Tips on investment risk of gem: after this stock issuance, it is planned to be listed on GEM, which has high investment risk. GEM companies have the characteristics of large investment in innovation, uncertainty about the success of the integration of new and old industries, still in the growth stage, high operation risk, unstable performance and high delisting risk. Investors are facing greater market risk. Investors should fully understand the investment risks of the gem and the risk factors disclosed by the company, and make investment decisions prudently. Shandong Sanyuan Biotechnology Co., Ltd
(No. 89, ZhangFu Road, Binbei, Binzhou City, Shandong Province)
Initial public offering and listing on GEM
Letter of intent
Sponsor (lead underwriter)
(Building 4, No. 66 Anli Road, Chaoyang District, Beijing)
Important statement
Any decision or opinion made by the CSRC and the exchange on this issuance does not indicate that they guarantee the authenticity, accuracy and integrity of the registration application documents and the information disclosed, nor do they indicate that they make substantive judgment or guarantee on the profitability, investment value of the issuer or the income of investors. Any statement to the contrary is a false statement.
According to the provisions of the securities law, the issuer shall be responsible for the changes in the operation and income of the issuer after the shares are issued according to law; Investors independently judge the investment value of the issuer, make investment decisions independently, and bear the investment risks caused by changes in the operation and income of the issuer or changes in the stock price after the shares are issued according to law. The issuer and all directors, supervisors and senior managers promise that the prospectus and other information disclosure materials are free from false records, misleading statements or major omissions, and bear corresponding legal liabilities.
The controlling shareholder and actual controller of the issuer promise that there are no false records, misleading statements or major omissions in this prospectus, and bear corresponding legal liabilities.
The person in charge of the company, the person in charge of accounting and the person in charge of accounting institutions shall ensure that the financial and accounting materials in the prospectus are true and complete.
The issuer and all directors, supervisors, senior managers, controlling shareholders, actual controllers, sponsors and underwriting securities companies promise to compensate investors for losses in securities issuance and trading due to false records, misleading statements or major omissions in the issuer’s prospectus and other information disclosure materials.
The sponsor and the securities service institution promise to compensate the investors for the losses caused to the investors due to the false records, misleading statements or major omissions in the documents prepared and issued for the issuer’s public offering.
Overview of this offering
Type of shares issued: RMB ordinary shares (A shares)
The number of shares to be issued this time shall not exceed 33721000 shares, accounting for no less than 25.00% of the total share capital after issuance, all of which are new shares, and do not involve the public offering of shares by shareholders
The par value of each share is RMB 1.00
Issue price per share [] yuan
Expected issue date: January 24, 2022
The stock exchange to be listed is the growth enterprise market and the board of Shenzhen Stock Exchange
The total share capital after issuance shall not exceed 134883800 shares
Sponsor (lead underwriter) China Securities Co.Ltd(601066)
Signing date of the prospectus: January 14, 2022
Tips on major events
The company reminds investors to carefully read the full text of this prospectus and pay special attention to the following important matters. 1、 The company specially reminds investors to pay attention to the following risks in the “risk factors” (I) the risk of intensified market competition
With the improvement of consumers’ health awareness and the upgrading of consumption demand for sugar substitute products, the prosperity of erythritol industry continues to improve, which is promoting the original manufacturers to expand production capacity and attract new investors, which will make the market competition of erythritol industry more intense. The intensification of market competition may lead to the decrease of the price of erythritol and its complex products and the increase of the proportion of sales expenses. If the company cannot adapt to the competitive development trend of the industry through capacity expansion and technology upgrading, the company’s industry status and market share will face certain risks, which will have an adverse impact on the company’s operating performance. (II) product quality control risk and improper consumption risk of consumers
Erythritol and compound sugar produced by the company are used as food additives in the fields of table sugar, seasoning sugar, beverage, candy food and baking food. Product quality control and food safety are the lifeline of the enterprise. With China’s increasing emphasis on food safety and the continuous enhancement of consumers’ awareness of food safety, manufacturers need to carry out strict quality control in all links such as procurement, processing and sales. If unexpected product quality problems occur, it will have an adverse impact on the company’s brand and operating performance.
