Although the listing journey of companies in the dairy sector is not smooth, there are still companies that have "repeatedly lost and fought".
At the beginning of February this year, Sichuan Jule Food Co., Ltd. (hereinafter referred to as "Jule Shares") issued a reply to the second round of review inquiry letters for the initial public offering and listing application documents on the main board, and planned to sprint to the Shenzhen main board for listing, with the sponsor being China Securities Construction Investment Co., Ltd
Previously, a number of consumer companies such as Wolon Food, Miss Food, and Texas Grilled Chicken withdrew their A-share IPOs. As a company mainly engaged in the research and development, production and sales of dairy products, Adopt a Cow Holding Group Co., Ltd. voluntarily withdrew its main board IPO application at the beginning of this year.
Since 2017, when the company first broke through the Shenzhen main board under the sponsorship of Huaan, the company's internal control system defects, distributors, gross profit margin and other issues have been concerned by the market and regulators, some of which are reflected in the inquiry letter.
This time, can the IPO of Jule shares be successful?
Fierce competition in the dairy segment led to a decline in the subsidiary's revenue.
According to the prospectus, the main business of Jule shares is the research and development, production and sales of dairy beverages and dairy products, and its main products include milk-containing beverages, fermented milk, pasteurized milk and sterilized milk. During the reporting period, the revenue of dairy beverages accounted for more than 50%, which is an important income of the company**.
Jule said that compared with traditional comprehensive dairy enterprises, the business strategy of focusing on dairy beverage products enables the company to compete with comprehensive dairy enterprises in a dislocation: "In the dairy beverage business sector, comprehensive dairy enterprises often only regard dairy beverages as one of the development directions of the whole industry chain layout, and the investment is smaller than that of dairy products, while the company regards dairy beverages as its core business, and invests more in products, and can ensure the priority development of dairy beverage products in terms of marketing network layout and product update and iteration." ”
The Company's dairy products are mainly divided into fermented milk, pasteurized milk and sterilized milk. According to the prospectus, from 2019 to June 2023, the company has launched a total of 166 new products to the market, and the company's new product revenue in each period is 8733150,000 yuan, 28,002990,000 yuan, 38,217470,000 yuan and 23,880800,000 yuan, accounting for the proportion of main business income respectively. 02% and 3093%。
From the perspective of the composition of Jule's operating income, new dairy products such as fermented milk and pasteurized milk account for a relatively large proportion of the company's revenue. However, the company faces a more competitive environment in the dairy sector.
Taking pasteurized milk as an example, the company's market competitors in pasteurized milk include large dairy enterprises such as Yili Co., Ltd., Mengniu Dairy and Bright Dairy, as well as surrounding dairy enterprises located in southwest China, such as New Dairy and Tianyou Dairy. In addition to Yili, Mengniu Dairy and Bright Dairy, the market competitors of fermented milk products also include dairy enterprises in the southwest region and some dairy enterprises in the northeast region where Huifeng Dairy is located; The competitors of sterilized milk products include national dairy enterprises such as Yili Co., Ltd. and Mengniu Dairy, as well as dairy enterprises in southwest China and surrounding regions.
According to the certificate issued by the China Dairy Industry Association, from 2020 to 2022, the company's market share in the dairy industry is only. 30% and 031%, ranking 38th, 33rd and 31st in the industry.
Huifeng Dairy, a subsidiary of the company that focuses on the research and development of low-temperature fermented milk and other products, has experienced a decline in revenue due to the decline in fermented milk revenue since 2022. Jule said that the decline in fermented milk revenue was caused by two factors: lower sales volume and lower unit price.
When analyzing the reasons for the decline in Huifeng dairy revenue, Jule said that since 2023, the dairy product consumption market in different regions has been greatly differentiated, and the dairy consumption in the Northeast is relatively weak, while the surplus of fresh milk in the Northeast is more prominent, and the market competition is relatively more intense; And the increase in the amount of fresh milk has also intensified the competition in the dairy market, which in turn has led to a decline in the sales of Huifeng dairy products.
Why do we need to raise funds to expand production at a low capacity utilization rate?
In this impact IPO, Jule shares plan to raise 136.3 billion yuan, to be invested in dairy farming projects, dairy production base expansion projects, marketing network center upgrade construction projects, R & D center upgrade construction, information system construction and supplementary working capital, including 17.2 billion yuan for 120,000 tons of dairy production capacity expansion.
