Shanghai Stock Exchange document szkss (refinancing) [2022] No. 16
About Changzhou Galaxy Century Microelectronics Co.Ltd(688689)
Application documents for issuing convertible bonds to unspecified objects
Audit inquiry letter
Changzhou Galaxy Century Microelectronics Co.Ltd(688689) , China Securities Co.Ltd(601066) : in accordance with the securities law, the measures for the administration of securities issuance registration of companies listed on the science and Innovation Board (for Trial Implementation), the rules for the examination and approval of securities issuance and listing of companies listed on the science and Innovation Board of Shanghai Stock Exchange and other relevant laws, regulations and relevant provisions of the exchange, The audit institution of the exchange reviewed the application documents of Changzhou Galaxy Century Microelectronics Co.Ltd(688689) (hereinafter referred to as listed companies or companies) for issuing convertible corporate bonds to unspecified objects, and formed the first round of questions.
1. About the industrialization project of vehicle specification semiconductor devices
1.1 according to the prospectus and application materials, (1) one of the projects raised and invested this time is the industrialization project of vehicle specification level semiconductor devices; (2) At present, the company’s products are mainly used in home appliances, computers and peripheral equipment, networks and communications, and there are relatively few products in high-end application fields such as automotive electronics. The company plans to gradually increase the market share of the company’s high-end semiconductor discrete device products; (3) There is no independent production line for the company’s vehicle specification grade semiconductor discrete device products, which needs to share the production line with the existing consumer grade semiconductor discrete devices, but the vehicle specification grade products have higher requirements for equipment; (4) As of November 30, 2021, the company’s orders for vehicle specification products were 29.5043 million yuan. According to the calculation, the average annual sales revenue after the project is fully completed is 405988000 yuan; (5) In recent years, new devices such as MOSFET and IGBT have developed rapidly. In some application scenarios with high requirements, the realization mode of circuit function has changed, resulting in local iteration of diode and triode products.
The issuer explains: (1) this project involves the specific types and application scenarios of the products. If there is any qualification certification for vehicle grade semiconductor devices compared with other applications, the requirements for product performance, production process and technology advanced should be specified. If so, please specify the specific contents. (2) Compare the products of the previous raised investment project with the company’s existing product structure to explain whether the raised investment project involves new products; In combination with the company’s current production, sales and technical reserves of discrete devices in the automotive electronics field, explain the corresponding relationship between the technology required by the raised investment project and the issuer’s existing core technology and research projects, whether it involves new technology, whether it has the basis for carrying out relevant technology R & D, and whether there are major uncertainties in the R & D work; (3) The requirements of vehicle specification level semiconductor device production equipment are different from those of the issuer’s existing equipment, and whether the equipment to be purchased in this raised investment project is special and universal with the existing equipment; (4) Explain the capacity digestion measures of the raised investment project in combination with the product market scale, market competition pattern, future development trend and the company’s orders in hand and order development plan; (5) Combined with the technical iteration of vehicle specification level semiconductor devices and the current mainstream level of the industry, explain the advantages and disadvantages of relevant technologies of the company’s raised investment projects compared with the mainstream level of the industry, the specific measures of the company to deal with the technical iteration, and whether there is a risk that the technology will be iterated.
1.2 according to the prospectus, the industrialization project of vehicle specification semiconductor devices has not obtained the EIA reply, and the issuer is actively promoting the handling of relevant procedures.
The issuer is requested to explain the current progress of the EIA approval process of the raised investment project, the follow-up process and the expected time to obtain the EIA approval.
The lawyer of the issuer is invited to check and give opinions, explaining the verification process, basis and conclusion.
2. On financing scale
According to the application materials, (1) the total investment budget of the “vehicle specification level semiconductor device industrialization project” is 453.6157 million yuan, including 54 million yuan of construction investment, 352.2131 million yuan of equipment investment, 5 million yuan of software investment, 20.56 million yuan of reserve fund and 21.8427 million yuan of initial working capital; The amount of raised funds to be invested is 400 million yuan; (2) It is proposed to use the raised capital of 100 million yuan to supplement the working capital.
The issuer is requested to explain: (1) list the specific details and amount of each investment in the “vehicle specification level semiconductor device industrialization project” in the form of table, whether it belongs to capital expenditure, the amount to be invested with the raised funds, and explain the calculation basis and calculation process of the above investment amount, and the fairness of the purchase price of equipment and software; (2) Combined with the amount of non capital expenditure in the raised investment project, calculate the specific amount of working capital actually supplemented in the raised investment project, and explain whether the proportion used to supplement working capital and repay debts exceeds 30% of the total amount of raised funds.
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.
Please report to the accountant for verification and express clear opinions.
