After 371 days of waiting, Sinolong New Materials Co., Ltd. is hereinafter referred to as "Sinolong New Materials"."Zhonglun New Materials"The IPO application has only just moved forward to the registration process with the Securities and Futures Commission.
From the submission of the listing application materials on May 25, 2022 to the official review of the Shenzhen Stock Exchange, it took only 7 months for Sinolong New Materials to be reviewed by the Shenzhen Stock Exchange, but what it did not expect was that its subsequent IPO road would be so long, and it took 12 months to wait only for the registration process.
As early as December 30, 2022, at the 89th review meeting of the GEM in 2022 held by the Shenzhen Stock Exchange, the IPO of Sinolong New Materials was successfully obtained"Meet the issuance conditions, listing conditions and information disclosure requirements"At this time, Sinolong New Materials, which had just been recognized by the Shenzhen Stock Exchange, should not have expected that it would take so long to submit for registration.
In the more than 12 months from the meeting to January 5, 2024, the registration of Sinolong New Materials' IPO has been stagnant and has not progressed.
Fortunately, 12 months after passing the review of the Shenzhen Stock Exchange, on January 5, 2024, Sinolong New Materials finally submitted its IPO registration application to the China Securities Regulatory Commission, marking a substantial step towards the A** market.
In striking contrast, among the three companies that have been arranged to be tried on the same day as Zhonglong New Materials, Ningbo Li'an Technology Co., Ltd. submitted for registration on December 29, 2023 as early as Zhonglong New Materials, while Zhejiang Sanfang Control Valve Co., Ltd. has not yet submitted for registration, compared with Sinolong New Materials, it is lucky.
It is worth noting that on February 22 last month, Fapon Biotech, a company planning to IPO on the GEM, terminated its registration, becoming the first company to fail in the registration process this year.
So, at the moment of strict control of listing quality, can the IPO of Zhonglong New Materials be smoothly promoted? After more than a year of meeting, the registration was submitted, and what was it that hindered the pace of Sinolong New Materials?
Huiju Finance found that the higher the net profit of the pre-IPO company, the shorter the time required to submit for registration, and whether the exchange submits registration depends on many factors such as the profitability of the pre-IPO company itself, industry and policy influence.
Huiju Finance noticed that in 2023, it will take an average of 157 days for GEM IPO companies to submit registration to successful registration, while it will take 371 days for Zhonglong New Materials to submit for registration.
Obviously, according to the above average duration, there is still a long time to wait for in the future, and combined with the current semi-suspended IPO, it remains to be seen whether Sinolong New Materials can be successfully listed.
Due to the fact that the process of supplementing materials involves multiple links, the time has been extended accordingly, but the main reason is that the non-net profit deducted after the period has declined significantly, which undoubtedly affects the continued promotion of the IPO of Sinolong New Materials, which may be the reason for the slow submission of Zhonglong New Materials for registration one year after the meeting. ", a senior brokerage investment banker in Shenzhen told Huiju Finance.
As an enterprise mainly engaged in the R&D, production and sales of functional BOPA films, biodegradable BOPLA films and polyamide 6 (PA6) and other related material products, Sinolong New Materials, which was established in November 2018, has a relatively single product structure, accounting for more than 90% of the revenue of functional BOPA films during the IPO reporting period.
Looking through the prospectus, the reason for Sinolong New Material's internal control irregularities is so eye-catching, and the prospectus shows that it once paid employee salaries outside the body in 2019.46220,000 yuan.
Huiju Finance noted,In order to balance the employees' emotions due to the salary increase of some senior executives and key employees, 7 people, including Jian Jinchi, executive director and deputy general manager of Zhonglong Plastics, were paid in the name of housing allowance and car compensation.
Sinolong New Materials plans to raise 227.3 billion yuan was invested"High-performance film project - high-performance BOPA film industrialization project"、"High-performance film project - new bio-based degradable film industrialization project"、"Industrialization project of high-performance polyamide materials"and other three major projects and replenish working capital and repay bank loans of 400 million yuan.
Zhonglong New Materials, which has been on the GEM for only 4 years, has achieved gorgeous performance, relying on"The snake swallows the elephant"mergers and acquisitions.
Just one year after the establishment of the company, Sinolong New Materials carried out a major asset restructuring and acquired Xiamen Changsu Industrial Co., Ltd"Changsu Industry"100% equity.
After the successful acquisition of 100% equity of Changsu Industry, Sinolong New Material's performance has improved by leaps and bounds, and it has successfully turned around its losses in 2020.
