Text/Rui Finance Yang Hongbin
With two days left before the end of 2023, Chen Zhengyuan decided to take another important step with Shengfulai - to sprint to the Beijing Stock Exchange.
Shengfulai is one of the main manufacturers of reflective materials industry in China, and the company's current products can be divided into two categories: high refractive index glass beads and products and optical films according to product forms and characteristics.
Judging from the development process, Shengfulai may not have been founded by Chen Zhengyuan, but by the time it was submitted to the Beijing Stock Exchange, Chen Zhengyuan and his son Chen Oubo were already the actual controllers of the company.
Chen Zhengyuan's relationship with Shengfulai may have been in 1980. At the age of 35, he was transferred to Taizhou Jiaojiang Glass No. 3 Factory as deputy director, and then was promoted to factory director, where he stayed for 30 years.
In 2004, the predecessor of Centroi was established, and Chen Zhengyuan held the largest number of shares among the original nominees. In 2011, the first year of Chen Zhengyuan's resignation as the director of the No. 3 Glass Factory, Taizhou Zhentai, which was transformed from the No. 3 Glass Factory, became the largest shareholder of Centrobe until it was submitted to the Beijing Stock Exchange. Chen Zhengyuan has been the chairman of the board since the establishment of Shengfulai.
Under the leadership of Chen Zhengyuan, Shengfulai has been listed on the New Third Board in August 2022. But his ambitions still don't stop there, and in December 2023, Centroi launched a sprint to the Beijing Stock Exchange, and he is nearly 79 years old this year.
According to the prospectus, Shengfulai intends to issue no more than 15.831 million shares, accounting for 25.00% of the total share capital after the issuance, and the raised funds will be used for an annual output of 3,000 tons of high refractive index glass beads and R&D center construction projects and supplementary working capital, involving 173.5 million yuan and 30 million yuan respectively.
However, the road to listing was not smooth, and soon after the submission of the form, the regulator sent a total of 13 questions, including the company's gross profit margin, controlling shareholder issues, technology sources and independence issues.
As for these questions, Centroi has not been able to answer within the stipulated time, and has extended the response date and has not disclosed it by press time.
01
Fosun has earned 13.18 million yuan in 10 years of investment, and Chen Zhengyuan and his son control 62.93% of the voting rights
The predecessor of Shengfulai, known as Jiangxi Shengfulai Directional Reflective Materials Co., Ltd., was founded in 2004 by 8 natural persons including Chen Zhengyuan, with a registered capital of 10 million yuan, of which Chen Zhengyuan invested 3 million yuan, and the remaining 7 people each contributed 1 million yuan.
1. The holding is lifted, and Fosun participates
A year after its establishment, Shengfulai ushered in the first equity change, Guo Guangchang's "Fosun System" entered Shengfulai through Shanghai Fosun Chemical and Pharmaceutical Investment Co., Ltd. (hereinafter referred to as "Shanghai Fosun"), holding 5% of the shares, in addition, Taizhou Jiaojiang Glass No. 3 Factory also became a shareholder, also holding 5% of the shares, all of which came from Chen Zhengyuan, but the price of equity transfer was only 1 yuan/capital contribution.
At the same time, 8 natural person shareholders, including Chen Zhengyuan, transferred their equity to Taizhou Orientation, and the transfer price was also 1 yuan/capital contribution. After this change, Shengfulai is 90% owned by Taizhou, 5% by Shanghai Fosun, and 5% by No. 3 Glass Factory.
The transfer of the equity of the eight natural persons was to resolve the nominee shareholding relationship at the time of the establishment of Centroly. Before the establishment of Shengfulai, the Company Law did not allow the establishment of a one-person company, so Taizhou Directional entrusted 8 natural persons to hold it on its behalf, and the equity obtained by Shanghai Fosun and the Third Glass Factory was actually from Taizhou Direction.
In December 2005, Shengfulai received a targeted capital increase of 8 million yuan from Taizhou, the controlling shareholder. As a result, Taizhou's shareholding in it rose to 94.44%, and the shareholding of Shanghai Fosun and the third glass factory both decreased to 2.78%. After 2010, Shanghai Fosun and No. 3 Glass Factory were renamed Fosun Venture Capital and Taizhou Zhentai respectively.
