On February 25, at the 9th review meeting of the GEM Listing Committee in 2022, Hunan Hengmao High Tech Co., Ltd. (hereinafter referred to as “Hengmao high tech”) failed to pass the meeting because the IPO did not meet the issuance conditions, listing conditions or information disclosure requirements. On the same day, Shenzhen Stock Exchange terminated the GEM Listing audit of Hengmao high tech.
On the spot, the municipal Party committee raised three questions to Hengmao high tech, mainly in terms of equity ownership, persons acting in concert and gross profit margin.
With regard to why the company did not hold the meeting, the listing committee considered that Hengmao high tech failed to fully explain the clear ownership of the issuer’s shares held by the controlling shareholder, the actual controller and the persons acting in concert, and the rationality of Jiang Hanbai’s failure to actually control Zhaohe Yate and Zhaohe Zhongtai, which is not in line with Article 6 of the measures for the administration of the registration of initial public offerings on the gem (Trial) Article 12 and the relevant provisions of Articles 18 and 28 of the Shenzhen Stock Exchange gem stock issuance and listing examination rules.
In addition, the interface news reporter also noticed that the regulators also have doubts about the recommendation responsibility of Western Securities Co.Ltd(002673) the sponsor of Hengmao high tech.
unclear ownership
According to the prospectus, Guo min holds 55.76% of the shares of the company and is the controlling shareholder and actual controller of Hengmao high tech; Jiang Hanbai, the person acting in concert of Guo min, directly holds 12.86% of the shares of the company, holds 74.15% of the partnership share of Zhaohe Weigong and serves as the general partner and executive partner, while Zhaohe Weigong holds 5.25% of the shares of the company. Therefore, Guo min and Jiang Hanbai, the person acting in concert, jointly control 73.87% of the shares of the company.
From July to August 2016, Hengmao high tech employees Jiang Hanbai, Deng Yihua, Liao Beiping, Zhou Chunping, Li Yongkang and Zhu Zulin (hereinafter referred to as six people) planned to take shares in the company through the employee stock ownership platform Zhaohe Weigong. In order to raise funds, the six people borrowed a total of 12 million yuan from the bank. The interest settlement date agreed in the contract is the 20th of each month, and the monthly interest rate is 6.21 ‰, The total amount of loans obtained after deducting the deposit is 10.8 million yuan.
However, between January 2017 and February 2018, the bank accounts of others controlled by Guo min and Jiang Hanbai transferred about 12000 yuan to six people or their spouses before and after the 20th of each month. The above transfer was the loan provided by Jiang Hanbai on behalf of Guo min to six people for the bank loan interest generated.
In August 2019, after the maturity of the above loans, Guo min gave a total loan of 10.45 million yuan to six people to repay the principal of the above bank loans. In November 2019, Jiang Hanbai purchased part of the equity of the other five people with 1 yuan / share.
However, it is worth noting that after Jiang Hanbai and others obtained dividends and share transfer, large cash withdrawal occurred.
Therefore, the Listing Committee requests the issuer to explain whether the equity of the issuer held by the issuer’s employees through Zhaohe Weigong and whether the equity of the issuer held by Jiang Hanbai is held by Guo min on behalf, and whether the ownership of the shares of the issuer held by the controlling shareholders, actual controllers and persons acting in concert is clear.
In addition, Jiang Hanbai holds 85.84% of the capital contribution of Zhaohe Yate and 61.62% of the capital contribution of Zhaohe Zhongtai, and the withdrawal shares of other partners are undertaken by Jiang Hanbai. The general partner and executive partner of Zhaohe Yate and Zhaohe Zhongtai are Wang Huiming and Yi Maowei respectively. Wang Huiming is Guo min’s classmate and Yi Maowei is Guo min’s relative. Guo min and Jiang Hanbai once borrowed and controlled their bank accounts.
Similarly, the Listing Committee requests the issuer to explain the reasons and rationality for not confirming that Jiang Hanbai actually controls Zhaohe Yate and Zhaohe Zhongtai in combination with the above situation.
The interface news reporter noted that the capital flow verification of Hengmao high tech also received key attention in the audit inquiry.
