Source: Yicaixin
Author: Bai Yu
Jiangsu Wanda Special Bearing Co., Ltd. (hereinafter referred to as "Wanda Bearing") applied for the IPO of the Beijing Stock Exchange in November 2023, and after the first round of inquiries, it quickly passed the meeting and submitted a registration application in January this year.
Founded in 2001, Wanda Bearing is one of the earliest enterprises in China to carry out the professional production of forklift bearings, the main business is the research and development, production and sales of forklift bearings and slewing rings, and the main customers are Anhui Heli, Hangcha Group, China Lonking, Toyota Forklift, KION Group and other leading domestic and foreign forklift enterprises.
Profit fluctuations due to non-recurring gains and losses
According to the prospectus, during the reporting period (2020 to January to June 2023), Wanda Bearing achieved operating income of 261.4534 million yuan, 354.373 million yuan, 338.4771 million yuan and 170.305 million yuan respectively, a year-on-year increase of 35.54% and -4.49% in 2021 and 2022, respectively, and a net profit of 17.0539 million yuan, 94.9859 million yuan and 43.4504 million yuan respectively. 25.4659 million yuan, a year-on-year increase of 456.97% and -54.26% in 2021 and 2022, respectively.
During the reporting period, Wanda Bearing's net profit fluctuated significantly, mainly due to the impact of non-recurring profit and loss.
During the reporting period, the net non-recurring profit and loss of Wanda Bearing were -10.5193 million yuan, 52.2975 million yuan, 2.312 million yuan and 1.5129 million yuan respectively. Among them, the amount of other profit and loss items that meet the definition of non-recurring profit and loss in 2020 and 2021 will be -21.2395 million yuan and -25.855 million yuan respectively, which are share-based payment expenses. In 2021, the disposal amount of Wanda Bearing's illiquid assets was 80.9281 million yuan, which was the profit or loss on the disposal of the old plant, and the combination of the two led to a low net profit of Wanda Bearing in 2020 and a sudden increase in net profit in 2021.
In 2021, Wanda Bearing's production site was the old factory on Yishou South Road, and after signing a housing relocation compensation and resettlement agreement and investment agreement with the Rucheng Sub-district Office of the Rugao Municipal People's Government, Wanda Bearing moved to the new plant on Fushou East Road at the end of that year. During the relocation of the old plant, the assets disposed of were fixed assets, intangible assets and long-term amortized expenses, with a total book balance of 26.4742 million yuan and a book value of 13.1637 million yuan at the time of disposal. In that year, Wanda Bearing received a gain of 81.1309 million yuan from asset disposal, which was 67.9672 million yuan higher than the book value of the assets of the old plant, with a premium of 516.32%.
The exchange inquired about whether the amount of the relocation and disposal of the old factory of Wanda Bearing should accrue government subsidies, and Wanda Bearing's explanation in the reply document was inconsistent.
The reply to the inquiry disclosed that according to the Application Guide of Accounting Standard for Business Enterprises No. 16 - Government Subsidies (2018), the compensation for demolition and relocation received by an enterprise due to policy relocation is determined based on the fair value of the land delivered by the enterprise, and the essence of the compensation is that the government purchases assets from the enterprise according to the market price of the corresponding assets, which should be regarded as the proceeds from the disposal of non-current assets.
Subsequently, Wanda Bearing continued to say that the pricing of the relocation of its old plant was based on the appraisal value of the old plant by a third-party appraisal agency hired by the Rucheng Sub-district Office, which was in line with the characteristics of "the government purchased assets from the enterprise according to the market price of the corresponding assets", and the essence of the relocation compensation was not a government subsidy but a transaction consideration, which did not belong to the policy relocation.
The contradiction between the old factory relocation and the "whether it is a policy relocation" is not known for what is the reason?
Official document data contradict each other
Continuing to study Wanda Bearing's public documents, it is found that there are contradictions in many of its data.
During the production and operation of Wanda Bearing in the old factory, limited by the land occupation and plant area, it does not have the conditions for a complete layout of the bearing production and processing process, so Wanda Bearing will outsource some non-core processes or directly purchase semi-finished products that do not involve the core process.