However, in the highly competitive dairy market, the need for such investment and expansion is questionable. From 2021 to the first half of 2023, Jule shares still have some idle capacity, and its capacity utilization rates are. 29% and 824%。
In this regard, the company disclosed in the prospectus that from 2020 onwards, the company's production capacity will be 12140,000 tons, 16890,000 tons, 15620,000 tons as well as 11330,000 tons.
Jule shares said that the current production capacity compared with comparable companies in the same industry has a disadvantage, the company believes that the main is not listed to raise funds to expand production capacity: "the company's raised funds investment project involves the expansion of production capacity, the raised funds will be used for the Wenjiang dairy production base reconstruction and expansion project and an annual output of 120,000 tons of dairy production base project." After the reconstruction of the Wenjiang dairy production base, it will achieve an annual output of pasteurized fresh milk400,000 tons, low-temperature yogurt 0570,000 tons, room temperature yogurt 0230,000 tons, sterilized milk 3300,000 tons, 0250,000 tons, 6 milk-containing beverages0 million tons and 0 complex protein drinks250,000 tons of production capacity; After the completion of the dairy production base project with an annual output of 120,000 tons, it will also add 60000000 tons of production capacity of dairy beverages. ”
Big customer mystery.
According to the prospectus, Huangdao District Innovation Preferred Commercial Bank (hereinafter referred to as "Preferred Commercial Bank") is the second largest customer of Jule in 2021 and the third largest customer in 2022, with sales amounts of 4356 respectively220,000 yuan, 4706770,000 yuan, Jule shares for its sales model for distribution. According to the data, in the first half of 2023, the sales amount of preferred commercial banks will be 205010,000 yuan.
It is worth noting that the preferred commercial bank that has contributed a total of more than 90 million yuan to Jule shares in the past two years is composed of several individual industrial and commercial households.
In the announcement of the reply to the second round of review inquiry letters, Jule Co., Ltd. said that the preferred firm is composed of five companies: Huangdao District Innovation and Preferred Commercial Bank, Jinan Aijiaxin Commercial and Trade *** hereinafter referred to as "Aijiaxin Commercial Bank"), Huangdao District Yahengkai Commercial Bank (hereinafter referred to as "Yahengkai Commercial Bank"), Shandong Hua Chenghan Commercial and Trade *** hereinafter referred to as "Hua Chenghan Commercial and Trade") and Shandong Zhongfu Jiarui *** hereinafter referred to as "Zhongfu Jiarui **".
Tianyancha shows that Huangdao District Innovation and Preferred Commercial Bank was established on December 17, 2020, the enterprise type is individual industrial and commercial households, the operator and beneficial owner are Zhang Honghe, the registered capital and the number of insured people are unknown, and the annual report of the enterprise from 2020 to 2022 shows that the number of employees in the company is 1.
Aijiaxin Trading was established on April 18, 2014, with 5 insured people; Founded on November 19, 2020, Yahengkai Commercial Bank is an individual industrial and commercial household, and the 2021 industrial and commercial annual report shows that there are 1 employees; Hua Chenghan Trading was established on October 26, 2020, and the number of insured people is 2; Zhongfu Jiarui** was established on May 26, 2023, with a registered capital of 8 million yuan, and the number of insured people is unknown.
The number of employees in the above five enterprises is less than 6 people, and only Aijiaxin Commerce and Trade was established earlier, in April 2014, Yahengkai Commercial Bank and Hua Chenghan Commerce and Trade were established in the fourth quarter of 2020.
In other words, these individual industrial and commercial households with only a few employees have contributed more than 40 million yuan in sales to Jule shares for two consecutive years. Among them, Huangdao District Innovation and Preferred Commercial Bank contributed nearly 20 million yuan in revenue to Jule shares in the second year of its establishment.
It is worth mentioning that Yonghui Supermarket (601933SH) is the third largest customer of Jule Co., Ltd. in 2021 and the fourth largest customer in 2022, and the sales volume of Jule Co., Ltd. to it are 3588170,000 yuan, 3793870,000 yuan. For two consecutive years, the sales contributed by these customers composed of individual industrial and commercial households to the company surpassed that of Yonghui Supermarket, a large supermarket chain in China.
For large customers who have been established for a short time and have few employees, but can provide large revenues year after year, their rationality and sustainability have always attracted great attention from the market.
In the latest announcement of the reply to the inquiry of the Shenzhen Stock Exchange, Jule Co., Ltd. said that Huangdao District Innovation and Preferred Commercial Bank, Yahengkai Commercial Bank and Hua Chenghan Commercial and Trade have been cancelled on August 1, 2023, and the reason for the cancellation is that "dealers optimize management and cancel business entities that are no longer needed".
