On May 16, the IPO of Marco Polo Holding Co., Ltd. (hereinafter referred to as "Marco Polo", "Marco Polo Holdings" or "Marco Polo Tiles") was suspended. It is worth mentioning that Marco Polo is also the first company to attend the meeting after the introduction of the new "National Nine Articles".
Among them, the main questions asked at the listing committee meeting included operating performance issues and accounts receivable issues, and Marco Polo Holdings was required to explain the reasons and reasonableness of revenue growth and gross profit margin in 2023 higher than that of comparable companies in the same industry; Explain the reasons and reasonableness of the gross profit margin of the main business being higher than that of comparable companies in the same industry; stability of business performance, etc.
According to Bedo Finance, Marco Polo Holdings pre-disclosed the prospectus in May 2022 and prepared to be listed on the main board of the Shenzhen Stock Exchange. After the implementation of the full registration system in 2023, the company will submit a prospectus and continue the IPO process. In this sprint listing, Marco Polo Holdings originally planned to raise about 4 billion yuan.
Marco Polo, as we all know, was an Italian who traveled to China and wrote "The Travels of Marco Polo". Marco Polo Holdings, named after "Marco Polo", was born in Dongguan, formerly known as Weimei Tiles, and was later renamed by Huang Jianping, who graduated from the Department of Inorganic Materials of South China University of Technology.
As the first company to be listed after the promulgation of the "National Nine Articles" and other regulations, Marco Polo Holdings has become the focus of market attention, and the same is true for being suspended. However, Bedo Finance found that there are many other controversies in Marco Polo Holdings, which has been suspended.
First, the scale of funds raised will be reduced.
According to the earlier prospectus, Marco Polo Holdings originally planned to raise 4.018 billion yuan in advance, which will be used for the construction project of ceramic home furnishing industrial park, high-performance ceramic plate project, ceramic production line system upgrading project, comprehensive capacity improvement project, and supplementary working capital.
The prospectus (last draft) shows that Marco Polo Holdings plans to raise 3.158 billion yuan, and the project of "supplementary liquidity" has been deleted, and it was originally planned to invest 860 million yuan for the project. However, about 427 million yuan is still used for the company's comprehensive capacity improvement project.
According to the prospectus, the so-called "comprehensive capacity improvement project" is located at No. 102, Gaobu Section, Beiwang Road, Gaobu Town, Dongguan City, Guangdong Province, and the main body of the construction is Marco Polo, with a construction period of 3 years. According to reports, the project plans to upgrade the information center, brand promotion and marketing and intelligent warehousing construction.
Among them, 180 million yuan will be invested in marketing expenses, 221 million yuan in engineering costs, and 139 million yuan in equipment purchase costs, and there are overlaps between this part and other projects. But in the final analysis, the difference between Marco Polo Holdings' comprehensive capacity improvement project and replenishment of liquidity is not too big.
Before the meeting, Marco Polo Holdings had deleted the "supplementary liquidity project".
Second, large dividends.
According to the prospectus, Marco Polo Holdings will pay cash dividends of 500 million yuan and 320 million yuan in 2022 and 2023 respectively, totaling about 820 million yuan. Previously, in 2020, the company also paid cash dividends of 80 million yuan to shareholders.
Just two months before the submission of the listing application in May 2022 (i.e., March 2022), Marco Polo Holdings distributed a profit of 500 million yuan to all shareholders. In March 2023, while the prospectus was submitted, the company once again paid a dividend of 320 million yuan to shareholders, which was an obvious "surprise" dividend.
For such behavior, the "National Nine Articles" issued not long ago pointed out that the continuous supervision of listed companies will be strictly enforced. Among them, it is emphasized that information disclosure and corporate governance supervision should be strengthened, the system of shareholding reduction rules should be comprehensively improved, and the supervision of cash dividends of listed companies should be strengthened, so as to promote listed companies to enhance their investment value.
At the same time, the "Opinions on Strictly Controlling the Access to Issuance and Listing and Improving the Quality of Listed Companies from the Source (Trial)" issued by the China Securities Regulatory Commission on March 15 this year also made it clear that it is strictly concerned about whether the enterprises to be listed have pre-listing surprise "clearance" dividends, etc., strictly prevent and strictly investigate, and implement negative list management.
