Ham Heng International IPO Postponed: Asset Profitability Is Now Declining Goldman Sachs Asia has lost its sights

Xianheng International Technology Co., Ltd. (stock abbreviation: Xianheng International, stock code: 605056) The roadshow and subscription for the listing on the main board of the Shanghai market have been postponed to July, which is a full delay of 19 days. Can it be made up?

A study by the Financial Channel of China Industrial Economic Information Network found that from the end of 2016 to the beginning of 2017, Goldman Sachs Asia Strategy and Ningxia Kaixian Shunding "joined" at a price of 12 yuan per share to prepare for gold panning, and the investment scale of the two institutions was 192 million yuan and 24 million yuan respectively. The issue price of this Xianheng International IPO is 13.56 yuan / share, waiting for more than 4 years and anxiously waiting for the issuance that is being postponed, even if Xianheng International is successfully listed, it is still waiting for the 1-year lifting period, what is the mood of these two institutions at this moment?

However, the valuation of the issue price of 13.56 yuan of Xianheng International is still much higher than that of the same industry. At the same time, the company's performance growth has been poor, asset profitability has declined, and it has declined in 2021.

Issuance delayed by 19 days Valuation is much higher than the same industry level

According to the disclosure, the online roadshow scheduled for June 17, 2021 by Xianheng International has been postponed to July 8, 2021, and the online and offline subscriptions originally scheduled for June 18, 2021 will be postponed to July 9, 2021, and the publication of the issuance announcement will be postponed.

On June 11, after preliminary inquiry, The issue price of Xianheng International was determined to be 13.65 yuan per share, and it intends to issue 40.01 million shares in the initial public offering, with a total expected amount of 546.1365 million yuan, and after deducting the issuance fee of 71.5364 million yuan, the net amount of funds raised is expected to be 474.6001 million yuan.

However, the valuation of Xianheng International's offering is not low, and after the issuance, the issue price of 13.65 yuan / share corresponds to the diluted price-earnings ratio of 22.99 times in 2020. As of June 15, 2021, China Securities Index Limited released the industry's most recent monthly average static price-to-earnings ratio of 16.25 times in the secondary market. Xianheng International also publicly disclosed that after the listing, there is a risk that the valuation level will return to the industry's average price-earnings ratio, and the decline in stock prices will bring losses to new stock investors.

At the same time, XianHeng International also compared the valuations of three other overseas listed companies in the same industry. The three companies are GoodE&J (GWW.N), FastChai (FAST.O) and Eurosea Corporation (ECM), which are listed on the New York Stock Exchange, the NASDAQ Stock Exchange and the London Stock Exchange, respectively.

Cross-border and cross-market comparison is quite a taste of finding comfort in the heart.

Goldman Sachs Asia has lost sight of it

According to the calculation of the financial channel of China Industrial Economic Information Network, goldman Sachs Asia Strategy has a total investment of 192 million yuan in Xianheng International.

More than 4 years ago, Goldman Sachs Asia Strategy and Ningxia Kaixian Shunding invested at a price of 12 yuan through the transfer of old stocks and capital increases, compared to the issue price of 13.56 yuan, although there is a premium, it is a gray feeling, definitely not an exciting investment.

Investors who invested in Xianheng International at the same time more than 4 years ago had a cost price of 2.4 yuan per share.

According to the disclosure, on March 17, 2017, Xianheng Limited completed the sixth equity transfer and the sixth capital increase.

Among them, on December 23, 2016, Xianheng Group and Goldman Sachs Asia Strategy signed the Equity Transfer Agreement, and Xianheng Group transferred the equity of 9 million yuan held by Xianheng Limited to Goldman Sachs Asia Strategy at a transfer price of 12 yuan per 1 yuan of registered capital.

On March 1, 2017, through the resolution of the shareholders' meeting of Xianheng Limited, it was agreed that Xianheng Group would transfer the equity of Xianheng Limited of 9 million yuan to Goldman Sachs Asia Strategy, and increase the registered capital of Xianheng Limited by 9 million yuan to 143 million yuan, of which Goldman Sachs Asia Strategy increased by 7 million yuan and Ningxia Kaixian Shunding increased capital by 2 million yuan. The capital increase price is 12 yuan for every 1 yuan of registered capital, and the capital increase is increased in cash.

