Cao Cao's dependence on aggregation platforms deepened, and the son of the vice president of Changya's subsidiary became a supplier

Company dynamics:

[Marco Polo's first meeting on the Shenzhen Stock Exchange on May 16]

According to the website of the Shenzhen Stock Exchange, the Listing Review Committee of the Shenzhen Stock Exchange is scheduled to hold the 9th review meeting of the Listing Review Committee in 2024 on May 16, 2024, at which time it will review the initial offering of Marco Polo Holding Co., Ltd. (hereinafter referred to as "Marco Polo"). Marco Polo focuses on the R&D, production and sales of architectural ceramics, and is one of the largest manufacturers and sellers of architectural ceramics in China.

【Changlian Technology IPO Submission for Registration】

On May 10, Dongguan Changlian New Material Technology Co., Ltd. (hereinafter referred to as "Changlian Technology") applied for the IPO review status of the Shenzhen Stock Exchange's GEM to be changed to "submitted for registration", with Dongguan Securities as its sponsor. According to the prospectus, Changlian Technology specializes in the research and development, production and sales of printing materials, the main products include water-based printing paste, water-based resin, silk screen silicone, etc., and is engaged in the research and development, design and sales of printing equipment, and the products are mainly used in the field of textile printing.

【Idetech Technology Launches IPO Counseling】

On May 9, Shenzhen Idetai Technology Co., Ltd. (hereinafter referred to as "Idetai Technology") went through the counseling registration with the Shenzhen Securities Regulatory Bureau, and planned to make an initial public offering of shares and go public, and the counseling brokerage was Guosen Securities. Founded in 2007, Idetech Technology is a leading provider of optical connection equipment, the company's main products are passive optical devices, optical fiber management systems, WDM wavelength division multiplexers, ODN intelligent equipment and a series of products.

[Wuhan Xinxin launches A-share IPO counseling]

On May 10, Wuhan Xinxin Integrated Circuit Co., Ltd. (hereinafter referred to as "Wuhan Xinxin") went through the counseling registration with the Hubei Securities Regulatory Bureau, and planned to make an initial public offering of shares and go public, and the counseling brokerage was Guotai Junan. Founded in Wuhan in 2006, Wuhan Xinxin can provide 12-inch NOR Flash, CIS and Logic wafer foundry and technical services for 40nm and above processes, and the company is committed to becoming a leader in semiconductor characteristic processes.

[Hongzhong Pharmaceutical terminates the IPO of the Beijing Stock Exchange]

On May 9, the website of the Beijing Stock Exchange announced the decision to terminate the review of the public offering of shares of Hubei Hongzhong Pharmaceutical Co., Ltd. (hereinafter referred to as "Hongzhong Pharmaceutical") and listing on the Beijing Stock Exchange. Hongzhong Pharmaceutical originally planned to raise 178 million yuan for the industrialization expansion project of R&D of characteristic APIs, the industrialization project of key intermediates of periwinkle series anti-tumor APIs, and the project of supplementing working capital. Its sponsor is Haitong Securities (600837) Co., Ltd., and the sponsor representatives are Hu Xuan and Wang Zhe.

Corporate Public Opinion:

[Cao Cao, who lost 7 billion yuan in three years, rushed to Hong Kong stocks: deepened dependence on aggregation platforms]

Recently, Cao Cao submitted an application for listing on the Hong Kong Stock Exchange, with Huatai International, ABC International and GF Securities (Hong Kong, China) as joint sponsors. It is worth noting that Cao Caoxing, which continued to lose money, achieved a positive profit in the year before its listing, and submitted an IPO in the first year of profit, which also has hidden concerns about the deepening dependence on aggregation platforms. Cao Cao has achieved a rapid increase in order size by accessing various aggregation platforms, but this has also made the company face greater market volatility and uncertainty.

From 2021 to 2023, Cao Cao continued to lose money in net profit, which was -3.007 billion yuan, -2.007 billion yuan and -1.981 billion yuan, respectively, and its adjusted net profit was -2.959 billion yuan, -1.651 billion yuan and -966 million yuan, respectively. The cumulative loss in the past three years is nearly 7 billion yuan. Nevertheless, 2023 will also be a turning point for Cao Cao, with its gross profit margin rising from minus 24.4% to plus 5.8%, and net cash flow from operating activities improving from -1.1 billion yuan in 2022 to 136 million yuan in 2023.

