Reporter Chen Jingbin reports from Guangzhou
The resumption of IPO review for A-shares after three months marks the advancement of the new "National Nine Articles" policy. In this context, on May 16, Marco Polo became the first IPO company to submit to the meeting after the policy was introduced. However, at around 9 p.m., the Shenzhen Stock Exchange announced the results of the review and suspended the review of Marco Polo.
According to the on-site inquiries of the meeting of the Listing Committee of the Shenzhen Stock Exchange, Marco Polo faced some major problems. First of all, in view of the decline in the company's revenue and profit in the past three years, the committee members asked for further explanation of the reasons for the revenue growth in 2023 and the evaluation of its reasonableness, as well as the stability of the company's operating performance.
In fact, Marco Polo's revenue and profit did decline to a certain extent. According to the data disclosed in the prospectus, from 2021 to 2023, Marco Polo's operating income will be 9.365 billion yuan, 8.661 billion yuan and 8.925 billion yuan respectively, and the net profit will be 1.653 billion yuan, 1.514 billion yuan and 1.353 billion yuan respectively. At the same time, Marco Polo's bad debt provision for accounts receivable is also increasing year by year.
In fact, this trend is also influenced by the industry as a whole. The China Building and Sanitary Ceramics Association previously released the report on the "Operation Overview of the National Building Ceramics and Sanitary Ware Industry in 2023". According to the data, the national output of ceramic tiles will continue to decline in 2023, reaching 6.73 billion square meters, a decrease of 8% from 2022.
In the face of the continuous decline in the output of the national ceramic tile industry, Marco Polo is facing the risk of a possible further decline in operating profits, how Marco Polo seeks new profit growth points, and in the face of the suspension of financing brought about by the suspension of the Shenzhen Stock Exchange, Marco Polo responds, the relevant situation reporter called and sent a letter to Marco Polo Holding Co., Ltd., as of press time, no further reply has been received.
Revenue and profit declined
On the evening of May 16, the Listing Review Committee of the Shenzhen Stock Exchange issued an announcement on the results of the "postponement of review" of Marco Polo's initial public offering (IPO) application, which attracted a lot of attention from the IPO market as the first IPO application considered by the exchange recently.
It is understood that Marco Polo is an enterprise focusing on the research and development, production and sales of architectural ceramics, and is one of the leading manufacturers and sellers of architectural ceramics in China. The company has production bases in Dongguan, Guangdong, Qingyuan, Fengcheng, Jiangxi, Rongchang, Chongqing and Tennessee, USA.
According to the relevant person of the Shenzhen Stock Exchange, the listing committee suspended the review of Marco Polo's listing application, mainly considering the actual situation of the company's operating income and profit during the reporting period, such as a certain decline, and it is necessary to further confirm whether the uncertain factors affecting performance are eliminated on the existing basis.
Indeed, Marco Polo's revenue and profits have declined over the past period. According to the data disclosed in its prospectus, from 2021 to 2023, the company's operating income will be 9.365 billion yuan, 8.661 billion yuan and 8.925 billion yuan respectively, and the net profit will be 1.653 billion yuan, 1.514 billion yuan and 1.353 billion yuan respectively.
Marco Polo said that because its downstream real estate industry is greatly affected by macroeconomic and policy regulation, if there are significant adverse changes in the macroeconomic environment or the competitive environment in which the company is located, it may affect the stability of the company's product prices and operating performance, which will further lead to a decline in operating profit.
In response to the inquiry requirements of the Shenzhen Stock Exchange, Marco Polo needs to explain and disclose the stability of operating performance and explain whether the provision for individual bad debts is accurate based on factors such as the price trend of major products, market competition and the situation of comparable companies in the same industry. At the same time, the sponsor and the reporting accountant will also conduct supplementary checks and issue clear opinions.
Lu Lida, a lawyer at Shanghai Guangming Law Firm, told reporters that the decline in revenue and profits has undoubtedly brought challenges to the sustainability of Marco Polo's operation. This decline may be due to many factors such as intensified market competition, improper cost control, and insufficient product innovation capabilities. If effective measures cannot be taken to improve, the company's long-term development will face greater pressure.
Economist Yu Fenghui told China Business News that Marco Polo's accounts receivable bad debt provisions are increasing year by year, which may pose risks to its operations, such as increased cash flow pressure and credit losses.
Yu Fenghui suggested that, first of all, strengthen the management of accounts receivable, improve the efficiency of collection, and reduce the risk of bad debts. Second, optimize sales strategies, improve customer credit ratings, and avoid large-scale bad debts. In addition, the company can consider bringing in strategic investors or debt financing to alleviate cash flow pressure and ensure the normal operation of the company. At the same time, through technological innovation, product quality improvement and market share expansion, etc., enhance their core competitiveness to cope with the competitive pressure in the industry.
The industry continues to diverge
In fact, the decline in Marco Polo's revenue and profit reflects the continuous downward trend of China's ceramic tile production to a certain extent.
This situation is revealed in the report "2023 National Building Ceramics and Sanitary Ware Industry Operation Overview" recently released by the China Building and Sanitary Ceramics Association. According to the data, the national output of ceramic tiles in 2023 will be 6.73 billion square meters, a decrease of 8% from 2022. In addition, in 2023, the number of architectural ceramics enterprises above designated size will be 1,022, a decrease of 4 from 2022.
The report pointed out that in 2023, the mainland building ceramics industry will experience a period of hot, hot, cold and cold operation cycle, which is basically consistent with the trend of the real estate development prosperity index.
In the first half of the year, with the weakening of the impact of the epidemic and the recovery of consumption, the industry as a whole showed signs of recovery, but since June, the market has quickly fallen into a downturn, and the pressure on business operations has increased sharply. Throughout the year, with the promotion of the real estate "guaranteed delivery" policy, the area of housing completed increased sharply year-on-year, which brought good news to the building ceramics industry, especially had a positive impact on the sales of the engineering end. In 2023, the national output of ceramic tiles will continue to decline to 6.73 billion square meters.
In 2023, there will be a clear differentiation in the business situation of enterprises: according to the data disclosed by listed companies, the overall performance of leading enterprises with product, technology, cost and brand advantages is improving. However, in the context of overcapacity and intensified market competition, small and medium-sized enterprises, especially those that lack cost advantages and face serious challenges of product homogenization, are under greater operating pressure. In 2023, the number of architectural ceramics enterprises above designated size will be 1,022, a decrease of 4 from 2022.
Compared with the global ceramic production, according to incomplete statistics, the output of the world's major ceramic producing countries in 2022 will total 15.542 billion square meters, with China accounting for 47.03%. However, with the rise of other ceramic producing countries, China's share of production has fallen from more than 70% at its peak to less than 50%.
Zhan Junhao, a well-known strategic positioning expert and founder of Fujian Great Aim Brand Positioning Consulting, said that the continuous downward trend of the national ceramic tile output means that the market demand is weakening and the competition is intensifying, which puts pressure on the company's performance and operation.
In this regard, Zhan Junhao suggested that in order to maintain market share, the company may need to increase marketing efforts and R&D investment, which will increase the cost burden; At the same time, overcapacity in the industry may lead to price wars, further compressing profit margins. Marco Polo needs to take measures to adapt to market changes, such as optimizing product mix, opening up new markets or application areas, and enhancing its ability to withstand cyclical fluctuations in the industry.
(Editor: Zhao Yi Review: Tong Haihua Proofreader: Yan Jingning)