In April 2011, Shengfula ushered in the second equity change, and Taizhou Directional transferred all the subscribed capital contributions to Fosun Venture Capital, Taizhou Zhentai, in addition to Chi Xuexiang, the initial holding of 7 natural persons, and natural person Li Hongyuan.
Among them, for Taizhou Zhentai and Fosun Venture Capital, the two companies were transferred to Taizhou with a directional capital contribution of 7.5 million yuan and 6.6173 million yuan respectively, at a price of 9.4298 million yuan and 8.32 million yuan, and the capital contribution cost was 1.2573 yuan/capital contribution share. The capital contribution cost of 8 natural persons is 1.7911 yuan/capital contribution share.
As a result, the shareholding structure of Shengfulai has become the largest and second largest shareholders of Taizhou Zhentai and Fosun Venture Capital respectively, holding 44.44% and 39.54% of the shares respectively, and the remaining 16.11% is held by 8 natural persons.
Six months later, Shengfulai ushered in the second capital increase, Chen Zhengyuan contributed 1.612 million yuan, Lu Yuming and Cao Xi contributed 537,300 yuan and 1.433 million yuan. The cost of the three people is 1.7911 yuan/contribution share, which is the same as the transfer price 6 months ago.
After the completion of the second capital increase, the equity ratios of Taizhou Zhentai and Fosun Venture Capital were reduced to 40% and 35.59% respectively. Chen's stake rose to 7.32%.
2. Multiple financings involve VAM, and Fosun exits after realization
Since then, Centroa has ushered in 13 more shareholding changes, including the increase in Chen Zhengyuan's shareholding, the acquisition of his son Chen Oubo, and the realization of Fosun.
Chen Oubo's first investment was in May 2012, when Lu Yuming withdrew and transferred his equity to Chen Oubo at the same price as his purchase price. Chen Zhengyuan has repeatedly acquired shares from the shareholders of Shengfula, and the counterparties include Lin Haibing, Hu Zhong, Cao Xi, Fosun Venture Capital, and Taizhou Zhentai, whose personal shareholding reached 23.04% in 2015, second only to Taizhou Zhentai.
After that, Chen Zhengyuan gradually transferred his equity to the shareholding platform Yichun Ruitai and employees such as Li Junding, Yao Zhimin, and Zhang Xuede.
Fosun's realization was from 2014 to 2015, when all the shares of Shengfulai were transferred to Hu Zhong and Chen Zhengyuan respectively, with a total price of 22 million yuan, and according to its two shareholding prices of 8.82 million yuan, its investment in Shengfulai earned 13.18 million yuan, and Fosun Venture Capital has been cancelled in November 2023.
In September 2020, Shengfulai obtained the last capital increase, and the total share capital of the issuing company increased to 46,692,500 shares, which was subscribed by the state-owned Hunan High Venture Capital, etc., and the subscription price has reached 11.1153 yuan per share, and the company's pre-investment valuation has reached 450 million yuan.
It is worth mentioning that some of the multiple financings obtained by Centrolite involved VAM agreements, but they have now been dissolved. For example, Zheng Qian's capital increase in 2016, Hunan High-tech Capital, Wuxi Huikai Haite, and Shenzhen Xingping No. 1 Capital Increase in 2020.
After a series of equity transfers, the final shareholding structure of Shengfulai is: Taizhou Zhentai is the largest shareholder, holding 33.84% of the shares, Yichun Ruitai is the second largest shareholder, holding 24.78% of the shares, Chen Zhengyuan directly holds 2.94% of the shares, and Chen Oubo directly holds 1.37% of the shares. The father and son duo and Taizhou Zhentai are acting in concert, and are also the general partners of Yichun Ruitai and serve as executive partners. Therefore, Chen Zhengyuan and Chen Oubo hold 62.93% of the company's voting rights.
Before submitting the form to the Beijing Stock Exchange, Shengfulai had been listed on the New Third Board, which was listed on August 12, 2022, and issued 800,000 shares at a price of 12.85 yuan per share, raising 10.28 million yuan.
