Notice on Shanghai Hiuv New Materials Co.Ltd(688680) application documents for issuing convertible bonds to unspecified objects
Review the special verification opinions of the inquiry letter
Rongcheng zhuanzi [2022] No. 350z001
Rongcheng Certified Public Accountants (special general partnership)
Beijing, China
About Shanghai Hiuv New Materials Co.Ltd(688680)
Application documents for issuing convertible bonds to unspecified objects
Review the special verification opinions of the inquiry letter
Rong Cheng Zhi Zi [2022] No. 350z001 Shanghai Stock Exchange:
We have received the inquiry letter on the examination of Shanghai Hiuv New Materials Co.Ltd(688680) application documents for issuing convertible bonds to unspecified objects (szksh (refinancing) [2021] No. 125) (hereinafter referred to as the "inquiry letter") issued by your exchange on December 29, 2021. According to the requirements of the inquiry letter issued by your firm, Rongcheng Certified Public Accountants (special general partnership) (hereinafter referred to as "reporting accountant" or "we") as the reporting accountant of Shanghai Hiuv New Materials Co.Ltd(688680) (hereinafter referred to as " Shanghai Hiuv New Materials Co.Ltd(688680) " company "," company "or" issuer ") conducted special verification on the issues related to the reporting accountant in the inquiry letter. We hereby reply to the relevant questions related to the reporting accountant in the inquiry letter as follows:
Question 2 About the previous raised investment project
According to the application materials: 1) the net amount of the issuer's previous fund-raising was 1346.9064 million yuan, of which 255 million yuan was used to supplement working capital and repay bank loans, 223 million yuan was used to permanently supplement working capital, and the investment direction of 523.9064 million yuan was not clear; 2) On March 30, 2021, the company agreed to add a wholly-owned subsidiary Shangrao haiyouwei and Shanghai applied materials to jointly implement the "technical transformation project of polymer special membrane with an annual output of 170 million square meters". At the same time, the implementation location of Shangrao haiyouwei is B25 and B27, photovoltaic industrial ecological park, Ma'anshan sector, Shangrao economic and Technological Development Zone, Jiangxi Province.
The issuer is requested to explain: (1) analyze the necessity and rationality of the issuer's financing in combination with the asset liability ratio, the use and future arrangement of the over raised funds, the balance of monetary funds, etc; (2) The specific reasons for the new implementation sites of the previous raised investment project, the production capacity, output, product distribution and project progress of the two implementation sites.
The recommendation institution is requested to check and express clear opinions according to question 4 of the examination and answer of securities issuance and listing of listed companies on the science and innovation board.
The reporting accountant is requested to check the above matters (1) and express clear opinions.
reply:
1、 Issuer description
(I) analyze the necessity and rationality of the issuer's financing in combination with the asset liability ratio, the use and future arrangement of the over raised funds, the balance of monetary funds, etc
1. The raised funds will further optimize the issuer's asset liability ratio and financial structure
At the end of 2018, 2019, 2020 and September 2021, the comparison between the company's asset liability ratio and companies in the same industry is as follows:
End of September 2021 end of 2020 end of 2019 end of 2018
Hangzhou First Applied Material Co.Ltd(603806) 11.08% 21.79% 21.38% 13.94%
Risen Energy Co.Ltd(300118) 68.29% 65.63% 63.42% 55.26%
Cybrid Technologies Inc(603212) 49.79% 42.86% 41.63% 48.12%
43.05% 43.43% 42.14% 39.11% average of comparable listed companies in the same industry
Issuer 28.99%, 50.73%, 48.01%, 45.17%
Note: Swick focuses on photovoltaic packaging adhesive film business. During the reporting period, Swick was a Risen Energy Co.Ltd(300118) subsidiary. In September 2021, Risen Energy Co.Ltd(300118) transferred 52.49% of Swick holdings it held. After the transfer, Swick will no longer be a holding subsidiary of Risen Energy Co.Ltd(300118) .
From the end of 2018 to the end of September 2021, the company's asset liability ratio was 45.17%, 48.01%, 50.73% and 28.99% respectively. From the end of 2018 to the end of 2020, the company's asset liability ratio was higher than the average value of comparable listed companies in the same industry, mainly because the current company, as a non listed enterprise, had relatively single external financing channels, and the funds required for operation and development mainly depended on bank loans. In 2021, as the company completed the initial public offering to raise funds, the asset scale increased. By the end of September 2021, the asset liability ratio of the company was 28.99%, lower than the average value of comparable listed companies in the same industry, and the asset liability ratio was improved. However, at the same time, the company still needs to further optimize the asset liability ratio and financial structure in the future, mainly for the following reasons:
(1) The business scale of the company continues to expand, and the demand for working capital and long-term assets has increased significantly
The company is a high-tech enterprise engaged in R & D, production and sales of special polymer films. In the context of vigorously developing the new energy industry, the company's main polymer film materials are mainly supporting the photovoltaic module industry in the new energy industry. During the reporting period, the company's operating revenue was 715432900 yuan, 106322000 yuan, 1481092400 yuan and 2001992500 yuan respectively, with a compound growth rate of 43.88% from 2018 to 2020, and continued to maintain rapid growth from January to September 2021.
