About Guangdong Jiayuan Technology Co.Ltd(688388)
Application documents for issuing shares to specific objects
Reply report to the opinion implementation letter of the Audit Center
Sponsor (lead underwriter)
Shanghai Stock Exchange, North block of excellence Times Square (phase II), No. 8, Zhongxin Third Road, Futian District, Shenzhen, Guangdong Province:
We have received the letter of implementation of the opinions of the audit center on Guangdong Jiayuan Technology Co.Ltd(688388) issuing shares to specific objects (hereinafter referred to as the "implementation letter") issued by your exchange on May 13, 2022, Citic Securities Company Limited(600030) (hereinafter referred to as " Citic Securities Company Limited(600030) ," sponsor "and" sponsor ") as the sponsor of Guangdong Jiayuan Technology Co.Ltd(688388) (hereinafter referred to as" Guangdong Jiayuan Technology Co.Ltd(688388) , "issuer" and "company") issuing shares to specific objects, and Guangdong Jiayuan Technology Co.Ltd(688388) Guangdong Xinda law firm (hereinafter referred to as "the issuer's lawyer") and Lixin Certified Public Accountants (special general partnership) (hereinafter referred to as "the issuer's reporting accountant" and "the accountant") have carefully implemented the issues listed in the implementation letter one by one. Now, the reply to the issues in the implementation letter is as follows, please review.
Unless otherwise specified, the definitions of abbreviations or terms in this reply report are the same as those in the prospectus for offering shares to specific objects in Guangdong Jiayuan Technology Co.Ltd(688388) 2021.
Question 1. Please further disclose the impact of the epidemic on the company's business operation in the first half of this year and reveal the relevant risks.
1、 The impact of the epidemic on the company's business operation and risk tips in the first half of this year
In the first half of this year, covid-19 epidemic was repeated in some parts of China. From the perspective of downstream market development trend, upstream procurement and the company's own production and operation, the epidemic has not had a significant adverse impact on the company's business operation. The details are as follows:
From the perspective of downstream market demand, the new energy vehicle market in the company's downstream main application fields showed a relatively prosperous growth trend. According to the data of China Automobile Association, from January to April 2022, the production and sales of Shanxi Guoxin Energy Corporation Limited(600617) vehicles reached 1.605 million and 1.556 million respectively, with a year-on-year increase of 113.7% and 112.2%. The development of downstream industries continued to drive the improvement of the company's product market demand.
From the perspective of the company's upstream procurement, taking the copper wire, the company's main raw material, as an example, the company has long-term cooperation with major suppliers. On the premise of ensuring the quality of raw materials, the company tries to explore new suppliers, strive to obtain better business conditions, increase the diversity of procurement sources, and minimize the risk of raw material shortage caused by the outbreak of epidemic in some areas.
On the premise of fully ensuring the safety of epidemic prevention, the company carried out production and operation activities in an orderly manner, and the capacity utilization rate exceeded 100% from January to March 2022. According to the unaudited financial statements of the company, from January to March 2022, the main operating indicators of the company, including operating income, operating profit and net profit attributable to shareholders of the parent company, increased compared with the same period of the previous year. Among them, the operating income was 962686500 yuan, an increase of 81.44% over the same period last year; The operating profit was 2055969 million yuan, an increase of 57.72% over the same period last year; The net profit attributable to the parent company was 174022000 yuan, an increase of 57.29% over the same period last year. The company overcame the epidemic and other adverse factors, realized the growth of business performance, and reflected the steady ability of sustainable operation.
To sum up, the impact of the epidemic on the company's business operation in the first half of this year is relatively limited, and there is no situation affecting the ability of sustainable operation.
2、 Verification procedure and conclusion
(I) verification procedure
1. Consult industry data, research reports, etc., understand the downstream application market of the issuer's products, and confirm the demand change trend of the new energy vehicle market mainly used by the company's products;
2. Obtain the purchasing account, interview the purchasing personnel of the issuer, and understand the company's procurement of main raw materials from upstream;
3. Check the unaudited or reviewed financial statements of the company in the first quarter of 2022 to understand the company's performance and year-on-year changes.
(II) verification conclusion
As of the issuing date of this reply, the impact of the epidemic on the company's business operation in the first half of this year is relatively limited, and there is no situation affecting the ability of sustainable operation. Question 2. Please further explain: (1) the on hand orders and customers of PCB copper foil products to supplement the stability of customers and the rationality of financing scale; (2) Supplement the necessity of large-scale financing and expansion of production in combination with the orders in hand, the cooperation agreement between the issuer and Contemporary Amperex Technology Co.Limited(300750) and the matching degree of capacity location and downstream demand; (3) Business operation in the first quarter of 2022, and submit the application documents with updated data in accordance with relevant regulations.
