Produced by | Bullet Finance
Author | Wang Yajing
Edit | Hu Fangjie
American Editor | Qianqian
Audit | Ode
After sprinting to the Shanghai Stock Exchange's Science and Technology Innovation Board, Jinko Electronics chose to switch to the Hong Kong Stock Exchange.
On February 1, Guangdong Jinko Electronics Co., Ltd. (hereinafter referred to as "Jinko Electronics") submitted a report to the Hong Kong Stock Exchange, with CITIC Securities as the sole sponsor.
It is a provider of intelligent vision products and system solutions integrating LED+ technology, specializing in automotive intelligent vision, high-end lighting and new display products.
Since its delisting on the New Third Board in February 2019, Jinko Electronics' path to entering the capital market again has not been smooth.
According to public information, in 2019, the company submitted a report to the Science and Technology Innovation Board, but after receiving an inquiry letter from the Shanghai Stock Exchange, Jinko Electronics and the sponsor did not reply to the inquiry letter, and applied to withdraw the listing application documents in May 2020, and the road to A-shares was terminated.
Jinko Electronics, which did not successfully enter the Shanghai Stock Exchange, still successfully caught the Geely Express in business. According to the prospectus, in 2020, the company began business cooperation with Geely enterprises, and by 2022, Geely enterprises have become the company's largest customers.
After 4 years of accumulation, Jinko Electronics once again launched an attack on the capital market, but the target was changed from the Shanghai Stock Exchange to the Hong Kong Stock Exchange. And this time, will Jinko Electronics be able to knock on the door of the Hong Kong Stock Exchange?
1. Transferred to the Hong Kong Stock Exchange, the traditional lighting business fell one after another
Jinko's business history dates back to 2003.
In February of that year, Chen Zhenghao, Xiao Guowei and researchers from the Hong Kong University of Science and Technology began to engage in LED chip and product research and development business in Hong Kong through Microcrystalline Advanced Optoelectronics. In August 2006, Microcrystalline Advanced Optoelectronics established Jinko Electronics in Guangzhou, and gradually integrated the business operations of Microcrystalline Advanced Optoelectronics.
After years of operation, Jinko Electronics has occupied a certain position in the industry. According to CIC, in terms of revenue, the company ranked third among domestic manufacturers of devices and modules in China's high-end lighting industry in terms of revenue in 2022 and the first nine months of 2023, and ranked fifth among domestic manufacturers in China's mid-to-high-end automotive intelligent vision industry.
In terms of performance, Jinko's revenue has been rising, but profits have fluctuated.
According to the prospectus, from 2021 to the first nine months of 2023 (hereinafter referred to as the "reporting period"), the company achieved revenue of 1.388 billion yuan, 1.411 billion yuan and 1.339 billion yuan, and profits of 78 million yuan, 39.071 million yuan and 49.568 million yuan during the period. It can be seen that the company's profits will almost be "cut in half" in 2022.
(Photo / Jinko Electronics Prospectus)
And 2022 happens to be a turning point for Jinko Electronics.
This year, Geely's enterprises became the company's largest customer for the first time during the reporting period. With this in mind, Jinko Electronics' fledgling automotive intelligent vision business has developed by leaps and bounds.
From 2021 to the first nine months of 2023, the automotive intelligent vision business contributed 5.3%, 28.3% and 39.3% of the revenue, respectively. In less than three years, this smallest business has become the company's largest source of revenue.
(Photo / Jinko Electronics Prospectus)
However, Jinko Electronics did not hold the "city" of the traditional high-end lighting business. In 2021, the high-end lighting business achieved revenue of 1.034 billion yuan, accounting for 74.5% of the total revenue. In the first nine months of 2023, this business contributed only 38.3% of the revenue, amounting to only 513 million yuan.
With such a mixed report card, Jinko Electronics launched a sprint to the Hong Kong Stock Exchange. In fact, this is not the first time that the company has tried to land in the capital market.
