- Chief Business Intelligence
- Chief Business Intelligence
Introduction: Is it appropriate for such a company to continue to IPO while paying large dividends and raising funds through listing?
At the beginning of November last year, a company that supplies intelligent industrial control products to Foxconn, BYD and other enterprises - Shenzhen Konghui Intelligent Co., Ltd. (hereinafter referred to as "Konghui shares") submitted an application for listing on the Beijing Stock Exchange after its application for listing on the Beijing Stock Exchange was accepted, and recently received a second round of review inquiry letters from the Beijing Stock Exchange, in which a total of eight questions were raised, all of which need to be solved.
At the critical juncture when Foxconn was inspected last year, as a supplier of Foxconn, it still queued up to be listed, what is the origin of this foreign exchange control shares?
A post-70s couple started a business
The first five cash dividends of the IPO were 23.4265 million yuan
Wu Youcai, the actual controller of Konhui shares, was born in June 1979, and after graduating from Huazhong Agricultural University with a bachelor's degree, he joined Lenovo Network (Shenzhen) Co., Ltd. as a R&D engineer in the company.
Wu Youcai
Perhaps because he felt that Lenovo could not fully display his talents, he worked for less than half a year, and Wu Youcai resigned in December 2005 and went to Shenzhen Kodia Technology Co., Ltd., also as a R&D engineer.
During this period, with his talent and hard work, Wu Youcai was quickly reused by the company and promoted to the position of supervisor.
However, after working in Kodia for 2 years, he was unwilling to continue to work for others, and Wu Youcai's inner entrepreneurial gene began to trouble.
So, from November 2008 to August 2010, he began to prepare to start his own business.
After everything was ready, finally in September 2010, Wu Youcai and his wife Yu Linna founded Shenzhen Konhui Technology Co., Ltd. (hereinafter referred to as "Konhui Technology"), the predecessor of Shenzhen Konhui Intelligent Co., Ltd. (hereinafter referred to as "Konhui Technology").
In April 2016, Konhui Technology was changed to a joint-stock company, and it was also renamed as "Shenzhen Konhui Intelligent Co., Ltd."
In October 2016, Konforeign Exchange was listed on the New Third Board and made its debut in the capital market.
In 2023, Konhui shares will be delisted from the New Third Board, and the A-share IPO listing plan will be launched, and this time it will be listed on the Beijing Stock Exchange, and Konhui shares plan to raise 163.1 million yuan, which will be used for industrial computer and core components expansion construction projects, R&D center construction projects and information construction projects.
However, it is worth noting that the company has paid dividends several times before going public.
According to the prospectus, the company distributed cash dividends of 2.1067 million yuan, 1.9911 million yuan, 5.9565 million yuan, 8.48 million yuan and 4.8923 million yuan respectively according to the profits of the third quarter of 2020, the half year of 2021, the half year of 2022, the half year of 2022, the half year of 2022 and the half year of 2023.
According to the company's shareholding structure, Wu Youcai and Yu Linna are the joint actual controllers of the company, and Wu Youcai is currently the chairman and general manager of the company.
As of the signing date of the prospectus, Wu Youcai and Yu Linna directly and indirectly held a total of 59.80% and 25.96% of the shares respectively, and the couple held a total of 85.76% of the shares of the company, a proper "mom-and-pop shop".
In this kind of dominance background, the couple basically went into their pockets in the cash dividends that they paid five times in four years, and the cumulative cash dividends exceeded 20 million yuan.
If you only want to keep the benefits to the major shareholders, push the problem to the market, and let ordinary investors "pay" for the company's risks, it will undoubtedly damage the function of the capital market.
At present, the "clearance dividend" is on the cusp of public opinion, and ordinary investors are very disgusted with this kind of behavior of raising funds while paying dividends before listing, which will not only cause damage to the image and reputation of the company, but also the final result is often to shoot themselves in the foot.
It is a self-proclaimed high-tech enterprise, but the R&D expense rate is insufficient
and was questioned about exchanging low prices for orders
According to the introduction of the prospectus, Konhui is a high-tech enterprise specializing in the research and development, production and sales of industrial automation control products, the products mainly include intelligent industrial computers, industrial control boards and related accessories, the company's products are widely used in 3C product manufacturing, intelligent equipment, Internet of Things, new energy, machine vision, artificial intelligence, industrial automation and many other fields.
Although the name is very high, but in short, the industrial computer is specially designed for the industrial environment of the computer, and our home computer is the same, but the industrial computer has a more robust design and protection function than the home computer, and can operate stably in harsh environments.
The main product lines of Kongo
Although Konhui has always emphasized that it is a high-tech enterprise in the prospectus, it said that as of June 30, 2023, the company has 2 invention patents, 28 utility model patents, and 61 software copyrights.
But in fact, the company is still mainly engaged in processing business, and does not attach much importance to R&D investment.
During the reporting period (from 2020 to January to June 2023), the R&D investment of Konhui Co., Ltd. was 7.2566 million yuan, 10.0351 million yuan, 10.7641 million yuan and 7.2783 million yuan respectively, accounting for 4.68%, 4.80%, 4.15% and 4.39% of the current operating income respectively.