In addition, although scientific research has made it clear that erythritol is safe and non-toxic, and there are no safety risks such as carcinogenesis, teratogenicity, mutagenicity, acute or subchronic and chronic toxicity, reproductive toxicity and so on, and the human tolerance of erythritol is much higher than that of xylitol and other sugar alcohols, even taking high-dose erythritol will not produce any toxicity. However, due to the great differences in consumers’ physique, excessive consumption of erythritol at one time may lead to certain adverse physiological reactions: for example, a very small amount of erythritol consumed by the human body that is not absorbed by the small intestine will enter the large intestine and become a low-energy carbon source for intestinal bacteria fermentation, and excessive consumption may produce flatulence; For another example, the one-time ingestion of large amounts of unabsorbed carbohydrates on an empty stomach will lead to the accumulation of high concentrations of carbohydrates on the inner wall of the small intestine, resulting in high osmotic pressure, which may lead to diarrhea. For example, some consumers will have diarrhea after drinking a large amount of milk on an empty stomach, and the one-time high-dose consumption of erythritol on an empty stomach may also cause diarrhea in some consumers.
In conclusion, although erythritol products are produced by fermentation and are generally considered to be more natural and safe sweeteners, due to the great differences in individual physique of consumers, if consumers have adverse reactions due to improper consumption of erythritol or products containing erythritol, it may have an adverse impact on erythritol market consumption and the company’s business performance. (III) risk of unsustainable high gross profit margin
In 2018, 2019, 2020 and January June 2021, the company’s comprehensive gross profit margin was 36.85%, 45.77%, 42.27% and 41.09% respectively, and the gross profit margin remained at a high level. From 2018 to 2019, affected by the expansion of erythritol production capacity and process improvement, the unit cost continued to decline and the gross profit margin continued to increase. Since January 1, 2020, the company has implemented the new revenue standard, and listed the transportation insurance expenses and port miscellaneous expenses directly related to the performance of the contract into the operating cost, resulting in a decrease in the gross profit margin.
If the company faces such adverse factors as intensified market competition, falling sales prices of main products, high raw material prices and rising labor costs in the future, the comprehensive gross profit margin may decline, which will have an adverse impact on the profitability of the company, and the company may face the risk that the high gross profit margin can not be maintained. (IV) risk of rising purchase price of raw materials
From January to June in 2018, 2019, 2020 and 2021, raw materials accounted for 68.00%, 72.64%, 67.69% and 73.97% of the main business costs respectively. The main raw material of erythritol and compound sugar of the company is glucose, and the processing raw material of glucose is mainly corn. Therefore, the fluctuation of corn price will have an impact on the price of glucose, and then on the cost of erythritol and compound sugar of the company. Corn prices are affected by climate, planting area, national grain collection and storage policies, as well as other complex factors, such as the corn market in the international market and the performance indicators of corn itself. If the price of corn increases greatly in the future, resulting in a sharp rise in the price of glucose, it will have an adverse impact on the profitability of the company. (V) risk of high customer concentration
From January to June in 2018, 2019, 2020 and 2021, the total sales revenue of the company’s top five customers accounted for 45.30%, 55.93%, 47.87% and 51.38% of the current operating revenue respectively, of which the sales of saroya accounted for 7.15%, 35.04%, 20.28% and 7.57% respectively. The company has the risk of relatively concentrated sales customers. If there are significant adverse changes in the production, operation and cooperative relationship of major customers in the future, or the reduction of purchase orders to the company, or the company fails to continuously develop new customers, it will have an adverse impact on the company’s operating performance. (VI) risk of single product structure
Since its establishment, the company has focused on the R & D, production and sales of erythritol products, gradually accumulated industry-leading product quality, production efficiency and many well-known customers, and gradually grew into an enterprise with a leading market share in the global erythritol industry. During the reporting period, the company complied with the market demand, gradually launched compound sugar products and actively developed new products such as rebaudioside m and alodonose, but the company’s product structure was still dominated by erythritol. From 2018 to January June 2021, erythritol revenue accounted for 84.65%, 59.87%, 78.80% and 91.48% of operating revenue respectively, and erythritol gross profit accounted for 84.67%, 57.06%, 78.59% and 90.62% of comprehensive gross profit respectively. Erythritol has a significant impact on the company’s operating performance. If the demand or supply of erythritol industry fluctuates significantly, or the company’s new product R & D fails to meet expectations, it will have an adverse impact on the company’s operating performance, and the company faces the risk of single product structure. (VII) risk of Sino US trade friction
