Polytechnic Navigation Equity Acquisition Received Inquiry Letter Again, the Company's Stock Price Break, Performance Has "Turned on the Red Light"

After more than half a year, Polytechnic Navigation once again received an inquiry letter from the exchange due to equity acquisition. It is worth mentioning that the company's performance has been declining continuously since its listing in 2022, and it has been in a state of loss, so the company's shares may also be subject to delisting risk warning. Not only that, but the company is also facing the dilemma of halving the stock price.

Source: Photo.com

The acquisition at a premium of nearly 350% attracted attention, and the exchange's inquiry letter pointed to a number of issues such as performance commitments

On April 3, Beijing Institute of Technology Navigation and Control Technology Co., Ltd. (stock abbreviation: Science and Technology Navigation; stock code: 688282. SH) disclosed that it had received an inquiry letter from the exchange, involving the company's acquisition of the equity of Shijiazhuang Yuxun Electronics Co., Ltd. (hereinafter referred to as Yuxun Electronics).

According to the announcement, Polytechnic Navigation intends to acquire control of Yuxun Electronics by way of equity acquisition and capital increase, of which it is planned to increase the capital of Yuxun Electronics with 50 million yuan and acquire the equity of Yuxun Electronics held by the counterparty with 76.5 million yuan. After the completion of this transaction, Polytechnic Navigation will acquire 50.60% of the equity of Yuxun Electronics.

According to the disclosure, Yuxun Electronics is located in a specialized directional supporting military market, mainly used on a variety of weapons platforms such as ground fixed, vehicle-mounted, airborne, shipborne, and missile-mounted. Yuxun's current main products include RF and microwave devices/modules, components, equipment, etc., and there are synergies with listed companies in products, technology, procurement and other links.

Polytechnic Navigation said that after the completion of this transaction, the company and Yuxun Electronics can produce synergies in products, technology research and development, development resources and other aspects, which is conducive to enhancing the company's profitability and anti-risk ability.

Regarding the acquisition of assets, the Shanghai Stock Exchange sent a letter of inquiry to Polytechnic Navigation, requiring the company to verify and supplement the disclosure of a number of issues.

Among them, in terms of the business and synergies of the target company, Polytechnic Navigation is required to explain whether there is a risk of dependence on specific customers and specific products of Yuxun Electronics, whether the change of control of Yuxun Electronics has an adverse impact on its customer relationships, orders in hand, business qualifications, etc., and it is required to explain whether the business income of Yuxun Electronics is sustainable and whether there is a risk of large fluctuations in income in combination with the order placement cycle of major customers in the reporting period, the orders in hand at the end of the period and the expected delivery cycle.

The final evaluation conclusion of this acquisition is based on the income method, and the value of all the equity of Yuxun Electronics shareholders is 210 million yuan, with an appraised value of 163 million yuan and an appreciation rate of 349.08%. In the letter of inquiry, the Exchange requested Polytechnic Navigator to disclose the key indicators such as forecasted revenue, cost, gross profit margin, expense ratio and net profit assessed by the income method, the basis and reasonableness of the determination of each index, and explain whether the valuation of the target company is reasonable and fair in combination with comparable transaction cases and comparable listed companies.

In terms of performance, in 2022, Yuxun Electronics will achieve a net profit of 8.6459 million yuan, and a net profit of 12.6304 million yuan from January to November 2023, a year-on-year increase of about 46%. The counterparty of the transaction promised that the net profit attributable to the parent company of Yuxun Electronics before and after deducting non-profits from 2024 to 2026 would not be less than 60 million yuan, and from 2024 to 2026, it would not be less than 13 million yuan, 19.5 million yuan, and 27.5 million yuan respectively, with a compound growth rate of over 45%. The exchange requires Polytechnic Navigation to explain the realizability of this performance commitment, the reasonableness of the rapid growth of net profit during the performance commitment period, and whether the counterparty has the ability to compensate for performance and performance guarantee measures based on the historical performance, industry status and prospects, orders in hand, and performance guarantee measures for Yuxun Electronics.

According to the audit report, the balance of accounts receivable at the end of November 2023 was 80.3798 million yuan, and the balance of notes receivable was 9.3068 million yuan, accounting for 115.77% of the current operating income, the aging was mainly less than one year, and the total balance of bad debt provision at the end of the period was 5.1163 million yuan. Among them, the balance of accounts receivable at the end of the first period of the customer was 65.7006 million yuan. The exchange requires Polytechnic Navigation to explain whether the provision for bad debts of the target company's receivables is reasonable and sufficient, and whether there is a risk that the accounts receivable cannot be collected for a long time.

