Jiachi Technology's listing was suspended: the technical level was doubtful, and the actual controller Deng Longjiang resigned before the IPO

On May 14, the information disclosed by the Shanghai Stock Exchange showed that Chengdu Jiachi Electronic Technology Co., Ltd. (hereinafter referred to as "Jiachi Technology") was suspended from the issuance registration process because the sponsor hired by the China Securities Regulatory Commission was taken regulatory measures to restrict business activities.

This means that the IPO road of Jiachi Technology has once again cast a shadow. Previously, on April 16, Bedo Finance had issued a report "The backbone of the backbone left, and the sponsor Huaxi Securities "exploded", and Jiachi Technology was listed "difficult"", saying that once Huaxi Securities' sponsorship business qualification was suspended, its sponsorship IPO projects, including Jiachi Technology, would be pressed the pause button.

Correspondingly, on May 14, the Jiangsu Securities Regulatory Bureau issued a document stating that Huaxi Securities violated a number of regulations in the sponsorship project of Jintongling Technology Group Co., Ltd. in 2019 for non-public issuance of shares. Therefore, the Jiangsu Securities Regulatory Bureau has decided to suspend Huaxi Securities' sponsorship business qualification for 6 months, from April 28 to October 27, 2024.

According to Beduo Finance, Huaxi Securities also participated in the sponsorship of Sichuan Zhongbang New Materials Co., Ltd. (hereinafter referred to as "Zhongbang New Materials") and Dongguan Liuchun Intelligent Technology Co., Ltd. (hereinafter referred to as "Liuchun Technology"). Among them, Liuchun Intelligence has passed the IPO meeting in July 2022.

Now, Zhongbang New Materials and Liuchun Technology have also chosen to voluntarily withdraw their listing application materials, and the issuance and listing review has been terminated. In this sprint listing, Liuchun Technology originally planned to raise 474 million yuan, which will be used for the production project (relocation) of precision functional devices for electronic products, the construction project of R&D center, and the replenishment of working capital.

At present, Jiachi Technology is also in a dilemma. In this sprint listing, Jiachi Technology originally planned to raise 1.245 billion yuan, which will be used for the construction project of electromagnetic functional materials and structures manufacturing base, electromagnetic functional materials and structure R&D center construction project, etc.

According to the prospectus, Jiachi Technology is a provider of electromagnetic functional materials and structures (EMMS), and its main products are stealth functional coating materials and stealth functional structural parts mainly used in the field of stealth of national defense weapons and equipment, and electromagnetic compatibility materials are mainly used in the civil electronic information industry.

In 2021, 2022 and 2023 (i.e., the "reporting period"), the operating income of Jiachi Technology will be 530 million yuan, 769 million yuan and 981 million yuan respectively, and the corresponding revenue growth rates will be 89.90%, 45.04% and 27.55% respectively. It is not difficult to see that the company's revenue is still growing, but the trend of declining growth rate is becoming more and more obvious.

During the reporting period, Jiachi Technology achieved net profit of 167 million yuan, 484 million yuan and 564 million yuan respectively, and net profit after deducting non-profit was 298 million yuan, 452 million yuan and 523 million yuan respectively, which also faced the problem of declining growth rate. In addition, the company's gross profit margin decreased from 82.58% in 2021 to 82.15% in 2022 and further declined to 76.91% in 2023.

Due to the long collection cycle of the military materials industry, the receivables of Jiachi Technology are rising in the case of slowing down performance growth. During the reporting period, the company's total book balances of receivables and notes receivable were 355 million yuan, 678 million yuan and 984 million yuan respectively, accounting for 66.91%, 88.16% and 100.34% of its revenue, respectively.

Not only the receivables continue to rise, but the customers of Jiachi Technology are also quite concentrated. During the reporting period, the company's revenue from the largest customer, the aviation industry, accounted for 70.17%, 58.34% and 65.81% of the total revenue, respectively, and the revenue from the top five customers accounted for 94.01%, 94.93% and 97.04% of the total revenue, and there was a risk of relying on a single customer.

In this regard, Jiachi Technology said in response to an inquiry about the "sustainability of business cooperation with large customers" that as of the end of January 2024, the company's contract balance in hand for the aviation industry was 898 million yuan, and it will deliver products to customers according to the delivery plan in the future, and the delivery plan will continue until 2025, and the balance is relatively sufficient.

At the same time, Jiachi Technology expects its operating income from January to March 2024 to be 130 million yuan to 136 million yuan, a year-on-year increase of 2.98% to 7.74%; net profit was 66.5639 million yuan to 70.4909 million yuan, a year-on-year increase of 2.04% to 8.06%; The net profit after deducting non-profits was 65.0625 million yuan to 68.9895 million yuan, a year-on-year increase of 1.27% to 7.38%.

