This article**: Times Business School Author: Peng Chenyu
*|Times Business School.
Author |Peng Chenyu.
Edit|Bi Xiaolei.
With the continuous advancement of China's "manufacturing power" strategy, the technical barriers to the production and application of high-performance fibers have been continuously broken, which has driven the research and development of ultra-high molecular weight polyethylene fiber products in the field of national defense and civil use. According to the statistics of Zhiyan Consulting, as of 2022, the market size of ultra-high molecular weight polyethylene fiber in China is about 565.4 billion yuan.
On December 22, Zhejiang Millennium Dragon Fiber Special Fiber Co., Ltd., which focuses on the field of ultra-high molecular weight polyethylene fiber, received a review inquiry letter and planned to land on the Beijing Stock Exchange, intending to contribute to its own development through the capital market.
Times Business School found that from 2020 to the first half of 2023 (hereinafter referred to as the "reporting period"), Millennium Dragon Fiber frequently procured services from related parties, including but not limited to canteen catering, accommodation services, and energy, and the fairness and operational independence of its related party transactions were questioned by the Beijing Stock Exchange.
In addition, Millennium Dragon Fiber's customers and large businessmen have abnormalities in many aspects such as paid-in capital, number of insured people, and registered addressIn the case of large fluctuations in performance and sharp increase in debt repayment pressure, Millennium Dragon Fiber chose to pay a large dividend on the eve of the IPO, and planned to raise a large amount of funds to supplement liquidity after the large dividend.
Related-party transactions are complicated, and the operational independence has been questioned by the Beijing Stock Exchange
According to the prospectus, Millennium Dragon Fiber is a high-tech enterprise focusing on the research and development, production and sales of ultra-high molecular weight polyethylene fiber and its products. Ultra-high molecular weight polyethylene fiber is one of the fibers with the highest specific strength and specific modulus in the world, and is known as the world's three major high-performance fibers together with carbon fiber and aramid fiber, which are mainly used in marine fisheries, military equipment, safety protection, textile supplies, sporting goods, construction engineering, aerospace and medical equipment and other fields.
According to the prospectus, the controlling shareholder of Millennium Dragon Fiber is Xu Chunhua, who directly holds 5045 of the company990,000 shares, accounting for 59 percent of the total share capital08%。
As of the signing date of the prospectus (November 17), Yao Xiangjiang and Xu Chunhua directly held Millennium Dragon Fiber respectively. 08% of the shares, and through the control of Zhejiang Qianxi Automobile Industry *** hereinafter referred to as "Qianxi Automobile Industry"), Yongkang Qianhe Equity Investment Management Partnership (Limited Partnership) (hereinafter referred to as "Qianhe Investment") and Yongkang Longxian Enterprise Management Partnership (Limited Partnership) (hereinafter referred to as "Longxian Partnership") control a total of 9807% of the voting rights and is the actual controller of the company.
From the perspective of senior executives, Yao Xiangjiang and Xu Chunhua served as the chairman and vice chairman of Millennium Dragon Fiber respectivelyYao Xiangjiang's brother-in-law, Chen Hong, served as the company's director, general manager and core technical personnel, and indirectly held the company's shares through Qianhe Investment and Dragon Fiber Partnership.
It is not difficult to see that Millennium Dragon Fiber is a "mom-and-pop shop" with a high concentration of equity, and many of the company's core positions are held by family members.
For IPO companies with "one dominant share", the standardization of corporate governance and the effectiveness of internal control have always been the focus of regulatory review, and the research of Times Business School found that Yao Xiangjiang and Xu Chunhua, the actual controllers of Millennium Dragon Fiber, seem to be particularly keen to cooperate with companies controlled by relatives.
According to the prospectus, during the reporting period, there were a series of complicated related party transactions in Qianxi Dragon Fiber, involving 8 entities including Qianxi Group, Longyou Jupeng Machinery Manufacturing, Longyou Jupeng Machinery Manufacturing, and Qunsheng Group, hereinafter referred to as "Qunsheng Group".
Among them, Longyou Jupeng is an enterprise controlled by Xu Busheng, the father of Xu Chunhua, the actual controller of Millennium Dragon Fiber, Qunsheng Group is an enterprise controlled by Xu Zhufeng, Xu Chunhua's younger brother, and Qianxi Group indirectly holds 15 Millennium Dragon Fiber through Qianxi Automobile08% of the shares, which is a related party of Millennium Dragon Fiber.