In addition, Polytechnic Navigator disclosed that after the completion of this transaction, it is expected to form a large amount of goodwill, and the inquiry letter requires the company to clarify the scope of the asset group corresponding to the formation of goodwill, the amount of goodwill expected to be formed and the proportion of net assets, and fully indicate the risk of goodwill impairment in a quantitative manner.

The previous asset acquisition also received an inquiry letter from the exchange, and was terminated after two postponement responses

Prior to this acquisition, Polytechnic Navigation had also planned an equity acquisition in 2023, but it was eventually terminated due to the lack of agreement on the transaction price and performance commitment compensation of the target company.

On September 6, 2023, Polytechnic Navigation signed the "Acquisition Intent Agreement" with the shareholders of Chongqing Aerospace New Century Satellite Application Technology Co., Ltd. (hereinafter referred to as Chongqing New Century), and the company intends to acquire 51% of the equity of Chongqing New Century Corporation and obtain control of the company in cash. According to the information disclosed at the time, the overall valuation of Chongqing New Century is estimated to be no higher than 387.5 million yuan.

According to the disclosure, Chongqing New Century specializes in the research and development, production and sales of mobile satellite communication systems (in motion), laser gyroscopes, laser gyroscopes, strapdown inertial navigation systems, rapid positioning and orientation systems, aerospace telemetry and remote control equipment and other products, the main products include inertial navigation and its positioning and orientation systems, telemetry and remote control systems, and mobile satellite communication systems.

Polytechnic Navigation said at that time that through this acquisition, it will expand the application field of the company's products, enter the field of special vehicle navigation and communication, expand the application of the company's fiber optic gyroscope and inertial navigation system, and create new business growth points, so as to enhance the company's profitability and industry competitiveness.

On September 11, 2023, Polytechnic Navigation also received an inquiry letter from the Shanghai Stock Exchange, which involved issues such as business synergy, performance commitments, and goodwill of the target company. According to the requirements of the Shanghai Stock Exchange, Polytechnic Navigator should complete the reply to the relevant questions and disclose them to the public before September 26, 2023.

However, on September 25, 2023, Polytechnic Navigator applied to the Shanghai Stock Exchange to postpone the completion of the reply to the inquiry letter and external disclosure by October 12, 2023. On October 12, 2023, the company again applied for an extension to complete the response to the inquiry letter and external disclosure by October 26, 2023.

After two postponement responses, what was waiting for was a notice of termination of the acquisition by the company.

Polytechnic Navigator disclosed that since the signing of the acquisition intention agreement, the company has entrusted intermediaries and business personnel to conduct audit, evaluation, legal and business due diligence on the target company. After sufficient argumentation and analysis, the parties to the transaction believe that the conditions of this transaction are not yet mature, and the parties to the transaction have not reached an agreement on the transaction price and performance commitment compensation, etc., on October 25, 2023, Polytechnic Navigation and the counterparty signed a termination agreement of acquisition intention.

The performance of Polytechnic navigation "turned on the red light", and the stock price was cut in half after two years of listing

According to the data, Polytechnic Navigation was established in February 2012 and listed on the Science and Technology Innovation Board of the Shanghai Stock Exchange on March 18, 2022. The company focuses on the R&D, production and sales of inertial navigation systems and core components.

In terms of performance, in the first year of listing on the Science and Technology Innovation Board in 2022, Polytechnic Navigation achieved an operating income of 204.7085 million yuan, a year-on-year decrease of 35.67%, and a net profit attributable to the owners of the parent company of 55.8026 million yuan, a year-on-year decrease of 23.63%.

Not only that, due to the impact of the supporting relationship of the industrial chain, starting from the end of 2022, some supporting manufacturers of the superior supporting units of Polytechnic Navigation have experienced a shortage of capacity supply, resulting in a decline in the demand for the company's product procurement by the superior supporting units, and the number of contract orders signed by the company in 2023 is small, resulting in a significant decline in the scale of revenue.

In 2023, the company will achieve a total operating income of 21.7504 million yuan, a year-on-year decrease of 89.37%, a net profit attributable to shareholders of listed companies of -22.5435 million yuan, a year-on-year decrease of 140.40%, and a net profit attributable to shareholders of listed companies after deducting non-recurring gains and losses of -44.1553 million yuan, a year-on-year decrease of 211.31%.

It should be noted that the performance of Polytechnic Navigator in 2023 may touch the provisions of "the audited net profit before or after deducting non-recurring gains and losses in the most recent fiscal year is negative and the operating income is less than 100 million yuan", and the company's shares are subject to delisting risk warning.

In addition, the current share price of Polytechnic Navigation has been halved compared to the initial listing in 2022.

As of the close of trading on April 8, 2024, the share price of Polytechnic Navigation was 25.18 yuan per share, with a total share capital of 88 million yuan and a total market value of about 2.216 billion yuan.