Suya Jincheng Certified Public Accountants (special general partnership)
Reply report to the letter on making preparations for the Jiangsu Boamax Technologies Group Co.Ltd(002514) non public development bank stock issuance and examination committee meeting
China Securities Regulatory Commission:
According to the requirements of the issues listed in the letter on preparing for the Jiangsu Boamax Technologies Group Co.Ltd(002514) non-public development bank stock issuance and audit committee meeting (hereinafter referred to as the "working letter") issued by your association on January 11, 2022, Suya Jincheng Certified Public Accountants (special general partnership) (hereinafter referred to as "Suya Jincheng" and "accountant") in the principle of diligence, honesty and trustworthiness, Carefully analyzed, verified and replied to the questions raised in the working letter one by one. The specific replies to the questions raised in the working letter are as follows. Please review them.
Question 2: About repayment risk
At the end of each reporting period, the applicant's interest bearing liabilities such as short-term loans, non current liabilities due within one year, long-term loans, long-term accounts payable and lease liabilities were 465.2910 million yuan, 448.8197 million yuan, 494.2861 million yuan and 396.7092 million yuan respectively.
The applicant is requested to: (1) further explain the reasons and rationality for the continued high amount of interest bearing liabilities during the reporting period; (2) Analyze and explain whether there is a significant debt repayment risk, whether it has a significant adverse impact on the issuance, and whether the relevant risks are fully revealed in combination with the available monetary funds, asset liquidity, future cash flow forecast and other debt repayment ability; (3) In combination with the maturity date of relevant debts, the cash flow forecast in the next 12 months and the credit line of financial institutions that have not been used at present, explain the applicant's measures to deal with debt repayment risk and their feasibility, whether there is great uncertainty, whether it may have a significant adverse impact on the applicant's future production and operation, and whether the relevant risk tips are sufficient.
The recommendation institution and the applicant's accountant shall explain the verification basis and process, and express clear verification opinions. reply:
1、 Further explain the reasons and rationality for the continued high amount of interest bearing liabilities during the reporting period
At the end of each reporting period, the composition of the company's interest bearing liabilities is as follows:
Unit: 10000 yuan
Project 2021.9.30 2020.12.31 2019.12.31 2018.12.31
Short term loan 25700.75 31886.52 28550.77 34109.85
Non current liabilities due within one year 5759.43 5026.53 6892.07 7352.88
Project 2021.9.30 2020.12.31 2019.12.31 2018.12.31
Long term loan 4330.70 4352.51 1597.50-
Long term accounts payable - 8163.05 7841.62 5066.37
Lease liabilities 3880.04 ---
Total 39670.92 49428.61 44881.97 46529.10
Total assets 135875.95 146564.84 177953.85 187160.53
Interest bearing liabilities accounted for 29.20%, 33.72%, 25.22%, 24.86% of total assets
During the reporting period, the company's interest bearing liabilities were high, mainly due to: ① since 2019, Xiamen baomax, a subsidiary, borrowed 44.7373 million yuan of long-term loans from the bank for the construction of new plants. As of September 30, 2021, the balance of long-term loans remained 43.307 million yuan; ② The company needs more capital for investment and construction flexibility peak shaving projects, and the company carries out project construction through financial leasing. In October 2018, in order to build the 120mW auxiliary peak shaving project of Inner Mongolia Jingke Power Generation Co., Ltd. and 400MW auxiliary peak shaving project of Guodian investment Fuxin Power Generation Co., Ltd., Nanjing Youzhi signed a financial lease contract with China Power Investment and Financing Leasing Co., Ltd., with a lease principal of 200 million yuan and a lease term of 48 months. As of September 30, 2021, There are 34.7436 million yuan of outstanding financial lease principal, interest, handling charges and taxes. In December 2019, in order to build the 200MW auxiliary peak shaving project of Inner Mongolia Daban power plant, youzhiwang signed a financial lease contract with China Power Investment and Financing Leasing Co., Ltd., with a lease principal of 80 million yuan and a lease term of 60 months. As of September 30, 2021, there were still 61.6511 million yuan of outstanding financial lease principal, interest, handling fees and taxes; ③ The balance of accounts receivable and inventory in the reporting period is high and occupies a certain working capital. In order to maintain the normal development of production activities, the company borrows short-term loans to supplement the working capital; ④ In 2015 and 2016, the company provided a total of 144 million yuan of financial assistance to Shanghai apani, the holding subsidiary. Due to the long-term loss and insolvency of Shanghai apani, the company has transferred all the equity of Shanghai apani to Jiangsu Haibin Power Technology Co., Ltd. with RMB 1 in 2017. The company's corresponding current accounts have a high risk of bad debts, and the impairment provision has been withdrawn in full. The written aid occupies more working capital and has not been recovered so far. The company borrows short-term loans to supplement the working capital.
At the end of each reporting period, the company's short-term borrowings maintained a certain scale, which is required for maintaining production and operation. Long term payables, lease liabilities and non current liabilities due within one year are mainly required for the company's investment and construction of flexible peak shaving projects, and long-term borrowings are mainly due to the investment and construction of new plants by its subsidiary Xiamen baomax.
In conclusion, there are objective reasons and rationality for the high amount of interest bearing liabilities of the company during the reporting period.
2、 Combined with available monetary capital, asset liquidity, future cash flow forecast and other solvency points
Analyze and explain whether there is significant debt repayment risk, whether it has a significant adverse impact on the issuance, and whether the relevant risks are fully disclosed
(I) analysis of solvency
1. Available monetary funds
As of September 30, 2021, the monetary fund balance of the company was 62.6164 million yuan, including the current deposit balance of 9.6418 million yuan, which was small.
