Xingtong Shipping Co., Ltd. (hereinafter referred to as "Xingtong Shares") is mainly engaged in the water transportation business of domestic coastal bulk liquid chemicals and refined oil products, and is currently sprinting to the main board of the Shanghai Stock Exchange IPO.
According to the prospectus, Xingtong co., Ltd. is a leading enterprise in the domestic coastal bulk liquid chemical shipping industry. As of the end of 2020, Xingtong co., Ltd. has a total of 14 bulk liquid chemical tankers and refined oil tankers, with a total capacity of 175,800 dwt, of which 11 bulk liquid chemical tankers have a capacity of 117,000 dwt, accounting for 9.61% of the total capacity of the market segment.
Xingtong Co., Ltd.'s transportation routes reach the coastal areas of the country and the middle and lower reaches of the Yangtze River and the Pearl River, and has established long-term and stable strategic cooperative relations with large petrochemical enterprises such as Sinopec, Fujian United Petrochemical, Zhejiang Petrochemical, CNOOC, CNOOC Shell, Hengli Petrochemical, and China Aviation Oil. From 2018 to 2020, the main business income of Xingtong Co., Ltd. was 268.8923 million yuan, 291.9467 million yuan and 386.4176 million yuan, accounting for 100% of its operating income.
However, our research found that in 2020, the operating income growth of Xingtong shares seems to be mainly due to the increase in sales to Zhejiang Rongsheng Holding Group Co., Ltd. (hereinafter referred to as "Rongsheng Holdings"), at the same time, in 2020, the related parties of Rongsheng Holdings suddenly entered the shares of Xingtong Shares, and Rongsheng Holdings indirectly acquired the equity of Xingtong Shares. In addition, There may be insufficient depreciation provisions in Xingtong shares.
Source: Photo Network
"Airborne" the first largest customer
Rongsheng Holdings holds 100% of the equity of Zhejiang Rongtong Logistics Co., Ltd. (hereinafter referred to as "Rongtong Logistics") and adopts the equity of Zhejiang Rongtong Petrochemical Co., Ltd. (securities abbreviation: Rongsheng Petrochemical, stock code: 002493. SZ) controls Zhejiang Petrochemical Co., Ltd. (hereinafter referred to as "Zhejiang Petrochemical").
According to the prospectus, in 2020, the sales amount of Xingtong shares to Zhejiang Petrochemical was 90.3832 million yuan, the sales amount to Rongtong Logistics was 8.956 million yuan, and the total sales amount to Rongsheng Holdings was 99.3391 million yuan, and Rongsheng Holdings became the largest customer of Xingtong shares in 2020. However, Rongsheng Holdings did not appear among the top five customers of Xingtong shares in 2018 and 2019.
Judging from the disclosed data, the fifth largest customer of Xingtong shares in 2019 is China Aviation Oil Group Haixin Shipping Co., Ltd., and the sales amount of Xingtong shares to it is 17.5587 million yuan. Considering that the sales amount of Xingtong shares to Rongsheng Holdings in 2019 should not be higher than the above amount, the sales amount of Xingtong shares to Rongsheng Holdings in 2020 will increase by at least 81.7804 million yuan compared with 2019. At the same time, the overall operating income of Xingtong Shares in 2020 increased by 94.4709 million yuan compared with 2019, according to this calculation, the increase in the sales amount of Xingtong Shares to Rongsheng Holdings contributed more than 86.57% of the increase in its operating income.
Xingtong co., Ltd. explained that in 2020, Rongsheng Holdings became its largest customer, mainly because the 40 million tons /year refining and chemical integration project (phase I) invested by Zhejiang Petrochemical was fully put into operation in December 2019, and the transportation demand of Zhejiang Petrochemical increased sharply in 2020. In order to ensure the stability of product transportation, Rongsheng Holdings is widely looking for high-quality shipowner enterprises in the industry to cooperate, and Xingtong Shares, as the industry leader, matches the transportation needs of Zhejiang Petrochemical. In 2020, Xingtong co., Ltd. invested more in ship services Rongsheng Holdings, which made the sales revenue of Rongsheng Holdings increase significantly.
With the sudden acquisition of shares by related parties, Rongsheng Holdings indirectly held shares in Xingtong Shares
Xingtong co., Ltd. submitted the prospectus for the first time in May 2021, and in the year before the filing, Xingtong Co., Ltd. implemented two capital increases in May and August 2020, respectively, at a price of 8 yuan per share and 13.5 yuan per share, respectively.
In just 3 months, the capital increase price of Xingtong shares rose by 68.75%, in this regard, Xingtong shares explained that in June 2020, the company achieved new transportation capacity with the first place, and is expected to put into operation 2 chemical tankers in the second half of 2020, with a total capacity of about 57,500 dwt, and 1 new refined oil tanker, with a total capacity of about 50,000 deadweight tons. Compared with the end of 2019, the company's total chemical ship capacity increased by 96.64%, and the total capacity of refined oil tankers increased by 568.18%, and the expected significant increase in transportation capacity significantly increased the company's market value.
Coincidentally, in 2020, in addition to "airborne" to become the largest customer of Xingtong shares, Rongsheng Holdings also indirectly obtained the equity of Xingtong shares through capital increase.
