This article**: Times Business School Author: Chen Lina.
* |Times Business School.
Author |Lina Chen.
Edit |Chen Jiaxin.
During the critical period of the IPO, it was warned by the China Securities Regulatory Commission (CSRC) and clearly notified that its net profit was incorrectly reported, and the listing prospect of Jiangsu Shengan Transmission Co., Ltd. (hereinafter referred to as "Shengan Transmission") was unclear.
According to the official website of the China Securities Regulatory Commission, on January 2, the Jiangsu Securities Regulatory Bureau conducted an on-site inspection of Shengan Transmission. After investigation, Shengan Transmission reported net profit incorrectly in the accounting process due to problems such as cross-period recognition of revenue, inaccurate subsidy accounting methods, inaccurate provision for impairment of long-term receivables, and inaccurate measurement of inventory and main business costs. As a result of this incident, there were inaccurate information disclosures in the 2020 annual report, 2021 annual report, 2022 annual report, and 2022 semi-annual report.
According to the Beijing Stock Exchange, Shengan Transmission has received the third round of inquiry letters from the Beijing Stock Exchange and is in the critical period of IPO.
In addition to the inaccurate net profit data, Shengan Transmission has also fallen into the dilemma of being lowered by large customers and cutting orders, and its revenue has continued to decline since 2022.
In terms of business, Sheng'an Transmission has 0 people participating in the insurance of many large ** businessmen, suspected of shell companies, and some ** businessmen were promoted to the top five ** business list in the year of their establishment. It is also worth paying attention to the fact that some related party procurement** is significantly lower than that of non-related procurement.
By large customers to reduce prices and cut orders, the performance continued to decline
According to the prospectus, Shengan Transmission specializes in the research and development, production and sales of gear and CNC gear machine tool products, including various types of gears and CNC gear machine tools. During the reporting period (2020-2023 first half of 2023), the company's performance was like a roller coaster.
In 2021, Shengan Transmission's performance was outstanding, with a year-on-year increase of 5023%, net profit increased by 287 year-on-year73%, and the subsidiaries it acquired the previous year contributed to it.
In 2020, Shengan Transmission wholly acquired Yancheng Qinchuan Huaxing Machine Tool (hereinafter referred to as "Huaxing Machine Tool"), and the performance of Huaxing Machine Tool was significantly improved the following year.
According to the prospectus, from 2020 to the first half of 2023, Huaxing Machine Tool will achieve revenue of 3021590,000 yuan, 7005270,000 yuan, 5340180,000 yuan, 1682940,000 yuan, and the year-on-year growth rate of revenue from 2021 to 2022 will be 13184%、-23.77%；From 2020 to the first half of 2023, the company achieved a net profit of -662670,000 yuan, 1336240,000 yuan, 1180670,000 yuan, 197380,000 yuan.
In 2021, the revenue and net profit of Huaxing Machine Tool accounted for the proportion of Sheng'an Transmission's revenue and net profit respectively. 82%, up from 12. in 202064%、-14.94% has increased significantly, which will drive the performance growth of Shengan Transmission in 2021.
In the first three quarters of 2020-2023, Sheng'an Transmission's operating income was 19.7 billion yuan, 29.7 billion yuan, 23.9 billion yuan, 14.9 billion yuan, the year-on-year growth rate of revenue was respectively. 23%、-19.37%、-4.19%；The net profit for the same period was 1238620,000 yuan, 4802450,000 yuan, 4434480,000 yuan, 2118650,000 yuan.
Since 2021, Shengan Transmission's performance has continued to decline.
In the first round of inquiry letters, the exchange asked Shengan Transmission to explain the specific reasons for the decline in performance, and whether the change in performance is consistent with the trend of change in comparable companies.
According to the prospectus, Shengan Transmission belongs to the gear industry, the downstream market is mainly in the field of construction machinery and CNC machine tools, and the terminal application market includes automobiles, real estate, wind power, etc.
