According to the Shenzhen Stock Exchange, the GEM Listing Committee is scheduled to review the initial offering of Shanghai Meinong Biotechnology Co., Ltd. (hereinafter referred to as Meinong Biotechnology) on January 20. New Third Board listed company Meinong Bio (873489) once again broke through the IPO.
According to the prospectus, Meinong Bio is a high-tech enterprise with the research and development, production and sales of feed additives and enzymatic protein feed raw materials, and its main products are used in the breeding of pigs, ruminants, poultry and aquatic products. The listing of Meinong Biological Growth Enterprise Market intends to raise 360 million yuan.
Judging from the financial data disclosed by the company, in the past two years, the operating performance of Meinong Bio has risen like a "rocket", and in 2020, it has achieved revenue of 421 million yuan, an increase of 50.23% year-on-year, and a net profit of 66.714 million yuan, an increase of 94.13% year-on-year; in the first half of 2021, it has achieved revenue of 248 million yuan, an increase of 63.97%; net profit of 37.3318 million yuan, an increase of 51.31% year-on-year.
Performance has soared, and there may be multiple pushers behind the scenes
Regarding the reasons for the sharp increase in operating performance in recent years, Meinong Bio explained that the high price of pigs in 2020 led to the growth of demand for pig feed additives, as well as the suspension of the production of feed additives containing growth promotion drugs, and the company's acidity regulators became the first choice for "substitution".
However, some professional institutional investors have found that the performance of Meinong Bio has soared, or there are other behind-the-scenes drivers.
Meinong Bio's shareholding structure Screenshot from the prospectus
According to the prospectus, Hong Wei, chairman of Meinong Biologics, and his wife Wang Jihong are the actual controllers of Minong Biologics, Hong Wei directly holds 50.85% of the shares, and the husband and wife directly and indirectly control 60.37% of the shares of Minong Biologics. Wang Jihong, who occupies the position of director and deputy general manager, is also the head of the procurement department of Meinong Biologics.
On the surface, the shareholding structure of Meinong Biotech is clear, but the intricate relationship behind this, as well as the multiple interest chains formed by it as the core, have attracted the attention of professional investors.
According to the disclosure, among the board members and senior management personnel of Meinong Biotech, Wang Jihong, the actual controller of the company and the head of the procurement department, and Zhou Qian, the financial director, are cousins, while Zhou Qian and the procurement engineer Lin Changyu are husband and wife. In other words, the key links that determine the business performance of Meinong Biotech, procurement and finance, are controlled by the actual controller and his family.
Meinong Bio's top five customers Screenshot from the prospectus
Looking at the list of the top five customers of Minong Biotech, it can be found that during the reporting period, the first major customer of Minong Bio was Me Non Production Trading Company Limited and its affiliates, a Vietnamese distributor actually controlled by Di Bo and Huang Xiaoling. According to the prospectus, from 2018 to the first half of 2021, the proportion of sales revenue from the overseas market of Meinong Bio to the main business income of the current period was 29.92%, 33.84%, 23.52% and 19.86%, respectively. In terms of sales ratio, nearly half of Minong Bio's overseas sales revenue during the reporting period came from Me Non Production Trading Company Limited and its affiliates.
What needs more attention is that the actual controller of this Vietnamese dealer, Di Bo, took a stake in Meinong Biotech in January 2011 and held 0.70% of the shares, and Di Bo and Hong Wei, the actual controller of Minong Bio, have been friends for many years.
During the reporting period, Di Bo's brother-in-law Zhou Anping was also one of Thermec's customers.
In a similar situation, there are two main customers of Meinong Biotech - Boen Group and its affiliates, Hengde Biotech. Zou Xinhua, the actual controller of Boen Group, and Deng Zhigang, the actual controller of Hengde Biologics, also took a stake in Meinong Bio in January 2011, holding 0.35% of the shares respectively, and also had many years of friends with Hong Wei, the actual controller of Meinong Biologics.
