Beijing Jiuzhou Fengshen Technology Co., Ltd. (hereinafter referred to as the "Company") plans to attend the meeting on March 29, 2022, and plans to list on the GEM and issue 21.423 million shares. The sponsor is Zhongtian Guofu Securities and the audit agency is Zhongqin Wanxin . The company was once listed on on New Third Board with the stock code of 873121.
company is mainly engaged in the research, development, production and sales of computer hardware products with computer radiator as the core. The main products include computer radiator, chassis and power supply.
After deducting the issuance expenses, the funds raised this time are planned to invest in the following projects:
1 There is significant uncertainty in the sustained profitability
Value Home found that during the reporting period, the company had risks such as the decline in gross profit margin in the latest period, the proportion of export revenue was too high, the risk of major raw materials rising sharply, the significant increase in overseas transportation and miscellaneous expenses, and the ratio of export tax rebates to total profit is too high. The superposition and resonance of these operating risks may lead to significant uncertainty in its sustained profitability.
① The overall gross profit margin during the reporting period was higher than the average level of the same industry, and the gross profit margin declined severely in 2021 Unit: 10,000
From the data in the above table, it can be seen that the gross profit margin in 2021 was 32.39%, 39.49% in 2020, and 7.1 percentage points lower than the 2020 year-on-year; from 2018 to 2020, the company's gross profit margin increased year by year, up 5.19 percentage points in 2019 and 0.5 percentage points year-on-year in 2020. At the same time, the company's gross profit margin reached its peak in 2020, reaching 39.49%. Such a high gross profit margin level as is relatively rare in traditional computer hardware manufacturing.
The following table is the gross profit margin data of the company's peers in 2020:
From the table above, it can be seen that the company's main source of revenue in 2020 was export, accounting for 75.41%. The company's gross profit margin of export was 44.37%, which was 4.88% higher than the company's average gross profit margin in 2020. is 4.2 and 21.48 percentage points higher than the peers Ruixin Technology and overclocking three export gross profit margins respectively.
Is the company's high gross profit margin level related to the company's excessive proportion of distribution and export revenue? During the reporting period, the company's distribution and export revenue accounted for about 75%, which is significantly higher than the export and distribution share ratio of about 20% in the past three years (2018 to 2020).
As shown in the above table, in the first quarter of 2022, the company's net profit attributable to the parent company was approximately -6.0665 million yuan to RMB 265,000, a decrease of approximately 124.26% to 98.94% from the same period in 2021, and the gross profit margin fell by 2.59 percentage points to 3.98 percentage points during the same period. Although the company explained that the net attributable to the parent company in the first quarter of 2022 was RMB 19.8584 million due to the amount of factory relocation expenses and employee severance expenses of RMB 19.8584 million, resulting in the net attributable to the parent company in the first quarter of 2022 due to the amount of factory relocation expenses and employee severance expenses of RMB 19.8584 million, resulting in the net attributable to the parent company in the first quarter of 2022. Profits fell sharply, but the net profit after deducting non-operating items was about 13.6247 million yuan to 19.9562 million yuan, a decrease of about 46.66% to 21.87% from the same period in 2021. The company explained that the decline in gross profit margin and severe decline in net profit was mainly due to rising raw material prices, falling revenues, and foreign exchange losses. However, the objective fact is that the company may lose money in the first quarter of 2022, but the net profit after deducting non-operating items in the same period last year was 25.54 million, and the decline in profitability of is obvious.
In summary, the company's revenue growth has stagnated since 2021, and it fell slightly by 2.17 percentage points year-on-year in 2021. At the same time, gross profit margin fell sharply by 7.1 percentage points in 2021 compared with the same period last year. In the first quarter of 2022, both revenue and gross profit margin fell by about 3 percentage points year-on-year, and net profit may be lost.
Looking back at the company's profit and loss data during the reporting period, it may be the peak of the company in 2020. In 2020, the revenue increased by 54.81% year-on-year, with the highest gross profit margin reaching 39.49%, and the net profit that year exceeded 100 million yuan. After the peak of , it is a slow down state and it is difficult to overcome any further. Lenovo voluntarily applied to the Shenzhen Stock Exchange for the suspension of the issuance and listing review procedure on December 4, 2020, on the grounds that the financial information was updated. After the update was completed, the Shenzhen Stock Exchange resumed its issuance and listing review on March 2, 2021. Why did the company's financial peak status in 2020 fail to pass the review? Many financial indicators are in a downward trend in 2021 and the first quarter of 2022. We are really worried about the company and wait and see if they can pass the review successfully.
