Southwest Securities Co.Ltd(600369) verification opinions on issues related to the supervision letter on information disclosure of Shenzhen Heungkong Holding Co.Ltd(600162) 2021 annual report the first Department of listed company management of Shanghai Stock Exchange:
Southwest Securities Co.Ltd(600369) (hereinafter referred to as “independent financial consultant”) as the independent financial consultant of Shenzhen Heungkong Holding Co.Ltd(600162) (hereinafter referred to as “listed company” and “company”) issued shares twice in 2015 and 2016, paid cash to purchase assets and raised supporting funds (hereinafter referred to as “primary restructuring”, “secondary restructuring” and “secondary restructuring” respectively, and the merger is referred to as “secondary restructuring”), The two restructuring supervision periods ended December 31, 2017 and December 31, 2018 respectively. Up to now, the continuous supervision period of the two reorganizations has expired, and the raised funds have not been used up. The independent financial adviser performs the supervision duties on the use of the raised funds account in accordance with the guidelines for the supervision of listed companies No. 2 – regulatory requirements for the management and use of raised funds of listed companies (revised in 2022) and the guidelines for the self discipline supervision of listed companies on Shanghai Stock Exchange No. 1 – standardized operation.
According to the requirements of your ministry’s letter on the supervision of information disclosure of Shenzhen Heungkong Holding Co.Ltd(600162) 2021 annual report (szgh [2022] No. 0331), the independent financial adviser has checked the relevant issues, and the verification results are as follows:
Question 3 Progress of raised investment projects
According to the announcement, the company raised matching funds through non-public offering twice in 2015 and 2016 for the construction project of Changsha Gaoling trade city and other projects (hereinafter referred to as primary reorganization and secondary reorganization respectively). Among them, the actual investment of the construction project of Changsha Gaoling Trade City in the first reorganization is 298 million yuan, and the project has reached the scheduled usable state in December 2017; The second restructuring promised to invest 1.322 billion yuan in the construction project of Changsha Gaoling trade city. At present, the actual investment is only 287 million yuan. In the report on raising supporting funds in the early stage, the company said that the construction period of Changsha Gaoling trade city construction project was from December 2014 to December 2017. Please explain the connection and difference between the “Changsha Gaoling trade city construction project” mentioned in the two restructuring, the actual progress of the project, whether the relevant progress is in line with the original plan and whether it is consistent with the feasible report. If not, please explain the reasons; Combined with the specific situation of early information disclosure, explain whether there is insufficient and incomplete information disclosure and risk prompt. The financial consultant Southwest Securities Co.Ltd(600369) is requested to give a clear opinion. Reply: I. the connection and difference between the “Changsha Gaoling trade city construction project” in the two restructuring
According to the feasibility study report on the use of raised funds, The “Changsha Gaoling trade city construction project” (hereinafter referred to as “Changsha project”) of the first reorganization and the second reorganization is a trade logistics base construction project (involving plots A1-1 and A1-2) invested and constructed by Listed Companies in Jinxia Economic Development Zone, Changsha City, Hunan Province (which is the first batch of key development zones in Hunan Province approved by the State Council and the only comprehensive modern logistics park in Hunan Province), Changsha Development and Reform Commission issued the project filing certificate with filing number 2014211. The construction period of the project is from December 2014 to December 2017. The Changsha project is constructed in two phases, including:
1. The “Changsha Gaoling trade city construction project” reorganized once is the first phase of the project, that is, the commercial complex building of a / B / C hall will be built in plot A1-2 (state-owned land use right certificate No. cGy (2014) No. 125432), with a land area of 42200 square meters and a planned building area of 90900 square meters. 2. The second restructured “Changsha Gaoling trade city construction project” is the second phase of the project, that is, the D / E / F / g / h Pavilion trade complex building is built on the project land plots A1-1 and A1-2 (state-owned land use right certificate No. cGy (2014) No. 125431, cGy (2014) No. 125432 and cGy (2015) No. 068938). The project land area is 151700 square meters and the planned construction area is 383400 square meters. 2、 At present, the actual progress of “Changsha Gaoling trade city construction project”, whether the relevant progress is in line with the original plan and whether it is consistent with the feasible report. If not, please explain the reasons
According to the feasibility study report on the use of raised funds, the construction period of phase I of Changsha project is two years. The funds raised from the first restructuring were actually in place in December 2015, and the project was completed in December 2017, which lasted two years. Therefore, the listed company believes that the construction progress of phase I of Changsha project is in line with the original plan and consistent with the feasibility study report on the use of raised funds.
