Hailanxin's annual report was asked: explain the reasons for the change in gross profit margin, and whether there is a big difference with the gross profit margin of comparable companies in the same industry

On May 15, the Shenzhen Stock Exchange issued an inquiry letter on the annual report of Beijing Hailanxin Data Technology Co., Ltd. (hereinafter referred to as "Hailanxin" or "the Company"). The letter of inquiry requires Hailanxin to explain the reasons for the change in gross profit margin, whether there is a big difference between the gross profit margin and that of comparable companies in the same industry, and whether the gross profit level is sustainable based on factors such as market environment, competition, raw material prices, and order price changes during the reporting period.

Screenshot of the inquiry letter of the Shenzhen Stock Exchange

In the post-mortem review of Hailanxin's 2023 annual report, the Shenzhen Stock Exchange paid attention to the following situations:

1. During the reporting period, Hailanxin achieved operating income of 754 million yuan, a year-on-year increase of 4.04%, and realized net profit attributable to shareholders of listed companies (hereinafter referred to as "net profit") of -116 million yuan, and the net profit after deducting non-recurring gains and losses was negative for two consecutive years. In terms of products, the revenue of ocean observation and exploration equipment and systems, intelligent ships and intelligent navigation systems accounted for 37.27% and 60.34% of the total operating income respectively, an increase of 61.26% and a decrease of 14.64% year-on-year respectively; The gross profit margin was 22.02% and 22.79% respectively, a year-on-year decrease of 11.85 percentage points and an increase of 9.77 percentage points respectively. In the fourth quarter of 2023, Hailanxin's revenue and net profit will be 266 million yuan and -125 million yuan respectively, a year-on-year increase of more than 100%. In the first quarter of 2024, Hailanxin's operating income and net profit were 47 million yuan and 2.4428 million yuan respectively, a year-on-year decrease of 69.18% and 48.02% respectively. Please Hailan letter:

(1) Combined with factors such as market environment, competition, raw material prices, order price changes and other factors during the reporting period, explain the reasons for the change in gross profit margin, whether there is a large difference between the gross profit margin and that of comparable companies in the same industry, and whether the gross profit level is sustainable.

(2) If there is a large difference between the unit cost of specific products in the reporting period and previous years, please explain the reasons in detail.

(3) Separately list the top five customers of ocean observation and exploration equipment and systems, whether the composition of major customers, cost allocation or aggregation caliber has changed this year, and explain the reasons for the substantial increase in operating income but continuous decline in gross profit margin of this business.

(4) Combined with the company's quarterly business development, production and sales level, historical operating income and net profit seasonal distribution, etc., explain the reasons and reasonableness of the significant increase in the performance in the fourth quarter of 2023 compared with the same period last year.

(5) Explain the revenue recognition policy, the specific time point of revenue recognition, the specific basis for revenue recognition and its compliance and reasonableness, whether the recognition of costs and expenses is true, accurate and complete, whether the relevant revenue and costs are recognized in advance or across periods, and further explain whether the relevant accounting treatment complies with the relevant provisions of the Accounting Standards for Business Enterprises in combination with the transfer of risk and reward.

Ask the annual accountant to check and give a clear opinion.

2. At the end of the reporting period, the book value of Hailanxin's accounts receivable was 392.4228 million yuan. During the reporting period, Hailanxin made a total provision for credit impairment losses of 102.6999 million yuan, including 44.2396 million yuan for bad debts of accounts receivable and 57.6847 million yuan for bad debts of other receivables. During the reporting period, Hailanxin wrote off accounts receivable of 6.816 million yuan, and the receivable object was Rongzhitong (Tianjin) Data Technology Co., Ltd. (hereinafter referred to as "Rongzhitong"), and the main reason for the write-off was to obtain a settlement agreement between the two parties and cancel the payment. At the end of the reporting period, the book balance of other receivables of Hailanxin was 130.7389 million yuan, of which the book balances of the first and second places at the end of the period collected by the debtor were 57.044 million yuan and 40.2654 million yuan respectively, and the nature of the payment was "current payment", and the bad debt provision had been fully accrued. Please Hailan letter:

(1) List the top five accounts receivable with closing balance and aged more than 3 years collected by the debtor, including but not limited to transaction background, formation time, age, whether the counterparty and Hailanxin, directors, supervisors, senior managers, more than 5% shareholders and their related parties are related, whether the accounts receivable are overdue, and the basis and adequacy of bad debt provisions.

