In the process of this IPO, Dijia Pharmaceutical's plan to replenish liquidity and repay bank loans by raising funds has attracted widespread attention from regulators and investors.
Li Lu, a researcher at the Investment Times.
Active pharmaceutical ingredient (API) is the raw material for the production of pharmaceutical preparations, which have certain pharmacological activity or other direct pharmacodynamic effects in the diagnosis, symptom relief and prevention of diseases, and can be further processed to form pharmaceutical preparations for patients. Pharmaceutical intermediates refer to chemical raw materials or chemical products used in the synthesis process of chemical APIs, both of which are important links in the chemical production chain.
Dijia Pharmaceutical Group Co., Ltd. (hereinafter referred to as Dijia Pharmaceutical) is an enterprise engaged in the research and development, production and sales of APIs and pharmaceutical intermediates. The company's main API products include loxoprofen sodium, telmisartan, febuxostat, levamlodipine besylate, fodosteine, etc., which mainly include musculoskeletal system, cardiovascular system, digestive tract and metabolism, respiratory system and nervous system products according to the action site and mechanism of downstream preparations.
As a pharmaceutical R&D company, Dijia Pharmaceutical has recently launched an impact on the Growth Enterprise Market (GEM) and has completed the first round of inquiry responses. According to the prospectus information, in this IPO, Dijia Pharmaceutical intends to raise 63.1 billion yuan, of which 35.5 billion yuan for the second phase of the industrialization project of high-end API green process, 12.5 billion yuan for the construction project of the R&D center, and the remaining 1$500 million will be used to replenish working capital and repay bank loans.
In this fundraising, the company's plan to replenish liquidity and repay bank loans through raised funds has attracted widespread attention from regulators and investors. Because in the past three years, the company has paid a large amount of cash dividends, and while dividing the working capital while raising funds to replenish the flow, its fundraising intention has to make the market suspicious. In addition, Dijia Pharmaceutical also has operational problems such as large customers are also shareholders and the qualifications of ** merchants are doubtful.
In response to the above situation, the researcher of "Investment Times" emailed the communication outline to the relevant departments of Dijia Pharmaceutical for inquiry, and the company replied that it was inconvenient to accept an interview due to the quiet period of listing.
The controlling shareholder is a major customer
According to the data disclosed in the prospectus, from 2020 to 2022 and in the first half of 2023 (hereinafter referred to as the reporting period), Dijia Pharmaceutical achieved operating income of 30.7 billion yuan, 37.4 billion yuan, 51.5 billion and 26.4 billion yuan;In the same period, the net profit was 5801790,000 yuan, 6998740,000 yuan, 11.5 billion and 490240,000 yuan, and the overall revenue and profit are on the rise. However, the company's gross profit margin level is not very stable, and the reporting period is respectively. 23% and 4515%。
Behind the revenue growth, the company's revenue** is worth paying attention to. According to the prospectus, in each period of the reporting period, the company's revenue from the top five customers accounted for the proportion of total revenue. 68% and 4556%, showing an upward trend. Not only that, in the list of the top five customers in each period, Disha Group appears frequently.
Disha Group is the controlling shareholder of Dijia Pharmaceutical, and directly holds 4716% stake. In each period of the reporting period, the sales amount of Dijia Pharmaceutical to Disha Group was 3636620,000 yuan, 4170720,000 yuan, 4859590,000 yuan and 2778940,000 yuan, accounting for about the proportion of revenue. 43% and 1054%。Overall, except for Disha Group, which is the second largest customer of Dijia Pharmaceutical in 2020, Disha Group is the company's largest customer in the rest of the periods. In other words, there are a large number of related party transactions between the two, and Dijia Pharmaceutical's income is more dependent on the controlling shareholder.
The above-mentioned related party transactions have also attracted regulatory attention, and the Shenzhen Stock Exchange asked Dijia Pharmaceutical to explain the fairness of the related party transactions between the company and Disha Group** in the inquiry letter. Dijia Pharmaceutical explained that Disha Group is mainly engaged in the research and development, production and sales of chemical preparations, which belongs to the company's downstream industries. During the reporting period, DISHA Group purchased raw materials from the company in accordance with the production plan, and strictly implemented the inventory of raw materials, and the relevant related party transactions were carried out in a reasonable market.