In the reply to the first round of inquiry letters, Shengan Transmission said that the areas of decline in performance are mainly in the field of construction machinery and CNC machine tools, mainly because the overall macroeconomic situation is at a low level, and the prosperity of many downstream industries of the company is not high. In addition, affected by the decline in the start of projects in the fields of infrastructure and real estate and the tight financial situation, the market demand of the domestic construction machinery industry continued to decline.
However, the first round of inquiry letters shows that from 2011 to 2022, the market size of the gear industry where Shengan Transmission is located has maintained a stable growth trend, with a compound annual growth rate of 577%。
Although Shengan Transmission said that the decline in performance was affected by the low downstream prosperity, the market size of the gear industry in which it is located is still stable and upward. As can be seen from Figure 1, in 2022, the market size of the gear industry will reach 330 billion yuan, a year-on-year increase of 5%, while the operating income of Shengan Transmission will decline by 19% year-on-year in the same period37%, which is clearly contrary to the industry trend.
While revenue is declining, the gross profit margin of Shengan Transmission has also shown a downward trend since 2022. From 2020 to the first three quarters of 2023, the gross profit margins of Shengan Transmission were: 12%。
Specifically, during the reporting period, the gross profit margin of many major businesses of Shengan Transmission declined significantly.
According to the prospectus, the main business of Shengan Transmission is divided into six categories: construction machinery, automobiles, gear processing, textiles and others, gear development, and wind power. In 2022, the gross profit margin of the construction machinery business, which accounted for 38% of revenue, will drop to 835%, while in 2020 and 2021, the gross profit margin of this business is relatively stable, respectively. 77%。
In 2022, the automotive business accounted for 3034%, with a gross margin of 1589%；In 2020 and 2021, the gross profit margin of this business will be respectively. 79%。
In addition, compared with the gross profit margin in 2020, the gross profit margin of gear processing in 2022 decreased by 353 percentage points, the gross profit margin of textile and other businesses decreased by 1306 percentage points.
The gross profit margin of the wind power business even turned from positive to negative. From 2020 to 2022, the gross profit margin of the wind power business was as follows: 04%、-9.00%。
On the whole, five of the six major businesses of Shengan Transmission have a decline in gross profit margin.
Sheng'an Transmission's performance and gross profit margin declined simultaneously, or related to reduced sales. According to the first round of inquiry letters, Shengan Transmission said that downstream customers for cost control considerations, in the commercial negotiations with the company usually have a certain demand for price reduction, the company in consideration of the market competition environment, production costs, within the acceptable product gross profit range, will be by reducing the product ** to enhance the competitiveness of products.
In 2022, Ningbo Dongli Transmission Equipment, the largest customer of Shengan Transmission, will purchase from Shengan Transmission in order to reduce costs. From November 2022, in order to cooperate with Ningbo Dongli's procurement adjustment, Shengan Transmission has reduced the price of its ** products by about 10%.
In addition, Jiangsu Guomao Reducer Co., Ltd. (hereinafter referred to as "Guomao Co., Ltd.") is the largest customer of Shengan Transmission in 2020 and the second largest customer in 2021. Sheng'an Transmission said that Guomao's own performance pressure is greater, in order to reduce costs to reduce the purchase of business, the company considers its long-term cooperative relationship to accept some product concessions.
In 2022, the top ten products sold by Shengan Transmission to Guomao Co., Ltd. will be reduced by about 15%. But even so, Sheng'an Transmission was still cut by Guomao shares. In 2022, ITG reduced its purchases from Shengan Transmission and withdrew from the top five customers. In this regard, Shengan Transmission explained that it is related to the transformation of products sold to Guomao shares in 2022 into low-end products.
Times Business School found that the reason behind the order cut was actually related to the customer's own production of gears. The first round of inquiry letters shows that in 2022, Guomao's gear fundraising project will be gradually put into production, and the purchase volume of Sheng'an Transmission will gradually decrease.