(2) Explain the background of the formation of the write-off accounts receivable, whether the real sales business occurs, whether the product quality conforms to the agreement, whether the sales return occurs, the specific content of the settlement agreement, the reasons for the cancellation of the payment, whether there is an affiliated relationship or other benefit arrangement between Rongzhitong and your company and the actual controller, whether it damages the interests of the listed company, and report to our firm the settlement agreement between the two parties, the write-off procedures performed and other relevant documents.

(3) Supplement the specific situation of the above two other receivables, including the background, time, reason, content, relationship between the receivables, the term of the payment, etc., and whether the collection measures taken by Hailanxin, the reasons and proportion of bad debt provisions are sufficient and reasonable.

(4) Combined with the above reply, verify the accuracy, adequacy and reasonableness of the provision for bad debts of Hailanxin's receivables in the reporting period and the previous period.

Ask the annual accountant to check and give a clear opinion.

3. During the reporting period, the sales amount of Hailanxin to the top five customers was 487 million yuan, accounting for 64.56% of the total sales, an increase of 4.76 percentage points year-on-year, and the procurement amount of the top five suppliers was 370 million yuan, accounting for 52.09% of the total procurement, a year-on-year decrease of 7.71 percentage points, and the names of the top five customers and suppliers were not disclosed. Please Hailan letter:

(1) Explain whether the confidentiality agreement or terms have been signed with the top five customers and suppliers, the reasons and reasonableness of not disclosing the names of the top five customers and suppliers, and verify whether the names of the counterparties are consistent in each period of simplified identification.

(2) Explain in detail the specific situation of the company's top five customers, including but not limited to name, establishment time, business scope, registered capital, cooperation period, whether there are new customers in the reporting period, specific products sold, amount and payment collection as of the date of reply, accounts receivable and bad debt reserve balance, credit policy, whether the scale of operation matches the amount of its order, and whether there is an affiliated relationship, concerted action relationship or other relationships that may cause interest tilt with Hailanxin, controlling shareholders, actual controllers, directors, supervisors and senior executives and their affiliates.

(3) Describe in detail the company's top five suppliers, including but not limited to name, establishment time, business scope, procurement content, credit policy, registered capital, cooperation period, whether there are new suppliers in the reporting period, whether the business scale matches the amount of its order, and whether there is an associated relationship, concerted action relationship or other relationships that may cause interest tilt with Hailanxin, controlling shareholders, actual controllers, directors, supervisors, senior executives and their affiliates.

4. During the reporting period, Hailanxin's various expenses decreased, and the sales expenses were 73.5398 million yuan, a year-on-year decrease of 14.64%; The management expenses were 76.0796 million yuan, a year-on-year decrease of 36.64%, and the reason for the change was that "the company continued to promote a number of measures to reduce costs and increase efficiency to reduce management expenses"; The financial expenses were -2.7998 million yuan, a year-on-year decrease of 109.97%, and the reason for the change was that "more interest on convertible bonds was accrued last year, and there is no need to accrue interest on convertible bonds this year"; R&D expenses were 44.2513 million yuan, down 25.32% year-on-year. Please Hailan letter:

(1) Combined with the detailed items of sales expenses (wages and salaries, marketing expenses, storage expenses, etc.) and changes in the past three years, the proportion of sales expenses in revenue, and the relevant information of comparable companies, explain the reasons and reasonableness of the increase in operating income but the decline in sales expenses.

(2) Combined with the composition and changes of management expenses in the past three years, explain the reasons and reasonableness of the changes in management expenses, and list the specific measures and corresponding results of Hailanxin to reduce costs and increase efficiency in 2023.