That is to say, in the sixth equity expansion of Xianheng International, Goldman Sachs Asia Strategy acquired a total of 16 million shares of the company through the transfer of old shares and capital increase, at a price of 12 yuan, with a total cost of 192 million yuan; ningxia Kaixian Shunding paid a total of 24 million yuan.

The fifth capital increase and share transfer of Xianheng Limited was carried out at almost the same time, and the cost of investors was 2.4 yuan per share.

On December 12, 2016, the shareholders' meeting of Xianheng Limited passed a resolution to increase the registered capital of the company to 134 million yuan, of which Dening Investment increased its capital by 10 million yuan, Hongning Investment increased its capital by 10 million yuan, and Yining Investment increased its capital by 6 million yuan. The capital increase price is 2.40 yuan for every 1 yuan of registered capital, and the capital increase is increased in cash.

The background of this capital increase is to increase the employee shareholding platforms Dening Investment, Hongning Investment and Yining Investment as shareholders of Xianheng Limited. The capital increase price is 2.40 yuan per 1 yuan of registered capital, which is determined by negotiation based on the net assets of Xianheng Limited at that time.

The shareholders' meeting of Xianheng Limited on December 22, 2016 also passed a resolution agreeing that Xingrun Investment would transfer the equity of Xianheng Limited to Wang Laixing for 7 million yuan at a transfer price of 2.4 yuan per 1 yuan of registered capital. The transaction has completed the registration of industrial and commercial changes on January 20, 2017, which is the fifth equity transfer of Xianheng Limited.

Performance in 2021 is weak

Xianheng International is an intensive MRO supplier of tools, instruments and meters, and is engaged in the research and development, production, sales and related technical services of the above products, mainly serving the power industry.

During the reporting period, the revenue of Xianheng International's main business from the State Grid, China Southern Power Grid and its subsidiaries and other power industry customers accounted for 68.27%, 65.02% and 56.16% respectively, of which the revenue of the State Grid and its subsidiaries accounted for 59.48%, 61.08% and 51.57% respectively, and the application fields were mainly power transmission, distribution and other links, and the customer group was relatively concentrated.

During the reporting periods of 2018, 2019 and 2020, the operating income of Xianheng International was 1521.2503 million yuan, 1947.7396 million yuan and 1990.8748 million yuan, respectively, with a compound growth rate of 14.40%; the net profit attributable to the company's common shareholders after deducting non-recurring gains and losses was 196.169 million yuan, 224.6723 million yuan and 252.2031 million yuan, respectively, with a compound growth rate of 13.39%.

Judging from these data, Xianheng International has performed well, but the company still reveals "the risk of not being able to maintain sustained growth" and what the trend is in the company's performance in 2021.

In the first quarter of this year, Xianheng International's performance increased significantly year-on-year under the influence of the epidemic last year. From January to March 2021, the company achieved operating income of 301.4692 million yuan, an increase of 1.511% year-on-year; net profit attributable to owners of the parent company of 17.4975 million yuan, an increase of 521.88% year-on-year; net profit attributable to owners of the parent company after deducting non-recurring gains and losses increased from -258,600 yuan in January-March 2020 to 16.4573 million yuan in January-March 2021.

However, the performance of the first half of this year has not improved much.

Xianheng International expects operating income of 820 million yuan to 900 million yuan for January-June 2021, an increase of 0.70% to 10.52% year-on-year from January-June 2020; net profit attributable to owners of the parent company of 91 million yuan to 100 million yuan, an increase of 37.00% to 50.55% year-on-year; and net profit attributable to owners of the parent company after deducting non-recurring gains and losses of 87 million yuan to 96 million yuan, an increase of 0.48% to 10.88% year-on-year.

There is also a relatively subtle indicator of change, that is, the profitability of Xianheng International's assets is slowly declining.

In 2018, 2019 and 2020, the company's weighted average return on equity, net of non-recurring gains and losses, was 29.68%, 29.55% and 28.57%, respectively.

After the listing, with the fundraising and capital expansion, will the profitability of Xianheng International assets step into the water?

Transferred from: China Industrial Economic Information Network

Editor-in-Charge: Lina Zhang