On June 24, Qingdao Food Co., Ltd. (hereinafter referred to as "Qingdao Food") made its debut, which was a substantial step in the transition of "Shandong people's childhood memories" from the New Third Board to A shares. In fact, turning to the A-share market, Qingdao Food intends to seek greater development.
However, it is worth noting that before Qingdao Food disclosed the prospectus, it was notified by the regulatory authorities for not disclosing the equity transfer. In addition, problems such as excessive dependence on the Shandong market and unstable product quality have also plagued Qingdao food.
From the new third board to A shares
Qingdao Food is a local veteran enterprise in Qingdao, and Shandong people are very familiar with it. Its "green food" calcium milk biscuits have always been the childhood memories of Shandong people, and now many people use calcium milk biscuits to give gifts or visit the elderly.
According to public information, Qingdao Food was formerly known as Qingdao Food Factory, which was founded in 1950, restructured into a joint-stock limited company in 1992, listed on the Qingdao capital market for over-the-counter trading in 1996, and closed the market in 1999, and the enterprise was put off the cabinet. On November 30, 2017, Qingdao Food Co., Ltd. was approved by the China Securities Regulatory Commission and listed on the National Small and Medium-sized Enterprise Share Transfer System ("Neerhiza") and in early 2020, Qingdao Food is ready to be listed on the A-share market.
On March 3, 2020, Qingdao Food submitted the listing counseling filing materials to the Qingdao Securities Regulatory Bureau and was accepted, and the counseling institution was CITIC Securities. On June 19 of that year, Qingdao Food passed the counseling and acceptance of Qingdao Securities Regulatory Bureau. On June 22, 2020, Qingdao Food submitted an initial public offering of shares and a listing prospectus to the CSRC. On June 29, 2020, its shares were suspended from the National SME Share Transfer System.
According to the prospectus, Qingdao Food intends to publicly issue no more than 22.2 million new shares, raising 464 million yuan, and plans to use it for three projects: intelligent factory renovation and expansion, R&D center construction, marketing network and information construction. As of the end of 2019, Qingdao Food has 654 employees, and its main products include "Qingshi" brand calcium milk biscuits, "Qingshi" brand casual biscuits and "Haiyou" brand peanut butter, while the company also produces a small amount of peanut butter products through OEM mode. Since 2010, the core brand "Qingshi" has won the famous trademark of Shandong Province for 10 consecutive years, and in 2012, it has won the well-known trademark of China.
Shen Meng, executive director of Chanson Capital, told the Beijing News that under the background of rising costs and sluggish demand, the income from securitization of traditional enterprises is greater than the operating income of entities, and the gap in entity operations is supplemented through securitization. For the capital market, excess liquidity has also led to a great expansion of demand for benchmarks, and even if the fundamentals are not bright, they may still be pushed by capital.
There were a number of flaws in the review phase
Since passing the counseling and acceptance of the Qingdao Securities Regulatory Bureau in June 2020, Qingdao Food, which has been queuing for more than a year, has finally ushered in the opportunity to attend the meeting. However, in the review stage before that, Qingdao Food had been found to have a number of problems.
On May 22, 2020, Qingdao Food received the Decision on Ordering Public Explanation Measures against Qingdao Food Co., Ltd. issued by the Qingdao Securities Regulatory Bureau. According to the Qingdao Securities Regulatory Bureau, after investigation, Qingdao Food repurchased shares twice in 1999 and 2002 and carried out follow-up disposal, and the relevant circumstances were not disclosed in the Public Transfer Prospectus. In addition, there were errors in the data in the table in the Public Transfer Prospectus on the "Transfer of the Company's Share Registration from September 1999 to July 2017". The Qingdao Securities Regulatory Bureau decided to take administrative supervision measures against Qingdao Food to order public explanations, and recorded it in the integrity file of the securities and futures market.
Qingdao Food responded that the two unexplored repurchases showed were mainly qingdao foods transferring repurchased shares to internal employees. At the end of 2001, the company repurchased 851,950 shares of the public through two employees, and the repurchase amount was 1175691 yuan. The repurchased shares were also held on behalf of the two employees.
