Yangtze River Business Daily reporter Shen Yourong
Pan-home companies have hit the IPO, although it has not been smooth, but the enthusiasm has not diminished. Guangdong Tute Precision Hardware Technology Co., Ltd. (hereinafter referred to as "Tute shares") is one of them.
The confidence of Tute shares lies in the fact that it is in the first echelon of the subdivided industry, and the company's operating performance has continued to grow in the past three years.
In this IPO, Tute shares have also won the "endorsement" of home furnishing shareholders such as Sophia and Detao Home. The company said that it has successfully entered the supply chain system of well-known home furnishing companies such as Sophia, Gold Cabinet, and Opai Home. However, Sophia, the third largest shareholder of Tutt, is also its second largest customer, and whether the transaction price between the two is fair has attracted attention.
What has attracted much attention is that Tute shares were founded by He Xiaoyu and Chen Jieyuan with a total investment of 100,000 yuan, and the two are the joint actual controllers of the company, holding more than 81% of the company's shares in total. Before the IPO, the two had a total of 9 relatives who had access to shares.
100,000 entrepreneurs "benefited" 9 relatives
The IPO of Tut shares will be a wealth-making activity.
Behind Tut shares, there are two founders, He Xiaoyu and Chen Jieyuan. At present, He Xiaoyu, born in 1974, serves as the chairman of the company, and Chen Jieyuan, born in 1972, serves as vice chairman and general manager.
Speaking of which, the two have an unexpected entrepreneurial story.
Public information shows that Chen Jieyuan is a native of Dong'an, Hunan, and in the late autumn of 1993, he went south to work with 150 yuan borrowed from relatives after failing the college entrance examination, and became a production worker in a small home hardware factory in Fangcun, Guangzhou. Here, Chen Xie Yuan has been working for seven years, growing step by step from a production worker to a production director, and has successively worked as a quality inspector, warehouse manager, hardware mold maintenance worker, mold making master, mold designer, and product development engineer.
In the past seven years, Chen Jieyuan also took the initiative to learn hardware mold maintenance technology. Because of his outstanding ability, Chen Jieyuan was hired with a high salary to be the director of a hardware products factory in Shunde. From July 2004 to May 2006, Chen Xie Yuan jumped to Changhong Hardware Products Factory and served as the factory director for two years.
In Changhong Hardware Products Factory, Chen Jieyuan and He Xiaoyu had their first intersection. After graduating from university, He Xiaoyu worked as a foreign trade salesman in this company, but he resigned and started a business after not working for long.
In June 2006, in Foshan Shunde Jiaheda Hardware and Plastic Products Co., Ltd., Chen Jieyuan and He Xiaoyu had an intersection again. In this company, Chen Jieyuan served as executive director and general manager, and He Xiaoyu served as supervisor, and the two worked together for three years and came up with the idea of starting a business together.
On June 18, 2009, Chen Jieyuan and He Xiaoyu each invested 50,000 yuan to set up Foshan Shunde Yingnan Hardware Co., Ltd., which is the predecessor of Tute shares. In 2013, the company changed its name to "Guangdong Tute Home Technology Co., Ltd.", and in March 2023, it was changed to "Guangdong Tute Precision Hardware Technology Co., Ltd.".
With the golden 10 years of China's real estate, Tute shares have achieved rapid growth. In June 2023, Tute submitted a listing application to the Shenzhen Stock Exchange, launching a sprint to the A-share market.
As of the date of signing the updated prospectus, He Xiaoyu held 44.71% of the shares of Tut, Chen Jieyuan held 36.59% of the company's shares, and the two acted in concert, holding a total of 81.2981% of the company's shares.
There is no doubt that if Tut shares are successfully listed, He Xiaoyu and Chen Jieyuan will be among the rich.
What has attracted much attention is that the "seven aunts and eight aunts" of the two actual controllers have already invested in advance and will usher in a splash of wealth.
Foshan Jiheng and Foshan Shengheng are the employee shareholding platforms of Tute Co., Ltd., with a total of 14 limited partners, of which 9 are relatives of two actual controllers. At the end of 2020, Chen Jieyuan's elder brother Chen Aiyuan, Chen Renyuan, younger brother Chen Xiaochun, niece Tang Qiuxiang, sister's spouse Long Lijun, spouse's brother-in-law Chen Mingliang, as well as He Xiaoyu's younger brother He Junyan, spouse's sister Zhang Jiani, and niece Lu Liwen became shareholders of the company. 9 people indirectly hold a total of 5.0599% of the company's shares through Foshan Jiheng and Foshan Shengheng.
Sophia is both a shareholder and a customer
The IPO of Tute shares has attracted much attention in the industry, and it is also related to the well-known enterprise Sophia.
Tute Co., Ltd. is a research and development, production and sales as one of the professional precision hardware enterprises, the main products include hinges, slide rails, sliding door systems, storage systems, rebounders and other precision hardware products, the company's products are mainly used in the field of home furnishing.
Tute shares in the prospectus said that the company has accumulated rich experience in R&D and production for more than 10 years, and has established long-term and stable cooperative relations with well-known enterprises at home and abroad, such as Sophia, Gold Cabinet, Opai Home, Hollywood, Gujia Home, Shangpin Home Delivery, India Ebco, Germany HAFELE, Russia T.B.M. At the same time, the company has a network of more than 100 dealers, all over the country's major cities.
In recent years, affected by the adjustment of the real estate industry, the home furnishing industry has also been affected to a certain extent. Surprisingly, Tut's operating performance is still outstanding.
