Securities code: Hangzhou Gaoxin Rubber & Plastic Materials Co.Ltd(300478) securities abbreviation: Hangzhou Gaoxin Rubber & Plastic Materials Co.Ltd(300478) Announcement No.: 2022038
Hangzhou Gaoxin Rubber & Plastic Materials Co.Ltd(300478)
Announcement on the reply to the inquiry letter of the annual report of Shenzhen Stock Exchange
The company and all members of the board of directors guarantee that the information disclosed is true, accurate and complete without false records, misleading statements or major omissions.
Hangzhou Gaoxin Rubber & Plastic Materials Co.Ltd(300478) (hereinafter referred to as ” Hangzhou Gaoxin Rubber & Plastic Materials Co.Ltd(300478) ,” listed company “and” company “) received the inquiry letter on the annual report of Hangzhou Gaoxin Rubber & Plastic Materials Co.Ltd(300478) (GEM annual report inquiry letter [2022] No. 207) (hereinafter referred to as” inquiry letter “) issued by your ministry on May 5, 2022. The company attaches great importance to this and has carefully verified the relevant matters mentioned in the inquiry letter. Now we reply to the questions involved in the inquiry letter:
1. The annual report disclosed that during the reporting period, your company achieved an operating income of 387 million yuan, a decrease of 5.85% over the same period; The net profit attributable to the shareholders of the listed company was 15 million yuan, which turned losses into profits, but the net profit after deducting Non Profits suffered losses for three consecutive years; The net cash flow from operating activities was -71 million yuan, down 265.51% from the same period. Please your company:
[company reply]
(1) Further explain the specific reasons for the decline in revenue during the reporting period, and further explain whether the decline in revenue will continue in combination with the actual operation of relevant businesses, industry development situation, order acquisition and other factors.
During the reporting period, the company achieved a sales revenue of 387.13 million yuan, compared with 411.21 million yuan in the same period of last year. The sales revenue decreased by 24.08 million yuan, a decrease of 5.85% over the same period. The comparison of operating income between the first half of 2020 and the second half of 2021 is as follows:
Period operating income period operating income
RMB 164.45 million from January to June 2021 and RMB 222.68 million from July to December 2021
198.85 million yuan from January to June 2020 and 212.36 million yuan from July to December 2020
Increase or decrease of – 34.4 million yuan over the same period and 10.32 million yuan over the same period
As shown in the above table, the operating income in the first half of the reporting period decreased by 34.4 million yuan compared with the same period, and the operating income in the second half of the reporting period increased by 10.32 million yuan compared with the same period. The main reason is that from January to June 2020, the operating revenue of Fujian Nanping high tech materials Co., Ltd., a consolidated holding subsidiary, was 42.34 million yuan. Excluding the influence of this factor, the operating revenue of the parent company increased slightly.
Affected by the epidemic, the operating revenue in the first quarter of 2022 decreased by 3.43% compared with the same period of the previous year. At present, remarkable achievements have been made in the national epidemic control, customers and suppliers have gradually resumed production, and the traffic control has been gradually liberalized. The order situation of the company has also improved. Among them, the production of silane crosslinked cable materials has reached saturation. According to the current situation, the operating revenue of the company will not continue to decline.
(2) Explain whether the rising trend of raw material prices during the reporting period is expected to continue and its impact on your company’s profitability.
The company’s main raw materials are Petrochemical derivatives such as polyethylene resin and polyvinyl chloride resin. Its price mainly depends on various factors such as the supply change of international petrochemical bulk products. The company cannot judge whether its price rising trend will continue. However, according to the current procurement situation, the price of raw materials is relatively stable and there is no continuous upward trend.
The rise of raw material price has a great impact on medium and long-term price locked orders such as monthly bidding and quarterly bidding. The rise of raw material price will lead to the decline of product gross profit and even loss. In the face of sharp fluctuations in raw material prices, the company will continue to improve hedging management, timely adjust business strategies, and improve operation efficiency through multiple approaches in order receiving, accounts receivable management, supply chain management and so on.