Why did these customers suddenly cancel en masse, and how to fill the gap that may be brought to the company's revenue? These issues are yet to be explained in detail by issuers to reassure market participants.
Is the related party transaction** fair?
Although the total proportion of the top five ** merchants of Jule shares showed a downward trend in the reporting period, the company still faced a relatively concentrated situation of ** merchants. In 2020, 2021, 2022 and from January to June 2023, the company's total purchases from the top five raw material ** suppliers were 3700 million yuan, 45.4 billion yuan, 40.4 billion and 20.5 billion yuan, accounting for the proportion of the total procurement in the current period. 23% and 4734%。
According to the prospectus, the company's largest businessman is Gansu Qianjin Animal Husbandry Technology Co., Ltd. (hereinafter referred to as Qianjin Dairy), which originally held 100% of the equity of Shuhan Animal Husbandry, and in 2021, the company transferred 55% of the equity of Shuhan Animal Husbandry to Jule shares. Jule shares and advance animal husbandry are therefore related parties to each other.
According to the prospectus, from January to June 2020, 2021, 2022 and 2023, the amount of fresh milk purchased by the company from Qianjin Animal Husbandry was 18.2 billion yuan, 19.9 billion yuan, 12.9 billion yuan and 6025020,000 yuan, accounting for the proportion of the current operating costs. 46% and 1133%。
The reporter inquired about the prospectus and found that the company purchased fresh milk from the animal husbandry industry, which was higher than the purchase of fresh milk from other ** merchants and there were obvious differences (except for Xinqing agriculture and animal husbandry, the company was temporarily purchased at the ** business, which was used to adjust the gap between the actual demand of other **business and the company's actual demand, so the purchase unit price was higher).
Why is the purchase of fresh milk from Jule higher than that of the third party? In an interview with reporters, an industry insider questioned: "Is there a transfer of interests or a situation of bearing costs for Jule shares?" ”
In the prospectus, Jule shares explained the reasons for the difference in the purchase of fresh milk: first, the company's purchase of fresh milk is the factory price, including transportation costs, and the location of the milk source of Advance Animal Husbandry is Gansu Province, and the corresponding transportation costs are higher than those of other farmers in Sichuan Province, resulting in a difference between the milk source and the milk source in Sichuan Province; In addition, the company's purchase of fresh milk from major merchants follows the principle of "quality and price", and the protein content of fresh milk in the first place of the company is higher; The company has the purchase of fresh milk beyond the amount agreed in the long-term procurement contract of Xiangqian Animal Husbandry and Jinyu Agriculture and Animal Husbandry, and the purchase of fresh milk is determined according to the market situation of the month, and there are fluctuations.
Is the internal control hard injury solved?
Previously, in April 2020, the China Securities Regulatory Commission issued the "Decision on Issuing a Warning Letter to Sichuan Jule Food Shares". According to the decision, in the process of applying for an initial public offering** and listing, there was a total of 9,577 cases of misappropriation of the company's funds by the cashier of the branch890,000 yuan and the first declaration draft did not disclose the matter, the disclosure of monetary funds was untrue, there were major defects in the internal control system, and the rebate accrual was inaccurate.
In the IPO application documents submitted in June 2020, Li, the former cashier of Jule Food, disclosed that from December 2014 to March 2019, by stealing blank checks, electronic business statements, forging bank receipts, statements and other fraudulent methods, he used the time difference between the company's headquarters appropriation and the actual payment of Meishan Branch every month to embezzle the company's funds many times, and the company has recovered the actual balance of the misappropriated funds in a timely manner 461790,000 yuan, which did not cause actual loss to the company's property.
On December 10, 2021, the Qingyang District People's Court of Chengdu City, Sichuan Province made a first-instance criminal judgment on the above matters ([2021] Chuan 0105 Xingchu No. 649), ruling that the original cashier of Meishan Branch of Jule Co., Ltd. was guilty of misappropriation of funds and forging the company's seal. On February 18, 2022, the Intermediate People's Court of Chengdu City, Sichuan Province, made a final ruling on the appeal of the former cashier of Meishan Branch of Jule Co., Ltd. ([2022] Chuan 01 Xingzhong No. 120), rejecting his appeal request and upholding the original judgment.
It is worth noting that Jule Food started to apply for an IPO as early as December 2017, and the company did not discover the above problems until September 2019. Although Jule said in the latest prospectus that the company has carried out targeted rectification, and the impact of the above-mentioned regulatory measures on the company has been eliminated, which does not constitute a substantial obstacle to the IPO listing, the company's internal control mechanism, reputation and other issues are still concerned by all participants in the market.