From 2021 to 2023, the company's operating income will be 644 million yuan, 695 million yuan, and 826 million yuan respectively, a year-on-year increase of 80.05%, 7.88%, and 18.85%; The net profit attributable to shareholders of the parent company (hereinafter referred to as "net profit") was 64 million yuan, 93 million yuan and 130 million yuan respectively, a year-on-year increase of 97.14%, 45.29% and 39.06%.
The outstanding performance of Tute's operating performance may be related to the shareholding of home furnishing companies.
According to the prospectus, in April 2021, Tute shares increased its capital and shares, and the registered capital increased from 45,851,528 yuan to 50,110,959 yuan, of which Sophia Investment subscribed for 2,254,993 new shares with 16.74 million yuan in monetary terms, and Zeng Yong subscribed 2,004,438 new shares with 14.88 million yuan in monetary terms.
Sophia is a well-known home furnishing company, Zeng Yong is the secretary general of Guangdong Custom Home Furnishing Association, and the founder of China (Guangzhou)/(Chengdu) Custom Home Furnishing Exhibition.
In November 2022, Tute shares increased their capital and shares again, and Detao Home Furnishing invested 18 million yuan to increase the capital of Tute shares by 2.5361 million shares, holding 3% of the shares. Behind Detao Home Flournment, are the two actual controllers of the gold medal cabinet, Wen Jianhuai and Pan Xiaozhen.
At present, Sophia holds a 4.37% stake in Tutt shares, making it the company's single third largest shareholder and the second largest customer of Tut shares. From 2021 to 2023, the revenue from sales of Tute shares to Sophia will be 31.0359 million yuan, 74.0586 million yuan, and 102 million yuan respectively, increasing year by year, accounting for 4.82%, 10.66%, and 12.32% of the company's sales revenue that year, respectively, and also increasing year by year.
Both shareholders and customers have been questioned as to whether the transaction between them is reasonable and whether the price is fair. In addition, the indirect shareholder Gold Medal Cabinet is also a customer of Tut shares.
There is also the phenomenon of overlapping customers and suppliers. Beijing Litu Home Technology Co., Ltd., Anhui Fengzhijie Household Products Co., Ltd., and EMUCA S.A. Co., Ltd. are both customers and suppliers of the company. Taking 2023 as an example, the company will purchase a total of 4.5195 million yuan from these three companies, with a total sales of 56.1356 million yuan.
According to the company, Beijing Litu Home Technology Co., Ltd. and Anhui Fengzhijie Household Products Co., Ltd. are the company's distributors, in order to meet the rapid delivery requirements of home furnishing manufacturers, the company will store some products in local distributors according to the needs of customers, and pay warehousing service fees to dealers according to a certain proportion of the customer's sales amount (ranging from 3% to 8%).
Under financial pressure, the dividend is still 30 million
There are many domestic hardware enterprises, and the industry concentration is not high. Under the intensification of competition, the shortcomings of Tut shares are obvious.
In recent years, the market prosperity is not high, coupled with the serious homogenization of industry products, the bargaining power of enterprises is low, and the competition in the industry has intensified. Tut shares not only have to face the competition of domestic counterparts, but also face the challenge of foreign hardware giants including Blum, Hettich, Case Bomar, Grasse and so on.
Among the domestic counterparts, Tut shares are not large. In 2022, the operating income of the main business of Higold Group, Xinghui Co., Ltd., and Dinggu Jichuang Home Hardware will be 1.292 billion yuan, 1.058 billion yuan, and 393 million yuan respectively, and the operating income of Tute Co., Ltd. will be 695 million yuan, which is only higher than that of Dinggu Jichuang.
Of course, in terms of profitability, Tut shares squeezed into the first camp. In 2023, the company's net profit will be 130 million yuan, which is lower than the 333 million yuan of Higold Group and higher than that of Xinghui and Dinggu Jichuang.
In recent years, Tut's accounts receivable have continued to increase. From the end of 2021 to the end of 2023, the balance of the company's accounts receivable was 67.5746 million yuan, 73.1772 million yuan and 93.3895 million yuan respectively, a year-on-year increase of 62.97%, 8.29% and 27.62%, and the corresponding bad debt provisions were 3.2814 million yuan, 3.7592 million yuan and 5.5617 million yuan respectively. Enterprises that have made provision for bad debts include Gujia Home Furnishing, Opai Home, Sophia, Schneemann and other home furnishing companies.
What has attracted much attention is that although the net profit of Tute shares has continued to grow in the past three years, and the company has introduced well-known shareholders in the large home furnishing industry such as Sophia and Detao Home, the company still has financial pressure. As of the end of 2023, the company's debt-to-asset ratio was 43.35%, an increase of 12.18 percentage points from 31.17% at the end of 2022. At the end of the period, the company's monetary funds were 68.5105 million yuan, and the corresponding debts were short-term borrowings of 18.0176 million yuan, non-current liabilities due within one year of 5.3018 million yuan, long-term borrowings of 158 million yuan, and the total long-term and short-term debts were about 181 million yuan.
What is puzzling is that in the case of obvious financial pressure, Tut shares still pay cash dividends to shareholders. In 2022 and 2023, the company will distribute cash dividends of 10 million yuan and 20 million yuan respectively, totaling 30 million yuan.
In this IPO, Tute plans to raise 690 million yuan for the construction of intelligent manufacturing base projects, R&D center projects, and replenishment of working capital. Among them, 202 million yuan is planned to be used to raise supplementary liquidity, accounting for about 30% of the total planned fundraising.
In the case of insufficient funds and to rely on IPO fundraising to supplement liquidity, 30 million yuan of cash dividends were still distributed, and the operation of Tute shares was questioned by the market.
The dividend was 30 million yuan, He Xiaoyu and Chen Jieyuan received a total of 24.3894 million yuan, and the 9 relatives of the two received about 1.518 million yuan.
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