2. Asset liquidity
As of September 30, 2021, the financing balance of the company's receivables was 7.9406 million yuan, mainly bank acceptance bills, with low cashing risk and strong liquidity.
As of September 30, 2021, the balance of accounts receivable of the company was 332.752 million yuan, of which the ending balance of overdue accounts receivable was 168.7985 million yuan. The main customers are Schneider, Sungrow Power Supply Co.Ltd(300274) and other well-known enterprises with strong financial strength, with good payment collection ability, low risk of bad debt loss and certain liquidity. As of September 30, 2021, the company's inventory balance was 191726900 yuan, of which the total amount of inventory goods and issued goods was 100.6569 million yuan, accounting for 52.50%; The total amount of raw materials and products in process was 72.0171 million yuan, accounting for 37.56%. In the company's inventory balance, the inventory within 1 year accounts for 68.90%. According to the business model and actual production and operation conditions of production agreed in the order or contract, the company will gradually realize the sales of inventory goods, complete the complete production process and product transformation of raw materials and products in process in a short time, and have a certain asset liquidity.
3. Future cash flow forecast
The cash flow from operating activities during the reporting period and the forecast for the next 12 months are as follows:
Unit: 10000 yuan
Project 2021.9.30-2022 2021 2020 2019 2018.9.30 (forecast) January September
Net cash flow from operating activities 1601.67 7932.90 7704.09 22597.73 5123.83
Net cash flow from investment activities -8291.71 1322.30 -11640.59 -18083.61 -13790.89
Net cash flow from financing activities 18690.45 -13726.19 672.05 -2462.73 8647.81
Total 12000.41 -4470.99 -3264.45 2051.39 -19.25
Note: the net cash flow forecast of the company's financing activities in the next 12 months is based on the assumption that this non-public offering will be made in the next 12 months
Upon completion, the Development Bank estimates the amount of relevant inflow and expenditure according to the completion time of fund raising and the progress of returning interest bearing liabilities with raised funds
To.
The cash inflow from the company's operating activities is mainly the cash received from the sales of equipment accessories (precision CNC sheet metal products), wet chemical equipment and related businesses in energy conservation and environmental protection, as well as the current accounts and tax returns of units and individuals received by the company. The cash outflows from the company's main operating activities are mainly the cash paid for purchasing raw materials, the wages paid to employees, and various expenses required to be paid for daily operating activities. During the reporting period, the operating activities were a continuous net inflow, and the forecast data of net cash flow from operating activities in the next 12 months decreased, mainly due to the expected repayment of early procurement funds.
The cash generated from the company's investment activities in 2018-2020 and the next 12 months is a net outflow, mainly due to the large amount of cash spent by the company on the construction of flexible peak shaving projects and the plant construction of Xiamen subsidiary.
During the reporting period, the cash inflow from financing activities of the company is mainly the cash received from bank loans and financial leasing business, and the cash outflow from financing activities is mainly the cash paid for repaying bank loans and financial leasing funds. The company predicts a large increase in net cash from financing activities in the next 12 months, mainly based on the successful completion of non-public offering of shares.
To sum up, the net cash flow from operating activities, investment activities and financing activities of the company in the next 12 months will total 120004100 yuan.
In the future, the company will continue to strengthen the management of accounts receivable, control the scale of accounts receivable, continuously enhance profitability and ensure the stability and sustainability of future cash flow, so as to improve the company's solvency and reduce the company's debt repayment risk.
4. Proposed countermeasures and effectiveness
(1) Jiangsu jiedeng, the controlling shareholder of the company, provides the company with an interest free loan limit of no more than RMB 100 million. This matter has been deliberated and approved by the fourth extraordinary general meeting of shareholders in 2021 held on August 31, 2021. The loan limit is valid from the date of deliberation and approval by the general meeting of shareholders to the date of holding the annual general meeting of shareholders in 2021. The quota can be recycled and rolled within the validity period, which can effectively solve the company's short-term capital demand and alleviate the company's capital pressure to a certain extent. Jiangsu jiedeng has provided 35 million yuan of financial support to the company. As of December 31, 2021, the loan balance provided by Jiangsu jiedeng to the company was 17 million yuan.
(2) All the funds raised from this non-public offering will be used to supplement working capital and repay interest bearing liabilities, so as to help the company reduce debt repayment pressure and liquidity risk. The total amount of funds to be raised by this non-public offering of shares does not exceed 491.36 million yuan, the amount of interest bearing liabilities in the book of the company at the end of the latest period is 396.7092 million yuan, and the total amount of funds raised exceeds the amount of interest bearing liabilities in the book at the end of the latest period, which can effectively reduce the debt repayment pressure of the company.
(3) The company has continuously strengthened the collection of accounts receivable, including but not limited to the establishment of an accounts receivable recovery team to collect accounts receivable, file lawsuits and arbitrations against overdue customers, and repay the company's debts with operating income. The cash flow of the company's operating activities is in good condition, and the cash flow of operating activities during the reporting period is a continuous net inflow.
(4) The company has a sound operation, good credit record and smooth external financing channels. It can finance through equity financing, bond financing and other financing channels to inject funds into the company. During the reporting period, the company's interest bearing liabilities were paid on schedule, and there were no situations such as overdue or unable to repay.
(5) The company changes according to national policy guidance and market demand
