. The recommendation institution and the issuer's accountant shall explain the verification basis and process, and express clear verification opinions. reply:
1、 Explain whether the company has not hired an appraisal company to carry out the appraisal of purchase price allocation, but whether the accounting treatment is reasonable based on the cost method that does not form the appraisal conclusion (i.e. the appraiser does not think it is an appropriate method) in the appraisal report for pricing purpose issued by Tianjian, and whether it leads to the situation that the off book intangible assets (such as technology, trademark, customer, order contract, etc.) that should be identified and measured are not separately identified
(I) the issuer has identified the patented technology, trademark and other intangible assets
When the issuer merged Wilman on the acquisition date in 2015, it recognized the following intangible assets that Wilman did not record in the financial statements before being acquired:
Project amount (10000 yuan)
Land use right (value-added part) 348.41
Software-32.43
Patent and computer software copyright 790.00
Trademark 354.00
Total 145998
That is Jiangsu Huahong Technology Co.Ltd(002645) has apportioned the consideration for the acquisition of Wilman to identifiable tangible and intangible assets. The recognition of various assets is based on the evaluation value of asset-based method in the evaluation report issued by Beijing Tianjian Xingye asset evaluation Co., Ltd. the issuer takes the evaluation value of asset-based method as the fair value of Wilman identifiable assets on the acquisition date. The reasons are as follows:
Article 39 of the assets evaluation criteria - enterprise value stipulates that "the asset-based method in enterprise value evaluation refers to the evaluation method of reasonably evaluating the value of various assets and liabilities on and off the balance sheet of the evaluated enterprise on the benchmark date, and determining the value of the evaluation object.
”And Article 40 stipulates that "the certified public valuer shall identify the assets and liabilities on and off the balance sheet of the evaluated enterprise according to the accounting policies and enterprise operation."
According to the above criteria, when using the asset-based method, appraisers should not only evaluate the assets on the balance sheet, but also fully identify and evaluate the assets off the balance sheet. In the appraisal report of Jiangsu Huahong Technology Co.Ltd(002645) proposed to issue shares and pay cash to purchase the equity of Jiangsu Wilman Technology Co., Ltd. (Tian Xing Ping Bao Zi (2015) No. 0407) issued by Beijing Tianjian Xingye Assets Appraisal Co., Ltd. on May 20, 2015, the appraisal method is the asset-based method and the income method. The asset base method is based on the balance sheet of Wilman company on the appraisal benchmark date, reasonably evaluates the value of various assets and liabilities of the enterprise, and identifies various identifiable assets of Wilman company, including off balance sheet intangible assets, i.e. patents, computer software copyrights, trademarks, etc.
In the M & A cases of listed companies, the accounting treatment based on the asset-based method that does not form the evaluation conclusion in the evaluation report for pricing purposes includes Taiji Computer Corporation Limited(002368) ( Taiji Computer Corporation Limited(002368) . SZ) acquiring 91% equity of Beijing Huidian Technology Co., Ltd. in 2013, Gaona Aero Material Co.Ltd(300034) ( Gaona Aero Material Co.Ltd(300034) . SZ) acquiring 65% equity of Qingdao Xinlitong Industry Co., Ltd. in 2018 Zhejiang Ssaw Boutique Hotels Co.Ltd(301073) ( Zhejiang Ssaw Boutique Hotels Co.Ltd(301073) . SZ) acquired 67% equity of Shanghai bieyuan in 2019.
(II) reasons and rationality of unconfirmed customer relationship, contractual relationship and other intangible assets
According to the accounting standards for Business Enterprises No. 6 - intangible assets, intangible assets refer to identifiable non monetary assets without physical form owned or controlled by enterprises; If an asset meets one of the following conditions, it meets the recognizability standard in the definition of intangible assets: (1) it can be separated or divided from the enterprise and can be used for sale, transfer, licensing, lease or exchange alone or together with relevant contracts, assets or liabilities; (2) Derived from contractual rights or other legal rights, whether or not these rights can be transferred or separated from enterprises or other rights and obligations.
According to the relevant provisions of the accounting standards for Business Enterprises No. 20 - business combination, if the fair value of the intangible assets obtained in the combination can be measured reliably, they shall be separately recognized as intangible assets and measured according to the fair value.
According to the provisions of the interpretation of accounting standards for Business Enterprises No. 5, in a business combination not under the same control, when the acquirer initially recognizes the acquiree's assets obtained in the business combination, it shall fully recognize and reasonably judge the intangible assets owned by the acquiree but not recognized in its financial statements. If one of the following conditions is met, it shall be recognized as intangible assets: (1) from contractual rights or other legal rights; (2) It can be separated or divided from the acquiree and can be used for sale, transfer, licensing, lease or exchange alone or together with relevant contracts, assets and liabilities.
According to "question 31 of the answers to some questions on initial business" issued by the CSRC in June 2020, "what aspects should be paid attention to in practice when some initial enterprises identify and confirm intangible assets in merger, and purchase customer resources or customer relations?" "Customer resources or customer relationships can only be recognized as intangible assets if they are supported by contracts or other legal rights to ensure that the enterprise can obtain stable income over a long period of time and can calculate the value. If the enterprise cannot control the future economic benefits brought by customer relationships and human resources, it does not meet the definition of intangible assets and should not be recognized as intangible assets."
1. The framework agreement cannot ensure that the target company can obtain stable income for a long time
On the one hand, Wilman cooperates with his main customers by signing a framework agreement. The framework agreement generally stipulates the type of purchased products, pricing method, delivery method, payment method, liability for breach of contract and other commercial terms, but does not include the purchase scale or supply scale of products, and there is no limit on the minimum purchase quantity. Moreover, at the end of the cooperation period agreed in the contract, the main customers have the right to unilaterally terminate the contract. Therefore, the framework agreement is not binding on the specific scale of cooperation between the two sides, and the specific product specifications, quantities and prices purchased shall be subject to the actual purchase order. On the other hand, the framework agreement is not exclusive. Major customers will also consider purchasing similar products from other suppliers from the perspective of their supply chain management.
2. "Contract relationship" or "customer relationship" is indivisible and cannot be accounted for
The customization degree of elevator parts products is high. Parts enterprises need to deeply participate in the design and development of customers' new products according to the needs of downstream customers and with their sufficient technical strength, and simultaneously provide the whole process services of supporting parts design, development and testing. Only based on this can they maintain a stable cooperative relationship with customers. That is, the relevant "contractual relationship" or "customer relationship" is closely connected with Wilman's management team and technical service team, and cannot be separated or divided from the acquiree. It is used for sale, transfer, licensing, lease or exchange alone or together with relevant contracts, assets and liabilities. In other words, even if a competitor enters the customer's supplier directory, if there is no excellent technical team and mature management team, it can not respond to the customer's needs in time and maintain the cooperative relationship with downstream customers. That is, only relying on the framework contract with major customers can not guarantee the stable inflow of interests in the future, that is, the company can not separate its "contractual relationship" or "customer relationship" separately