1、 The on hand orders and customers of PCB copper foil products supplement the stability of customers and the rationality of financing scale
(I) on hand orders of PCB copper foil products, customer conditions and customer stability
Since its establishment in 2001, the issuer has been engaged in the R & D, production and sales of all kinds of copper foil. In 2015 and before, the issuer mainly developed, produced and sold lithium battery copper foil with thickness of 8 µ m and above and standard copper foil for PCB with thickness of 12 µ m and above. After 2016, the issuer successfully broke through the production technology of copper foil of 6 µ m and below. With the continuous optimization and improvement of the manufacturing process of copper foil of 6 µ m and below, the issuer gradually turned to the production of copper foil products for extremely thin lithium batteries. However, the issuer has also continued the production of the original PCB copper foil products, and continued to maintain cooperation with old customers such as Junya electronics, Goldenmax International Technology Ltd(002636) , Bomin Electronics Co.Ltd(603936) , Shenzhen gold, Shenzhen jinchengsheng, Longyu electronics and other companies for at least 3 years and at most 10 years, with good stability.
From January to April 2022, the sales revenue of PCB copper foil products of the company was 441415 million yuan (Unaudited). By the end of April 2022, the total amount of orders on hand for PCB copper foil products of the company was 8.3751 million yuan, and the number of orders on hand was relatively limited. The main reasons are: ① the issuer's current PCB copper foil production capacity is limited. In 2021, the company's PCB copper foil production capacity was 2000 tons, but the annual output was 3100 tons and the sales volume was 300000 tons. The annual production and sales volume of such products was much higher than the company's production capacity; It can be seen that although customers have strong demand for PCB copper foil products of the issuer, the company is difficult to respond to the needs of more PCB customers due to the existing capacity scale. Affected by the above reasons, the number of orders on hand of the issuer in the current period is limited. ② The issuer's PCB copper foil products have a short period from the customer's order to the enterprise's production and then to the final delivery to the customer (generally about 1-2 weeks); Because the price of copper foil is closely related to the price fluctuation of upstream copper materials, involving the price fluctuation of raw materials such as copper price, the issuer's customers usually do not buy more orders at one time, but usually purchase according to their own needs in batches, days, weeks or months, so the issuer has a limited number of orders on hand.
(II) customers to be expanded in the future
At present, the company focuses on developing and expanding customers of PCB business as shown in the table below:
Full name of the customer: the customer's expected purchase demand in the future and the current cooperation stage
Shengyi Technology Co.Ltd(600183) 6000-7000 T / a product testing stage
（SH： Shengyi Technology Co.Ltd(600183) ）
Goldenmax International Technology Ltd(002636) 5000-6000 T / a small batch cooperation
（SZ： Goldenmax International Technology Ltd(002636) ）
Other existing customers cooperate in small quantities of 20 Jinzai Food Group Co.Ltd(003000) tons / year
The customer group being developed is more than 4000 tons / year, and the product is in the sample delivery or testing stage
Note: the purchase demand of such customers shall be subject to the final sales volume of the company to customers.
At present, the issuer focuses on developing Shengyi Technology Co.Ltd(600183) (SH: Shengyi Technology Co.Ltd(600183) , hereinafter referred to as " Shengyi Technology Co.Ltd(600183) "). Customers who intend to expand their scale on the basis of existing cooperation include Goldenmax International Technology Ltd(002636) and its subsidiaries (SZ: Goldenmax International Technology Ltd(002636) , hereinafter referred to as " Goldenmax International Technology Ltd(002636) ), Bomin Electronics Co.Ltd(603936) and its subsidiaries (SH: Bomin Electronics Co.Ltd(603936) , hereinafter referred to as" Bomin Electronics Co.Ltd(603936) "), Guangdong Champion Asia Electronics Co.Ltd(603386) and its subsidiaries (SH: Guangdong Champion Asia Electronics Co.Ltd(603386) , hereinafter referred to as" Junya Electronics ").
