The subsidiary's profit exceeds that of the parent company.
Author: Zheng Minfang.
Editor: Songgully.
On December 14, Hangzhou Qianyang Technology Co., Ltd. *** (hereinafter referred to as "Qianyang Technology") submitted an IPO application to the Beijing Stock Exchange.
It is worth mentioning that the company Nature (834019NQ) is the controlling shareholder of Qianyang Technology, holding 7535% stake.
Up to now, this is the first case in the whole market in which a company "split" a subsidiary to be listed on the Beijing Stock Exchange.
It is worth mentioning that the profits of Qianyang Technology have surpassed that of nature.
From 2020 to 2022, the net profit attributable to the parent company of Qianyang Technology was 07 billion yuan, 06.5 billion and 14.3 billion yuan, according to the proportion of nature's shareholding, Qianyang Technology's net profit attributable to the parent company in nature reached. 77% and 14896%。
This is also the core controversy of Qianyang Technology's IPO - Qianyang Technology's profit contribution of more than 100% in the "nature" of the company has exceeded the 50% red line in the "Spin-off Rules for Listed Companies (Trial)" (hereinafter referred to as the "Spin-off Rules").
Trade Winds (ID: tradewind01) learned that when Qianyang Technology sprinted to the GEM but failed, the regulator pointed out that the listed entity, as the controlling shareholder, naturally "has the characteristics of a listed company", so it is necessary to refer to the relevant requirements of the spin-off rules.
Judging from the practical cases, although the "A Split" can currently be exempted from the requirements of the spin-off rules, the situation of Qianyang Technology supporting the profit level of nature may still bring the risk of "hollowing" to the parent company, and whether this will become the IPO controversy of Qianyang Technology is attracting attention.
The first case of "demolition" went to the north
In March this year, Qianyang Technology applied for listing and submitted an IPO application to the Beijing Stock Exchange on December 14.
As the controlling shareholder of Qianyang Technology, Nature also holds 7535% stake.
This is a case of a first-class company "splitting" a subsidiary to IPO on the Beijing Stock Exchange, which is the first case in the capital market.
This may have attracted much attention to the IPO of Qianyang Technology.
As an enterprise engaged in the production of organic ester fine chemicals, Qianyang Technology's performance has been large-scale.
From 2020 to 2022, Qianyang Technology's revenue was 40.5 billion yuan, 53.2 billion and 80.1 billion yuan, and the net profit attributable to the parent company in the same period was 07 billion yuan, 06.5 billion and 14.3 billion yuan.
Qianyang Technology has indeed had a past of sprinting to Shanghai and Shenzhen.
At the end of 2020, Qianyang Technology submitted an IPO application to the Shenzhen Stock Exchange under the sponsorship of Minsheng**, and after more than 1 year, Qianyang Technology finally withdrew its IPO application.
The main reason for the defeat was precisely the company's suspected IPO spin-off, and the lack of corresponding rules to apply.
According to the audit information, the regulatory authorities believe that although the parent company Nature is listed but has the characteristics of a listed company, the IPO of Qianyang Technology needs to refer to the spin-off rules, and the proportion of Qianyang Technology in Nature has exceeded the requirements of the "spin-off red line".
Qianyang Technology, a subsidiary of Nature Holdings, applied for the IPO of the GEM in December 2020, and after inquiry, the Shenzhen Stock Exchange asked the Issuance Department of the Securities Regulatory Commission for instructions on the listing of the subsidiary, and based on prudent considerations, it was suggested that Nature has the characteristics of a listed company, and the listing of its subsidiary on the GEM is recommended to refer to the "Rules for the Spin-off of Listed Companies (Trial)". As a result, Qianyang Technology withdrew its GEM IPO application in January 2022. Qianyang Technology explained.
This also means that the issue of suspected spin-offs still exists in this IPO application.
According to the spin-off rules, the net profit of the subsidiary to be spun off on equity in the consolidated statements of the listed company in the most recent fiscal year shall not exceed 50% of the net profit attributable to shareholders of the listed company.
Trade Winds (ID: tradewind01) follows nature to Qianyang Technology 75The 35% shareholding ratio measures the proportion of performance, and from 2020 to 2022, the proportion of Qianyang Technology's revenue to nature will be reached. 42% and 6829%, and the proportion of net profit attributable to the parent company in nature in the same period was respectively. 77% and 14896%。
Judging from the performance proportion data, Qianyang Technology is undoubtedly the core asset of nature.
