Dunyuan Juxin IPO: Failure to disclose issues such as being restricted and eliminated The sponsor Orient Securities may be suspected of dereliction of duty

Phoenix.com Finance

2024-04-25 16:01Posted on the official account of Beijing Phoenix Finance

Produced by Phoenix.com Finance's "IPO Observation Post".

Recently, Ningxia Dunyuan Juxin Semiconductor Technology Co., Ltd. (hereinafter referred to as "Dunyuan Juxin") replied to the second round of inquiries from the Shenzhen Stock Exchange, the company mainly engaged in silicon components and quartz crucibles is the third listed company to be listed in China by the spin-off of Japan Magnetron, the first two are Anhui Fuld and Zhongxin Wafer. Among them, Anhui Fuld has been listed, and Zhongxin Wafer has submitted a listing application and is in a state of inquiry.

Since the business of Dunyuan Juxin is spun off from various subsidiaries of Japan Magnetron, and there are many related party transactions with related parties, the second round of inquiries of the Shenzhen Stock Exchange once again paid attention to the independence of Dunyuan Juxin.

In addition, the "IPO Observation Post" of Phoenix.com Finance noticed that Dunyuan Juxin did not disclose the matters that it was issued with a consumption restriction order and listed as a key pollutant discharging unit during the reporting period, and it was a sponsor of a related party or was suspected of dereliction of duty.

1. The proportion of related-party transactions is relatively high, and the independence is questionable

In this IPO, the most concerned issue of Dunyuan Juxin is independence.

The indirect controlling shareholder of Dunyuan Juxin is the Japanese listed company Japan Magnetron, which controls the operating entities of various business segments in China through Hangzhou Thermomagnetics and Shanghai Shenhe.

Among the various plates spun off by Japan Magnetron in China, Dunyuan Juxin is mainly engaged in silicon components and quartz crucibles, Zhongxin Wafer is mainly engaged in semiconductor silicon wafers, Anhui Fuld is mainly engaged in precision cleaning services for equipment in the pan-semiconductor field, and Jiangsu Fuler is mainly engaged in copper-clad ceramic substrates.

Due to the same semiconductor industry, it is logical for Dunyuan Juxin to have business dealings with related parties.

From 2020 to 2022 and the first half of 2023, the revenue from the sale of crucibles to the subsidiaries of Japan Magnetron in China was 27 million yuan, 42 million yuan, 62 million yuan and 32 million yuan respectively, accounting for 10.36%, 6.92%, 5.64% and 5.55% of the current operating income.

Outside of China, during the same period, the revenue from the sale of silicon rings to the related party ATC was 71 million yuan, 89 million yuan, 114 million yuan and 45 million yuan respectively, accounting for 27.08%, 14.74%, 10.48% and 7.69% of the current operating income, respectively, and the indirect sales of silicon components and other commodities through overseas related parties controlled by Japan Magnetron were 87 million yuan, 115 million yuan and 63 million yuan respectively. 33 million yuan, accounting for 33.08%, 19.04%, 5.79% and 5.73% of the current operating income respectively.

During the reporting period, the total revenue obtained by Dunyuan Juxin through related parties was 185 million yuan, 245 million yuan, 239 million yuan and 110 million yuan, accounting for 70.52%, 40.7%, 21.91% and 18.97% of the current operating income respectively.

It can be seen from the data that in recent years, the proportion of sales revenue of Dunyuan Juxin to related parties has gradually declined, but this does not mean that Dunyuan Juxin has gotten rid of its dependence on related parties, but the direct sales to related parties have decreased and the indirect sales through related parties have increased.

According to the practice of the semiconductor industry, when an overseas related party assists in promoting customer resources and providing auxiliary sales support services, Dunyuan Juxin will pay sales commission and service fee to it in accordance with the proportion agreed in the agreement.

From 2020 to 2022 and the first half of 2023, the sales revenue of Dunyuan Juxin involving commissions and service fee payments was 88 million yuan, 259 million yuan, 597 million yuan and 187 million yuan respectively, accounting for 33.53%, 43.11%, 54.64% and 32.19% of the current operating income respectively.

In the context of such high related-party transactions, whether it is possible to get rid of the related parties to complete sales independently and also establish the problem that Dunyuan Juxin has to face.

In addition, the amount of commissions paid by Dunyuan Juxin to related parties is very high, and this expenditure inevitably affects the profitability of Dunyuan Juxin. During the same period, the sales commissions and service fees paid by it were 50 million yuan, 30 million yuan, 64 million yuan and 19 million yuan respectively, accounting for 13.41%, 22.44%, 30.25% and 10.26% of the net profit for the current period.

It is worth noting that the increase in the commission of Dunyuan Juxin is mainly related to its new large customer A in 2021.

From 2021 to 2022 and the first half of 2023, in order to reach a transaction with customer A, Dunyuan Juxin paid commissions of 25 million yuan, 44 million yuan and 07 million yuan respectively to the overseas subsidiary FTU of Japan Magron recommended by the intermediary, accounting for 83.77%, 68.71% and 37.96% of the total commissions in the current period, respectively, while the actual commission rates for each period were 12.86%, 11.8% and 11.6% respectively , the rates in 2021 and 2022 were the highest among related parties.

Due to the application for exemption from disclosure by Dunyuan Juxin to customer A, the largest customer in 2021 and 2022 was covered with a touch of mystery, which also triggered speculation about Dunyuan Juxin: Is the transaction real and effective, and does it involve the transfer of benefits?

