On May 16, the Shenzhen Stock Exchange issued an annual report inquiry letter to Chiway Co., Ltd., requesting to explain a number of issues such as the borrowing of funds from related parties.
According to the annual report, Chiway Co., Ltd. achieved operating income of 710.6953 million yuan during the reporting period, a year-on-year decrease of 15.45%, the net profit attributable to shareholders of listed companies (hereinafter referred to as "net profit") was -160.7035 million yuan, a year-on-year increase of 76.61%, and the net profit attributable to shareholders of listed companies after deducting non-recurring gains and losses (hereinafter referred to as "net profit after deducting non-recurring profits") was -167.4077 million yuan, a year-on-year increase of 76.18%. The net cash flow from operating activities was 34.3369 million yuan, a year-on-year increase of 23.88%.
In this regard, the Shenzhen Stock Exchange requires Chiway to share:
(1) Explain the reasons and reasonableness of the significant increase in net profit and net profit after deducting non-profits in the case of a decline in operating income; The reasons and reasonableness of the large difference between the change in operating income and net cash flow from operating activities.
(2) Combined with the business development, revenue recognition and cost collection process of each quarter, explain the reasons and reasonableness of the large fluctuations in net profit and net profit after deducting non-profits in each quarter, the reasons and reasonableness of the mismatch in the trend of income, profit and cash flow changes in each quarter, and the reasons for the high proportion of operating income in the fourth quarter.
According to the annual report, the construction business of Chongqing Huayu Garden Co., Ltd. (hereinafter referred to as "Huayu Garden"), a subsidiary of Chiway Co., Ltd., has been basically completed, and the accounts receivable of Huayu Garden's garden business are mainly concentrated in Anshun and Zunyi areas of Guizhou. In December 2023, the company disclosed the "Announcement on the Signing of Debt Repayment Related Agreements by Subsidiaries", stating that Huayu Garden signed a debt repayment related agreement with the Shenxi Town Government, and converted the 26.37 million yuan owed by the Shenxi Town Government in the previous period into a loan to it; The annual report shows that Huayu Garden has recovered 3.2498 million yuan, but there are still 26.37 million yuan of loans owed to the company that are overdue.
In this regard, the Shenzhen Stock Exchange requires Chiway to share:
(1) Describe the construction projects of Huayu Garden in Anshun and Zunyi areas of Guizhou Province in the form of a table, including but not limited to the name of the customer, the name of the project, the cooperation model, the project amount, the progress of construction and settlement, the payment collection arrangement agreed in the contract, and the progress of payment recovery as of the end of the reporting period.
(2) Explain in the form of a table the recognition of income and costs of the above items and the basis, the balance of accounts receivable at the end of the period and the provision for bad debts, and explain whether the provision for bad debts of accounts receivable is sufficient.
(3) Explain the specific reasons and purposes of converting the project money owed by the People's Government of Shenxi Town into a loan, whether it is conducive to the recovery of relevant debts, the reasons and reasonableness of the overdue loan at the end of the reporting period, explain the reasonableness of the company's conversion of the project money into a loan in combination with the progress of repayment, and explain the safeguard measures that your company intends to take or has taken for the recovery of the loan.
According to the annual report, the closing balance of accounts receivable of Chiway shares was 2,705,197,600 yuan, of which, among the accounts receivable provided for bad debts by combination, the book balance of accounts receivable from external customers was 563,838,300 yuan, and the provision ratio for bad debts was 25.56%; The book balance of accounts receivable with a single provision for bad debts was 2,141,359,300 yuan, and the provision for bad debts was 46.74%.
In this regard, the Shenzhen Stock Exchange requires Chiway to share:
(1) Combined with the sales model, revenue recognition policy, settlement method, etc., explain the reasons and reasonableness of the increase in the closing balance of accounts receivable under the decline of the company's operating income.
(2) Explain the reasons for the formation of accounts receivable from external customers who make provision for bad debts according to the portfolio, the name of the debtor, the content and amount of the transaction, as well as the aging and collection of the accounts, whether there is a risk that the payment cannot be collected, the measures taken by the company, and whether the provision for bad debts is sufficient.
(3) Explain the basis and reasons for confirming that the accounts receivable of customer 12, customer 13 and customer 23 are "expected to be unable to fully recover" in the accounts receivable of customer 12, customer 13 and customer 23, the specific signs of impairment of the relevant funds and the reasons for their occurrence, and whether the corresponding proportion of bad debt provision is reasonable.
(4) Explain the specific situation of the top five accounts receivable customers, including but not limited to the name of the customer, the transaction amount, the transaction content, the aging of the accounts receivable, the collection at the end of the reporting period, etc., whether the relevant customers are related to the company, the controlling shareholder, the actual controller, and the directors, supervisors and senior executives, and whether the provision for bad debts is sufficient.
At the end of the reporting period, the closing balance of long-term receivables of Chiway was 930.113 million yuan, and the project was PPP project and other project funds, of which the closing balance of bad debt provision was 346.9071 million yuan, and the closing balance of long-term receivables of Xixiu District Government of Anshun City was 346.9071 million yuan, and the reason for the provision was "expected to be difficult to recover", and the proportion of bad debt provision was 40.00%. The closing balance of bad debt provision according to the combination was 583.2059 million yuan, and the proportion of bad debt provision was 1%.
In this regard, the Shenzhen Stock Exchange requires Chiway to share:
(1) Explain the specific situation of the project involved in the long-term receivable, including but not limited to the project name, project location, customer name, project amount, account age, payment collection agreement, estimated completion time and payment collection.
(2) Combined with the impairment test process and basis, explain whether the provision for bad debts is sufficient and reasonable; The specific circumstances and reasons for the recognition of the long-term receivables of the Xixiu District Government of Anshun City as "expected recovery difficulties", and whether the provision ratio of bad debts of 40.00% is sufficient and reasonable under this circumstance.
According to the annual report, during the reporting period, Chiway Co., Ltd. borrowed funds from related parties, with an amount of 10 million yuan from the related party Shanghai Ruize Equity Investment Management Co., Ltd., 20 million yuan from the related party Chiway Holding Group Co., Ltd., and 10 million yuan from the related party Shanghai Ruize Equity Investment Management Co., Ltd.
In this regard, the Shenzhen Stock Exchange requires Chiway to share:
(1) Explain the reasons and necessity of the capital lending, the occurrence time, repayment period, and recovery of the relevant capital lending, whether the relevant matters have fulfilled the review procedures and information disclosure obligations in a timely manner, and whether there is any occupation of funds by related parties.
(2) Explain the basis for determining the interest rate of related parties' funds, whether there is a difference between it and the market interest rate, and whether it is fair.
According to public information, Chiway Co., Ltd.'s main business includes two major fields: packaging technology and garden ecology.
In terms of performance, in the first quarter of 2024, Chiway Co., Ltd.'s operating income will be about 166 million yuan, a year-on-year increase of 11.58%; The net loss attributable to shareholders of the listed company was about 45.2035 million yuan, an increase of 206.58% over the same period last year. (Sino-Singapore Jingwei APP)