According to the feasibility study report on the use of raised funds, the construction period of phase II of Changsha project is two years. The funds raised from the second restructuring were actually in place in February 2017 and should be completed in February 2019 as originally planned. The actual progress is as follows: the project involving plot A1-2 in the raised investment project (sharing a plot with phase I of Changsha project) has been completed simultaneously with phase I project in December 2017, which is in line with the original plan; The A1-1 plot in the raised investment project is in temporary construction status and has not been started yet.
The specific reasons for the slowdown of plot A1-1 in phase II of Changsha project are: affected by the national real estate regulation policies, the year-on-year growth rate of commercial real estate transaction area in 100 cities in the first, second, third and fourth tier of China in 2018 was 1.3%, – 14.7% and 0.8% respectively (data source: the report on China’s 100 cities commercial real estate market issued by E-House Real Estate Research Institute in February 2019), In that year, the real estate market in Hunan Province also entered a downward adjustment period. The sold shops of Changsha project phase I achieved a net profit of 81.12 million yuan in 2017, but the sales situation in 2018 was less than expected, and the sold shops had a net loss of 55.32 million yuan in that year. Plot A1-1 of phase II of Changsha project is close to phase I of Changsha project. The low removal rate of the latter means that the sales cycle will be prolonged. Therefore, the construction progress of plot A1-1 will slow down accordingly.
Before the covid-19 epidemic in 20182019, in consideration of the normalization of national real estate policy regulation and the periodicity of commercial real estate prosperity, in order to reduce development risks, avoid capital occupation and protect the interests of investors, listed companies chose to slow down the construction of plot A1-1 in phase II of Changsha project and planned to wait for the market to recover before taking action; After the covid-19 epidemic in 20202021, the continuous covid-19 epidemic has significantly hindered commercial activities across the country, greatly weakened the prosperity of commercial properties, and increased the vacancy rate of commercial real estate. The listed company judged that the feasibility of continuing to develop plot A1-1 according to the original plan was reduced, and began to communicate with the local competent department of the project on the specific matters of the construction planning adjustment of plot A1-1.
Although the progress of plot A1-1 slows down, the projects involved in plot A1-2 in the same raised investment project will successively pay the settlement project funds and other expenses from the balance of raised funds in 20182021 after completion according to the project settlement progress. The specific details are shown in the following table:
Unit: 10000 yuan
Annual investment amount cumulative investment amount
2018 5,615 26,052
2019 684 26,736
2020 1,582 28,318
2021 430 28,748
Total 8311-
3、 Combined with the specific situation of early information disclosure, explain whether there is insufficient and incomplete information disclosure and risk prompt
1. Information disclosure in 20182019 after the funds raised from the secondary restructuring are in place
In 2018 and 2019, according to historical experience, listed companies believed that the regulation of national real estate policies was normalized, and the prosperity of commercial real estate had cyclical characteristics. The construction of plot A1-1 in phase II of Changsha project could be started after the market recovered, which did not have a significant impact on the overall production and operation of the company; At the same time, the projects involved in plot A1-2 of the same raised investment project are still disbursed in the raised funds according to the settlement progress. Therefore, the listed company believes that the raised investment project is under normal promotion and there is no plan to suspend or change the raised investment. In the special report on the deposit and actual use of raised funds in 2018 and 2019, the listed companies truthfully disclosed the profits and losses of the shops sold in the current year, the accumulated profits and losses of the shops sold, and the temporary construction of plot A1-1 of phase II project, which has not yet started.