According to public data, in the three years from 2019 to 2021, Sinolong New Material's revenue was 126.4 billion yuan, 160.2 billion yuan, 199.4 billion yuan, with an average annual compound growth rate of 2558%。
In 2019, Sinolong New Materials deducted non-net profit and lost 251470,000 yuan, but in 2020 after the consolidated statements of Changsu Industry, the non-net profit of Zhonglong New Materials increased by 786266% to 19.5 billion yuan, and in 2021, the non-net profit of Zhonglong New Materials continued to soar by 4346% came to 2800 million yuan.
However, after entering 2022, with the weak demand of the terminal consumer market and the decline in the overall prosperity of the industry, the profitability of Sinolong New Materials has gradually declined, and the non-net profit has fallen by 443%, and the gross profit margin of the main business fell to 2249%。
Although the increase in revenue in 2022 will not increase profits, Sinolong New Materials has successfully passed the review of the Shenzhen Stock Exchange.
In fact, 2022 is only the beginning of the decline in the profitability of Sinolong New Materials, and in the registration draft of the prospectus on January 5, 2024, Sinolong New Materials disclosed the expected operating data for 2023 after the IPO, and we were able to get a glimpse of its operating conditions in 2023.
Huiju Finance noted that according to the preliminary estimated financial data of Sinolong New Materials in 2023, the annual revenue in 2023 is in the range of 2.3 billion to 2.4 billion yuan, with a change ratio of 014% to 449%, deducting non-net profit of 200 million to 2300 million yuan, with a change ratio of -2527% to -1406%。Although this financial data has not been audited or reviewed by accountants, the decline in non-net profit for the full year of 2023 compared with 2022 is basically a foregone conclusion.
Obviously, the weakness of Sinolong New Material's performance after the late meeting may be one of the important factors for its slow submission for registration.
The previous performance relied on the acquisition of the largest customer
Weak performance after the period deducted non-net profit decline
In 2021, the net profit reached a historical peak in the three years since its establishment, which is the biggest reliance of Sinolong New Materials' IPO.
According to public data, in 2019, just one year after its establishment, the revenue scale of Sinolong New Materials was 126.4 billion yuan, and the net profit attributable to the parent company in the current period also lost 5645640,000 yuan, while the loss after deducting non-net profit narrowed to 251470,000 yuan.
After successfully acquiring 100% of the equity of Changsu Industry, the largest customer in 2019, Sinolong New Material's performance has improved by leaps and bounds, and it has successfully turned around its losses in 2020, with a revenue of 16At the same time, the scale of 0.2 billion yuan reversed the downward trend of net profit, and the non-net profit was 786266% explosive growth.
It is worth noting that from January to June in 2021 and 2022, the net profit of Changsu Industry was 27,710450,000 yuan, 14276680,000 yuan, accounting for the net profit of Sinolong New Materials after the consolidated statements. 47%, that is to say, a large part of the profit of Zhonglong New Materials comes from Changsu Industry.
Looking back at the latest registration draft of the prospectus submitted by Sinolong New Materials to the Shenzhen Stock Exchange on January 5, 2024, in the three years before 2023, Sinolong New Materials' revenue has maintained a continuous growth trend.
According to the data, from 2020 to 2022, Sinolong New Materials' revenue was 160.2 billion, 199.4 billion, 229.7 billion, deducting non-net profit of 19.5 billion yuan, 2800 million yuan, 26.8 billion yuan.
The increase in revenue but not profit in 2022 is the embarrassment that Sinolong New Materials has to face in this IPO. In this year, although Sinolong New Material's revenue successfully exceeded the 2 billion yuan mark, at the same time, its non-net profit also increased from 2800 million yuan decreased to 26.8 billion yuan, down 443%。
After the meeting on December 30, 2022, Sinolong New Materials' operating income in the first half of 2023 did not maintain a growth trend, but fell by 7% year-on-year55%, deducting the decline in non-net profit has expanded to 2948%, only 11.3 billion yuan.
From January to September 2023, according to the reviewed financial data of Sinolong New Materials, from January to September 2023, its operating income was 169.5 billion yuan, deducting non-net profit of 15.8 billion yuan, respectively, declined. 36%。
With the release of the preliminary financial data for the whole year of 2023, the slight increase in revenue and the decline in net profit of Sinolong New Materials have basically become a foregone conclusion.
What's even more worrying is that in 2023, Sinolong New Materials' non-net profit will increase slightly while its revenue will decline sharply year-on-year.
According to the 2023 performance forecast submitted by Sinolong New Materials in the latest prospectus (registration draft), its operating income in 2023 will change between 014% to 449%, deducting the decline in non-net profit is 1406% to 2527%。
It is not difficult to find that the non-net profit of Sinolong New Materials has declined for two consecutive years, and the downward trend is still expanding.
