Author: Yang Lei Editor: Xiaoshimei
In early December, the Shanghai Stock Exchange officially accepted the Science and Technology Innovation Board IPO application for Chuangyao ( Suzhou ) Communication Technology Co., Ltd. (hereinafter referred to as "Chuangyao Technology"). Against the backdrop of "domestic substitution" and "technology to promote the country", Chuangyao Technology is in a highly anticipated high-quality track - integrated circuit design.
From 2017 to 2019, Chuangyao Technology's revenue compound growth rate exceeded 50%, which seemed to be growing very rapidly, but there is a phenomenon that performance is heavily dependent on a single large customer and the largest customer becomes a mystery. Judging from the situation of other companies, even if they go public after the next time, there will be considerable concerns in the company's stock price and performance in the future.
【The high-quality track has strong prospects, but who is Company A? 】
Chuangyao Technology was founded in 2006. Its main business includes chip layout design services and other technical services, power line carrier communication chip and solution services, access network network chip and solution services. The prospectus shows that as of the first half of this year, the above three major businesses accounted for 45.53%, 32.92% and 21.55% of revenue respectively.
From 2017 to the first half of this year, Chuangyao Technology's operating income was RMB 71 million, RMB 109 million, RMB 165 million and RMB 84 million, respectively. Among them, the average annual compound growth rate from 2017 to 2019 was 52.61%.
Chuangyao Technology's performance continues to grow, which is related to the growth space of the track in which it is located. Chuangyao Technology is located in the integrated circuit design industry, with very strong market prospects. Especially from January to June this year, the domestic market size was 149.06 billion yuan, a year-on-year increase of 23.6%, far higher than the market size growth rate of the global integrated circuit design industry.
Under the background of "domestic substitution" and "technology to promote the country", chip stocks often attract much attention. For example, the issue price of Lian Micro is only 4.92 yuan, but because it is a domestic chip concept, it is continuously bought by funds after opening the board, and the stock price once rose to 99 yuan, an increase of more than 17 times compared with the issue price.
Although good performance and the high-quality track in which it is located are the highlights of Chuangyao Technology, the questionable problem is that the performance of company is heavily dependent on a single large customer, and the largest customer is a mystery.
The prospectus shows that "Company A" has been Chuangyao Technology's largest customer since 2017. At the same time, "Company A" also appeared on the list of Chuangyao Technology's top five suppliers.
Chuangyao Technology disclosed in its prospectus that Company A is an enterprise controlled by shareholders who indirectly held more than 5% of the company's shares during the reporting period. In an interview, he also said, "In accordance with the requirements of the China Securities Regulatory Commission, and in an attitude of being responsible to the company's business, investors' interests and customers, some of the information in the prospectus shall be handled in accordance with the principle of exemption disclosure."
However, for investors with weak information, this greatly increases the risk of cognition of the company under the limited conditions of public information.
The regulatory authorities attach great importance to the transparency of information of IPO companies and listed companies. There are similar situations in Cambrian and Quantong Education , and both companies have encountered regulatory inquiries.
In May this year, Cambrian delivered the first round of inquiries on the Science and Technology Innovation Board. One of the focus was the Shanghai Stock Exchange's sharp question Cambrian : Who is the customer "Company A"? Cambrian reply stated that the parent company of Company A is a world-renowned technology group company, and its smartphone product shipments rank first among domestic smartphone brands.
Later, after market participants dig deeper, they learned that this company might be Huawei . And Cambrian covers up, revealing the hidden worries of losing big customers. It turns out that since losing Huawei's new order, the revenue of IP licenses for Cambrian terminal intelligent processors has declined.
In addition, Quantong Education was inquired by the Shenzhen Stock Exchange in 2019. According to the 2017 annual report, the sales of Quantong Education 's largest customer was 35.1846 million yuan, accounting for less than 4% of the total revenue that year.According to the 2018 annual report, the sales of Quantong Education 's largest customer was 298 million yuan, accounting for more than 30% of the total revenue that year.
The Shenzhen Stock Exchange's attention has attracted the attention of Quantong Education because it did not disclose any data involving the name, sales products, etc. of the largest customer. In the annual report inquiry letter, the Shenzhen Stock Exchange asked Quantong Education to explain the name of the largest customer in 2018, the specific economic content of the sales, the reasons for the significant increase in the sales share of the largest customer, whether the cooperative relationship between the two parties is stable, and whether the relevant sales funds are recovered on schedule.
【The "dark thunder" of performance relies on large customers】
If a company relies on a single large customer or the top five customers in its founding period, it may be of some help to the stable growth of its operating performance. However, with the continuous development, if you continue to rely on large customers, your performance will increasingly expose risks.
From 2017 to the first half of this year, Chuangyao Technology's sales to its largest customer "Company A" were RMB 39.6333 million, RMB 57.0146 million, RMB 89.1797 million and RMB 37.1916 million, respectively, accounting for 55.83%, 52.34%, 53.94% and 44.45% respectively.
The regulatory authorities have pointed out that if the issuer comes from a single large customer's main business income or gross profit contribution exceeds 50%, it indicates that the issuer has a significant dependence on the single large customer. In the judgment of issuance conditions, we should focus on customer stability and business continuity, and whether there are major uncertain risks.
Because, large customers may become a "dark thunder".
As the largest thermal magnetic ticket manufacturer in China, Lekai New Materials once relied on a printing company under the China Railway Group. Data shows that from 2015 to 2019, the revenue of the largest customer accounted for more than 65% of the total revenue of Lekai New Materials .
However, with the promotion of electronic tickets, the demand for thermal magnetic tickets has dropped sharply. China Railway Corporation and its subsidiaries have stopped purchasing thermal magnetic ticket products, resulting in the Lekai New Materials "thermal magnetic ticket production line" being in a state of suspension. According to the provisions of "the company's production and operation activities have been seriously affected and it is expected to not return to normal within three months" the company's stock has touched other risk warnings (ST), Lekai New Materials eventually became a "ST" concept stock.
Lirenlizhuang also failed to go public due to major customer problems. In August 2016, Liren Lizhuang launched an IPO sprint to A-shares, but was rejected in January 2018. At that time, the Issuance and Review Committee focused on issues such as "whether Liren Lizhuang's operating performance constitutes a major dependence on the Tmall / Taobao platform; business stability and future business growth space".
Anhan Technology also encountered market controversy during its IPO on the Science and Technology Innovation Board in 2019. From 2016 to 2018, Anhan Technology's sales revenue to the "Meinian Group" accounted for 81%, 73.5% and 76.27%, respectively, both of which exceeded 70%. In this regard, some financial media used "IPO warning" to describe Anhan Technology. During the review process, the Shanghai Stock Exchange conducted multiple rounds of inquiries on whether there are other interest arrangements for Anhan Technology and Meinian Health.
Although Chuangyao Technology is in a hot spot, the problem of its serious reliance on large customers in performance has added a lot of uncertainty to it in its IPO process. In addition, as the scale of operations expands, the proportion of the company's accounts receivable in current assets has increased from about 11% to more than 30%, and the company's financial risks are increasing.
Buffett once said that you should not touch companies that you cannot understand, and the "Company A" mentioned in the prospectus of Chuangyao Technology is a mystery.
Disclaimer
This article involves content about listed companies, and is a personal analysis and judgment made by the author based on the information disclosed by the listed company in accordance with its legal obligations (including but not limited to temporary announcements, periodic reports and official interactive platforms, etc.); the information or opinions in the article do not constitute any investment or other business advice, and Market Value Observation shall not bear any responsibility for any actions arising from the adoption of this article.
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