The shares of Meinong Biotech held by Di Bo, Zou Xinhua and Deng Zhigang were withdrawn by way of transfer in June 2017.
While the identities of shareholders and major customers overlap, there is also an overlap between partners, customers and suppliers. According to the information disclosed in the prospectus, While selling raw material products to Hefeng Shares and its affiliates and Sichuan Meishan Wanjiahao Feed Co., Ltd., Meishan Also purchased feed products from them.
The overlap between Meinong's customers and suppliers is screenshotted from the prospectus
It is worth noting that the inquiry of industrial and commercial information can be found that the above-mentioned Hefeng shares and Meinong Bio jointly hold the shares of a company - Hefeng Feed. Among them, Hefeng shares hold 65% of the equity of Hefeng Feed, and Meinong Bio holds 35% of the equity of Hefeng Feed, that is to say, Hefeng Shares, a customer and supplier of Minong Biologics, is also a partner of Hong Wei, the actual controller of Minong Biologics.
According to the prospectus, during the reporting period, all the related sales of Meinong Bio were the sales of feed additives to Hefeng Feed, which participated in 35.00% of the company's shares, and the sales amounts were 1.6619 million yuan, 1.1729 million yuan, 1.4148 million yuan and 793,500 yuan, accounting for 0.63%, 0.42%, 0.34% and 0.32% of the current operating income, respectively.
Where did the cash flow go
From the financial statements disclosed by Meinong Biotech, professional investors also found such a problem: the high-speed growth of Meinong Biotech's net profit does not represent that it has the same size of wealth flowing into the company.
In 2020 and the first half of 2021, the net profit of Meinong Bio was 66.714 million yuan and 37.3318 million yuan, respectively, an increase of 94.13% and 51.31% year-on-year, but its net cash flow from operating activities showed a cliff-like decline, that is, from 51.1636 million yuan in 2020 to -10.4716 million yuan in the first half of 2021
That is to say, the net profit of Meinong Bio in the past two years has not brought about the growth of the company's funds, so where has the cash flow of Minong Bio gone?
In the prospectus, Meinong Bio said that the increase in accounts receivable affected the company's capital turnover efficiency and net cash flow from operating activities, and increased the company's working capital pressure.
According to the financial report, in 2020 and the first half of 2021, the accounts receivable of Minong Bio were 85.0954 million yuan and 81.4515 million yuan, accounting for 37.65% and 33.13% of its current assets, respectively.
Most institutional investors believe that the change in Meinong Bio's accounts receivable is not enough to explain the cliff of its cash flow in the past two years.
The real reason may lie in the large dividends paid by Meinong Bio and its actual controller before the company's listing. According to the declaration materials of Meinong Biology, while the operating performance has increased significantly, in September 2020, Meinong Biologics implemented a semi-annual profit distribution, with a total of 30 million yuan in gold dividends, which is close to half of the company's net profit for the whole year.
In other words, nearly half of Minong Bio's cash flow flows into the pockets of its actual controllers and major shareholders.
While the actual controller and major shareholder of Meinong Biologics split nearly half of the company's profits, they also took the company's funds to "gamble" on the capital market.
On March 3, 2021, Meinong Biotech issued an announcement that the company intends to use the capital circulation of no more than 70 million yuan of principal for investment and financial management. The company intends to use 50 million yuan of raised funds to supplement working capital. While purchasing wealth management products in a large way, while raising funds to supplement working capital, this behavior has aroused the attention and inquiry of the Shenzhen Stock Exchange at that time.
According to the prospectus, from 2018 to the first half of 2021, the net cash flow generated by the investment activities of Meinong Biology was -40.7245 million yuan, -19 million yuan, 8.7338 million yuan and -73.433 million yuan, which also means that the investment of Meinong Biology in recent years is basically in a state of substantial loss.
From the perspective of the company's main business, what is the strength of Meinong Biology? Meinong Biology said in the prospectus that the company belongs to high-tech enterprises, although its revenue and net profit soared, but from its comparison with listed companies in the same industry, during the reporting period, the proportion of R & D investment in Minong Biology decreased year by year; in the financial report, during the reporting period, The R & D expenses of Minong Biology were significantly lower than its management expenses and sales expenses.
