On October 15, capital bangxun and Zhongli group issued a notice on reply to inquiry letter of Shenzhen Stock Exchange.

According to the announcement, on October 8, 2019, China interest group received the inquiry letter from Shenzhen Stock Exchange (inquiry letter [2019] No. 61 of the semi annual report of the SME board) (hereinafter referred to as "inquiry letter"), and now reply to the relevant questions as follows:

Q: 1. During the reporting period, the company's photovoltaic industry realized an operating revenue of 2.418 billion yuan, accounting for 42.16% of the operating revenue. Combined with the industry environment, industrial policy changes, business model and comparable companies in the same industry in the last three years, the reasons for the continuous decline of the company's photovoltaic industry operating revenue are explained.

It can be seen from the above table that, in addition to the leading enterprises in the photovoltaic industry (Longji, Zhonghuan, Tongwei and other enterprises involve multiple industrial chains in the photovoltaic industry, and rely on market financing to continuously increase the investment in the photovoltaic industry, which is less sensitive to the changes in the photovoltaic environment and industrial policies), the operating performance of other non leading photovoltaic enterprises has declined in recent three years.

The reason for the continuous decline of the company's operating revenue in the photovoltaic industry: in the first half of 2019, the decline of the company's operating revenue in the photovoltaic industry was mainly due to the decline of the operating revenue of photovoltaic modules and batteries, commercial power stations and poverty alleviation power stations.

① component sales business: due to the impact of the financing environment, the company did not invest in new capacity, but carried out the technical transformation project of perc process for the existing capacity, which affected the output and sales volume in the second quarter of 2019. From January to June 2019, the company sold 788mw photovoltaic cells and modules, down 19% from the same period last year. At the same time, influenced by the "531 photovoltaic New Deal" in 2018 and the improvement of photovoltaic manufacturing technology, the prices of batteries and components have declined compared with the same period last year. Overall, in the first half of 2019, the company's sales amount of photovoltaic modules and cells decreased by 30.35% compared with the same period of last year.

② photovoltaic power station business: with the gradual decline of benchmark feed in price of centralized commercial power stations, and the increasingly fierce competition in the domestic market, the gross profit space is also gradually compressed, the company has gradually reduced the investment in the development and construction of domestic commercial power stations since 2017.

③ poverty alleviation power plant business: affected by the 326 photovoltaic poverty alleviation policy, the development of poverty alleviation photovoltaic power plant decreased. From January to June 2019, the EPC settlement volume was 70.69mw, down 67% compared with the same period of last year, and the confirmed EPC sales revenue decreased 69.63% compared with the same period of last year. According to the national poverty alleviation plan in 2020, the domestic poverty alleviation power stations have entered the final stage in 2019, which is also one of the reasons for the reduction of income of poverty alleviation power stations.

Q: during the reporting period, the company's net cash flow from operating activities was 194 million yuan, an increase of 221.07% over the same period of last year; the book balance of accounts receivable was 10.325 billion yuan, a decrease of 5.95% over the beginning of the period. Combined with the change of the company's sales mode and credit policy and the difference with the same period of last year, the reasons and rationality for the substantial increase of net cash flow generated by the company's business activities and the decrease of the book balance of accounts receivable are analyzed in detail.

Reply: the main business of the company is cable business, photovoltaic business and special communication equipment business.