At the beginning of this year, Hubei Jianghan New Materials Co., Ltd. (stock abbreviation: Jianghan New Materials; stock code: 603281. SH) has attracted much attention from the market due to its huge issuance expenses, and the company's stock price has been broken for a long time since its listing. At present, the company's first year of listing results have been released, due to the downturn in the market, the company's revenue and net profit have both declined, which has affected the overall salary reduction of management posts, while the remuneration of directors and supervisors is basically the same as in 2022, a significant increase compared with 2021. In addition, Jianghan New Materials incurred a capital occupation fee of more than 5 million yuan in the year of listing, and the information disclosure of the annual report and the prospectus is also suspected to be contradictory.
Source: Photo.com
The issuance cost exceeded 300 million yuan, and the stock price has been broken for a long time since its listing
Jianghan New Materials is mainly engaged in the research and development, production and sales of functional organosilanes and other silicon-based new materials, the actual controllers are Gan Shuguan, Gan Jun and his son, and the company's main products include silane coupling agents and silane crosslinking agents. In January 2023, under the sponsorship of CITIC Securities, Jianghan New Materials officially landed on the main board of the Shanghai Stock Exchange, with an initial public offering of 66.6667 million shares at an issue price of 35.59 yuan per share, raising a total of 2,372,666,700 yuan, and net funds raised after deducting underwriting and sponsorship fees and other issuance expenses of 2,059,267,100 yuan, of which 611,000,600 yuan was used to supplement liquidity.
It is worth noting that according to the letter of intent of Jianghan New Materials, the company paid as much as 273.5849 million yuan in underwriting and sponsorship fees to CITIC Securities, and 22.4108 million yuan in audit and capital verification fees paid to Tianjian Certified Public Accountants, which combined with lawyer fees, information disclosure fees, handling fees, etc., and the total cost of this issuance was 313.3996 million yuan. In terms of absolute amount, Jianghan New Material's underwriting and sponsorship fees, audit and capital verification fees, and total issuance fees are the highest among listed companies on the main board of the Shanghai Stock Exchange in 2023.
The huge issuance cost once attracted the attention of the market, but the stock price of Jianghan New Materials broke for a long time after its listing, and the lowest point of the stock price was 19.71 yuan per share. In February 2024, Jianghan New Materials repurchased 10,500 shares of the company for the first time in a centralized bidding transaction, and the highest price of the repurchase transaction was 22.97 yuan per share.
The performance of the first year of listing "changed face", and the fund-raising project continued to expand production
At the same time as the stock price is sluggish, the report card handed over by Jianghan New Materials in the first year of listing is not ideal. On March 28, 2024, Jianghan New Materials disclosed its 2023 annual report. The annual report shows that in 2023, the company will achieve an operating income of 2,277,485,900 yuan, a year-on-year decrease of 31.23%, and an attributable net profit of 654,687,200 yuan, a year-on-year decrease of 37.05%. In contrast, the company's performance grew rapidly during the listing application period, with a compound growth rate of 55.88% in operating income and 83.14% in attributable net profit from 2020 to 2022.
The decline in the performance of Jianghan New Materials is largely due to the overall recession of the industry. Affected by the macro environment, the overall demand of the downstream market of functional silane is sluggish, and the production capacity of silane coupling agent in the industry has expanded, resulting in changes in the relationship between supply and demand, and the price of functional silane products has dropped significantly. The 2023 annual performance of listed companies in the same industry also fell sharply.
In this context, Jianghan New Materials is still continuing to expand production, and plans to invest 512.7244 million yuan to raise funds for the construction of functional silane coupling agents and intermediates, which will form an annual production capacity of 90,000 tons of functional silane products after the completion of the project, and part of the production line will be completed and put into trial production in 2023.
In addition, the actual investment amount of some of Jianghan New Material's fund-raising projects is significantly lower than the committed investment. The annual output of 60,000 tons of trichlorosilane project promised to invest 232.1808 million yuan in raised funds, and the project reached the scheduled usable state on July 31, 2022, and reached the design capacity in 2023. As of the end of 2023, the annual output of 60,000 tons of trichlorosilane project has invested a total of 146.1265 million yuan, a difference of 86.0543 million yuan from the promised raised funds.
The capital occupation fee is more than 5 million yuan, but no cash flow can be found
The non-recurring profit and loss statement shows that in 2023, the capital occupation fee charged by Jianghan New Materials to non-financial enterprises included in the current profit and loss will be 5.6559 million yuan, and the profit and loss will not be generated in 2022. The capital occupation fee charged to non-financial enterprises is usually formed by borrowing funds as interest compensation for the occupied funds. Through the non-recurring profit and loss statement, it can be seen that the capital occupation of Jianghan New Materials will occur in 2023, that is, the year of listing.