Shengan Transmission's capacity utilization rate also declined sharply in 2022. In 2021, the capacity utilization rate of the two major business gears and CNC gear machine tools will be: 71%, which fell to in 2022. 1%。
Not only was the price reduction and order reduction by large customers, but the customer payment collection situation of Shengan Transmission also deteriorated.
At the end of each period in the first three quarters of 2020-2023, the accounts receivable of Shengan Transmission were 7483230,000 yuan, 9257160,000 yuan, 11879270,000 yuan, 11921820,000 yuan, and the accounts receivable turnover rate from 2020 to 2022 is 314 years, 354 years, 226 times. At the end of 2022, the company's accounts receivable outside the credit period accounted for 5312%。
A number of large ** businessmen are suspected of shell companies, and the related procurement ** is low
In terms of business, among the top five ** merchants in the reporting period of Sheng'an Transmission, there are a number of suspected shell companies.
From 2020 to 2022, Shengan Transmission's procurement volume of the top five ** merchants accounted for respectively. 27%。
Tianyancha's data shows that the first largest business of Sheng'an Transmission in 2022 is Yuhuan County Gangtai Transmission Machinery, and the second largest business in 2022 is Yancheng Mingchi Machinery Manufacturing, and the first largest business in 2020 is Shandong Xinke Auto Parts***, but the number of insured people in the three companies in 2022 is 0.
Yancheng Ruichi Gear Manufacturing Co., Ltd. (hereinafter referred to as "Ruichi Gear") was established in early 2020, and was among the top five largest merchants of Sheng'an Transmission in the year of its establishment, and was promoted to the first largest supplier in 2021. However, in 2021, the number of insured people in this ** business is also 0. It is worth mentioning that Ruichi Gear is a related party of Sheng'an Transmission and is controlled by Zhou Gaoling, the younger brother of Zhou Yegang, the actual controller of Sheng'an Transmission.
Sheng'an Transmission's fourth largest business in 2021 is Jiangsu Runju Materials***, hereinafter referred to as "Jiangsu Runju"), which was established in 2019 and has no paid-in capital. The 2022 annual report shows that only one person in the company is insured. In 2021, Shengan Transmission purchased 1041030,000 yuan, mainly purchasing 20crmnti steel.
The same 20crmnti steel, the average unit price of Sheng'an Transmission's purchase from Jiangsu Runju is significantly higher than that of another **merchant, Wuxi Huaisen Materials, hereinafter referred to as "Wuxi Huaisen"). In 2021, the average unit price of 20crmnti steel purchased by Shengan Transmission from Jiangsu Runju and Wuxi Huaisen was 534867 yuan ton, 473929 yuan ton. Although the procurement is high, in 2022, Jiangsu Runju will still become the only supplier of Sheng'an Transmission's 20crmnti steel.
In addition to raw materials, for some outsourcing services, the unit price gap between Shengan Transmission's affiliated and non-affiliated suppliers is also large.
From 2020 to 2022, the unit price of Shengan Transmission purchasing fine car outsourcing processing from related parties was 098 yuan kg, 112 yuan kg, 105 yuan kg, the unit price of purchasing from non-related parties is 110 yuan kg, 118 yuan kg, 146 yuan kg, the purchase unit price of related parties in each period is lower than that of non-related parties.
References] 1"Jiangsu Securities Regulatory Bureau on Jiangsu Sheng'an Transmission Co., Ltd. to take measures to issue a warning letter".The official website of the Securities and Futures Commission.
2."Jiangsu Shengan Transmission Co., Ltd. Prospectus (Declaration Draft)".The official website of the Beijing Stock Exchange.
3."Inquiry Letter on the Review of Application Documents for the Public Offering of Jiangsu Shengan Transmission Co., Ltd. and Listing on the Beijing Stock Exchange".The official website of the Beijing Stock Exchange.
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