Produced by | At the forefront of entrepreneurship
Author | Left Xingyue
Edit | Egg total
American Editor | Li Yufei
Audit | Ode
The Shenzhen Stock Exchange is about to usher in a high-tech enterprise - Chengdu Reddy's Intelligent Drive Technology Co., Ltd. (hereinafter referred to as "Reddy's Intelligent Drive") will be listed on the Growth Enterprise Market of the Shenzhen Stock Exchange on May 13.
Reddy's is an enterprise that develops and produces key components of automation equipment, and has a layout in many industries such as robots, elevators and automotive electric doors. As early as June 2022, the company disclosed its first round of prospectus. Now Reddy's is about to go public, and it has finally realized its dream in the capital market.
On April 30, the company issued an announcement, agreeing that the number of valid subscribers for the online pricing issuance was 8679230, the winning rate of the online pricing issuance was 0.017%, and the effective subscription multiple of online investors was 5804.77 times.
(Photo / Company announcement)
It is worth noting that the listing of Reddy's not only shrank the amount of funds raised, but also the price-earnings ratio is also far from the industry level. In recent years, Reddy's annual revenue has been more than 500 million yuan, and the gross profit margin and R&D expense rate are inferior to peers.
1. The listing is imminent, and the amount of funds raised has shrunk
On April 25, Reddy's issued an announcement on the listing of the Growth Enterprise Market (GEM), and the issue price was determined to be 25.92 yuan per share.
According to public information, in 2022, the diluted P/E ratio of the diluted net profit attributable to shareholders of the parent company before and after deducting non-recurring gains and losses will be 20.86 times, and the P/E ratio in 2023 will be 15.65 times, both of which are lower than the average static P/E ratio of 26.43 times in the latest month of "C34 General Equipment Manufacturing Industry" released by China Securities Index Co., Ltd. on April 24, 2024 (T-3).
In addition, compared with peer companies, Reddy's P/E ratio is not outstanding. The rolling P/E ratio of peer companies is 53.03 times before deduction and 60.43 times after deduction, while the non-rolling P/E ratio of Reddy's is 15.77 times and 17.55 times, which is much lower than that of peer companies.
(Photo / Reddy's Smart Drive Listing and Issuance Announcement)
It can be seen that the market underestimated the stock price level of Reddy's Smart Drive.
It is worth mentioning that on April 25, the company's latest prospectus showed that the company planned to raise 357 million yuan in this IPO, which was mainly used for the electromagnetic brake expansion project and the construction project of Reddy's intelligent drive R&D center.
(Photo / Reddy's Smart Drive Prospectus)
However, according to the listing announcement, according to the issue price of 25.92 yuan per share and the number of new shares issued of 13.7795 million shares, the total amount of funds raised is 357 million yuan, and the net amount of funds raised is expected to be 301 million yuan after deducting the estimated issuance cost of 56.609 million yuan (excluding VAT). It can be seen that the investment funds used by Reddy's for the project have shrunk by about 50 million yuan.
(Photo / Reddy's Smart Drive Listing and Issuance Announcement)
In the field of capital markets, Reddy's is slightly inferior to peer companies; If we compare the performance between companies, Reddy's operating income performance is also relatively sluggish.
Founded in 2009, Reddy's has had many major customers in the past 15 years, including Toshiba Elevator, Hitachi Elevator, Inovance Technology, Lingfeida of Germany, Fenner Transmission of the United States, etc., with the cooperation of these large customers, the company's revenue has been maintained at more than 500 million yuan in the past three years.
From 2021 to 2023 (hereinafter referred to as the "reporting period"), Reddy's operating income was 567 million yuan, 587 million yuan, and 585 million yuan respectively, a year-on-year increase of 38.33%, 3.57%, and -0.32%; In the same period, the net profit attributable to the parent company was 64.993 million yuan, 74.8843 million yuan and 96.5841 million yuan respectively, a year-on-year increase of 38.26%, 15.22% and 28.98%.
(Photo / Wind (unit: 10,000 yuan))
During the reporting period, the company's operating income growth was weak, and it will even decline by 0.32% in 2023, which shows that in recent years, Reddy's has not expanded its scale, although the net profit attributable to the parent company has increased, but the revenue is "standing still".
In the case of no new improvement in operating income, it remains to be seen whether Reddy's will perform well in the capital market after listing.
