Source: Yicaixin
Author: Mazov
Changzhou Ruihua Chemical Engineering Technology Co., Ltd. (hereinafter referred to as "Ruihua Technology") is a leading petrochemical technology provider in China with its core business covering basic research and testing, process route and catalyst development, technology licensing, technical services, chemical equipment design and manufacturing, and new material technology development and preparation.
According to public information, Ruihua Technology was established in April 2007 and listed on the New Third Board on July 31, 2018. In March last year, the IPO of Ruihua Technology on the Beijing Stock Exchange was accepted and successfully passed in February this year. The sponsor of Ruihua Technology's IPO cooperation is China Securities Construction Investment, and the auditor is Lixin Zhonglian.
The authenticity of the transaction of the major customer was questioned
The prospectus disclosed that from 2020 to January to June 2023 (hereinafter referred to as the reporting period), Ruihua Technology achieved operating income of 267.4287 million yuan, 142.1757 million yuan, 325.9886 million yuan and 207.037 million yuan respectively, and net profit of 62.5564 million yuan, 36.5729 million yuan, 78.6147 million yuan and 90.6334 million yuan respectively. During the period in 2021, Ruihua Technology's revenue and net profit declined sharply.
In each period of the reporting period, the total sales amount of Ruihua Technology to the top five customers was 239.1981 million yuan, 128.6965 million yuan, 290.1701 million yuan and 206.0836 million yuan, accounting for 89.44%, 90.52%, 89.01% and 99.54% of the current operating income respectively, with a high customer concentration.
It is worth mentioning that the transaction between Ruihua Technology and its major customer Shandong Heze Yuhuang Chemical Co., Ltd. (hereinafter referred to as Heze Yuhuang) has received the focus of the exchange.
According to the reply to the inquiry, Heze Yuhuang was established in August 2007 and cooperated with Ruihua Technology in the year of its establishment. The client faced bankruptcy restructuring in the fourth quarter of 2020. After the crisis was resolved, Heze Yuhuang and its affiliates purchased patented proprietary equipment from Ruihua Technology in 2021, with an amount of 15.8317 million yuan, becoming the third largest customer of Ruihua Technology that year.
During the period, in November and December 2021, due to the guidance of Ruihua technology and the operation of Heze Yuhuang personnel, the polystyrene project accident occurred in Heze Yuhuang, and there was a large material loss.
In the handling of this accident, Ruihua Technology and Heze Yuhuang initially had a certain dispute over the determination of responsibility for this issue, and then Ruihua Technology believed that it had business contacts with Heze Yuhuang since 2013 (the cooperation time disclosed on page 26 of the inquiry reply was 2007), and the past cooperation was smooth and without disputes, and a good cooperative relationship was established; For the sake of maintaining its own reputation, and considering that there are still potential business development opportunities with Heze Yuhuang, it assumed the responsibility for the accident of the project.
After the technical cooperation project between Heze Yuhuang and Ruihua, the production was stopped due to the poor polystyrene market.
In addition, among the top five customers of Ruihua Technology, there are also individual customers with a small number of insured people, and the establishment time is relatively short, that is, the cooperation with Ruihua Technology.
Ruihua Technology's fourth largest customer in 2022 is Fuzhou Wanjing New Materials Co., Ltd. (hereinafter referred to as Fuzhou Wanjing), with a transaction amount of 15 million yuan, and the transaction content is a process package. According to Qixin.com, the number of social security contributors in Fuzhou Wanjing in 2022 is 0.
According to the inquiry reply, Ruihua Technology has been cooperating with Fuzhou Wanjing since 2021. Interestingly, Fuzhou Wanjing was registered as Fujian Haoyijia Furniture Co., Ltd. before September 30, 2021, and its business scope includes the production and sales of wooden furniture and household products.
Jiangsu Fenghai High-tech Materials Co., Ltd. (hereinafter referred to as Jiangsu Fenghai) is the fifth largest customer of Ruihua Technology in 2021, with a transaction amount of 12.90 million yuan and a process package. According to Qixin.com, the number of social security payers in Jiangsu Fenghai in 2021 is 0.
Tangshan Xuyang Aromatics Products Co., Ltd. (hereinafter referred to as Tangshan Xuyang) is the second largest customer of Ruihua Technology in 2020, with a transaction amount of RMB 41.1276 million, and the transaction content is patented proprietary equipment and catalysts. In February this year, Tangshan Xuyang was cancelled due to the merger or division of the company.