(3) Combined with the specific composition and cost of the company's borrowings in the past three years, the changes in borrowings, and the basis for the accrual of convertible bond interest expense, it is explained that the reasonableness of the non-provision and significant decrease in financial expenses in the current period due to the large amount of convertible bond interest accrued in the previous period is explained.

(4) Combined with the details of R&D projects in the past three years, the capitalization of R&D expenses, the main purpose of R&D expenses, the number of R&D personnel, and the proportion of R&D expenses in revenue, the reasons and reasonableness of the continuous decline in R&D expenses are explained.

(5) Comprehensively verify the compliance of Hailanxin's cost-related accounting treatment, and whether there is incomplete provision of costs and expenses in the previous period and the current reporting period.

Ask the annual accountant to check and give a clear opinion.

5. Hailanxin's "Announcement on the Completion of the 2023 Annual Performance Commitment of Hainan Oute Marine Technology Co., Ltd." shows that the company purchased 100% of the equity of Shenzhen Oute Marine Technology Co., Ltd. (now renamed "Hainan Oute Marine Technology Co., Ltd.", hereinafter referred to as "Oute Marine") by paying cash on February 7, 2020, and the performance pledgee promised that the target company in 2020, The net profit attributable to owners of the parent company after deducting non-recurring gains and losses in the audited consolidated statements for 2021 and 2023 shall not be less than 28.0534 million yuan, 32.6266 million yuan and 45.1731 million yuan respectively. In 2023, the audited net profit attributable to shareholders of the parent company after deducting non-recurring gains and losses is 39.3172 million yuan, and the promised net profit in 2023 has not been completed, and the compensation obligor shall pay cash compensation to Hailanxin within 60 days after the audit results of the current net profit are issued. According to the annual report, the overall performance of Ote Marine in 2023 increased significantly year-on-year, with operating income and net profit of 146.6268 million yuan and 34.4625 million yuan in 2023, respectively, and operating income and net profit of 11.579 million yuan and -997,500 yuan in 2022, respectively. Please Hailan letter:

(1) Supplementary disclosure of the production and operation of Auto Marine in the past five years, the main financial data and financial indicators, major customers and suppliers, the timing and basis of the recognition of sales revenue, and explain the reasons and reasonableness of the significant improvement in 2023 annual performance.

(2) Supplemental disclosure of the performance of each quarter of 2023, combined with the operating income and net profit in the first quarter of 2024, to explain whether there is a sudden recognition of revenue and profit at the end of the year, and a decline in performance after the performance commitment period.

(3) Explain the specific amount of compensation that the compensation obligor should fulfill the performance commitment, the specific compensation arrangement, the latest progress and the specific measures taken by the company.

(4) Explain the accounting treatment of the relevant performance compensation and whether it conforms to the standards of enterprise accountants.

Ask the annual accountant to check and give a clear opinion.

6. On March 21, 2024, Hailanxin disclosed the announcement of the change of some fund-raising projects, saying that the "Smart Ocean Technology Center Construction Project" implemented by its wholly-owned subsidiary, Puffin (Hainan) Technology Co., Ltd., was changed to "Construction and Industrialization Project of Ship Solid-state Navigation Radar Test Platform" and "UDC Shanghai Project (Phase I)". Among them, the project implementation body of the "Ship Solid-state Navigation Radar Test Platform Construction and Industrialization Project" is the listed company and its wholly-owned subsidiary Jiangsu Hailan Marine Electrical System Technology Co., Ltd., and the project implementation body of the "UDC Shanghai Project (Phase I)" is the listed company. Please Hailan letter:

(1) Combined with the difference between the actual situation and the previous demonstration and project establishment, explain the reasons and reasonableness of the change in the investment direction of the raised funds, as well as whether the early decision-making of the original fundraising and investment project is prudent, and whether there are insufficient risk disclosure and untimely information disclosure;

(2) Explain the differences and advantages between the proposed change project and the original fundraising project in combination with market competition, customer needs, and development strategy, prudently assess the necessity of changing the fundraising project, and verify whether there is a disguised change in the use of the raised funds.

Ask the sponsor to check and give a clear opinion.

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Review: Sun Shijian