On December 9, 2002, Qingdao Food transferred 1032275 shares repurchased in 1999 to the company's internal employees and their close relatives at a repurchase price of 738,925.09 yuan. On April 26, 2004, the two employees transferred the 851,950 shares they held in 2001 to the company's internal employees and their close relatives at a repurchase price of 1175691 yuan.
In fact, in October 2019, according to the relevant opinions of the Discipline Inspection Committee of Qingdao Huatong State-owned Capital Operation (Group) Co., Ltd., on the basis of the original transfer price, the relevant personnel further increased the equity transfer payment of 652,2086 yuan with reference to the price-to-book ratio (stock price to net assets per share) at that time.
In addition, Qingdao Food has also been found to have defects in management, real estate and other aspects. According to the progress report of CITIC Securities on the counseling work of Qingdao Food's initial public offering of shares released by the Qingdao Securities Regulatory Bureau on April 21, 2020 (Q1 2020), during the counseling period, Qingdao Food made rectifications to the main irregularities, specifically: further improving the corporate governance structure and adding three independent directors; obtaining the company's housing real estate property rights certificate located in Qingdao City's Wrong Port Ridge Third Road, further standardizing the relevant property defects.
Product quality issues occurred during the IPO queue
In the product line of Qingdao Food, "Qing food" calcium milk biscuit is undoubtedly the most well-known one. It was born in the 1960s. From 1959 to 1961, the country entered a "three-year difficult period" of food shortage, in order to solve the problem of infant malnutrition, the state decided to choose a key food factory to develop calcium supplements, rich nutrition, suitable for feeding babies children's biscuits. In 1961, Qingshi developed the "Qingshi" brand calcium milk biscuits, which were included in the "planned supply" of baby food, thus opening the best-selling road of calcium milk biscuits.
Although it made its fortune in the Shandong market, Qingdao Food has not been able to enter the national market since then. According to the prospectus, from 2017 to 2019, the sales revenue of Qingdao Food in Shandong Province accounted for 80.02%, 82.06% and 82.29% of the main business income, respectively. Qingdao Food said that although it is committed to developing markets outside Shandong Province and vigorously developing online sales business, the expansion of sales channels and the cultivation of consumer habits require a certain amount of time, and the current situation of concentration of sales areas is expected to exist in the short term. If there are major adverse changes in the market environment, residents' disposable income, consumption habits, population structure, etc. in Shandong Province, it will adversely affect its production and operation and performance.
It is worth noting that during the IPO queue, Qingdao Food was also notified for unqualified product sampling. On October 30, 2020, the Beijing Market Supervision Bureau announced that the iron zinc animal biscuits (brewed tough biscuits) (300g/bag, 2020/03/04) produced by Qingdao Food Co., Ltd. were found by the National Food Quality Supervision and Inspection Center that the peroxide value (in terms of fat) was 0.4g/100g, and the standard value was ≤0.25g/100g, which did not meet the national food safety standards. Qingdao Food Co., Ltd. objected to the test results and applied for re-inspection; after the re-inspection, the preliminary inspection conclusion was maintained.
In addition, according to the "Feedback on the Application Documents for the Initial Public Offering of Shares of Qingdao Food Co., Ltd." issued by the CSRC on January 8, 2021, qingdao food had more complaints during the reporting period in terms of food safety. Qingdao Food is required to explain whether its internal control system for product quality and food safety in all aspects of food production, circulation, raw material procurement and additives is sound and effectively implemented in accordance with the Food Safety Law and other laws and regulations, and whether the issuer's distributors, raw material suppliers, and outsourcing processing manufacturers have obtained food production and operation licenses. At the same time, it is explained whether there are product quality problems or food safety accidents during the reporting period, and whether there are undisclosed administrative penalties.
Beijing News reporter Wang Ziyang
Edited by Zhu Fenglan Proofreader Zhao Lin