In addition to the major customer A, the difference in the gross profit margin of Dunyuan Juxin's sales to related parties and non-related parties also makes it fall into the "doubt" of benefit transfer.

Taking silicon rings as an example, during the reporting period, the gross profit margins of silicon rings sold by Dunyuan Juxin to related parties ATC were 30.92%, 12.49%, 11.17% and 1%, respectively, while the gross profit margins of non-related parties were 34.86%, 42.55%, 39.19% and 11.91% respectively, the difference rate is not small, and the same situation also occurs in silicon component materials and solar crucibles.

Dunyuan Juxin IPO: Failure to disclose issues such as being restricted and eliminated The sponsor Orient Securities may be suspected of dereliction of duty

In this regard, the "IPO Observation Post" of Phoenix.com Finance sent a letter of confirmation to Dunyuan Juxin, but as of press time, no reply has been received.

2. There may be problems with the disclosure of information The sponsor is a related party

In addition to doubts about independence, the "IPO Observation Post" of Phoenix.com Finance found that there may be problems with the disclosure of Dunyuan Juxin's information.

According to the (2020) Ning 0105 Zhi 67 document, on January 14, 2020, Ningxia Fule Quartz Materials Co., Ltd., the predecessor of Dunyuan Juxin, was taken by the People's Court of Xixia District, Yinchuan City, to restrict consumption by the People's Court of Xixia District, Yinchuan City, and restrict Dunyuan Juxin and Dunyuan Juxin (the legal representative, the main person in charge, the person directly responsible for affecting the performance of debts, The actual controller) He Xianhan shall not carry out high-consumption and consumption behaviors that are not necessary for life and work.

During the reporting period in 2020, Dunyuan Juxin did not disclose this matter, and it is unknown whether the consumption restriction order of Dunyuan Juxin and its chairman He Xianhan will be lifted, and whether the dispute with the enforcement applicant, Ningxia Baisheng Environmental Protection Equipment Engineering Co., Ltd., will be resolved.

He Xianhan, chairman of Dunyuan Juxin

In addition to the failure to disclose the consumption restriction order, the subsidiary was listed as a key pollutant discharger in 2022, and Dunyuan Juxin still did not disclose it.

According to Hangzhou Huanfa [2022] No. 26 document, on April 14, 2022, Hangzhou Dunyuan Juxin Semiconductor Technology Co., Ltd., a subsidiary of Dunyuan Juxin, was listed as a key pollutant discharge unit by the Hangzhou Municipal Bureau of Ecology and Environment.

According to the disclosure requirements for the social responsibility report of listed companies in the Self-Regulatory Guide for Listed Companies No. 1 of the Shenzhen Stock Exchange - Business Handling (Revised in August 2023), listed companies or their important subsidiaries that are listed as key pollutant dischargers announced by the environmental protection department shall disclose pollutant discharge information (including but not limited to the name, discharge mode, number and distribution of discharge outlets, emission concentration and total amount, excessive discharge, etc.) of major pollutants and characteristic pollutants in accordance with relevant laws, regulations and departmental rules. The implementation of pollutant discharge standards, the total amount of approved discharge), the construction and operation of pollution prevention and control facilities, the environmental impact assessment of construction projects and other environmental protection administrative permits, emergency plans for environmental emergencies, environmental self-monitoring plans and other environmental information that shall be disclosed.

However, Dunyuan Juxin did not disclose the above two matters, and the compliance of its information disclosure is questionable, and its sponsor may also be suspected of dereliction of duty.

In this IPO, the sponsor of Dunyuan Juxin is Orient Securities Underwriting and Sponsorship Co., Ltd. (hereinafter referred to as "Orient Investment Bank"), which is a wholly-owned subsidiary of Orient Securities Co., Ltd. (hereinafter referred to as "Orient Securities").

The "IPO Observation Post" of Phoenix.com Finance noticed that there is an association between Oriental Investment Bank and Dunyuan Juxin.

According to the prospectus, Orient Securities Ruiqiao Investment Partnership (Limited Partnership) (hereinafter referred to as "Orient Securities Ruiqiao") holds 0.46% of the equity of Dunyuan Juxin, and Shanghai Orient Securities Capital Investment Co., Ltd., the executive partner of Orient Securities Ruiqiao, is a wholly-owned subsidiary of Orient Securities.

In fact, the Shenzhen Stock Exchange also noticed this affiliation and asked Dunyuan Juxin to explain whether there is an interest arrangement between Oriental Investment Bank and its related parties, and whether it affects the independence of Dunyuan Juxin.

In this regard, Dunyuan Juxin said that Orient Securities Ruiqiao invested because it was optimistic about the Dunyuan Juxin industry, development prospects and future growth, and for the purpose of obtaining financial investment returns, the relevant due diligence work of Oriental Investment Bank was independent, sufficient and objective.

However, since Dunyuan Juxin stated, why did it not disclose the consumption restriction order and the matters of key pollutant dischargers in its prospectus? Why did Oriental Investment Bank not urge Dunyuan Juxin to disclose truthfully?

As for whether it is due to the equity relationship, Oriental Investment Bank has shielded Dunyuan Juxin, and the "IPO Observation Post" of Phoenix.com Finance sent a letter of verification to Dunyuan Juxin, but as of press time, no reply has been received.

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