It is worth mentioning that as a company named after "electronic technology", Jiachi Technology has many controversies in technology. During the reporting period, the company's R&D expenses were 32.7864 million yuan, 44.0533 million yuan and 86.8641 million yuan respectively, accounting for 6.18%, 5.73% and 8.86% of revenue, respectively, and the previous two years were lower than the industry average of 7.70% and 6.49%.

As of the end of 2023, Jiachi Technology has a total of 135 R&D personnel, accounting for 32.30% of its total employees. However, the company, which claimed in the prospectus that it had actively built an intellectual property protection system for its core technologies, had only 56 patents as of the date of the prospectus, including 19 invention patents.

In addition, according to Bedo Finance, 8 of the 19 invention patents obtained by Jiachi Technology are obtained by the company from the University of Electronic Science and Technology of China through public bidding in the Chengdu Intellectual Property Exchange Center, with a transfer price of only 3.3 million yuan, the main purpose of which is to build patent barriers, and 1 is jointly owned by it and the University of Electronic Science and Technology of China.

In other words, nearly half of Jiachi Technology's invention patents are not independently developed. In addition, according to the inquiry letter of the Shanghai Stock Exchange, Jiachi Technology has applied for a number of identical or similar patents, and many patents have been identified as duplicate declarations or invalid patents, and most of the company's directors, supervisors, senior executives and core technical personnel have studied and worked in the University of Electronic Science and Technology of China.

In this regard, Jiachi Technology said in its reply to the inquiry letter that some of its relevant personnel were mainly engaged in theoretical, academic and forward-looking scientific research during their time at the University of Electronic Science and Technology of China, and did not participate in the research and development of the company's core technology, and the other part of the relevant personnel had resigned from the University of Electronic Science and Technology of China.

At the same time, Jiachi Technology said that although the company and the company's directors, supervisors, senior executives, and main R&D personnel have participated in the research and development of patents that have not been included in the company's system, such circumstances will not constitute a substantial legal obstacle to the issuance and listing, and once again reiterated that the company's core technology comes from independent research and development, and has independent and continuous research and development capabilities.

Regarding the actual situation of patent auction and transfer, Jiachi Technology explained that except for cases involving state secrets and national security, the University of Electronic Science and Technology of China can independently decide on the transfer of patents. In addition, the relevant patents were obtained by the company through formal bidding, which did not involve the main business and core technology, and were not used for production and operation.

Before this listing, Deng Longjiang directly held 22.38% of the shares of Jiachi Technology. In addition, Deng Longjiang signed the "Concerted Action Agreement" with Liang Difei, Xie Xintong, Xie Jianliang, Deng Bowen, Liang Xuanyu, Jiachuang Zhonghe, and Jiake Zhixin, holding 71.15% of the shares through concerted action.

Careful study shows that the family attributes of Jiachi Technology are very obvious. Among them, Deng Bowen, Liang Xuanyu, and Xie Xintong are the children of the company's founders Deng Longjiang, Liang Difei, and Xie Jianliang respectively. In addition, Yao Yao, chairman and administrative director of Jiachi Technology, and Deng Longjiang are uncles and nephews.

It is worth mentioning that in the past two years, Deng Longjiang has been the largest shareholder of Jiachi Technology, and the actual control of the equity ratio through its concerted actors has been stable at more than 70%. In the nomination of directors, supervisors and senior executives of Jiachi Technology since 2020, 4 non-independent directors and 2 independent directors among the 8 directors were nominated by Deng Longjiang.

In addition, the Concerted Action Agreement stipulates that if the parties in the concerted action relationship cannot reach an agreement on the exercise of shareholder rights such as the right to propose and vote, Deng Longjiang's opinion shall prevail. In addition, since Xie Jianliang and Liang Difei are only directors, their voting opinions on the board of directors and shareholders' meetings will also follow Deng Longjiang's opinions.

However, such a person, who can be called the "backbone" of Jiachi Technology, announced on February 4, 2024 that he would resign from the company's directors and special committees of the board of directors, as well as the position of chief scientist due to personal reasons. At the critical moment of the IPO, Deng Longjiang's sudden resignation inevitably sparked a lot of speculation.

However, Jiachi Technology insisted in the prospectus that Deng Longjiang's resignation from relevant positions would not affect his actual control position, would not lead to a material adverse change in the company's directors, and would not have a significant adverse impact on the production and operation of Jiachi Technology, and would constitute a substantial obstacle to the listing.