The average R&D intensity of comparable companies in the same industry is 12.72%, 12.24%, 13.48% and 11.76%, which is more than twice the proportion of R&D investment of Konhui.
The Beijing Stock Exchange also raised key inquiries in the new round of inquiry letters, saying that the company's innovation characteristics were not fully disclosed.
The Beijing Stock Exchange questioned the company, requiring that the company combine the SMT process without applying for patent protection, and the actual use of software copyrights is less, indicating whether the SMT process is a general technology in the industry, it is difficult to form technical barriers, and whether the company's relevant innovation achievements contribute less to the company's business.
The low investment in R&D of products has led to the low competitiveness of products. The Beijing Stock Exchange also pointed out in the inquiry letter that BYD, which only became the largest customer in the first half of last year, sold 41.03% of its operating income to it.
In order to obtain orders from this large customer, Konforeign shares have made some concessions in pricing, that is, to fight a price war, and the gross profit margin sold to BYD is at least 5%-10% lower than the gross profit margin sold to other new energy customers.
The prospectus also mentioned that from 2020 to the end of June 2023, the gross profit margin of the company's main business was 30.89%, 29.59%, 25.45% and 28.84% respectively, showing a downward trend year by year, due to the relatively low gross profit margin of the company's products sold to new energy customers, and the increase in the proportion of the company's new energy customers in 2021 and 2022, resulting in a decline in gross profit margin.
In the prospectus, the company also said that most of the cooperation with BYD is collected in the form of notes receivable, and BYD pays for the goods mainly by commercial acceptance bills, which has also led to a surge in the amount of commercial bills in the first half of 2023.
Therefore, some relevant people have analyzed that this means that Konhui shares have encountered difficulties in sales, so that the sales policy has been relaxed to increase the number of sales orders.
At the same time, the low-price strategy has also led to the gross profit margin of Konforeign Exchange shares being lower than that of its peers.
During the reporting period, the gross profit margins of Konforeign were 30.88%, 28.64%, 26.67% and 28.56% respectively, while the average gross profit margins of comparable companies in the same industry were 33.20%, 32.58%, 32.32% and 37.16% respectively.
Therefore, in the future, the fluctuation of the demand of customers in different downstream industries may cause fluctuations in the company's gross profit margin.
In fact, due to the low technical threshold, there are a large number of small and medium-sized enterprises in the mainland industrial computer industry, and the market competition is fierce, so under the homogeneous competition, enterprises can only fight a "price war" to win orders.
Can Konforeign Exchange support an IPO?
According to the prospectus, from 2020 to 2022 and the first half of 2023, the operating income of Konhui Co., Ltd. will be 155 million yuan, 209 million yuan, 259 million yuan and 166 million yuan respectively, and the net profit attributable to the owners of the parent company will be 15.5166 million yuan, 25.44 million yuan, 29.1375 million yuan and 17.2133 million yuan respectively.
It can be seen that the performance of Konhui shares has maintained a steady growth trend, however, in the first half of 2023, the net cash flow from operating activities of Konhui shares will be negative, which will be -46.7988 million yuan. At the end of 2022, this value was -6.7129 million yuan, which shows that the company's cash flow from operating activities is deteriorating year by year.
Moreover, the asset-liability ratio is far higher than that of peers, with the general asset-liability ratio of peer companies around 30%, and the value of the company has reached 53.9%.
In addition, the company also has internal control irregularities such as personal card collection, related party fund exchanges, and online platform bill swiping. It has also been concerned by the China Securities Regulatory Bureau for inaccurate disclosure of related party transactions.
Moreover, the dependence of Konhui on the top five customers is obvious. During the reporting period, the sales revenue of the company's top five customers was 63.8095 million yuan, 73.7804 million yuan, 111.5814 million yuan and 113.1912 million yuan respectively, accounting for 41.18%, 35.26%, 43.05% and 68.28% of the current operating income respectively.
Therefore, the Beijing Stock Exchange has also questioned whether the sales to customers are stable and sustainable.
In the context of the mainland's industrial upgrading and transformation and the increasing demand for intelligent manufacturing equipment, the industrial control industry has ushered in a good opportunity for development.
In the future, with the development of the industry and the update and iteration of technology, if the products developed by Konhui cannot meet the market demand of the company, it will lose major customers, lead to unstable performance, and adversely affect the company's sustainable profitability.
In addition, the pre-IPO surprise dividend has also raised questions in the market, and there are many challenges ahead of you if you want to successfully go public.
Although the surprise dividend has caused controversy, due to the good prospects of the industry, rich customer resources, and the operating income and net profit attributable to the parent company have been steadily increasing, the future is still worth looking forward to.
However, under the strict supervision of IPOs and the withdrawal of listing applications by many enterprises, it is worth paying attention to whether Konforeign Exchange shares can successfully land in the capital market in the future, and how to respond to the second round of inquiries.
What do you think about this? Welcome to leave a message in the comment area to discuss, express your opinions or opinions, thank you.
The earliest financial self-media in China, a must-have book for millions of business elites, focusing on daily hot events, financial figures, venture capital stories, wealth business opportunities, etc.!