02
The non-controlling shareholder has raised regulatory questions, and many of Chen Zhengyuan's relatives are lurking among them
1. The father and son are the actual controllers but not the largest shareholders
Although Chen Zhengyuan and Chen Oubo are not the largest shareholders of Shengfula, they are the actual controllers of the company. According to the disclosure in the prospectus, Yichun Ruitai, the second largest shareholder of Shengfula, is a partnership, with Chen Zhengyuan and Chen Oubo as executive partners, and the father and son control 24.78% of the shares of Shengfulai through Yichun Ruitai.
In terms of shareholding structure, Chen Zhengyuan and Chen Oubo hold 15.58% and 0.92% of Yichun Ruitai respectively, with a total shareholding of 16.5%, and Yichun Ruitai's only one limited partner, Lu Chunmin, holds 17.20% of the shares, which is higher than that of father and son.
After adding Yichun Ruitai's shareholding, Chen Zhengyuan and Chen Oubo hold a total of 33.91% of Shengfuli, which is close to Taizhou Zhentai's shareholding. Taizhou Zhentai is a limited liability company held by 86 natural persons, and its shareholding ratio is relatively dispersed, and the resolution of the general meeting of shareholders shall be voted according to the shares held by its shareholders.
Chen Zhengyuan and Chen Oubo are both among the shareholders of Taizhou Zhentai, of which Chen Zhengyuan is the largest shareholder, holding 10.53% of the shares, and Chen Oubo is the seventh largest shareholder, holding 3.73% of the shares, but the father and son are unable to actually control Zhou Zhentai.
In order to strengthen the control of Shengfulai, on November 5, 2021, Chen Zhengyuan, Chen Oubo and Taizhou Zhentai signed a concerted actor agreement, and after the signing of the "Concerted Actors Agreement", Chen Zhengyuan, Chen Oubo and his son can actually control 62.93% of the company's voting rights.
However, by the time the statement was submitted to the Beijing Stock Exchange, Centroi did not have a controlling shareholder. This point aroused regulatory concern, and a query was sent to Centro, asking for an explanation of Taizhou Zhentai's background and source of capital contribution, and the reasons why it was not identified as a controlling shareholder, as well as the possibility of a change in its control caused by changes in Taizhou Zhentai's internal shareholding structure.
As for Chen Zhengyuan, Chen Oubo and his son's shareholding in Shengfulai through Yichun Ruitai, the regulatory authorities also have questions and ask for clarification on whether the basis for the determination of being able to control Yichun Ruitai is sufficient.
2. A number of relatives latent in holding shares, and did not constitute a concerted actor with Chen Zhengyuan
In the two platforms of Taizhou Zhentai and Yichun Ruitai, there are not only Chen Zhengyuan, Chen Oubo and his son, but also many relatives of Chen Zhengyuan's family. For example, Chen Jingyi, the 11th largest shareholder of Taizhou Zhentai, and Chen Zhengyuan have a father-daughter relationship; among the shareholders of Yichun Ruitai, Chen Zhengyuan and Chen Zhengfei are brother and sister, Chen Zhengyuan and Chen Jianzhi are uncles and nephews, and Yuan Qifeng is Chen Zhengyuan's niece and son-in-law.
However, in the disclosure of the prospectus, these relatives did not constitute concerted actors with Chen Zhengyuan, Chen Oubo and his son.
The strange thing is that Chen Zhengyuan and Chen Oubo father and son served as chairman and director respectively in the board of directors of Shengfula, but the two did not serve as senior managers, the general manager of Shengfulai was Li Junding, and the deputy general manager was Yuan Qifeng.
Li Junding is the only member of the board of directors who has served as a senior management of Centroa, and according to the information, he has served as a director, executive deputy general manager and general manager of Centroa since 2013, and a director of Taizhou Zhentai since 2010. From 1989 to 2000, Li Junding served as the head of the General Department and the deputy director of the Board Office of Zhejiang Crystal Electronics Group Co., Ltd.
Since 2000, Li Junding has served as the deputy general manager and director of Taizhou Orientation, which has been the largest shareholder of Centroi until April 2011.