(3) In combination with the fact that the net profit in the reporting period mainly comes from non recurring profit and loss and the continuous loss of net profit after deducting non recurring profit in the first quarter of 2022, explain whether your company’s profitability has not been actually improved and the measures your company has taken and plans to take to improve profitability.
1. Main items of income statement in 2021, the first quarter of 2022 and the first quarter of 2021
Unit: 10000 yuan
Project year 2021 first quarter of 2022 first quarter of 2021
Operating income 3871319671424695269
Operating cost 3515033612388642989
Net profit attributable to all 148128, 126.54 – 775.51 of the parent company
Non recurring profit and loss 631830 832.07 54.84
Deducting non recurring profit and loss
Net profit attributable to owners of parent company after -483702 -705.53 -830.36
The gross profit margins of the company in 2021 and the first quarter of 2022 were 9.20% and 8.79% respectively, which remained basically stable. The first quarter of the company is the off-season of sales. The net profit after deducting non-profit in the first quarter of 2022 is still a loss, but the range of loss is smaller than that in the first quarter of 2021, and the profitability of the company has been gradually improved.
The measures the company has taken and plans to take to improve its profitability mainly include:
(1) The company mainly produces and sells polymer materials for cables. Relying on the existing business, the company continues to innovate and make breakthroughs, focuses on the core business, relies on the technical ability, team advantages and customer reputation accumulated in the field of polymer materials for online cables for many years, combs and integrates the needs of industry customers and existing businesses, fully investigates the market, seizes opportunities, establishes business strategies in line with the development of industry and market, and strives to realize the transformation and upgrading of the company’s core business.
(2) Through regular internal control review, the company ensures that the internal control system is effective and sufficient, further establishes and improves the corporate governance system and enhances the level of internal control of the company. By combing the internal control system and internal approval process involved in each link of daily activities, the company implements the internal control system from top to bottom, strictly prevents management loopholes, strictly controls the procurement link and expense expenditure link, and realizes cost reduction and efficiency increase by reducing procurement costs and controlling unnecessary expenses.
(3) According to the adjustment of business model and organizational structure, the company gradually optimizes the organizational structure and core processes, establishes and improves the reporting and accountability mechanism of the management team, strengthens the communication and linkage among business departments, functional departments and all levels, improves management efficiency and work efficiency, and reduces management costs.
(4) In terms of human resources, the company continues to implement the 6S management mode, continuously improve and optimize the employment mechanism, fully mobilize and tap the enthusiasm of employees, optimize the performance appraisal system and salary system, attract and retain excellent talents, strengthen the sense of belonging and cohesion of employees, and continuously improve the efficiency of human resources. By strengthening the training of employees in various departments, the company improves the risk prevention and control awareness of all employees and takes multiple measures to improve the company’s risk prevention and control ability.
2. Verification procedures and verification opinions
For the above matters, the annual audit accountant has implemented the following procedures:
(1) Obtain the financial statements, operating income and operating cost details of the company in 2021, the first quarter of 2022 and the first quarter of 2021, analyze the changes of operating income and sales volume of the company between months, and analyze the profitability of the company in combination with financial indicators such as gross profit margin of sales and return on net assets;
(2) Obtain the detailed statements of non recurring profits and losses of the company in 2021, the first quarter of 2022 and the first quarter of 2021, review the accuracy of the detailed statements of non recurring profits and losses prepared by the company, and analyze the profitability of the company after deducting non recurring profits and losses;
(3) Ask the governance and management of the company to understand the daily production and operation of the company, whether there are special matters that have an impact on the production and operation, and understand the measures the company has taken and plans to take to improve its profitability.
After verification, the annual audit accountant believes that the profitability of the company has been gradually improved. The measures taken and to be taken by the company to improve profitability mainly include formulating reasonable sales and procurement strategies, strengthening the construction of internal control, strengthening the control of procurement costs and expenses, improving management efficiency and work efficiency, etc.