In order to quickly increase the scale of orders, Cao Cao actively cooperates with various aggregation platforms. These aggregator platforms provide Cao Cao with a large amount of user traffic, and its order volume continues to grow between 2021 and 2023, with 370 million, 383 million, and 448 million orders, respectively. Thanks to the more cost-effective traffic obtained by the aggregation platform, the company's sales and marketing expenses will decline by 30.83% in 2023. However, at the same time, the dependence on aggregators has deepened, with the proportion of total order transactions from aggregators increasing from 43.8% in 2021 to 49.9% in 2022, and further surging to 73.2% in 2023. This change makes Cao Cao Travel enjoy the traffic dividend at the same time, there are also potential risks. (Source: Jiemian News)

[IPO of Changya shares: the son of the vice president of the subsidiary turned into a supplier, and the actual controller cooperated in the year of its establishment to take care of the younger generation]

Since the formal submission of the listing application to the main board of the Shenzhen Stock Exchange on June 26, 2023 and the acceptance, in more than 10 months, the listing process of Changya shares has been difficult to say smooth, not only by two rounds of review and inquiry from the Shenzhen Stock Exchange, but also completed 4 updates and supplements of the prospectus declaration draft during the period, and has still not obtained the qualification for the main board of the Shenzhen Stock Exchange.

In fact, the related-party transactions between Changya Co., Ltd. and Ying Cheng, the son of Cheng Xiufang, deputy general manager of its subsidiary Vietnam Changya, have also been questioned by the outside world. According to the prospectus, Tianjie Plastics, which is controlled by Ying Cheng, the son of Cheng Xiufang, deputy general manager of Changya's Vietnam subsidiary, is a supplier of packaging film for Changya shares, and the transaction amount in 2022 will reach 82.49% of the similar procurement amount of Changya shares. In fact, Ying Cheng is not only the son of Cheng Xiufang, deputy general manager of Changya Vietnam, but also worked in Changya Co., Ltd. from 2017 to 2020, and founded Tianjie Plastics based on his personal development and optimism about the plastic packaging industry.

In response to the cooperation with Yingcheng, Changya Co., Ltd.'s explanation is that "considering the entrepreneurial support for the younger generation, the company further increased the purchase amount after recognizing the service quality, stability and response speed of Tianjie Plastics." Not only that, in addition to the company-level cooperation between the two sides, Xu Jianhai, the actual controller of Changya shares, and Ying Cheng also have financial exchanges. From 2020 to 2021, Xu Jianhai provided loans to Ying Cheng many times, totaling 3.08 million yuan. Changya Co., Ltd. has stopped its business cooperation with Tianjie Plastics since May 2023, and the personal loan borrowed by Yingcheng from Xu Jianhai will also be fully settled in May 2023. (Source: Huiju Finance)

[The IPO of the main board of Interpai was terminated, the concentration of customers and suppliers was high, and the company's comprehensive gross profit margin continued to decline]

On the evening of May 9, the Shanghai Stock Exchange announced its decision to terminate the review of the IPO of Interpai Platinum Co., Ltd. on the main board, which was directly due to the withdrawal of the declaration/sponsorship by the company and the sponsor Huaying Securities. The company's IPO application was accepted on June 29, 2023, and the first round of inquiry responses was announced on February 1, 2024. The company only published the prospectus at the time of the first filing. The company's IPO plans to raise 1.096 billion yuan.

From 2020 to 2022 (hereinafter referred to as the "reporting period"), the company's sales revenue to the top five customers totaled 916.7152 million yuan, 1110.67 million yuan and 1429.5886 million yuan, accounting for 89.21%, 78.52% and 84.07% of the operating income respectively, and the top five customers have a high concentration. The company's main customers are large-scale LCD substrate glass and glass fiber manufacturing enterprises such as Rainbow Co., Ltd., Sinoma Science and Technology, China Jushi, and International Composite Materials.

During the reporting period, the main raw materials purchased by the company were platinum, rhodium and other precious metals, and the main raw material suppliers included Shanghai Gold Exchange, China Jushi, Guiyan Platinum, etc. In each period of the reporting period, the company's purchase amount from the top five raw material suppliers accounted for 93.77%, 82.99% and 96.98% of the total procurement amount in the current period, respectively, and the concentration of the top five suppliers was relatively high.

In addition, during the reporting period, the company's comprehensive gross profit margin was 19.01%, 15.69%, 13.84% and 11.23% respectively. The fluctuation of the Company's gross profit margin was mainly caused by changes in business structure and changes in the cost of precious metal raw materials. (Source: Under the Sycamore Tree V)