03
The capacity utilization rate of products has declined rapidly, and the independence of technology research and development is not clear
According to the prospectus, Shengfulai is an enterprise specializing in the research and development, production and sales of high refractive index glass beads and products and optical films, which can be mainly divided into two categories: high refractive index glass beads and products and optical films.
Among them, optical film products are divided into two categories: micro-prism reflective film and PC light diffusion plate (film). It is produced by Jiangxi Shenghui, a subsidiary of Shengfulai. The company is 77% owned by Shengfula, 13.50% by Lu Siyao, 4.75% by Guangzhou Shenghui and 4.75% by Baiyun Xinda.
1. The capacity utilization rate of one of the main products has declined rapidly
From the perspective of revenue structure, the main source of income is high refractive index glass beads and products, followed by optical films. From 2020 to 2022, the company's main business income was 228 million yuan, 276 million yuan and 256 million yuan respectively, and during the period, the revenue brought by high refractive index glass beads and products and optical films accounted for 59.58%, 38.18%, 58.30%, 39.15%, 57.04% and 38.88% respectively.
As one of the main products of Centroa, PC light diffusion plate (film) has experienced a rapid decline in capacity utilization in recent years. In 2020, the capacity utilization rate of this product reached 80.77%, which decreased to 76.56% in 2021, and fell sharply to 52.58% in 2022. In the first half of 2023, the capacity utilization rate of this product has dropped to 51.03%.
2. Technical independence is questioned by regulators
Regarding the research and development of Shengfulai products, the prospectus mentions that the company has cooperated with Ola Optics to carry out research on the structure and preparation method of a new generation of micro-prism reflective film, and has established a joint laboratory of functional optical materials and a master's/doctoral engineering practice base with Wuxi Institute of New Materials of Harbin Institute of Technology, and established a professional R&D team led by professors and responsible for doctors.
Secondly, SFL has established two provincial-level scientific research platforms (Jiangxi Reflective Materials Engineering Technology Research Center and Jiangxi Reflective Materials Engineering Research Center), which include functional optical film R&D group, special adhesive R&D group, glass bead R&D group, coating process development group, analysis and testing center, etc.
As of the submission table, Shengfula has 4 core technologies, namely high refractive index glass bead manufacturing technology, high refractive index glass bead surface treatment technology, micro prism reflective film manufacturing technology, and PC light diffusion plate (film) manufacturing technology.
In the manufacturing technology of micro-prism reflective film, Shengfulai has been authorized to use the technology by others, and the authorized parties are Aura Optics and Guangzhou Shenghui. Among them, Aura Optics provided Centfula with the patent authorization of "metallized microprism reflective film with improved observation angle", and the use authorization of a specific pattern steel strip spliced by N1 or N2 molds.
This has also raised regulatory questions, requiring Centroa to explain whether the source of the core technology is independent, and whether there is a situation where the technology research and development relies on shareholder investment, third-party authorization or cooperative research and development.
The risk warning column of the prospectus of Shengfulai writes that some of the technologies and patents of the company's micro-prism reflective film products come from the authorization of partners, and if the technology or patent authorization status changes in the future, it will have an adverse impact on the production and operation of the company's micro-prism reflective film products.
3. There is only 1 person with a master's degree or above, and the R&D investment is lower than that of the industry
It is not unreasonable for regulators to question the source of Forest's core technology. As an enterprise that needs to conduct product research and development, the overall education level of Centrois employees is not high, and the investment in research and development is also lower than the industry level.
As of the submission table, Shengfulai currently has a total of 308 employees, only 1 has a master's degree or above, 21 have a bachelor's degree, and 220 have a college degree or less, accounting for 71.43% of the total number of employees.
From 2020 to the first half of 2023, the R&D investment of Shengfulai was 9.3131 million yuan, 10.0798 million yuan, 11.1127 million yuan, and 5.5482 million yuan respectively, and the R&D expense rates were 4.08%, 3.64%, 4.34%, and 4.42% respectively.
The average R&D expense ratios of the six comparable companies were 5.05%, 5.94%, 5.82% and 5.34% respectively.