In the third round of inquiry, the on-site supervisor found that the actual controller and the persons acting in concert had control over other people’s bank accounts, and there were abnormal capital transactions and large cash withdrawals in the relevant accounts. The supervisor paid attention to whether the verification of the capital flow account was complete and whether the explanation of the whereabouts of the relevant funds was reasonable. The specific inquiry is as follows:
Source: inquiry reply
It is noteworthy that the recommendation responsibility of the recommendation institution has also attracted doubts from the regulators.
The regulator asked the sponsor to explain whether it paid full attention to the above abnormal situations, whether the verification procedures were in place, and whether the practice quality was in line with the provisions of Article 17 of the measures for the administration of securities issuance and listing recommendation business, and to explain that the controlling shareholder of the issuer and its actual controller, the directors and supervisors of the issuer The reason why the capital flow and relevant verification records of key personnel opening or controlling bank accounts from January 1, 2017 to June 30, 2020 are included in the working paper of initial declaration.
The gross profit margin is much higher than that of peers
The interface news reporter also noted that the inquiry about Hengmao high tech’s gross profit margin lasted for three rounds. Until the scene of the municipal Party committee, the regulators still required the issuer to explain the rationality that the gross profit margin of products during the reporting period was significantly higher than that of comparable companies in the same industry in combination with business model, cost control level, customer bargaining power and other factors.
According to the prospectus, Hengmao high tech is a professional manufacturer of network communication equipment. Its business includes the R & D, design, production and sales of related products. The company’s products mainly include switches, routers, wireless WiFi access devices, network cards, etc., mainly switch products.
In the first half of 20182021 (during the reporting period), the sales revenue of Hengmao high-tech switch was about 336 million yuan, 338 million yuan, 402 million yuan and 225 million yuan respectively, accounting for 79.89%, 83.6%, 71.56% and 75.69% of the main business revenue respectively.
From 2018 to 2020, the gross profit margin of Hengmao high tech’s main business was 21.44%, 23.88% and 21.05% respectively, which was much higher than that of comparable companies in the same industry. For example, the gross profit margin of Feiling Kosi in the same period was 8.79%, 14.21% and 14.35% respectively. In addition, the gross profit margin of the company in 2018 is also much higher than that in 20142015.
At the same time, Hengmao high tech’s switch products are mainly low-end products, layer 2 access switches, which accounted for 98.46%, 96.14%, 94.24% and 92.09% of the switch revenue from 2018 to 2021. The unit prices of main product switches in the same period were 89.03 yuan / set, 86.26 yuan / set, 107.85 yuan / set and 113.25 yuan / set respectively; From 2018 to 2020, the sales unit prices of filings Kos switches were 383.76 yuan / set, 422.81 yuan / set and 506.27 yuan / set respectively. The sales price of the company’s products was much lower than that of filings Kos.
In addition, the performance of D-Link, the largest customer of Hengmao high tech, fluctuated. During the reporting period, the company’s sales revenue of D-Link accounted for 43.03%, 36.41%, 24.62% and 27.22% of the operating revenue respectively, while the net profit of D-Link in the same period was 23.764 million yuan, – 118 million yuan, 288 million yuan and – 366526 million yuan respectively.
From 2017 to 2020, Hengmao high tech sold products to D-Link with gross profit margins of 25.16%, 19.68%, 23.94% and 25.27% respectively. The products sold were mainly switches. The prospectus disclosed that the gross profit margin of the company’s products sold to D-Link decreased in 2018, mainly due to the rise in the market prices of raw materials, electronic components and PCBs in the current period.
However, the on-site supervision found that the decrease in the gross profit margin of the company’s products sold to D-Link in 2018 was mainly due to the change of sales structure, that is, the proportion of products with low gross profit margin increased, of which the proportion of new product sales in that year was 32.98%, but the corresponding average gross profit margin was only 12.61%.
Therefore, the regulators require Hengmao high tech to re sort out the reasons for the annual increase of D-Link sales gross profit margin in 2019 and 2020, the sales proportion and specific gross profit margin level of products with low gross profit margin in 2019 and 2020, and explain whether the reasons for the decrease of D-Link sales gross profit margin in 2018 are disclosed truly and accurately.
Similarly, intermediaries are also required to explain whether the difference between the above disclosure and the actual situation has been fully concerned and verified, and whether the sponsor has comprehensively verified the registration application documents and information disclosure materials.