As early as 2016, Jinko Electronics had landed on the New Third Board, and it was not until February 2019 that the company was delisted from the New Third Board. In this regard, the company said that this move is to adjust the development strategy and prepare for the application for listing on the Science and Technology Innovation Board of the Shanghai Stock Exchange.
In December 2019, the company submitted a prospectus to the Science and Technology Innovation Board. Subsequently, the Shanghai Stock Exchange sent the first round of inquiries to Jinko Electronics in January 2020, but the company did not reply. Four months later, in May 2020, Jinko Electronics and the sponsor applied to withdraw the listing application documents.
2. Over-reliance on Geely, Li Shufu's son made a surprise move
It is undeniable that since the collapse of the Science and Technology Innovation Board, Jinko Electronics has tried to change, but unfortunately, the company has still not changed its dependence on large customers.
Previously, it disclosed in the prospectus submitted to the Shanghai Stock Exchange that from 2016 to 2018, the revenue from the top five customers accounted for 82.77%, 81.71% and 87.49% of the operating income in the same period, respectively.
(Photo / Jinko Electronics Prospectus (Science and Technology Innovation Board Version))
At this time, Philips Lighting and Samsung Electronics, as the top two customers, contributed far more revenue to the company. From 2016 to 2018, the revenue from these two customers accounted for 51.19%, 66.67% and 68.15% of the company's operating income. At this time, the company is still focusing on LED packaging and application module products.
However, Jinko Electronics was already testing the waters to cut into the automotive field at this time and successfully established a relationship with Geely.
According to the prospectus, in October 2018, the company and Geely enterprises jointly established an automotive intelligent vision product company - Lingwei Vision. Among them, Zhejiang Jichuang of Geely Holding holds 51% of the shares, and Jinko Electronics holds 49% of the shares.
(Photo / Jinko Electronics Prospectus)
However, in December 2020, Zhejiang Jichuang transferred all the shares of Lingwei Vision held by it and withdrew, and the receiver was Yaoning Technology. It is worth noting that as of the Latest Practicable Date, Yaoning Technology was indirectly controlled by Li Xingxing, the son of Li Shufu, Chairman of Geely Holding Group.
(Photo / Jinko Electronics Prospectus)
The relationship between Jinko Electronics and Geely has not been severed, but has been deepened. Also in 2020, Jinko Electronics began to cooperate with Geely enterprises.
Since then, Geely's business has become increasingly important. According to the prospectus, from 2021 to the first nine months of 2023, the company's revenue from Geely enterprises was 51 million yuan, 350 million yuan and 483 million yuan respectively, accounting for 3.6%, 24.8% and 36.1% of the total revenue in the same period.
Among them, in 2022 and the first nine months of 2023, Geely's enterprises are Jinko's largest customers.
(Photo / Jinko Electronics Prospectus)
And Jinko Electronics' close relationship with Geely doesn't stop there.
According to the prospectus, Zheng Xin, who serves as a non-executive director of the company, is Li Shufu's son-in-law. In addition, since December 2020, Zheng Xin has served as the general manager of Yaoning Technology.
(Photo / Jinko Electronics Prospectus)
On the eve of Jinko Electronics' IPO, Yaoning Technology made a surprise purchase. In December 2023, Jinko Electronics acquired its entire interest in Lingwei Vision from Yaoning Technology, not in cash, but in consideration for the issuance of shares to Yaoning Technology.
(Photo / Jinko Electronics Prospectus)
Jinko's explanation for this behavior is to streamline the group's corporate structure.
From Li Xingxing's side, after obtaining these allotment shares, Yaoning Technology has become an important shareholder of Jinko Electronics. Before the IPO, Yaoning Technology held 13.76% of the company's shares, and was the only single shareholder with a shareholding ratio of more than 10% except Microcrystalline Advanced Optoelectronics, and Li Xingxing became a major shareholder of Jinko Electronics because of his interest in Yaoning Technology.