04 The gross profit margin is higher than the industry level, and the dividend before the submission of the statement is 55 million yuan
In recent years, Centroa's revenue and profit have not maintained stable growth. From 2020 to 2022, the company's revenue was 228 million yuan, 277 million yuan and 256 million yuan respectively, and during the same period, the net profit attributable to the parent company was 38.1402 million yuan, 48.9024 million yuan and 37.288 million yuan respectively. It can be seen that the company will experience a decline in both revenue and net profit in 2022.
In the first half of 2023, Shengfula's revenue will be 126 million yuan, and the net profit attributable to the parent company will be 18.4476 million yuan.
Changes in operating costs in Centroa's business were consistent with changes in revenue. From 2020 to the first half of 2023, the company's operating costs will be 146 million yuan, 186 million yuan, 179 million yuan, and 87.3879 million yuan respectively. However, in 2022, the company's revenue decreased by 7.62%, but the operating cost decreased by only 3.58%, which led to a decline in the company's gross profit.
1. The gross profit margin is higher than the overall level of the industry, and the overseas gross profit margin is higher than that of the domestic market
From the perspective of the industry, the gross profit margin of Shengfulai in recent years is higher than the industry average, including the decline in gross profit margin in 2022. From 2020 to the first half of 2023, the company's gross profit margin will be 36.24%, 33.12%, 30.18%, and 31.08% respectively.
In the same period, the average gross profit margin of the six comparable companies was 27.64%, 26.95%, 22.71% and 24.36% respectively.
It is worth noting that Centroa's business is not limited to domestic, and part of its revenue comes from overseas sales, which accounted for 17.71%, 14.77%, 16.07% and 27.18% of revenue from 2020 to the first half of 2023, respectively.
In the first half of 2023, Centfula's overseas sales revenue grew rapidly. In this regard, it explained that the sales to the customer JAPAN TRADE SERVICE CENTER from January to June 2023 were 18.3986 million yuan, which was close to the customer's sales revenue for the whole year of 2022, resulting in an increase in the proportion of overseas sales.
In terms of gross profit margin, the gross profit margins of domestic sales during the period were 34.51%, 32.13%, 28.96% and 28.99%, respectively, and the gross profit margins of overseas sales were 44.27%, 38.79%, 36.53% and 36.66% respectively. The gross profit margin of overseas sales is higher than that of domestic sales. As for the specific customers of overseas sales, Shengfulai did not disclose in detail.
In addition to operating costs, management expenses are the most important expense of Centroly, and from 2020 to the first half of 2023, the expenses recorded 18.2109 million yuan, 15.2148 million yuan, 15.2231 million yuan, and 7.4798 million yuan respectively.
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During the same period, the non-operating expenses of Shengfulai were 609,700 yuan, 272,300 yuan, 93,200 yuan and 26,200 yuan respectively, mainly for external donations and losses from the scrapping of fixed assets, of which the compensation and fine expenses were 19,100 yuan, 13,100 yuan, 78,800 yuan and 4,400 yuan respectively.
Before submitting the statement to the Beijing Stock Exchange, Shengfula has paid dividends three times, namely dividends in 2020, interim dividends in 2021 and dividends in 2022, corresponding to 15 million yuan, 20 million yuan, and 19.9944 million yuan, totaling nearly 55 million yuan. Dividends accounted for 37.38%, 70.42% and 50.62% of the net profit for the current period respectively.
In recent years, Everlais has not been under much debt pressure. As of the end of June 2023, the company's monetary funds on hand were 52.5768 million yuan, short-term borrowings under current liabilities were 6.0064 million yuan, bank acceptance bills payable were 13.903 million yuan, and accounts payable were 16.8115 million yuan, and the cash on hand was sufficient to cover these payments.
In terms of cash flow, from 2020 to June 2023, Shengfula's operating cash flow continued to maintain a positive value, which was 57.6586 million yuan, 65.1093 million yuan, 31.6098 million yuan and 22.4353 million yuan respectively.
Attached: List of Listing and Issuance Intermediaries Sponsor and underwriter: Zhongtian Guofu Securities Law Firm: Shanghai AllBright Law FirmAccounting Firm: Tianjian Certified Public Accountants (Special General Partnership) Asset Appraisal Agency: Hubei Zhonglian Asset Appraisal Co., Ltd