Meinong Biotech R&D investment Screenshot from the prospectus
Nevertheless, during the reporting period, the amount of corporate income tax incentives enjoyed by Meinong Bio in accordance with the law increased year by year, with 1.32 million yuan, 3.0257 million yuan, 7.2263 million yuan and 3.0138 million yuan, respectively
Even in the above cases, the inventory and total liabilities of Meinong Bio are still increasing significantly, in 2020, the inventory on the books of Meinong Bio was 60.0814 million yuan, and in the first half of 2021, its inventory soared to 88.9136 million yuan; the total liabilities of Meinong Biologics soared from 41.5613 million yuan in 2019 and 93.0328 million yuan in 2020 to 130 million yuan in the first half of 2021.
Suspicious Hongye shares
According to the prospectus, there is a large amount of third-party payment in the internal control of Meinong Biological Funds. During the reporting period, the amount of third-party payments returned by Meinong Bio reached 60.7979 million yuan, 27.4345 million yuan, 26.1586 million yuan and 9.3939 million yuan respectively, accounting for 22.87%, 9.80%, 6.22% and 3.79% of the operating income of the current period.
From the perspective of the third-party payment collection channel, it is mainly the account of the customer's legal representative, actual controller, shareholder, director and supervisor and his close relatives or the customer's employee account; through the trade agent Hongye shares and Huihong Zhongtian settlement part of the export business; the customer's group through the group company or other companies in the designated group on behalf of the customer to make unified external payments.
Third-party payment collection refers to the situation that the payer of the sales collection received by the issuer (such as the remitter of the bank remittance, the method of issuing the bank acceptance bill or the commercial acceptance bill or the endorsing transferor) is inconsistent with the current customer who signed the economic contract. Since third-party payment collection is often associated with dealers, unincorporated customers, etc., which has a great impact on the verification of the authenticity of sales collection, third-party payment collection has always been a major issue in the CSRC's IPO review.
Among them, the third-party payment party of Meinong Bio - Hongye Shares (600128. SH) has a dual identity. According to the prospectus, in addition to trading agents, Hongye shares also have a number of related party transactions with Meinong Biological and Xiangrong Chemical.
From the specific transaction content, Hongye Co., Ltd. is responsible for purchasing ethyl vanillin from Jiaxing Zhonghua Chemical Co., Ltd., the main competitor of Xiangrong Chemical, and selling it to Meinong Bio. In addition, Hongye Co., Ltd. also purchased ethyl vanillin from Rong Chemical.
It should be noted that the actual controllers of Meinong Bio and Xiangrong Chemical are Hong Wei.
The related party transactions between Hongye Shares and Meinong Bio and Xiangrong Chemical are screenshots from the prospectus
In this regard, some professional institutional investors questioned the intricate transactions between Hongye Shares and Hong Wei, the actual controller of Meinong Biotech, or the space for the two to operate in the dark and transfer benefits.
During the reporting period, there were still cash collections in the internal control of Meinong Biologics' funds, including the driver of the transportation company collecting cash from customers and depositing them into the company's account by the company's employees, the company's employees receiving customer cash directly deposited into the company's bank account, or employees receiving customer cash and collecting the money through personal bank accounts; the amount of cash returns was 2.0626 million yuan, 1.2526 million yuan, 903,700 yuan and 0.63 million yuan, accounting for 0.78%, 0.45% of the current operating income, respectively. 0.21% and 0.00%.
Due to the above-mentioned cash payment, some investors questioned the authenticity of Thermity's operating income, concealed income, evaded taxes, and there were major risks to the security of the company's funds.
Due to the sharp increase in pig price performance, pig prices continue to decline, superimposed on the various problems hidden within the above company, professional institutional investors believe that the prospects and sustained profitability of Meinong Bio are worrying.