In 2018, 2019, 2020 and January June 2021, the company’s direct customs declaration sales revenue to the United States was 133.079 million yuan, 273.6244 million yuan, 335.5493 million yuan and 207.6482 million yuan respectively, accounting for 51.34%, 60.60%, 43.43% and 26.89% of the main business revenue respectively. Erythritol and compound sugar produced by the company are used in the field of food and beverage, which is closely related to people’s daily life. Since the Sino US trade friction in 2018, the company’s export to the United States has continued to grow, and the Sino US trade friction has not had a significant adverse impact on the company’s operating performance during the reporting period. If the Sino US trade friction further escalates in the future, it may have an adverse impact on the company’s operating performance. (VIII) risk of disclosure of core technical secrets
Erythritol production is a fermentation process. The raw and auxiliary material formula information, process control technical details, optimization and improvement equipment technology involved are important factors affecting production efficiency. Due to the particularity of the above factors, industrial enterprises usually protect it in the form of technical secrets rather than patented technology. If the process and technical secrets accumulated by the company through long-term exploration are leaked, it will have an adverse impact on the maintenance of the company’s competitive advantage. (IX) risk of covid-19 pneumonia affecting overseas markets
From January to June in 2018, 2019, 2020 and 2021, the company’s overseas market sales revenue accounted for 82.25%, 89.53%, 71.86% and 50.45% of its main business revenue respectively. The company’s customers were mainly concentrated overseas. In the first half of 2021, due to the significant growth of China’s “sugar free” beverage market demand, Yuanqi forest Nongnong Shanquan and other well-known Chinese beverage manufacturers increased their direct procurement to the company, and the proportion of the Chinese market increased. At present, the epidemic of covid-19 pneumonia is still spreading all over the world, and the normal production and end consumption activities in the United States, Europe and other countries and regions are still restrained.
Although the overseas air transportation in the epidemic maintains its operation, and all countries vigorously guarantee the production and supply of food and beverage, coupled with the rapid growth of market demand for new sweeteners, the company’s export revenue will maintain a rapid growth in 2020. However, if the further deterioration of covid-19 pneumonia in the future leads to the interruption of overseas shipping or the restriction of food and beverage production, it will have an adverse impact on the company’s operating performance. 2、 Distribution arrangement of accumulated profits before issuance and dividend distribution policy after listing
According to the resolution of the ninth extraordinary general meeting of shareholders in 2020, the accumulated undistributed profits before the completion of the company’s initial public offering of shares shall be shared by the new and old shareholders after the completion of the offering according to the shareholding ratio after the offering.
The specific contents of the company’s dividend distribution policy after issuance and listing are detailed in “(I) post issuance dividend distribution policy and decision-making procedure” of “II. Post issuance dividend distribution policy and decision-making procedure and the difference of dividend distribution policy before and after this issuance” in “section 10 investor protection” of this prospectus. 3、 Important commitments made by relevant entities of this issuance
The company reminds investors to carefully read the important commitments made by the company, major shareholders, directors, supervisors, senior managers and other responsible subjects and the binding measures for failure to fulfill the commitments. See “appendix: commitments related to investor protection” in this prospectus for details. 4、 Main financial information and operating conditions after the audit deadline of financial report (I) main financial information and operating conditions from January to September 2021
1. Review of financial data after the audit deadline of financial report
Shanghui certified public accountants reviewed the company’s balance sheet on September 30, 2021, profit statement, cash flow statement and notes to relevant financial statements from January to September, 2021, and issued the review report (shsbz (2021) No. 10810), The following review opinions were expressed: “according to our review, we have not noticed anything that makes us believe that the above financial statements of Sanyuan biological company have not been prepared in accordance with the provisions of the accounting standards for business enterprises and have failed to fairly reflect the financial position, operating results and cash flow of Sanyuan biological company in all major aspects.”
2. Main financial information after the audit deadline of financial report
According to the review report (shzbz (2021) No. 10810) issued by SHK accountant, the main financial data and year-on-year changes of the company from January to September 2021 are as follows:
(1) Key financial data
Unit: 10000 yuan