As for the decline in net profit in 2023, the reason given by Sinolong New Materials is"Mainly affected by the changes in the sales of major products in the current period, the gross profit margin of major products may fluctuate greatly. "
Judging from the results of the first half of 2023 and the full year, that is, the post-period performance after the IPO of Sinolong New Materials, the non-net profit after deducting non-net profit continues to decline, which is doubtful whether this can support the growth requirements of Sinolong New Materials' IPO.
It remains to be seen whether the decline after deducting the non-net profit period will cause substantial obstacles to the IPO of Sinolong New Materials, and the regulator is particularly concerned about whether the performance decline is sustainable. ", the above-mentioned senior investment banker told Huiju Finance.
In the first round of inquiries in the early stage, there was a question about whether Zhonglong New Materials is in line with the GEM"Growth-oriented innovation and entrepreneurship"The positioning and whether it has growth potential have been questioned by the Shenzhen Stock Exchange, especially in the last round of implementation of the opinions of the review center, the first major issue raised by the Shenzhen Stock Exchange is the questioning of Sinolong New Material's revenue and gross profit margin and whether it has growth in the field of BOPLA film.
Peer competition has been repeatedly questioned
Independence was questioned by the Listing Committee
The issue of Sinolong New Material's independence and competition in the same industry was concerned and questioned at the deliberation of the Listing Committee at that time.
Although at the deliberation site, the Listing Committee finally gave Sinolong New Materials"Eligible for issuance"At the same time, it is required to further implement the relevant matters, that is, it is necessary to explain the independence of the company in light of the existence of intra-industry competition with other enterprises controlled by the actual controller, related party transactions such as procurement, sales, capital lending, asset purchase, etc., as well as the fact that the actual controller receives remuneration from related parties.
Huiju Finance found that the issue of competition in the same industry had been lingering in the first round of inquiries of Zhonglong New Materials and the implementation of the opinion letter of the audit center.
According to the prospectus, the actual controller Yang Qingjin controls a number of enterprises, among which Jinyang Group is engaged in chemical raw materials, Jinyang New Materials' main products are modified plastics, tapes, etc., and Xiamen Changtian is engaged in the production, research and development and sales of tapes.
According to the data, from 2020 to January to June 2023, the sales revenue of Xiamen Changtian and Jinyang new materials BOPP tape was 19,750 respectively980,000 yuan, 25,354590,000 yuan, 21,551$710,000 and $7751420,000 yuan, accounting for the proportion of main business income. 28%；In addition to BOPP tape, the main business of Xiamen Changtian and Jinyang New Materials also includes the production and sales of modified plastics, release film and paper, and the first-class business of chemical raw materials such as polypropylene and polyethylene.
In 2019, Sinolong New Materials sold polyamide 6 to Jinyang New Materials, Xiamen Changkai and Most Materials, and the amount of related party transactions was large; Among them, the related sales to Jinyang New Materials continued until 2021, and the amount of each period was 1574030,000 yuan, 1179250,000 yuan, 464740,000 yuan. In 2020 and 2021, the scrap ** will be given to Jinyang New Materials, and the transaction amount will be 600 respectively380,000 yuan, 284630,000 yuan.
In response to this situation, in the implementation opinion letter of the audit center, the Shenzhen Stock Exchange requested Sinolong New Materials to explain the measures taken by the actual controller to avoid intra-industry competition, transfer interests and protect independence, and explain the effectiveness of the relevant measures.
In the view of industry insiders, independence is the most basic requirement of listed companies, and intra-industry competition is easy to incur business independence, or there will be a situation where the controlling shareholder uses control and subordination to make decisions that are detrimental to the interests of the listed company, and transfers interests to affiliated enterprises, harming the interests of listed companies and investors.
In order to further prove to the regulator that the possibility of intra-industry competition is not great, the actual controller Yang Qingjin made a further supplementary commitment: if the company is listed, Jinyang New Materials and Xiamen Changtian extend upstream to produce BOPP films, which will constitute a competitive relationship with the company. The production and sales of Xiamen Changtian BOPP film products, the inclusion of Jinyang new materials and Xiamen Changtian BOPP film business into the company's operation, the transfer of Jinyang new materials and Xiamen Changtian BOPP film business to unrelated third parties, and other ways that are beneficial to the company's rights and interests are protected to protect the company's interests.
Intra-industry competition may bury the risk of damaging the interests of small and medium-sized shareholders after listing, and this is obviously what the regulator cares about and is cautious about, and Sinolong New Materials is the focus of the regulator'Independence'with'Peer competition'Whether the two major crux issues have successfully dispelled the doubts of the regulator is obviously the key to the success of subsequent registration and eventual issuance and listing. "The above-mentioned investment bankers pointed out.
It took 371 days from the meeting to the submission of registration, and there are still many variables and uncertainties about whether the IPO can be successfully registered at the moment when the IPO is semi-suspended.