2. The gross profit margin is lower than that of peers, and the salary of salesmen is three times that of R&D personnel
"Entrepreneurship Frontline" noticed that behind the weak operating income, Reddy's gross profit margin that was inferior to its peers also sounded the "alarm bell" for the company.
According to the prospectus, during the reporting period, the comprehensive gross profit margin of Reddy's Intelligent Drive was 27.30%, 28.38% and 32.88% respectively, showing an upward trend.
(Photo / Reddy's Smart Drive Prospectus)
In addition, compared with peer companies, Reddy's gross profit margin is not dominant.
In 2021 and 2022 (the gross profit margin data of peer companies in 2023 was not disclosed), the industry average comprehensive gross profit margin of peer companies was 31.93% and 31.16%, respectively, which were higher than the gross profit margin of Reddy's in the same period.
(Photo / Reddy's Smart Drive Prospectus)
In 2021 and 2022, although Reddy's gross profit margin is lower than that of its peers, the rising gross profit margin in 2023 may be a positive signal.
It is worth mentioning that during the reporting period, the sales unit price of many of the company's products declined. It is reported that Reddy's products are mainly divided into three categories, namely electromagnetic brakes, precision transmission parts, and harmonic reducers.
Among them, the sales unit price of electromagnetic brakes will decline from 166.10 yuan/set in 2021 to 149.31 yuan/set in 2023, and the sales unit price in 2023 will decline by 15.24% year-on-year.
In addition, the sales unit price of harmonic reducer will decline from 1221.58 yuan/set in 2021 to 1137 yuan/set in 2023. The sales unit price of precision transmission parts has increased, from 27.99 yuan/set in 2021 to 30.11 yuan/set.
(Photo / Reddy's Smart Drive Prospectus)
Generally speaking, strengthening R&D and innovation capabilities may be an important way for companies to improve market competitiveness and catch up with peers in gross profit margins. However, Reddy's R&D investment is not high.
During the reporting period, the R&D expenses of Reddy's Intelligent Drive were 21.4795 million yuan, 27.8541 million yuan and 32.9811 million yuan respectively, accounting for 3.79%, 4.74% and 5.64% of the current operating income respectively. In 2021 and 2022, the industry average R&D expense ratio of peer companies will be 5.15% and 5.73%, respectively, both higher than Reddy's Intelligent Drive.
(Photo / Reddy's Smart Drive Prospectus)
In view of the fact that the R&D expense rate is lower than that of peer companies, Reddy's said in the prospectus that the company's R&D expenses are mainly based on employee salaries, and the company's R&D team has a large number of auxiliary personnel such as production and testing, and the remuneration of such personnel is relatively low.
In fact, on the whole, the educational level of the R&D personnel of Reddy's intelligent drive is not high. According to the prospectus, during the reporting period, the number of R&D personnel of the company was 103, 120 and 116 respectively. Among them, the number of R&D personnel with college degree and below is 75.73%, 74.17% and 61.21% respectively, which shows that more than 60% of the company's R&D personnel have college degree or below.
(Photo / Reddy's Smart Drive Prospectus)
Although the educational level of R&D personnel cannot represent the company's R&D strength, attracting more high-level R&D talents is also one of the ways for enterprises to further improve their R&D and innovation capabilities.
In addition, another factor in attracting high-level R&D personnel is salary, however, Reddy's is not generous to R&D personnel.
In 2021 and 2022, the average salary of the company's R&D personnel will be 107,000 yuan and 113,200 yuan, respectively, lower than the industry average of 149,100 yuan and 134,000 yuan.
(Photo / Reddy's Smart Drive Prospectus)
It is worth mentioning that in 2021 and 2022, the average salary of the company's sales staff will be 326,900 yuan and 319,200 yuan respectively, which is much higher than the average salary of 212,200 yuan and 204,900 yuan for sales staff in the same industry.
The average salary of Reddy's sales personnel is not only higher than that of its peers, but also nearly three times the average salary of the company's R&D personnel. It can be seen that Reddy's is not very generous to R&D personnel, but it is very generous to sales personnel.
It may be that the company's R&D team has lower the average salary of R&D personnel due to low education in production and testing, but if there is no attractive enough treatment, it may be difficult to retain excellent high-level R&D talents.