This means that once Qianyang Technology is successfully listed, the nature of the listed company may become an "empty shell" holding a listed company.
This undoubtedly brought potential controversy to the IPO of Qianyang Technology.
For Qianyang Technology, the ideal choice for IPO may not be "flying solo", but directly taking nature as the subject of IPO declaration, so as to bypass the requirements of the spin-off rules.
But the embarrassing reality is that nature doesn't meet the listing rules.
On the one hand, Nature also has business segments such as auto finance and insurance service products, which are all subordinate to the negative list of IPOs on the Beijing Stock Exchange, and the average return on equity of Nature in 2020 and 2021 is only that. 93%, which is lower than the minimum requirement of 8% on the Beijing Stock Exchange.
At the same time, Qianyang Technology also said that the historical evolution of nature is complex, the number of shareholders has exceeded 4,000, and the situation that a small number of shareholders have not completed the confirmation of share rights still needs a long time to solve.
In view of the complexity of the historical evolution, nature has fully considered the historical situation and the current situation of the company, and it still takes a long time to declare the IPO by itself. Qianyang Technology said.
In a dilemma, nature's "curve IPO" goal can indeed only be achieved through Qianyang Technology.
Judging from the actual case, the IPO of the Beijing Stock Exchange has not yet referred to the spin-off rules. For example, there were previously Hualing shares (430139BJ), Zhongke Meiling (835892BJ) and other companies that do not meet the conditions for spin-off have successfully landed on the Beijing Stock Exchange.
This may allow nature to see the possibility of spinning off its subsidiary, Qianyang Technology, to go public.
But with the solo flight of Qianyang Technology, nature has become an empty shell. This may also be the controversy that Qianyang Technology has to face in this IPO.
This proportion is indeed not low, and the profits of subsidiaries have exceeded those of the parent company. If the company listed on the stock market has the characteristics of a listed company, then whether this spin-off is feasible on the Beijing Stock Exchange may still be controversial. An investment banker in Shanghai pointed out.
Profits fell by more than 4%.
The core products of Qianyang Technology are TOP (trioctyl phosphate), DMP (dimethyl phthalate), and DEP (diethyl phthalate).
As a raw material for peroxides, pesticides, rubber and titanium dioxide extractants, TOP is the main revenue of Qianyang Technology**.
From 2020 to 2022, the revenue brought by TOP to Qianyang Technology was 23.9 billion yuan, 29.3 billion yuan and 50.5 billion yuan, accounting for respectively. 18% and 6311%。
Among them, the year-on-year increase in TOP revenue in 2022 is as high as 7235%。
This is also due to the additional purchase of Qianyang Technology by Syngenta, one of the top five customers. In 2022, Syngenta purchased 27 billion yuan of TOP, accounting for 53 percent of TOP sales47%。
Syngenta's demand has increased significantly compared with 2021, on the one hand, Brazil, as a major agricultural country, has increased soybean production, and the demand for Syngenta's related pesticide products has expanded, and on the other hand, the Russia-Ukraine war and the European energy crisis have affected the production of Syngenta's other top company, the German LANXESS Group, and Syngenta has increased the stocking cycle of raw materials to increase the purchase volume. Qianyang Technology explained.
However, geopolitics is only an occasional factor after all, and with the easing of the situation, the overall performance of Qianyang Technology has shrunk significantly since the beginning of this year.
In the first half of 2023, Qianyang Technology's revenue and net profit attributable to the parent company will be 27.2 billion yuan, 04 billion yuan, a year-on-year decline. 86%。
At the same time, the unit price of Qianyang Technology's TOP products has also shrunk significantly, with an average sales price of 2 in the first half of 2023640,000 tons, down 1239%。
Qianyang Technology also admitted that terminal demand has slowed down.
Since 2023, with the year-on-year decline in downstream demand and the continued decline of the main raw material octanol**, the company's TOP sales** have also declined. Qianyang Technology said.
In this context, Qianyang Technology is looking for new growth points.
In this IPO, Qianyang Technology plans to invest 13.1 billion yuan will be used for the construction of the "annual output of 43,000 tons of environmentally friendly new materials project".
"Environmentally-friendly new materials" involves silicone resins (silicones), which are the main components of insulating agents and water-repellent agents.
Whether the road to expanding environmentally friendly new materials can be carried out, the market is waiting to see.