In fact, the connection between Dijia Pharmaceutical and Disha Group is more than that. During the reporting period, Dijia Pharmaceutical also leased real estate from Disha Group for production, R&D and office, and the amount of related party transactions was 195440,000 yuan, 127090,000 yuan, 156460,000 yuan and 67050,000 yuan.
When it comes to the customer problems of Dijia Pharmaceutical, we should also pay attention to the overlap of customers and suppliers. For example, the company also sells to Smruthi Organics Ltd., a well-known Indian manufacturer of APIs and pharmaceutical intermediatesPurchases and sales were carried out, and the purchase amount in 2021 was 499030,000 yuan, the sales amount is 270050,000 yuan. In 2022, the purchase amount and sales amount were 946730,000 yuan and 374630,000 yuan. In this regard, Dijia Pharmaceuticals said, Smruthi Organics LtdAs a listed company on the Mumbai ** Exchange, the company has established a cooperative relationship with it since 2019, and the amlodipine base purchased from it is the main raw material of the company's main product, levamlodipine besylate, and the product to it is the product of dimidazole.
Except Smruthi Organics LtdIn addition, the companies that are both customers and businessmen of Dijia Pharmaceutical also include Zhuhai Rundu Pharmaceutical Co., Ltd., Zhejiang Huahai Pharmaceutical Co., Ltd., 600521SH) and its subsidiaries, Yantai Zhishu Pharmaceutical and Chemical Industry, Lianyungang Kaisheng Chemical, Emeishan Hongsheng Pharmaceutical Co., Ltd., etc. In view of the overlap between the customer and the businessman, the Shenzhen Stock Exchange also requires Dijia Pharmaceutical to explain from the perspectives of "purchase amount", "whether the overlap between the customer and the businessman is a common situation in the industry", and "whether the relevant transaction is fair".
In addition, the qualification of Dijia Pharmaceutical's first-class business is more worthy of attention. According to the prospectus, in each period of the reporting period, the total purchase amount of Dijia Pharmaceutical to the top five ** merchants accounted for the proportion of total procurement. 53% and 3478%, there is a certain concentration. In the list of the top five companies in each issue, there are several companies that need attention.
The Shenzhen Stock Exchange mentioned Shenyang Borui Biomedical Technology Co., Ltd. in the inquiry, hereinafter referred to as Shenyang Borui), the company became an important business of Dijia Pharmaceutical in the following year, according to the company's investigation information, the number of insured people in the company is only 1. Dijia Pharmaceutical said in its reply to the inquiry that the company confirmed through interviews that the person in charge of Shenyang Borui has been engaged in the pharmaceutical industry for nearly 18 years and has relatively senior experience, so although Shenyang Borui has been established for a short time, it has the ability to trade with the company.
In 2022 and the first half of 2023, Taizhou Deyue Biotechnology, one of the top five largest companies in Dijia Pharmaceutical, was established in 2020, and the enterprise check information shows that the paid-in capital is 0 and the number of insured people is 4. The company's cooperation with Dijia Pharmaceuticals began in 2021. In addition, Weihai Chenransheng Chemical Co., Ltd. was established in 2019, and began to cooperate with Dijia Pharmaceutical in the year of its establishment, and became the company's fourth largest businessman in 2021Nanjing Zhongming Pharmaceutical Technology Co., Ltd. was established in 2018, and began to cooperate with Dijia Pharmaceutical in the second year of its establishment, and became the fifth largest business of Dijia Pharmaceutical in 2020.
It can be seen that many of the important first-class merchants of Dijia Pharmaceutical Co., Ltd. cooperated with the company in the year of establishment or the following year, and this kind of situation is very easy for the market to question the rationality and sustainability of its transactions, and has attracted attention.