However, the scale of Marco Polo Holdings' profits is very impressive. In 2021, 2022 and 2023, the company's revenue will be 9.365 billion yuan, 8.661 billion yuan and 8.925 billion yuan respectively, net profit will be 1.653 billion yuan, 1.514 billion yuan and 1.353 billion yuan respectively, and the net profit after deducting non-profits will be 1.460 billion yuan, 1.360 billion yuan and 1.240 billion yuan respectively.
According to this calculation, Marco Polo Holdings' net profit in the past three years exceeded 4 billion yuan. Marco Polo Holdings said that its undistributed profits from 2021 to the end of 2023 amounted to 3.437 billion yuan, 4.305 billion yuan and 5.288 billion yuan respectively, and the company retained a large amount of undistributed profits to be shared by new and old shareholders after listing.
In the context of large dividends, Huang Jianping, the actual controller of Marco Polo Holdings, made a "lot of money". Prior to this listing, Meiying Industrial held 64.36% of the shares of Marco Polo Holdings and was the controlling shareholder of the company. Among them, Huang Jianping holds 64.01% of the shares of Meiying Industry and directly and indirectly holds 42.12% of the shares of Marco Polo, and is the actual controller of the company.
According to the proportion of shareholdings, Huang Jianping received more than 40% of the dividend amount of Marco Polo Holdings, and received at least 300 million yuan in cash. At present, Huang Jianping also serves as the chairman of Marco Polo Holdings, and is also the actual controller of Sitong Co., Ltd. (SH:603838), an A-share listed company.
Third, there are obvious related-party transactions.
According to Bedo Finance, the performance growth of Marco Polo Holdings is directly related to the affiliated enterprise controlled by Huang Jianping - Weimei Decoration. According to the earlier prospectus, Weimei Decoration was the main customer of Marco Polo Holdings in 2019 and 2020.
In 2019, Marco Polo Holdings' sales to Weimei Decoration amounted to about 1.072 billion yuan, accounting for 13.21% of the company's total sales, surpassing Evergrande Real Estate, Huanai Home Furnishing, Poly Real Estate, etc., as its largest customer; In 2020, the sales amount of Weimei Decoration will be about 648 million yuan, accounting for 7.56%, slightly lower than Evergrande Real Estate, which is its second largest customer.
In 2019 and 2020, Marco Polo Holdings was entrusted to produce ceramic products and sold about 730 million yuan and 405 million yuan to Weimei Decoration and the companies controlled by it, accounting for 8.98% and 4.71% of its sales revenue respectively, mainly to Weimei Decoration and related parties to entrust the processing of ceramic tile products, the purchase of raw materials and transportation services.
According to the prospectus, Marco Polo Holdings and Weimei Decoration have overlapping customers and suppliers. In order to solve the competition in the same industry and standardize related party transactions, since the beginning of 2021, Weimei Decoration has stopped the ceramic sales business. Among them, Weimei Decoration is a company controlled by Huang Jianping, the actual controller of Marco Polo Holdings.
In this regard, the Shenzhen Stock Exchange asked Marco Polo Holdings in the inquiry letter to explain whether the company has a significant dependence on related parties, whether it has a complete business system and the ability to operate independently directly to the market, and whether the company's main financial data after excluding the impact of related party transactions still meets the listing conditions it has chosen.
Explain the specific situation of the main overlapping customers and suppliers with Weimei Decoration, including the number of overlaps in each period, the amount and proportion of transactions between Marco Polo Holdings and Weimei Decoration to overlapping customers and suppliers respectively, and whether there is any related relationship, benefit transfer or other benefit arrangement between the company and its affiliates and overlapping customers and suppliers.
At the same time, it illustrates the difference between the brand of ceramic products of Weimei Decoration and Marco Polo Holdings. After the closure of Weimei Decoration, whether Marco Polo Holdings undertook the original supplier and customer resources of Weimei Decoration, whether there was any termination of cooperation or loss of customers, etc.
Marco Polo Holdings said that based on historical reasons, some of the early trademarks related to architectural ceramics were mainly obtained by Guangdong Weimei, and the company and Weimei Decoration used the above trademarks. Among them, Marco Polo Holdings is the operator and user of the Marco Polo brand, and Weimei Decoration is the user of the trademark.
Marco Polo Holdings also said that in order to protect the independence and integrity of the company's assets, standardize the management of intellectual property rights, and at the same time plan to stop production and operation based on Weimei Decoration, Guangdong Weimei will transfer trademarks related to architectural ceramics to Marco Polo Holdings and its subsidiaries in 2020.