Assuming that the occupancy time is 1 year and the borrowing interest rate is 4%, the amount of funds occupied corresponding to the interest of 5.6559 million yuan is about 141.3975 million yuan. The amount is inversely proportional to the occupation period, and if the occupation period is shorter, it means that the occupation amount is higher than 141,397,500 yuan.
In the cash flow statement, the company's foreign capital lending is usually included in other cash related to investment activities. However, Jianghan New Material's cash flow statement shows that other cash related to investment activities paid by the company in 2023 includes the purchase of fixed deposits, the payment of forward foreign exchange settlement and sales margins, the payment of forward foreign exchange settlement and sales losses, and the payment of employee loans, of which the payment of employee loans is only 150,000 yuan, excluding other capital lending projects. In other items in the cash flow statement, there is no cash flow related to the borrowing of funds by non-financial enterprises, which is puzzling.
The overall salary of management posts has been reduced, and the remuneration of directors and supervisors is basically the same as that in 2022
In terms of period expenses, in 2023, Jianghan New Materials' sales expenses will be 16.8976 million yuan, a year-on-year decrease of 22.45%, management expenses will be 92.5057 million yuan, a year-on-year decrease of 28.29%, and R&D expenses will be 68.9192 million yuan, a year-on-year decrease of 41.21%. According to the annual report, the main reason for the change in management expenses was the year-on-year decline in performance in the reporting period, and the consequent decline in performance compensation for managers. In 2022 and 2023, the employee compensation in the management expenses will be 104.1173 million yuan and 67.1427 million yuan respectively, a year-on-year decrease of 35.51% in 2023.
However, while the overall salary of management positions was reduced, Jianghan New Materials "opened the net" to directors, supervisors and senior executives, and the remuneration of directors, supervisors and senior executives even increased significantly compared with before the listing. According to the prospectus, from 2019 to 2021, the total remuneration of directors, supervisors and senior executives of Jianghan New Materials was 56.1999 million yuan, 45.4894 million yuan and 57.9704 million yuan respectively, while according to the annual report, in 2022 and 2023, the total pre-tax remuneration of directors, supervisors and senior executives from the company was 80.2037 million yuan and 78.4627 million yuan respectively.
Compared with 2022, the pre-tax remuneration received by directors, supervisors and senior executives in 2023 will only decrease by 2.17%, which will remain almost stable, with a difference of 33.34 percentage points from the overall salary reduction for management positions. Not only that, the pre-tax remuneration received by directors, supervisors and senior executives in 2023 is even higher than the employee remuneration in the current management expenses.
The number of R&D personnel is doubtful, and the procurement data is contradictory to the prospectus
According to the prospectus, according to the professional structure, as of the end of June 2022, the number of technical personnel of Jianghan New Materials was 114, and at the same time, in the first half of 2022, the sum of the monthly weighted average number of full-time R&D personnel and the number of part-time R&D personnel converted by working hours was 39.05. Judging from the prospectus, not all of Jianghan New Material's technical personnel are R&D personnel, of which the proportion of R&D personnel is about 30%.
However, Jianghan New Material's annual report disclosed in the "Employee Situation" section that at the end of 2023, the number of technical personnel in the company was 120, and the number of the company's R&D personnel was also 120 in the "R&D Personnel Table" section. In other words, in the annual report of Jianghan New Materials, all the technical personnel may be R&D personnel, which is significantly different from the caliber of the R&D personnel in the prospectus.
In addition, the reporting period of Jianghan New Material's prospectus is the first half of 2022, and the company disclosed the 2022 annual report in April 2023, updating the financial data for the whole year of 2022. The comparison found that there seems to be a contradiction between the procurement of the top five suppliers disclosed in the prospectus and the 2022 annual report.
According to the prospectus, Wuhan Chuangyue Chemical Co., Ltd. (hereinafter referred to as Chuangyue Chemical) is the fourth largest supplier of Jianghan New Materials in the first half of 2022, with a purchase amount of 58.7709 million yuan, and it is the top five new suppliers in the current period. According to the annual report, in 2022, one of the top five suppliers of Jianghan New Materials will be a new supplier, with a purchase amount of 57.5078 million yuan, but the annual report does not disclose the specific name of the supplier.
This creates a contradiction. If the new supplier in the annual report is Chuangyue Chemical, it means that the purchase amount of Chuangyue Chemical in the first half of 2022 is 58.7709 million yuan, and the annual procurement amount is 57.5078 million yuan, and the annual procurement amount is lower than the first half of the year, which is obviously unreasonable. On the contrary, if the new supplier in the annual report is not Chuangyue Chemical, but there are others, and the annual procurement amount of Chuangyue Chemical in 2022 is at least 58.7709 million yuan, which is higher than that of the supplier, then Chuangyue Chemical should also be among the top five suppliers, so that there should be 2 new top five suppliers in 2022, which is still inconsistent with the disclosure in the annual report.