On the one hand, the company's customers in the photovoltaic packaging film industry are mainly large photovoltaic module enterprises, which are usually settled by commercial acceptance bills or bank acceptance bills, and the product sales collection cycle is long; At the same time, the suppliers are mainly bulk chemical raw material manufacturers, with a short procurement payment cycle, and the industry has the characteristics of large occupation of working capital. During the reporting period, the company's business scale continued to expand, and the time difference between sales collection and purchase payment made the company's working capital occupy a large scale. In this context, the company needs to always maintain sufficient working capital to cope with the working capital gap caused by the rapid growth of business scale, and the demand for working capital increase is urgent.
On the other hand, as the company's business enters the stage of rapid development, the demand for long-term asset investment increases accordingly. At present, the photovoltaic industry as a whole has gradually got rid of its dependence on policy subsidies and formed a market-driven benign development model. It is expected that the new installed capacity of the photovoltaic industry will continue to maintain a growth trend, and the downstream market demand is strong, which provides a strong support for the capacity expansion of the midstream photovoltaic packaging material industry. The company complies with the capacity and expansion plans of downstream component customers, increases capacity accordingly to consolidate the cooperative relationship with major customers, actively seize new market share, and increase the demand for long-term asset purchase at the same time.
(2) The company's asset liability ratio is still at a high level compared with Hangzhou First Applied Material Co.Ltd(603806)
After continuous integration, the pattern of adhesive film industry for photovoltaic packaging is becoming more and more stable. At the level of business scale, a competitive pattern is formed with Hangzhou First Applied Material Co.Ltd(603806) as the first echelon, companies and other enterprises as the second echelon, and other small and medium-sized enterprises as supplements. Compared with Risen Energy Co.Ltd(300118) and Cybrid Technologies Inc(603212) comparable companies in the same industry, the business structure of the company is closer to Hangzhou First Applied Material Co.Ltd(603806) , but there is still a certain gap between the business scale and Hangzhou First Applied Material Co.Ltd(603806) .
At the end of each reporting period, the asset liability ratio of Hangzhou First Applied Material Co.Ltd(603806) was 13.94%, 21.38%, 21.79% and 11.08% respectively, and the asset liability ratio of the company was higher than that of Hangzhou First Applied Material Co.Ltd(603806) . Due to the inherent characteristics of the film industry, the working capital occupies a large scale. The long-term stability of the asset liability ratio will help the company better ensure the stability of production and operation under the background of continuous business growth, so as to maintain and improve market competitiveness. Therefore, the company raised funds through the issuance of convertible corporate bonds. On the one hand, the convertible bonds have the attribute of debt financing, and the interest payment cost is low due to the low coupon rate; On the other hand, with the conversion of convertible bonds into shares in the future, the issuer's financial structure will be optimized and the asset liability ratio will be improved accordingly, which will match the company's business planning.
2. Explain the necessity and rationality of this financing in combination with the use of the previous over raised funds and future arrangements
(1) Use of the previous over raised funds and future arrangements
On January 27, 2021, the company held the 9th meeting of the 3rd board of directors and the 6th meeting of the 3rd board of supervisors, deliberated and adopted the proposal on using some over raised funds to permanently supplement working capital, and agreed that the company would use the over raised funds of RMB 223 million to permanently supplement working capital. As of October 31, 2021, the company has used RMB 223 million of over raised funds to permanently supplement working capital. On the premise of ensuring the normal progress of the previous raised investment project, in order to meet the company's working capital demand, improve the use efficiency of raised funds, reduce financial costs, further improve the company's sustainable profitability, and safeguard the interests of listed companies and shareholders, the company plans to gradually use the remaining over raised funds of 523.9064 million yuan to permanently supplement working capital in the future.
(2) Reasons for not using over raised funds for this construction project
During the reporting period, the company's business scale gradually increased, and the time difference between sales collection and purchase payment made the company's working capital occupy a large scale. In the context of the continuous growth of the company's business scale, the company needs to always maintain sufficient working capital to cope with the working capital gap. The company's previous over raised funds are mainly used to meet the working capital needs in the next three years. The calculation of the company's working capital demand from 2021 to 2023 is as follows: unit: 10000 yuan
Average proportion of the project in operating revenue from 2018 to 2019 to 2020 E in 2021 E in 2022 E in 2023 e
Compound increase in operating income -- 43.88% 43.88% growth rate
Operating income 71543.29 106322.00 148109.24 100.00% 213099.57 306607.67 441147.11
Operating current assets 61036.92 68679.65 99184.79 72.29% 154055.29 221654.75 318916.85
Notes receivable 28880.75 25541.55 22346.85 26.49% 56456.57 81229.71 116873.30
Accounts receivable 22619.81 27474.44 52478.65 30.96% 65982.82 94936.09 136594.04
Receivables financing - 1264.15 3412.13 1.16% 2481.03 3569.70 5136.08
Prepayment 512.68 5556.49 4099.68 2.90% 6187.50 8902.57 12809.02
Inventory 9023.68 8843.03 16847.48 10.77% 22947.38 33016.69 47504.41
Operating current liabilities 9474.71 15843.86 25274.17 15.07% 32113.84 46205.40 66480.33
Notes payable 749.95 1593.50 7003.57 2.43% 5168.13 7435.90 10698.78
Accounts payable 8637.18 14027.22 17931.57 12.46% 26547.09 38195.95 54956.34
Advance payment and contract 87.57 223.14 339.03 0.19% 398.63 573.54 825.21 liabilities