Rongsheng Holdings holds 100% of the shares of Zhejiang Rongsheng Venture Capital Co., Ltd. (hereinafter referred to as "Rongsheng Venture Capital"), holds 47.17% of the shares of Hangzhou Mingcheng Zhihui Phase I Equity Investment Partnership (Limited Partnership) (hereinafter referred to as "Mingcheng Zhihui Phase I"), and holds 25% of the equity of Mingcheng Zhihui (Hangzhou) Equity Investment Co., Ltd. (hereinafter referred to as "Mingcheng Investment"), the executive partner of Mingcheng Zhihui I, and Mingcheng Investment holds a 0.94% share of Mingcheng Zhihui Phase I. Rongsheng Venture Capital and Ming Cheng Zhihui Phase I both participated in the two rounds of capital increase of Xingtong shares.
In May 2020, Ming Cheng Zhihui Phase I and Rongsheng Venture Capital invested 40 million yuan and 14 million yuan respectively to obtain 3.62% and 1.27% of the equity of Xingtong shares; in August, Ming Cheng Zhihui Phase I and Rongsheng Venture Capital invested 7.29 million yuan and 2.7 million yuan respectively to increase the capital of Xingtong shares again. Prior to the offering, Rongsheng Venture Capital directly held 1.30% of the shares of Xingtong shares, and Ming Cheng Zhihui Phase I directly held 3.69% of the shares of Xingtong shares.
In short, in 2020, the related parties of Rongsheng Holdings suddenly invested in Xingtong shares and indirectly acquired the equity of Xingtong shares, and in the same year, the growth of Xingtong shares' operating income seems to be mainly due to the growth of sales to Rongsheng Holdings.
Depreciation provision or inadequacy
Ships are the most important fixed assets of Xingtong Co., Ltd., at the end of 2018, 2019 and 2020, the original book value of its ships was 364.745 million yuan, 445.4653 million yuan and 857.2854 million yuan, respectively. At the same time, Xingtong co., Ltd. uses the straight-line method to calculate the depreciation of the ship, the depreciation period is 20 years, the salvage value rate is 5%, and the annual depreciation rate is 4.75%.
As of the date of signing of the prospectus, Xingtong Co., Ltd. owned a total of 15 ships, and the specific information such as the name, type, deadweight tonnage, completion time, entry time and original value of the 15 ships was disclosed in the prospectus. There were 10 ships recorded in the accounts of Xingtong Shares in 2018 and before, with a total original book value of 364.7449 million yuan, a total of 11 ships recorded in the accounts in 2019 and before, with a total original book value of 445.4652 million yuan, and a total of 14 ships recorded in 2020 and before, with a total original book value of 857.2852 million yuan, which is basically consistent with the data disclosed in the "fixed assets" section of the prospectus.
Judging from the completion time of the ships disclosed in the prospectus, among the 15 ships owned by Xingtong Shares, the earliest one was Xingtong Oil 59, which was completed in July 2003, and the earliest recorded was Xingtong Oil 69, which was recorded in March 2008. That is to say, as of December 2020, the ship assets disclosed in the prospectus should not be depreciated, and at the same time, according to the prospectus, the ship assets of Xingtong shares have not been charged with an impairment provision.
According to the original book value of Xingtong's ship assets at the end of 2018 of 364.745 million yuan and an annual depreciation rate of 4.75%, the depreciation amount of its ship assets in 2019 should not be less than 17.3254 million yuan. However, according to the prospectus, the cumulative depreciation of Xingtong's ship assets at the end of 2019 was 190.3205 million yuan, an increase of 11.2845 million yuan compared with the accumulated depreciation amount of 179.036 million yuan at the end of 2018, which is far lower than the theoretical minimum depreciation amount of 17.3254 million yuan mentioned above. According to the same method, in 2020, the depreciation amount of the ship assets of Xingtong shares should not be less than 21.1596 million yuan, but according to the prospectus, the cumulative depreciation of the ship assets of Xingtong shares at the end of 2020 is 209.1501 million yuan, an increase of 18.8296 million yuan compared with the end of 2019, which is also lower than the minimum depreciation amount of 21.1596 million yuan in the above theory.
The reasonableness of the amount of the fundraising may be doubtful
The fundraising projects of This IPO of Xingtong Co., Ltd. include stainless steel chemical ship purchase project, MR type refined oil product ship purchase project, 3 stainless steel chemical ship purchase project, 2 stainless steel chemical ship replacement purchase project, digital shipping R & D center project and supplementary working capital.
According to the prospectus, the stainless steel chemical ship purchase project plans to purchase a 12,500 dwt stainless steel chemical ship with a total investment of 122,000 yuan by purchasing existing ships on the market; the MR type oil product ship purchase project plans to purchase a 50,000 dwt MR type oil product oil product ship by purchasing existing ships on the market, with a total investment of 190 million yuan.
Coincidentally, in November 2020, Xingtong co., Ltd. recorded a bulk chemical tanker with a 12,500 dwt and an oil tanker with a 50,000 dwt, with the amounts recorded in the accounts of 95.8188 million yuan and 157.1486 million yuan, respectively. The investment amount of Xingtong shares in the investment project increased by 27% and 21% respectively compared with the recorded amount of similar ships at the end of 2020.
In addition, in May 2018, June 2019 and November 2019, Xingtong co., Ltd. resolved to pay dividends three times, distributing cash dividends of 55 million yuan, 47.7625 million yuan and 60 million yuan respectively, according to this calculation, Xingtong shares paid dividends of 162.7625 million yuan in 2018 and 2019, while its net profit in 2018 and 2019 totaled 132.333 million yuan. At the same time, Xingtong intends to use the IPO to raise 384.5 million yuan to supplement the working capital.
In addition, the total investment amount of the "Digital Shipping R&D Center Project" of Xingtong Co., Ltd. was 82 million yuan, but the company's research and development expenses from 2018 to 2020 were 945,900 yuan, 699,700 yuan and 1,381,600 yuan, respectively, with a total of 3,027,200 yuan.
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