Three years after listing, Youfang Technology (688159. SH) launched its first refinancing plan, which has been accepted by the exchange.
On the evening of June 12, the company announced that the issuance of A-shares to specific targets in 2023 was accepted by the Shanghai Stock Exchange. According to the fixed increase plan, the issue price is 15.07 yuan, the maximum number of shares to be issued is 27.5 million, the total amount of funds raised does not exceed 414 million yuan, and the net amount after deducting the issuance expenses is intended to be used to supplement liquidity or repay loans.
Or affected by the news that the fixed increase plan was accepted, the company's stock quickly soared nearly 10% after today's opening, and then there was a shock fall, as of the close of June 13, the stock price closed at 31.78 yuan, up 4.06%, with a total market value of 2.928 billion yuan.
Titanium media APP noted that the fixed increase plan was thrown out as early as March this year, and the choice at that time may be because its stock price was in a downturn, and the additional offering price of 15.07 yuan, far lower than the company's IPO price of 20.35 yuan three years ago. Based on today's closing price of 31.78 yuan, the target of the proposed subscription of the company's non-public shares may have a floating profit of more than 400 million yuan.
The target of the issuance is the actual controller of the company, and the fixed increase constitutes a related party transaction
According to Youfang Technology's fixed increase plan, the target of this offering is Wang Kang, Shenzhen Vincent King Consulting Management Co., Ltd. (hereinafter referred to as "Vincent King"), of which Wang Kang is the actual controller of the listed company, and Vincent Wang is a company controlled by Wang Kang, so this offering constitutes a related party transaction.
Before the issuance, the total number of shares of Youfang Technology was 91.6795 million shares, and Wang Kang controlled a total of 27.1894 million shares of the company, accounting for 29.66% of the total share capital of the company before the issuance. According to the upper limit of 27.5 million shares issued this time, after the completion of this issuance, Wang Kang controls 54.6894 million shares of the company, accounting for about 45.9% of the company's total share capital after issuance, then Wang Kang's control position over Youfang Technology will be further strengthened.
Titanium Media APP found that in addition to the issuance of this fixed increase only to the actual controller of the company, the company's fundraising time selection is also quite clever.
On January 23, 2020, Youfang Technology issued new shares for the first time and was listed on the Science and Technology Innovation Board, and the company issued a total of 22.92 million new shares at a price of 20.35 yuan, raising a total of 466 million yuan.
The K-line chart shows that less than two months after listing, the stock price of Youfang Technology's secondary market rushed to 87.6 yuan, reaching the highest point since listing. After more than two years of correction, at the end of April 2022, the company's stock price bottomed out at 14.33 yuan, and although it rebounded since then, it was still weak, and then the stock price continued to find the bottom, and it was not until the beginning of this year that the stock price began to officially heat up, rebounding to the current 30 yuan.
It is worth noting that the issue price of this fixed increase is 15.07 yuan, which is not less than 80% of the average trading price of the company's shares in the 20 trading days before the pricing reference date. However, because the company's share price was already at a low level before the pricing benchmark date, the offering price was discounted by approximately 25% compared to the company's IPO price. After the release of the fixed increase plan, the stock price of Youfang Technology showed signs of gradually rising, and if calculated at today's closing price of 31.78 yuan, the target of the non-public offering of shares of the company to be subscribed for this time may float more than 400 million yuan.
In order to alleviate the pressure on funds, no more than 414 million yuan was raised to "replenish blood"
As for why the increase? The company said in the fixed increase plan that this move will help meet the company's business further expansion of liquidity needs, optimize capital structure, reduce financial risks, and improve sustainable development capabilities.
In fact, due to the intensification of market competition in recent years and the nature of the company's large customers mainly power enterprises, the process of group enterprises is lengthy and the return of funds is slow, resulting in poor cash flow and high pressure on the capital side.
The data shows that from 2020 to 2022, the company's accounts receivable amount will be 290 million yuan, 500 million yuan and 370 million yuan, respectively. Although it is lower in 2022, it is still higher than in 2020. The company also said at this year's shareholders' meeting that with the further expansion of business scale, if the company cannot effectively control the speed of accounts receivable collection and inventory turnover, and continue to strengthen cash flow management, the company's capital turnover will face certain pressure, which will have a greater adverse impact on the company's operation and business expansion.
High accounts receivable can also create cash flow issues. The data shows that in the first quarter of 2020, 2021, 2022 and 2023, the net cash flow generated by the company's operating activities was -91.94 million yuan, -86.72 million yuan, 126 million yuan and -92.08 million yuan, respectively. In this regard, the company stated in the fixed increase plan that since the company's main customers are affected by the slow collection of payments by its downstream customers, such as power enterprises, the average payment cycle is longer, and the account period given to downstream customers by the issuer's major suppliers, especially chip manufacturers, is short, so there is a certain time difference between upstream and downstream payment and collection settlement, which may lead to poor cash flow of the issuer.