Raise funds to repay debts after large dividends
According to the prospectus, Dijia Pharmaceutical has increased its capital twice within one year of applying for listing on the GEM. The first time was in October 2022, and the capital increase added 16 natural person shareholders, with a capital increase of 1 yuan**, and these natural person shareholders all hold shares in the Disha Group, that is, the capital increase is only for internal investors;The second time was in December of the same year, the employee stock ownership platform Xindiya invested in the first 3 yuan of shares.
It should be noted that according to the capital increase**, after the two capital increases, the company's market value is 3600 million yuan and 108.2 billion yuan, which may mean that the company's market value has increased nearly 2 times in less than half a year. According to the amount of funds to be raised and the number of funds to be issued in this IPO, the company's market value may reach about 3 billion yuan after listing, an increase of nearly 2 times in one year.
In addition, it can be seen from the data disclosed in the prospectus that Dijia Pharmaceutical has paid a large amount of cash dividends in the three years from 2020 to 2022, with a cumulative dividend of 2200 million yuan, which is close to the net profit realized in three years. Among them, the dividend in 2022 will be the largest, with a dividend amount of 200 million yuan. So, these dividends are used in **?One of them invested in or helped shareholders increase their capital.
Dijia Pharmaceutical said that when it introduced shareholders by way of capital increase in October 2022, in order to provide loans to 16 natural person shareholders such as Wang Dejun, Wang Linjia, and Duo Yueying, the company paid a dividend of 200 million yuan that year. This unusual operation also led the Shenzhen Stock Exchange to ask Dijia Pharmaceutical to explain the identity of the relevant shareholders of the capital increase, the reason and reasonableness of the funds to the company's related parties, the reasonableness of the 16 natural persons who borrowed the capital increase, and the fund repayment arrangement.
Dijia Pharmaceutical explained the above situation in its reply to the inquiry. The company said that before the capital increase, Dijia Pharmaceutical had two corporate shareholders, Disha Group and Disha Group Shandong Marketing Company, and the 16 natural person shareholders who penetrated planned to increase their capital to the company by 1600 million yuan to achieve direct shareholding. However, due to the limited personal funds, it distributed dividends to Disha Group through Dijia Pharmaceutical, and borrowed money from Disha Group through natural persons.
However, in order to alleviate the financial pressure, 16 natural person shareholders turned to Femia, which is 100% owned by Disha Investment, the controlling shareholder of Disha Group. The way to achieve this is that Disha Group will distribute dividends to Disha Investment, Disha Investment will increase its capital in Fimiya, and 16 natural persons will borrow money from Fimia to repay Disha Group's loans. This series of operations is truly dizzying.
Up to now, 16 natural persons have repaid 10 million yuan of principal to Femiaria, and the remaining 1500 million yuan principal. Dijia Pharmaceutical said in the inquiry reply letter, 1The principal of 500 million yuan will be repaid through dividends, personal salaries and other income of Dijia Pharmaceutical, Disha Investment, Disha Group and other companies.
After distributing a large amount of cash to help natural person shareholders increase their capital, Dijia Pharmaceutical began to raise funds externally, and in 2022, the company's short-term borrowings increased from 0 at the end of 2021 to 6273190,000 yuan. The company's solvency has also been greatly affected, and in 2022, Dijia Pharmaceutical's asset-liability ratio will increase from 20 in the same period last year42% to 2711%。The short-term solvency ratio is also lower than the industry average, further widening the gap, and the company's quick ratio in 2022 is less than half of the industry average.
In this IPO, the company wants to raise 1$500 million will be used to replenish the flow and repay the loan. According to Article 7 of the Guidelines for the Supervision of Listed Companies No. 2 - Regulatory Requirements for the Management and Use of Funds Raised by Listed Companies (Revised in 2022), "in principle, the funds raised by listed companies shall be used for their main business". Therefore, for Dijia Pharmaceutical's plan to directly repay the bank loan of 50 million yuan of the raised funds, I don't know whether it can finally pass the review.
Comparison of the debt repayment indicators of Dijia Pharmaceutical and comparable companies in the same industry
Data**: Company Prospectus.