At present, the cooperation between the company and Shengyi Technology Co.Ltd(600183) has reached the stage of product testing, and there are cooperation with Goldenmax International Technology Ltd(002636) , Bomin Electronics Co.Ltd(603936) , Junya electronics. Due to the strong demand in the downstream market of lithium battery, the issuer adjusted the production scheduling plan according to the actual situation. At present, the main production capacity is used for the production of lithium battery copper foil, and only a small amount of production capacity is used for the production of PCB copper foil. Therefore, the production and sales of PCB copper foil have not been improved for the time being. The focus of subsequent expansion is to increase the purchase volume of PCB copper foil products of the issuer by relevant customers. After the release of production capacity in the future, the production and sales volume of PCB copper foil of the issuer will be improved. In addition to the above key customers, the issuer will also expand other new customer resources by virtue of its technical strength and sales capacity in the field of extremely thin copper foil and high-end PCB copper foil, as well as the customer resources accumulated in the copper foil industry over the years.
(III) overview of PCB market development
1. Current market development
PCB copper foil is an important raw material for the manufacture of copper clad laminate (CCL) and printed circuit board (PCB), which plays the role of conductor.
CCL and PCB are widely used in electronic information industry. CCL is an important basic material of PCB, and PCB is an important electronic component and the support of electronic components. It is widely used in communication equipment, automotive electronics, consumer electronics, computer and network equipment, industrial control and medical treatment. It is an indispensable electronic component in modern electronic information products.
After decades of development, PCB industry has become a large-scale industry in the world. In recent years, the output value of the global PCB industry accounts for more than 25% of the total output value of the electronic component industry, which is the industry with the largest proportion in the subdivided industry of electronic components. According to prismark's data, driven by the sustainable development of the global electronic information industry, the global PCB industry will grow at a compound annual growth rate of 5.8% from 2020 to 2025, and the market scale of the global PCB industry will reach 86.33 billion US dollars in 2025. Benefiting from the steady growth of downstream PCB industry with direct demand, the growth of PCB copper foil industry is also sustainable and stable.
Market scale and forecast of global PCB industry from 2020 to 2025 (unit: USD 100 million)
Data source: prismark
The global PCB industry chain was first led by Europe and the United States. With the rise of Japan's PCB industry, it has gradually formed a pattern dominated by the United States, Europe and Japan. Since entering the 21st century, benefiting from the cost advantage and strong market demand for downstream products, Asia has become the world's most important electronic product manufacturing base, and the focus of the global PCB industry has gradually shifted to Asia. China's PCB manufacturing industry has developed rapidly in recent years. According to the list of the world's top 50 PCB suppliers in 2021 released by prismak, there are a total of 10 enterprises in Chinese Mainland, including Suzhou Dongshan Precision Manufacturing Co.Ltd(002384) Victory Giant Technology (Huizhou)Co.Ltd(300476) Victory Giant Technology (Huizhou)Co.Ltd(300476) Aoshikang Technology Co.Ltd(002913) etc. There are 14 enterprises in Taiwan, China, many of which have established large production bases in Chinese Mainland. In addition, there are also many leading enterprises in Chinese Mainland in various sub sectors of PCB downstream applications, including Huawei, Lenovo, Ningbo Joyson Electronic Corp(600699) Shenzhen Inovance Technology Co.Ltd(300124) . Therefore, the demand for PCB copper foil in China is very strong.
The continuous development and upgrading of electronic information products not only puts forward lower cost and higher quality requirements for CCL and PCB, but also puts forward stricter requirements for copper foil in terms of low cost, high performance, high quality and high reliability. As an indispensable raw material of PCB, PCB copper foil has been widely used with the development of PCB technology. For example, high-power PCB reflects its unique performance and advantages in the safety and stability of high-end vehicles. High-end PCB copper foil applied to high-power PCB has also been highly concerned by the automotive industry. With the development of information transmission in the direction of digitization and networking, the PCB industry also continues to make rapid progress, and promotes the rapid development of PCB copper foil industry.
It is estimated that the growth drivers of China's PCB copper foil market in the next few years mainly include:
(1) The construction of 5g base station / IDC drives the development of high-frequency and high-speed circuit copper foil, and 5g network drives consumer electronics
The demand for standard copper foil for products increased;
(2) The development of charging pile and new energy vehicle market drives the growth of demand for high-power ultra thick copper foil;
(3) More high-performance copper foil localization substitution.
2. Policy situation
In recent years, the State Council and relevant government departments have issued a series of policies to promote the PCB copper foil industry
Laws, regulations and industrial policies that have a great impact on the industry include:
Time of release: industrial policy promulgation / preparation of relevant industrial policy content
No. unit
The national development and Reform Commission will encourage the import of new electronic components (chip components, frequency components and hybrid integrated electricity) in September 2016. The Commission of technology and products, the Ministry of finance, roads, power electronic devices, optoelectronic devices, sensitive components and sensors, the new monthly catalogue (2016 Edition) electromechanical components and high-density printing of the Ministry of Commerce will be published