(4) In combination with the market demand of main products and the situation of orders on hand, explain the reasons and rationality of the continuous low level of capacity utilization of main products, and whether the provision for impairment has been made in full for the production equipment related to the above products in 2021, and whether it is still necessary to make further provision for impairment.
1. Reasons and rationality for the continuous low level of capacity utilization
The company strives to develop new markets and new customers, but the development requires time accumulation and capital support. Due to the great changes in the company’s internal environment and the shortage of funds required for operation, the company’s business development is less than expected. The main reasons for the company’s low capacity utilization in 2021 are as follows:
(1) The internal environment of the company has changed greatly
In 2021, the internal environment of the company changed greatly. During the running in period when the new management and management were involved in the management, the sales work of the company was affected to a certain extent.
(2) The funds required for the company’s operation are relatively tight, and some bank accounts are frozen
While serving as the controlling shareholder and actual controller of the company, happy Holding Group Co., Ltd. and Gao Changhong signed loan contracts and guarantee contracts with creditors in the name of the company without the internal approval process and relevant decision-making procedures of the company. They borrowed money in the name of the company or the company assumed joint and several guarantee liabilities for the financing behavior of Gao Changhong and the company controlled by Gao Changhong. On and after November 2019, the company successively received the notice of responding to the lawsuit from relevant courts, and the relevant creditors asked the company to repay or assume joint and several guarantee liabilities for the arrears of Gao Changhong and the company controlled by Gao Changhong. The company paid the corresponding amount due to losing the lawsuit and mediation, and the bank account of the company was frozen by the creditor in 2021. In addition, the net cash flow from the company’s operating activities in 2021 decreased, and some banks required the company to repay the due short-term loans. The above matters strained the funds required for the company’s operation and had a certain impact on the company’s production and operation.
(3) Transformation of special equipment of the company
In order to better meet the production demand of products, the company updated and transformed some special machines and equipment in 2021, and the original value of the special equipment involved in the transformation was 124066 million yuan. The renewal and transformation time is generally more than half a year, and production cannot be carried out during the transformation, which has a certain impact on the production and operation of the company.
To sum up, in 2021, due to the changes in the company’s internal environment, the shortage of funds required for operation, the freezing of some bank accounts and the transformation of special equipment, the company’s business development was less than expected. The company has fewer sales orders in 2021, resulting in low capacity utilization.
2. Whether the production equipment related to the above products has fully accrued the impairment provision, and whether it is still necessary to further accrue the impairment provision
The capacity utilization of the company’s production line is as follows:
Number of production lines of main products location design capacity (ton) capacity utilization (piece)
Special polyethylene and crosslinked polysilane workshop 3000000 60.00% ethylene cable material
PVC cable material 4500000 40.00% 8 PVC workshop
Rubber plastic modified elastomer 100000 10.00%
Halogen free low smoke flame retardant cable material 4 halogen free low smoke workshop 1000000 30.00%
Rubber cable material 2 rubber workshop 300000 5.00%
The company’s main products are polymer linear materials for cables. Wires and cables are indispensable basic equipment for transmitting electric energy, transmitting information, manufacturing various motors, instruments and meters, and realizing electromagnetic energy conversion. They are necessary basic products in the electrification and information society. The support of national policies and the development of market demand have a positive impact on the company’s development of new markets and new products.
(1) Relevant production lines of special polyethylene and cross-linked polyethylene cable materials
As shown in the above table, the silane workshop of the company’s new plant has six production lines, which are mainly used to produce special polyethylene and cross-linked polyethylene cable materials. The capacity utilization rate of relevant production lines in 2021 is 60%, which is high. Special polyethylene and cross-linked polyethylene cable materials are the main products of the company. The newness rate of relevant production lines is high, the market price has not decreased significantly, and there is no obvious sign of impairment.
(2) Polychloride