According to the prospectus, in each period of the reporting period, Millennium Dragon Fiber purchased electricity from Longyou Jupeng, with an amount of 80310,000 yuan, 76650,000 yuan, 100490,000 yuan, 39590,000 yuan;In the first half of 2023, Millennium Dragon Fiber purchased 5440,000 yuan;In each period of the reporting period, Millennium Dragon Fiber purchased canteen catering services from Qianxi Group, with an amount of 93360,000 yuan, 91930,000 yuan, 123780,000 yuan, 69820,000 yuan.
According to the audit inquiry letter, during the reporting period, in addition to directly purchasing the company's electricity and canteen catering from related parties, there were also a number of related party transactions such as purchasing accommodation services, borrowing funds, and paying water and electricity bills on behalf of each other.
Assets, business, personnel, and finances are all related parties, and the operational independence of Millennium Dragon Fiber may need to be marked with a question mark.
For the above-mentioned related party transactions, in the review inquiry letter, the Beijing Stock Exchange requires Millennium Dragon Fiber to explain the procedural compliance and fairness of the related party transactions with Qianxi Automobile, Qianxi Group, Longyou Jupeng and Qunsheng Group, whether it will continue to occur, whether there are undisclosed related party transactions, and whether there is a situation of disbursement of costs or benefits. At the same time, it explains the foreign investment of the actual controller of the company and his relatives, the position or shareholding of the company, customers, and leading businesses, and the related transactions and intra-industry competition between the relevant enterprises and the company.
At the same time, the Beijing Stock Exchange also requires the sponsor to express a clear opinion on whether the assets, business, personnel, finance, and institutions of Millennium Dragon Fiber are independent, whether there are related party transactions that seriously affect the company's independence or are obviously unfair, or intra-industry competition that has a material adverse impact on the company, and whether there is a transfer of interests.
In response to the complicated problems of the above-mentioned related party transactions, on December 27, Times Business School sent a letter to Millennium Dragon Fiber to inquire.
On December 29, Millennium Dragon Fiber replied that during the reporting period, the company's purchase of electricity from Longyou Jupeng and Qunsheng Group was due to the above-mentioned related party company setting up a distributed photovoltaic power generation system in its factory area, and the surplus electricity after meeting its own consumption can be connected to the Internet**. In order to make rational use of energy, during the reporting period, the company's subsidiary, Longyou Long Fiber New Materials, continued to purchase electricity from Longyou Jupeng, and the company began to purchase electricity from Qunsheng Group in 2023. The company's photovoltaic electricity purchase ** is determined with reference to the on-grid bid price of distributed photovoltaic surplus electricity announced by the Zhejiang Provincial Price Bureau.
The company purchases catering services from Qianxi Group, and the employees of the catering department eat in the canteen of Qianxi Group, and the dining ** is implemented in accordance with the unified standards in the park. The above-mentioned related party procurement is priced according to the market, the transaction is fair, and the company's related party transactions are approved by the board of directors and the general meeting of shareholders, and there is no situation above the free internal control system.
The large ** businessman has 0 people insured but has supplied more than 10 million yuan, and has been included in the list of abnormal operations
In addition to the doubts about the fairness of related party procurement to relatives controlled enterprises, the fairness of the transaction between Millennium Dragon Fiber and a customer and a large **merchant was also questioned by the Beijing Stock Exchange during the reporting period.
Generally speaking, in order to ensure the quality of products and services, enterprises often need to establish a perfect screening mechanism for first-class businessmen, and evaluate first-class suppliers from all aspects such as product quality. However, according to the prospectus, Millennium Dragon Fiber reached a cooperation with Suzhou Feipol Technology, a large businessman, in the year of its establishment.
In each period of the reporting period, the amount of Millennium Dragon Fiber's purchase from Feibol Technology was 237530,000 yuan, 1266310,000 yuan, 706190,000 yuan, 446020,000 yuan, the purchase content is PE powder;In 2021, the proportion of Millennium Dragon Fiber's purchase amount from Feibol Technology will be 1323%, that year, Feipol Technology was the third largest ** business of Millennium Dragon Fiber, but after 2021, Feibo Technology fell out of the list of the top five ** merchants of Millennium Dragon Fiber.
It is worth noting that Tianyancha shows that Feipol Technology was established on April 7, 2020, with a registered capital of 1 million yuan and a paid-in capital of 0 yuan;The legal person is Hua Xiaokang, and its shareholding ratio is 100%;According to the annual report of industry and commerce, from 2020 to 2022, the number of insured people in Feibol Technology is 0.