2. Information disclosure from 2020 to 2021 after the funds raised from the secondary restructuring are in place
In 2020, affected by the covid-19 epidemic and the impact of Internet e-commerce, and with the evolution of the expectation of the epidemic, the listed company expects that the recovery time of the commercial real estate market is uncertain, and the feasibility of continuing to develop plot A1-1 of phase II project according to the original plan is reduced. At the same time, with the unsalable situation of commercial properties in China, the central and local governments have successively issued corresponding policies in order to help revitalize the real estate market and remove the inventory of commercial real estate. Although Hunan Province and Changsha have not issued relevant policies, the listed company has also begun to preliminarily communicate with the local competent department of the project on the specific matters of the construction planning adjustment of plot A1-1. The independent financial adviser disclosed the above matters in the special verification report on the deposit and use of raised funds in 2020 (the second major asset restructuring).
By October 2021, the Department of housing and urban rural development of Hunan Province, together with five ministries and commissions including the development and Reform Commission of Hunan Province, the Department of finance of Hunan Province and the Department of natural resources of Hunan Province, issued several opinions on promoting the destocking of non residential commercial housing, and issued ten measures for the destocking of non residential commercial housing, so as to promote the steady and healthy development of the real estate market in the province. After the introduction of the opinions, the progress of local governments at all levels is different. According to the above documents, the company further actively discusses the feasibility of project construction planning adjustment and other specific matters with the local competent authorities. The independent financial consultant disclosed the above matters in the special verification report on the deposit and use of raised funds in 2021 (the second major asset restructuring), and the listed company disclosed them in the special report on the deposit and actual use of raised funds in 2021.
3. Follow up arrangements and special risk tips of listed companies for Changsha Project
As of December 31, 2021, Changsha project phase II has invested 287.48 million yuan, compared with the total committed investment of 132.22 million yuan, and the balance of funds not yet invested is 103472 million yuan. At the end of April 2022, five departments including Changsha housing and Urban Rural Development Bureau, Changsha Development and Reform Commission and Changsha natural resources and Planning Bureau issued several opinions on promoting the destocking of non residential commercial housing. The company will speed up communication with the local competent authorities in Changsha on relevant planning adjustments. There are uncertainties in the above communication results. If the local competent department in Changsha agrees to the company’s adjustment plan, the company will perform the relevant decision-making approval procedures and information disclosure procedures, and reasonably arrange the use of the remaining raised funds; If the local competent department in Changsha disagrees with the company’s adjustment plan, the second phase of Changsha project may be difficult to implement for a period of time, and the raised funds may face the possibility of changing the investment direction. Please pay attention to the investment risk. 4、 Verification opinions of independent financial advisor
1. On the connection and difference of Changsha project in the two restructuring
After verification, the “construction project of Changsha Gaoling Trade City” mentioned in the two reorganizations are the construction project of commercial logistics base invested and constructed by the listed company in Changsha Jinxia economic development zone. Among them, the first reorganized Changsha project is phase I and the second reorganized Changsha project is phase II.
2. At present, the actual progress of Changsha project, whether the relevant progress is in line with the original plan and whether it is consistent with the feasible report. If not, please explain the reasons
After verification, the one-time restructuring Changsha project is consistent with the construction period described in the feasibility study report on the use of raised funds.
After verification, the secondary restructuring Changsha project should be completed in February 2019 according to the original plan. The actual progress is that the project involving plot A1-2 in the raised investment project was completed in December 2017, which does not exceed the provisions of the construction period specified in the feasibility study report on the use of raised funds; The A1-1 plot in the raised investment project is in temporary construction status and has not been started yet. The main reasons are: before the covid-19 epidemic in 20182019, the listed companies chose to slow down the construction of plot A1-1 in phase II of Changsha project in order to reduce the development risk and avoid the occupation of funds, taking into account the normalization of national real estate policy regulation and the periodicity of commercial real estate prosperity, and waited for the market to recover before taking action; After the covid-19 epidemic in 20202021, the continuous covid-19 epidemic has significantly hindered commercial and commercial activities across the country. The feasibility of continuing to develop plot A1-1 according to the original plan is reduced. The listed company has started to communicate with the local competent department of the project on the specific matters of the construction planning adjustment of plot A1-1.
3. Combined with the specific situation of early information disclosure, explain whether there is insufficient and incomplete information disclosure and risk prompt
After verification, in 20182019 after the funds raised from the secondary restructuring are in place, the listed company believes that A1-1 in Changsha Project
