Hua Min Co. (SZ300345)Thepokergame3, share price 7Thepokergame3.27 yuan with a market capitalization of 42Thepokergame3The 2023 annual report was released on April 23. According to the annual report, the company achieved operating income of 1.175 billion yuan in 2023, an increase of 367.71% over the same period last year, and a net profit loss of 198 million yuan, down 462.57% from the same period last year. Recently, the Shenzhen Stock Exchange issued an inquiry letter on the annual report to Huamin shares.

According to disclosure, in 2023, the income of photovoltaic products and wear-resistant products of Huamin shares increased by 1007.15% and declined by 29.82% respectively, accounting for 87.91% and 8.06% of total revenue respectively, and the gross profit margin was 4.2% and 8.81% respectively. The inquiry letter asks Huamin to explain the details of the photovoltaic business.

Continuous losses of the subject matter of related acquisitions

According to the disclosure, Huamin's total operating income in 2023 was 1.175 billion yuan, including 1.033 billion yuan for photovoltaic products and 94.6959 million yuan for wear-resistant products.Thepokergame3His business is 47.3879 million yuan. In the first quarter of 2024, Huamin's revenue was 231 million yuan, up 18.90% from the same period last year, while its net profit was a loss of 47.0932 million yuan, down 957.56% from the same period last year. The company mentioned "the expansion of photovoltaic business" many times in its quarterly report.

The income has increased greatly, but there have been continuous losses. The inquiry letter requires Huamin shares to list the monthly price trends of silicon materials, silicon rods / wafers and battery chips in the photovoltaic industry chain since 2022 and analyze the reasons for price changes. explain the downstream product demand and capacity utilization changes, trends and the main point in time, the company's industry segment competition, including the main competitors and their production capacity, scale, etc. Combined with the company's performance in the first quarter of 2024 and the reasons for the loss, it shows whether the company's performance has the risk of continuous loss and deterioration, and whether it is prudent to continue to invest a large amount in the new production line.

It is worth noting that one of the main implementers of Huamin's photovoltaic business is the holding subsidiary Hongxin New Energy. According to a reporter from the Daily Business News, in order to meet the needs of photovoltaic transformation, Huamin completed the acquisition of 80 per cent of Hongxin New Energy in September 2022 at a transaction price of 56 million yuan. the party is Hunan Jianhongda Industrial Group Co., Ltd. (hereinafter referred to as Jianhongda Group).

According to the disclosure at that time, Ouyang Shaohong, the actual controller and chairman of Huamin shares, held a 30% stake in Jian Hongda Group, and his spouse, Liu Pingjian, held a 65% stake in Jian Hongda Group. In addition, Huamin shares Ouyang Shaohong and individual directors and supervisors also work in Jianhongda Group, so it constitutes a related party transaction.

At that time, Hongxin New Energy was still in the period of construction and did not actually carry out operation. The performance commitment made by Jian Hongda Group is that the net profit of Hongxin New Energy from 2022 to 2024 is not less than 7.5 million yuan, 14.5 million yuan and 16 million yuan respectively.

However, the reporter also inquired that in 2022 and 2023, Hongxin New Energy's net profit was 18.6729 million yuan and 195 million yuan respectively, and the performance compensation involved in Jian Hongda Group was 56 million yuan. "in response to the above matters, the company is actively communicating with Jian Hongda Group." This is the hint in the announcement of Huamin shares.

Therefore, the inquiry letter also requires Huamin shares to explain the reasons and rationality of Jianhongda Group's long-term failure to carry out performance compensation, and whether listed companies are actively pursuing compensation.

The reasons for the huge increase in inventory need to be explained.

Behind the year-on-year increase in revenue of Huamin shares in 2023, a number of its major sales contracts were performed and revenue was recognized during the reporting period. According to the disclosure, among the eight major sales contracts listed in the annual report, 6 contracts have been performed with a total amount of 565 million yuan during the reporting period, with a total recognized income of 500 million yuan and a total recognized accounts receivable of 550 million yuan.

The inquiry letter requires Huamin shares to list the settlement conditions, acceptance conditions and payment conditions stipulated in each contract respectively, and combined with the income recognition conditions to explain the reason and rationality why the amount of contract performed is inconsistent with the amount of income recognition, and the reason why the amount of accounts receivable is larger than the amount of income recognition, combined with the company's credit policy to customers, the age of accounts receivable, the situation of repayment after the period, provision for bad debts, etc. Explain whether the credit policy is consistent with the comparable companies in the same industry, the reason and rationality of the actual repayment of each contract, the uncertainty of the payback, and the adequacy of the provision for bad debts.

In addition, Huamin shares are required to explain the financial subjects that have changed greatly during the reporting period. For example, at the end of the reporting period, the book balance of the inventory of Huamin shares was 213 million yuan, an increase of 28.85% over the beginning of the period, of which raw materials and products in process increased significantly, and the book balance increased by 174.79% and 131.18% respectively, accounting for 33.69% and 22.04% of the total inventory respectively. The company's inventory decline is prepared to accumulate 42.9846 million yuan, this period 137 million yuan, turn back or return 118 million yuan, mainly for products, inventory goods, commissioned processing materials. The company is required to explain the reason, rationality and necessity of the substantial increase in inventory, as well as whether the provision for raw materials and product price reduction is adequate.