In Wanda Bearing's reply to the inquiry, there was an inconsistency in the amount of outsourcing processing costs.
According to page 313 of the inquiry reply, during the reporting period, Wanda Bearing's outsourcing processing was divided into five categories: forging processing, turning processing, surface treatment processing, carburizing processing, and gear processing, and the total amount of outsourcing processing included in operating costs was 20.5342 million yuan, 30.5449 million yuan, 31.4542 million yuan, and 14.0336 million yuan respectively.
The 11th page of the inquiry reply shows that during the reporting period, the outsourcing processing fees included in the main business cost of Wanda Bearing were 9.1725 million yuan, 12.4427 million yuan, 13.3922 million yuan and 5.9932 million yuan respectively, which were 11.3617 million yuan, 18.1022 million yuan, 18.062 million yuan and 8.0404 million yuan less than the outsourcing processing amount in the operating cost.
Operating costs are composed of main business costs and other business costs, and the prospectus shows that Wanda Bearing's other businesses are scrap income, trademark use right income and interest income, so other business costs should not include outsourcing processing.
During the reporting period, Wanda Bearing's other business costs were 4.31 million yuan, 5.1741 million yuan, 5.7512 million yuan and 3.0021 million yuan respectively. Even if part of the outsourcing processing amount is included in other business costs, the amount of other business costs is much lower than the aforementioned difference, and the data is still contradictory.
In this IPO, Wanda Bearing is expected to raise 30,000.00 yuan, of which 16,000.00 yuan will be invested in the construction project of special bearings for industrial vehicles (hereinafter referred to as the "vehicle bearing project"), 10,000.00 yuan will be invested in the development and industrialization project of special bearings for intelligent equipment (hereinafter referred to as the "special bearing project"), and another 40 million yuan will be used to supplement working capital.
According to the prospectus, the vehicle bearing project will add 8 million sets of special bearings for industrial vehicles, with a total production capacity of 21 million sets.
According to the reply to the inquiry, the industrial vehicle is a forklift, and the corresponding production capacity of each process of forklift bearing product production in the vehicle bearing project is different, of which the lowest capacity of forging, overall heat treatment, and induction heat treatment process production capacity is 4 million sets, and the highest production capacity of grinding and assembly process is 8 million sets. The expansion data of the vehicle bearing project disclosed in the prospectus may have adopted the highest production capacity in the processing process.
According to the reply to the inquiry, as of the end of the reporting period, the production capacity of Wanda Bearing's forklift bearing products was up to 12 million sets of corresponding processing processes in the existing equipment. After the completion of the vehicle bearing project, the total production capacity of each processing process is 20 million sets, which is 1 million sets different from the data disclosed in the prospectus.
A similar situation exists with another special bearing project.
According to the prospectus, the special bearing project has added 250,000 sets of intelligent equipment and special bearing production capacity, with an overall production capacity of about 400,000 sets.
According to the reply to the inquiry, the special bearing is the slewing ring, as of the end of the reporting period, the production capacity of Wanda bearing slewing ring products is also disclosed in the form of processing processes, the lowest is 36,000 sets, the highest is 80,000 sets. After the implementation of the special bearing project, the maximum production capacity in the processing process of slewing ring products is 330,000 sets, which is far from the data of about 400,000 sets in the prospectus.
In addition, according to the prospectus, the total investment of the vehicle bearing project is 16,000.00 yuan, of which the environmental protection investment is 400,000 yuan, accounting for 0.25% of the total investment, and the construction period is 15 months.
According to the basic information table of the construction project on page 2 of the EIA document of the vehicle bearing project, the total investment of the vehicle bearing project is the same as the prospectus, which is 16,000.00 yuan, and the environmental protection investment is 1.40 million yuan, and the construction period is 18 months. However, page 26 of the same document shows that the total investment in the vehicle bearing project is 24,500,000 yuan, and the environmental protection investment is 1,700,000 yuan.
(Screenshot from page 2 of the EIA document)
(Screenshot from page 26 of the EIA document)