After Weimei Decoration ceased to operate externally, Marco Polo Holdings undertook some of the original non-overlapping customer and supplier resources of Weimei Decoration. Among them, Marco Polo Holdings has undertaken 100 customers, and the 100 customers will achieve revenue of 294 million yuan in 2021, accounting for 3.14%.
At the same time, Marco Polo Holdings has undertaken 16 suppliers, with a purchase amount of 12.223 million yuan in 2021, accounting for 0.23% of its operating costs. In addition, 10 Weimei Decoration 2020 customers and 10 2020 suppliers did not continue to cooperate with Marco Polo Holdings after Weimei Decoration closed down.
Fourth, the performance is unstable.
According to the prospectus, Marco Polo Holdings' revenue in 2021, 2022 and 2023 will be 9.365 billion yuan, 8.661 billion yuan and 8.925 billion yuan respectively. Among them, the revenue in 2022 has seen a certain decline, a year-on-year decrease of 7.52%, and there will be a slight recovery in 2023, but it is still lower than in 2021.
During the reporting period, the overall output of Marco Polo Holdings' architectural ceramics products showed a trend of first rising and then declining, which was consistent with the trend of revenue changes, while the sales volume continued to increase, and the revenue in 2022 was lower than that in 2021 due to the decline in sales unit price.
In this regard, the Shenzhen Stock Exchange requires Marco Polo Holdings to explain the changes in its main performance in 2022 compared with the previous year, the reasons for the changes and the reasonableness of the changes, and the expected performance from January to March 2023.
At the same time, Marco Polo Holdings is required to explain whether its operating performance and main financial indicators in 2022 are significantly different from those of comparable companies in the same industry and the reasons, and whether they match market demand, competition conditions, industry trends, and the operating performance of downstream customers.
For the year-on-year decline of 7.52% in revenue in 2022, Marco Polo Holdings said that it was mainly due to the external market environment in 2022, the intensification of market competition, and the decline in sales prices; The profit in 2022 decreased by 6.83% year-on-year, mainly due to the decrease in the company's gross profit margin of 7.94% and the decrease in the provision for credit impairment losses in 2022.
According to the prospectus (the previous draft), Marco Polo Holdings' revenue in the first quarter of 2024 will be about 1.313 billion yuan, a year-on-year decrease of 16.01%; net profit attributable to the parent company was 197 million yuan, a year-on-year decrease of 16.03%; The net profit after deducting non-profits was 174 million yuan, a year-on-year decrease of 15.36%, and the revenue and net profit both declined by double digits.
At the same time, Marco Polo Holdings expects its revenue in the first half of 2024 to be about 3.55 billion yuan to 3.75 billion yuan, a year-on-year change of -16.86% to -12.17%; net profit was 630 million yuan to 710 million yuan, a year-on-year change of -18.42% to -8.06%; The net profit after deducting non-profits was 590 million yuan to 670 million yuan, a year-on-year change of -17.14% to -5.91%, and the performance was also in a state of decline.
For the expected operating income in the first half of 2024 and the net profit attributable to the owners of the parent company after deducting non-recurring gains and losses, compared with the same period in 2023, Marco Polo Holdings said that it was mainly affected by the adjustment of the real estate industry and the fluctuation of quarterly performance.
Fifth, the production capacity is insufficient and it is still necessary to expand production.
It is not difficult to see that the performance of Marco Polo Holdings is limited by the impact of the adjustment of the real estate industry. Even so, Marco Polo Holdings still wants to raise about 3.2 billion yuan, which will be used to build factories and expand production capacity. If there are major adverse changes in the market environment of the building ceramics industry in the future, it will inevitably have a further adverse impact on the company's performance.
In particular, Marco Polo Holdings is not in full production. According to the prospectus, the company's production capacity in 2021, 2022 and 2023 will be about 211 million square meters, 220 million square meters and 250 million square meters, respectively. During the same period, the company's production capacity was approximately 196 million square meters, 192 million square meters and 217 million square meters, respectively.
Correspondingly, the capacity utilization rate of Marco Polo Holdings was 92.65%, 87.33% and 86.95% respectively, and the capacity utilization rate continued to decline. In addition, Marco Polo Holdings' production capacity in 2022 is still lower than in 2021. In 2023, the company's production capacity is about 217 million square meters, which is still lower than in 2022.