While the fixed increase is supplemented by the borrowed funds, dividends are distributed
During the reporting period, Ruihua Technology raised 99.412 million yuan through private placement of shares, which was mainly used to supplement liquidity, and as of December 31, 2021, the previous raised funds have been used up.
At the same time, Ruihua Technology also issued cash dividends of 110 million yuan twice during the reporting period, which also led to large fluctuations in the cash flow of Ruihua Technology during the reporting period. Among the two dividends issued during the reporting period, Xu Zhigang, the actual controller of Ruihua Technology, took 63.188 million yuan.
It should be noted that Ruihua Technology was quite short of money during the reporting period. In 2020, in order to support the company's business development, the company borrowed 15.2336 million yuan from 22 shareholders, of which 14.7536 million yuan was borrowed from related parties.
Ruihua Technology's listing on the New Third Board is the announcement of this related party loan. According to the announcement, the company's 22 shareholders plan to provide loans totaling 15.4736 million yuan to Ruihua Technology. The difference in the amount of the loan is mainly due to the change in the loan provided by the actual controller Xu Zhigang, and the prospectus discloses that Xu Zhigang borrowed 11.5216 million yuan from the company, but the amount disclosed in the announcement of the New Third Board is 11.7616 million yuan.
(Screenshot from the announcement of the New Third Board)
Fundraising projects to develop new businesses have attracted attention
According to the prospectus, Ruihua Technology publicly issued no more than 17,392,000 ordinary shares (including the number of shares, without exercising the over-allotment option) RMB ordinary shares, raised 417.408 million yuan, and planned to invest in 12,000 tons/year catalyst project (hereinafter referred to as the catalyst project) and 100,000 tons/year degradable plastic project (hereinafter referred to as the "degradable plastic project"). The main body of the two projects is Shandong Ruilun New Material Technology Co., Ltd. (hereinafter referred to as Shandong Ruilun), of which the catalyst project has a total investment of 31,500.00 yuan, all of which are raised funds; The total investment of the degradable plastic project is 674000000 yuan, and the raised funds are 1024080000 yuan.
In the process of being inquired about Ruihua Technology, some of the fundraising projects of its IPO have quietly changed.
According to pages 93-94 of the reply to the second round of inquiries, Ruihua Technology plans to issue no more than 20 million shares this time, with a proposed raised capital of 66,000.00 yuan, and a degradable plastic project to use the raised funds of 34,500.00 yuan.
Shandong Ruilun was established in July 2021 with a registered capital of 100 million yuan, and the paid-in capital as of the signing date of the prospectus (January 29, 2024) is only 42.00 million yuan.
According to the draft of the prospectus, the construction period of the catalyst project is 18 months, and the construction period of the degradable plastic project is 24 months.
According to the WeChat official account of the Heze Municipal Ecological Environment Bureau, Ruilun 300,000 tons of high-end plastics and their supporting projects, including catalyst projects and degradable plastic projects, will start construction in July 2023 and are expected to be completed and put into operation in December 2024, with a total construction period of only 18 months. After the project is put into operation, the annual income of the industry will be 4.800 billion yuan, the profits and taxes will be 638 million yuan, and 50 new jobs will be created.
(Screenshot from Heze Environment's WeChat public account)
It is worth noting that during the reporting period, Ruihua Technology did not carry out the production of degradable plastics, and its catalyst business did not involve catalyst production, and the main business process was catalyst raw material procurement, outsourcing processing and sales, and the catalyst business was a new business of Ruihua Technology in 2020, with a small business scale, only sales in 2020 and 2021, and no revenue in 2022. From 2020 to 2022, the revenue of the catalyst business in each period was 8.1802 million yuan, 15.5688 million yuan and 0.00 million yuan respectively.
According to the WeChat public account of Heze Environment, after Ruilun 300,000 tons of high-end plastics and its supporting projects are put into operation, the annual income of the industry will be 4.800 billion yuan, and the profits and taxes will be 638 million yuan. In addition, Heze Daily Baijia reported that after the project is put into operation, it can achieve an annual operating income of 7.700 billion yuan, a profit of 870 million yuan, and a tax revenue of 500 million yuan.
(Screenshot from Heze Daily Baijia No.)
There are discrepancies in the expected data of the fundraising and investment projects reported by the above two official reports, but whether it is an annual revenue of 4.8 billion yuan or 7.7 billion yuan, it is "out of reach" for Ruihua Technology, which will only have a revenue of 326 million yuan in 2022.