(Photo / Jinko Electronics Prospectus)
After deeply binding Li Shufu's son and son-in-law, the relationship between Jinko Electronics and Geely may be stronger.
Jinko Electronics also expects that the revenue from Geely will continue to grow in the future. According to the prospectus, the company has entered into a framework agreement with each member of Geely Group for the supply of products and services, according to which from 2024 to 2026, the upper limit of the transaction amount from Geely is 1.081 billion yuan, 1.218 billion yuan and 1.255 billion yuan respectively.
(Photo / Jinko Electronics Prospectus)
3. Shareholders have cashed out hundreds of millions of dollars
In Jinko's list of shareholders, there is actually no shortage of capital institutions.
For example, before the listing on the New Third Board, the company had experienced a series of equity changes and capital increases, and successively introduced Haohan Optoelectronics, Yueke Investment, National Venture Capital, Jingyu Optoelectronics and other enterprises.
During the listing on the New Third Board, Jinko Electronics conducted two rounds of allotment financing in 2016 and 2018.
In 2016, the company raised 89.908 million yuan by allotment, and introduced a number of institutions such as China Insurance Industry, Guangdong Science and Technology Venture Capital, and Xi'an Jiaotong Science and Technology Innovation.
In 2018, the company raised 211 million yuan by allotment of shares again. It is worth noting that in the process of this allotment, Gao Tao, the spouse of Hou Yu, the company's president, and Wang Hongying, the spouse of Zeng Mingming, the company's vice president, were able to enter the ranks of the company's shareholders.
(Photo / Jinko Electronics announcement, prospectus)
Soon after the company was delisted from the New Third Board, Jinko Electronics' shareholders started the road to cash.
In June 2019, Microcrystalline Advanced Optoelectronics transferred shares to Zhongke Baiyun and Fengyan Investment, cashing out about 29.82 million yuan and 3 million yuan respectively.
(Photo / Jinko Electronics Prospectus)
In 2021, Dongyi Fund and Microcrystalline Advanced Optoelectronics carried out several equity transfers, with a total of about 108 million yuan in cash.
(Photo / Jinko Electronics Prospectus)
In May 2022, Hengzhouxin transferred 2 million shares and cashed out 6 million yuan, and in June and August 2023, Jiamu Rongrong and Fengyan Investment cashed out 27.23 million yuan and 3 million yuan respectively through equity transfer.
(Photo / Jinko Electronics Prospectus)
Jinko Electronics said that the company did not receive any proceeds because the investments were made through the transfer of shares between shareholders.
Jinko Electronics may need these funds more than these shareholders. As of December 20, 2023, the company's cash and cash equivalents were only 163 million yuan, which is comparable to the cash amount of shareholders.
(Photo / Jinko Electronics Prospectus)
Similarly, as of December 20, 2023, the company's unused bank financing was 901 million yuan, which will undoubtedly increase the company's debt, and the company's debt-to-asset ratio is already on an upward trend.
From 2021 to the end of September 2023, Jinko Electronics' asset-liability ratios were 54%, 54% and 58%, respectively.
(Photo / Jinko Electronics Prospectus)
Listing financing can not only not increase the debt of the enterprise, but also supplement the cash flow, which can be described as killing two birds with one stone.
As a result of the IPO, Jinko Electronics plans to use a portion of the net proceeds for working capital and general corporate purposes. The Company believes that the Company has sufficient working capital to meet its current (i.e. at least 12 months from the date of this document) taking into account the operating cash flow, net proceeds from the financing and available financial resources.
When after 4 years, Jinko Electronics made a detour to hit the Hong Kong Stock Exchange, which can also be glimpsed. It's just that I don't know, this time, after being closely related to Geely's enterprises and automobile business, can Jinko Electronics enter the Hong Kong Stock Exchange as it wishes?
*The title image in the article comes from: Camera.com, based on VRF protocol.