At the same time, as of the end of 2022, the company's short-term borrowings were 225 million yuan, the total current liabilities were 580 million yuan, and the company's monetary funds were only 227 million yuan, so is there any debt repayment pressure for the company? In response to the above problems, titanium media APP as an investor to call Youfang Technology to inquire, the listed company said that the company still has a certain amount of bank credit, there should be no debt repayment pressure, and this fixed increase is mainly to improve the company's solvency.
It is worth mentioning that due to multiple factors such as changes in market demand, financial pressure, and the failure to achieve profitability in recent years, the fundraising projects "4G and NB wireless communication module and solution research and development and industrialization project" and "5G wireless communication module and solution research and development and industrialization project" have been postponed into use.
Youfang Technology also said in the fixed increase plan that after the completion of this offering, under the condition that the company's working capital is effectively supplemented, the loan demand will be correspondingly reduced, which will help reduce the company's financial expenses and improve its solvency.
The listing performance is "changing faces", with a three-year loss of nearly 150 million yuan
In fact, the previous sluggish stock price may be related to the poor fundamental performance of Youfang Technology.
According to public information, the main business of Youfang Technology is the research and development, production and sales of Internet of Things wireless communication modules, wireless communication terminals and wireless communication solutions. The products cover access cloud, pipe cloud, 2G/3G/4G/5G/NB-IoT/eMTC and other cellular wireless communication modules and complete machines.
Even before the IPO, Youfang Technology's performance was already volatile. From 2017 to 2019, Youfang Technology achieved operating income of 499 million yuan, 557 million yuan and 782 million yuan respectively; The net profit was 51.5778 million yuan, 43.4952 million yuan and 54.5605 million yuan respectively.
In the first year of listing in 2020, Youfang Technology fell into a loss, and it continued until 2022. In 2020 and 2021, Youfang Technology achieved operating income of 574 million yuan and 1.025 billion yuan respectively, and net profit losses of 75.0648 million yuan and 12.964 million yuan respectively. In 2022, the company achieved an operating income of 893 million yuan and a net profit loss of 59.1182 million yuan. For the company's revenue decline in 2022, its annual report said that the main reason was the decline in operating income in the power industry and the financial payment industry. If calculated based on the above data, since its listing three years ago, Youfang Technology has suffered a cumulative loss of 147 million yuan.
In addition, the company's gross profit margin on sales also has a downward trend. Financial report data shows that the company's sales gross margin decreased from 24.99% in 2019 to 14.67% in 2020, and although it recovered in 2021, it continued to decline by only 15.33% in 2022. In this regard, the company said in its 2022 annual report that the main reasons are the decline in the price of some products due to fierce competition in the industry and the increase in the procurement cost of some raw materials due to exchange rate fluctuations.
According to a securities research report, with the continuous iteration of communication standards in recent years, the application of 4G technology in the Internet of Things industry has become increasingly mature, and the gross profit margin of wireless communication modules has declined, and the same phenomenon may appear in 5G technology.
At the same time, the company's inventory has been high in recent years. From 2021 to 2022, the carrying value of the company's inventory will be 230 million yuan, 226 million yuan and 200 million yuan, respectively. In this regard, industry insiders told Titanium Media APP that the company maintains a certain amount of inventory to ensure the stability of operation, but if the price of raw materials and inventory goods drops sharply or the product sales are not smooth, and the company fails to respond effectively and make corresponding adjustments in a timely manner, the company will face the risk of inventory price decline.
It is worth noting that although it has only been listed for three years, Youfang Technology has been fined one after another for internal control and information disclosure problems. In September 2021, the Shenzhen Securities Regulatory Bureau conducted an on-site inspection of Youfang Technology, and due to the company's problems in corporate governance and internal control management, the Shenzhen Securities Regulatory Bureau ordered Youfang Technology to take corrective measures.
One year later, in September 2022, due to Youfang Technology's failure to fully consider credit impairment losses and accurately calculate share-based payment expenses during the preparation of the 2021 annual performance forecast and performance express report, resulting in a large deviation in the financial data in the "2021 Annual Performance Forecast" and "2021 Annual Performance Express" disclosed by the company, the Shenzhen Securities Regulatory Bureau decided to take regulatory measures to issue warning letters to Youfang Technology and related responsible persons Wang Kang and Li Yingeng. (This article was first published on Titanium Media App, author|Zhai Zhichao)