3. About revenue forecast
According to the application materials, the “vehicle specification level semiconductor device industrialization project” will build a vehicle specification level semiconductor discrete device production line covering the whole process of chip design, manufacturing and packaging test by purchasing advanced chip manufacturing equipment, packaging test equipment and vehicle specification level semiconductor discrete device test and detection equipment, introducing professional R & D and production personnel, Strengthen the integrated production capacity of the company’s vehicle specification level semiconductor discrete devices, improve the capacity scale of the company’s high-end semiconductor discrete devices, and meet the growing product demand in high-end application fields. The issuer is requested to explain: (1) the detailed calculation process and basis of the income of the “vehicle specification level semiconductor device industrialization project”, the rationality of the assumptions, and whether it conforms to the industry practice; (2) Whether the relevant forecast data fully consider the impact of market competition, supply increase and other factors on product price and sales volume; (3) Combined with the above situation, analyze the prudence and rationality of income calculation.
The recommendation institution and the reporting accountant are requested to check and express clear opinions on the prudence and rationality of the income forecast of the raised investment project.
4. On financial investment
According to the application materials, as of September 30, 2021, the company had trading financial assets of RMB 360 million, which was due to the company’s use of some idle initial raised funds and its own funds to purchase structured deposit products. Because structured deposits are embedded in financial derivatives, their benefits and risks are slightly higher than ordinary deposits.
The issuer is requested to explain: (1) whether the specific contents, risk characteristics and holding period of structured deposits are not financial investments; (2) Details of other financial investments (including similar financial investments) implemented or proposed to be implemented by the company from six months before the resolution of the board of directors related to the issuance to the issuance; Whether the relevant financial investment amount has been deducted from the total amount of funds raised this time; (3) Analyze whether the company meets the requirements of no large financial investment in the latest period in combination with relevant investment.
Please report to the accountant for verification and express clear opinions.
5. About operation
According to the application materials, (1) at the end of each reporting period, the book balance of the issuer’s accounts receivable was 166942600 yuan, 152874600 yuan, 159899400 yuan and 180482600 yuan respectively; (2) At the end of each reporting period, the book value of the company’s inventory was 72.7822 million yuan, 79.5317 million yuan, 96.3772 million yuan and 134.003 million yuan respectively; (3) From January to September 2021, the sales unit price of products increased and the purchase unit price of main raw materials increased.
The issuer is requested to explain: (1) in combination with the bad debt provision policy and the changes of accounts receivable, explain the adequacy of the provision for bad debts of accounts receivable; (2) Explain the adequacy of the provision for inventory falling price in combination with the stock age and the provision policy for inventory falling price reserves of comparable companies in the same industry; (3) The reasons for the increase of product sales unit price from January to September 2021, the impact of the increase of raw material purchase unit price on cost and gross profit margin, and whether the change trend is sustainable.
Please report to the accountant for verification and express clear opinions.
6. On other issues
6.1 according to the application materials, he Zilong, the company’s core technician, resigned for personal reasons during the reporting period. In addition, according to the prospectus, he Zilong once worked in the company’s semiconductor chip division and mastered the core technology of the company’s semiconductor chips.
Please explain to the issuer: in combination with the R & D projects and specific work he Zilong was responsible for in the company before his resignation, explain whether his resignation has a significant adverse impact on the company’s technical R & D work and production and operation.
The lawyer of the issuer is invited to check and give opinions, explaining the verification process, basis and conclusion.
6.2 according to the application materials, in the cash flow from investment activities from January to September 2021, the net cash flow from investment activities was -476251200 yuan, and the cash outflow from investment activities increased significantly compared with 2020.
The issuer is requested to explain the specific details of “cash received from investment recovery”, “cash paid for the purchase and construction of fixed assets, intangible assets and other long-term assets” and “cash paid for investment” and their cross checking relationship with the statement subjects.
Please report to the accountant for verification and express clear opinions.
6.3 the issuer is requested to improve the provisions on the rules of the meeting of convertible bond holders in the prospectus in accordance with the measures for the administration of convertible corporate bonds, the standards for the content and format of information disclosure by companies publicly issuing securities No. 43 – prospectus for securities issuance by companies listed on the science and innovation board to unspecified objects, and other relevant provisions.
The company is requested to distinguish between “disclosure” and “explanation”. In addition to applying for exemption, the disclosure content shall be added to the prospectus. The explanation content is the content of inquiry reply and does not need to be added to the prospectus; Where the amendment of the prospectus and other application documents is involved, the updated place shall be indicated in bold in regular script, and the amendment description and difference comparison table shall be submitted together; The recommendation institution is requested to carefully check and check the company’s reply item by item, and write the general opinion that “we have checked the company’s reply in this reply material to confirm and ensure its authenticity, completeness and accuracy” after the company’s reply.
Shanghai Stock Exchange
Subject words of January 21, 2002: inquiry letter on refinancing of science and Innovation Board
Shanghai Stock Exchange Kechuang board listing Audit Center issued on January 21, 2022