To sum up, in the year of the establishment of Feibol Technology, Millennium Dragon Fiber purchased more than 2 million yuan of raw materials from this first-class merchant with a paid-in capital of 0 yuan and 0 insured people.
In addition, the audit inquiry letter also shows that in the year (2021), which became the third largest merchant of Millennium Dragon Fiber, Feibol Technology was also included in the list of abnormal business operations by the Suzhou Industrial Park Market Supervision and Administration Bureau because it could not be contacted through the registered residence or business placeIn August 2021 and September 2022, Feipol Technology changed its registered address twice.
There are abnormalities in the paid-in capital, the number of insured people, and the registered address of Feibo Technology, whether it actually carries out business and whether it is a shell companyHow did Millennium Dragon Fiber reach a large cooperation with it in the year of its establishment?Is there an undisclosed relationship between Millennium Dragon Fiber and Feibo Technology?
For the above questions, Times Business School sent a research letter to Millennium Dragon Fiber on December 27 to consult the relevant situation, and on December 29, Millennium Dragon Fiber replied that Feibo Technology is the exclusive supplier of Jiujiang Zhongke Xinxing New Materials, hereinafter referred to as "Jiujiang Xinxing New Materials". The company generally selects 1-2 major suppliers as long-term partners for a raw material to ensure the quality of the company's raw materials and the stability of the channel. There is no affiliation between the Company and Fibertech.
Times Business School consulted public information and prospectus and found that Jiujiang Xinxing New Materials is one of the major domestic manufacturers in the upstream ultra-high molecular weight polyethylene resin industry of Millennium Dragon Fiber, but the prospectus did not disclose whether Millennium Dragon Fiber had direct procurement from Jiujiang Xinxing New Materials;In the prospectus, Millennium Dragon Fiber also did not disclose the purchase price and sales unit price of Feibol Technology, and analyzed the reasonableness and fairness of the relevant pricing.
It should be noted that Feipol Technology is not only the leading supplier of Millennium Dragon Fiber, but also its customer. According to the prospectus, in each period of the reporting period, the purchase amount of Millennium Dragon Fiber from Feibo Technology was 237530,000 yuan, 1266310,000 yuan, 706190,000 yuan, 446020,000 yuan, and the revenue from sales to it was 11070,000 yuan, 66820,000 yuan, 0 yuan, 0 yuan, the sales content is conventional silk.
In response to the above-mentioned abnormal situation of the first business, in the audit inquiry letter, the Beijing Stock Exchange asked Millennium Dragon Fiber to explain the historical evolution and future cooperation plan of cooperation with Feibo Technology, whether the type of products purchased and sold, whether the pricing is reasonable, whether there is an affiliated relationship or potential association with Feibo Technology, whether there is capital occupation or benefit transfer, etc.
The Beijing Stock Exchange also requires Millennium Dragon Fiber to explain in detail the background and reasonableness of the overlap of customers during the reporting period, whether there is the same purchase and sales content to the same partner, if so, analyze the necessity, reasonableness and fairness of the transaction, whether there is a situation where the company pays costs or adopts unfair transactions to provide economic resources to the company, and whether there are other benefit arrangements.
Under the fluctuation of performance and the high pressure of debt repayment, a large amount of dividends were paid, and 50 million yuan was raised to make up the flow
In fact, this IPO is not the first time that Millennium Dragon Fiber has hit the capital market. As early as July 2020, Millennium Dragon Fiber had submitted a listing application on the GEM, but on December 10 of that year, the company voluntarily withdrew its listing application, and the specific reason is unknown. On August 23, 2022, Millennium Dragon Fiber was officially listed on ***.
Looking at the financial data in the two declarations, it can be found that the operating performance of Millennium Dragon Fiber in recent years has been extremely unstable and has fluctuated significantly.