3. After the IPO declaration, it was sued by the equity
According to public information, Reddy's Intelligent Drive was changed from Reddy's Co., Ltd. to a limited liability company. In 2009, Reddy's Co., Ltd.'s predecessor, Reddy's Apex, was jointly funded by Reddy's Industry and Feng Chuantao, with a registered capital of 1 million yuan.
Among them, Reddy's holds 85% of the shares; Feng Chuantao holds 15% of the shares and serves as the general manager.
(Photo / Reddy's Smart Drive Prospectus)
In December 2015, Reddy's Apex changed its name to Reddy's Limited.
As of the date of signing the prospectus, the actual controllers of Reddy's Intelligent Drive, Lu Xiaorong and Wang Xiao. Among them, Lu Xiaorong directly holds 21.99% of the company's equity, Wang Xiao directly holds 8.30% of the equity, and the two indirectly control 43.18% of the company's equity through their total 73% of the company's Ruidi Industrial, and the actual disposable Ruidi Zhiqi shares account for 73.47% of the company's total share capital.
(Photo / Reddy's Smart Drive Prospectus)
Now it seems that Feng Chuantao, who is involved in Reddy Apex, is not among the current shareholders.
It is reported that Feng Chuantao resigned from Reddy's Limited due to personal family reasons and asked to withdraw from his shareholdings. In December 2015, Feng Chuantao and Lu Xiaorong signed the "Equity Transfer Agreement", under which Feng Chuantao transferred 15% of the equity of Reddy's Co., Ltd. (corresponding to the registered capital of 150,000 yuan) to Lu Xiaorong at a price of 225,000 yuan, deducting personal income tax of 210,000 yuan.
(Photo / Reddy's Smart Drive Prospectus)
On June 10, 2022, Reddy's disclosed the prospectus (declaration draft) for the first time.
On June 30, 2022, less than one month after the disclosure, Reddy's received a summons from the People's Court of Shuangliu District, Chengdu, in which the plaintiff Feng Chuantao filed a civil lawsuit with the court as defendants on the grounds of the dispute over the equity transfer of Reddy's Apex, requesting the people's court to order the defendant to jointly pay Feng Chuantao 1.7 million yuan for the equity transfer in accordance with the law.
On August 4, 2022, the Chengdu Shuangliu District People's Court issued the (2022) Chuan 0116 Min Chu No. 5849 Civil Mediation Document, which concluded the mediation of the case, and the mediation document has been signed by both the original defendant and has legal effect.
Feng Chuantao confirmed that he did not enjoy any shareholder rights and interests in Reddy's Limited, and there was no equity dispute or dispute with the three defendants Lu Xiaorong, Reddy's Industrial and any of the issuers, and Reddy's Industrial voluntarily paid Feng Chuantao a one-time compensation of RMB 1 million.
In fact, the dispute between Feng Chuantao and Reddy's Zhiqi can be said to have been going on for a long time.
On January 26, 2016, Reddy's and Feng Chuantao signed a Gift Agreement, which stipulated that Reddy's would donate 3 million yuan to Feng Chuantao and pay it in installments.
According to the agreement, the main reasons for the gift are, first, to thank Feng Chuantao for working in Reddy's for many years and his contribution to the development of Reddy's limited market, and second, to agree that Feng Chuantao should fulfill the obligation of non-competition. On January 28, 2016, Reddy's paid 1 million yuan to Feng Chuantao.
According to the reply to the inquiry letter, because the customers developed by Feng Chuantao during his tenure failed to continue the cooperation after his resignation and formed certain bad debts, and there was a dispute between the two parties as to whether Feng Chuantao violated the non-compete prohibition after his resignation, on September 2, 2017, Reddy's and Feng Chuantao signed the Gift Agreement (Supplementary Agreement), stipulating that the original gift amount of 3 million yuan was adjusted to 1 million yuan, deducting the 1 million yuan paid by Reddy's in 2016, so Reddy's Industrial would no longer pay any money to Feng Chuantao.
After the equity dispute, Reddy's paid 1 million yuan to Feng Chuantao, although Feng Chuantao confirmed that there were no equity disputes and disputes, but it is unknown whether Feng Chuantao will file a lawsuit against Reddy's again after the company is listed.
In the case that the gross profit margin is inferior to that of peers and the educational level of R&D personnel is low, the "front line of entrepreneurship" will continue to pay attention to the performance of Reddy's Intelligent Drive after listing.
*Note: The title image in the article is from the photo network and is based on the VRF protocol.