According to the prospectus at the time of the IPO of the Millennium Dragon Fiber Growth Enterprise Market, from 2017 to 2019, the operating income of Millennium Dragon Fiber was 11.3 billion yuan, 17.2 billion yuan, 23.4 billion yuan, and the year-on-year growth rate from 2018 to 2019 was respectively. 05%；From 2017 to 2019, the net profit deducted from non-attributable to the parent company was 3170570,000 yuan, 2877720,000 yuan, 6761780,000 yuan, and the year-on-year growth rate from 2018 to 2019 was respectively. 97%。
According to the prospectus of the IPO of the Beijing Stock Exchange, during the reporting period (2020 to the first half of 2023), the operating income achieved by Millennium Dragon Fiber was 16.7 billion yuan, 1800 million yuan, 37.4 billion yuan, 18.6 billion yuan, with a year-on-year growth rate of . 73%；During the same period, the company's net profit deducted from non-attributable to the parent was 744940,000 yuan, 251360,000 yuan, 7249280,000 yuan, 4042060,000 yuan, the year-on-year growth rate was respectively. 06%。
Millennium Dragon Fiber also admitted in the prospectus that at the beginning of the reporting period, affected by the adverse effects of global public health events, the international environment and the macroeconomic situation, the downstream demand for the company's main products was at a low level, and with the gradual improvement of related unfavorable factors during the reporting period, the downstream demand was released, and the company's performance improved significantly. For example, the occurrence of major global emergencies in the future, major changes in industry policies, the update and iteration of industrial technology, the sharp fluctuation of raw materials, and the further intensification of industry competition and other external conditions may have a significant impact on the company's operation, resulting in a decline in the company's operating performance.
The gross profit margin of Millennium Dragon Fiber also fluctuated a lot, and during the reporting period, the comprehensive gross profit margin of Millennium Dragon Fiber was as follows. 93%, down 22. year-on-year51, down 499, up 1684, up 325 percentage points;The average gross profit margin of comparable companies in the same industry during the reporting period was as follows. 05%。
For the sharp decline in gross profit margin in 2020 and 2021, Millennium Dragon Fiber attributed it in the prospectus mainly due to various factors such as global public health events, the international environment, and intensified market competition.
It can be seen that although the gross profit margin of Millennium Dragon Fiber has shown an upward trend, the gross profit margin has always been lower than the average of comparable peers. And compared with its peers, the anti-risk ability of Millennium Dragon Fiber seems to be relatively limited.
In addition, the prospectus shows that at the end of 2022, the monetary funds on the books of Millennium Dragon Fiber were 3719270,000 yuan, corresponding to a short-term loan of 450535 yuan;However, by the end of the first half of 2023, the company's monetary funds were only 507050,000 yuan, but the short-term loan is as high as 7003830,000 yuan, and all of them are mortgage loans, and the debt repayment pressure has increased sharply.
Although faced with fluctuating performance and high debt pressure, the dividend willingness of the actual controller of Millennium Dragon Fiber does not seem to have been greatly affected.
According to the prospectus, during the reporting period, Millennium Dragon Fiber will pay cash dividends of 4998 in 2022600,000 yuan, cash dividend of 5124 in the first half of 2023600,000 yuan, with a cumulative dividend of 10.1 billion yuan;The company submitted its prospectus in November 2023, and there are suspected signs of pre-IPO surprise dividends.
In 2022 and the first half of 2023, the total net profit attributable to the parent company of Millennium Dragon Fiber will be 12.3 billion yuan, so 1The dividend amount of 0.1 billion yuan accounts for the sum of the cumulative net profit of the current period as high as 8211%。
From the perspective of equity structure, it can be seen from the above that the actual controllers of Millennium Dragon Fiber, Yao Xiangjiang and Xu Chunhua, directly hold 7137% equity, which means 10.1 billion yuan in dividends of 7224930,000 yuan belongs to the husband and wife of the actual controller.
It is worth noting that in this IPO, Millennium Dragon Fiber also plans to raise 0500 million yuan is planned to be used to supplement liquidity, accounting for 4The proportion of 5.1 billion yuan was 1109%。
The front foot chose to pay surprise dividends during the reporting period, but the back foot planned to go public to raise funds to replenish the flow, and the necessity and rationality of the IPO fundraising of Millennium Dragon Fiber could not help but cause people to think deeply.
References: 1"Zhejiang Millennium Dragon Fiber Special Fiber Co., Ltd. Initial Public Offering** and Listing Prospectus (Declaration Draft)".The official website of the Shenzhen Stock Exchange.
2."Zhejiang Millennium Dragon Fiber Special Fiber Co., Ltd. Prospectus (Declaration Draft)".The official website of the Beijing Stock Exchange.
3."Letter of Inquiry on the Review of the Application Documents for the Public Offering of Zhejiang Millennium Dragon Fiber Special Fiber Co., Ltd. and Listing on the Beijing Stock Exchange".The official website of the Beijing Stock Exchange.
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