② The company's export revenue accounts for too high. The Sino-US trade frictions between Russia and Ukraine and the risk of the raging epidemic in overseas COVID-19 cannot be ignored. From 2018 to the first half of 2021, the company's overseas sales revenue was RMB 303.5694 million, RMB 390.0865 million, RMB 617.6595 million and RMB 299.8186 million, respectively, accounting for 73.69%, 74.11%, 75.76% and 76.52% of the main business revenue, respectively.
On February 24, 2022, Russia and Ukraine had a conflict, and the conflict between Russia and Ukraine has not ended yet. Russia is the main source of revenue in the company, with revenue accounting for about 19% of each period of the reporting period; the company's revenue in Ukraine is small, with revenue accounting for about 1% of each period of the reporting period, that is, about one-fifth of the company's annual revenue comes from two warring countries.
From the table above, it can be seen that among the company's top five sales customers in 2020, the first, third and fourth were Russian distributor customers, and the three major Russian customers accounted for 24.1% of the company's export ratio. Moreover, the company's first, third and fourth largest customers in 2018 and 2019 are all the above three customers, and the largest customers are all Russian DNS, and the same is true in the first half of 2021. In 2018 and 2019, the export proportion of Russia's three major customers was 25.48% and 24.43% respectively, with an average of about 25% in three years, and the sales model was all distribution.
The battle between Russia and Ukraine began in February 2022. As for when the war will be truce, no one can predict it. , but what is certain is that this war will definitely have a negative impact on the company's sales, especially overseas sales. After all, three of the company's top four sales customers are Russian customers , and the proportion is not small. In addition, due to Russia's invasion of Ukraine, Russia was sanctioned by Western countries led by the United States, including ordering companies from Western countries to suspend economic and trade exchanges with Russia, and even coercing other countries to avoid economic and trade exchanges with Russia, including the risk of depreciation of rubles. This increases the uncertain risk of the company's products in Russia, and also requires the company to re-evaluate the pressure from Western world .
The company's other major products except finished fans and thermal paste are exempted from tariffs by the United States, but the above exemption expires on December 31, 2020. After the expiration, the company's main exports to the United States will be subject to a 25% tariff starting from 2021. The above tariff collection has led to a decline in the company's sales profit level in the United States in 2020, and may further affect subsequent sales revenue, which will in turn have a certain impact on the company's overall operations.
In summary, the company's export revenue accounted for too high, and it has remained at about 75% during the reporting period, especially in the belligerent countries, Russia and Ukraine, which accounted for about one-fifth of the total revenue. Sales data from 2018 to 2020 showed that three of the company's top four customers were Russian customers, and there was no sign of a ceasefire in the short term. plus the continuous depreciation of the ruble and the raging COVID-19 epidemic overseas, the number of new patients and deaths continued to increase. These unfavorable factors of will definitely affect the company's overseas revenue after the resonance, resulting in a decline in revenue and a decline in profits, which in turn affects the company's ability to continue operating.
③ The company is suspected of concealing the fact that raw materials have increased significantly. The risk of a sharp increase in raw materials will have a huge impact on the company's gross profit margin and net profit
During the reporting period, the issuer's main raw materials were heat pipe , hardware materials, aluminum, plastic plastic accessories and packaging materials. During each period of the reporting period, the detailed details of the purchase amount of the top 3 raw materials for the total amount are as follows: Unit: 10,000
During the reporting period, the main raw materials of the heat pipe products purchased by the issuer were copper; hardware materials mainly include buckles, back panels, assembly parts, and hardware spare parts such as screws, and nuts. We understand that the main material of the company's hardware is steel; aluminum is mainly metal aluminum. Let’s take a look at the recent futures price of copper, steel and aluminum:
We can see from the above-mentioned futures trends of Lun copper, Lun aluminum and Shanghai rebar that Lun copper has been temporarily low from the temporary low of US$4,371.93 per ton in March 2020, and the price soared to a maximum of US$10,845 per ton in March 2022, and the highest increase of in just two years was 148% .Let’s look at Lun Aluminum again. From the low of US$1,455 per ton in April 2020 to the highest point of US$4,073.50 per ton in March 2022, the highest increase of in two years, was 180% ; Shanghai rebar , 3,284.21 yuan per ton in March 2020, the highest point of 6,208 yuan per ton in May 2021, and 4,969 yuan per ton in March 2022, the highest increase of is 89% . So far, the increase of is 51% . The reason for the rise in metal prices is that since the COVID-19 pandemic, the United States has printed the US dollar in order to recover economically and to save difficulties, which has led to a sharp rise in resource metals represented by copper, aluminum, steel, etc. We see that aluminum prices are rising even harder, especially since Russia and Ukraine have fought, because the West blockade and sanctions against Russia, and Rusal is an important provider of aluminum metals all over the world.
raw materials have increased their prices, attracting attention from the whole world. However, the data provided by the company in reply to the Shenzhen Stock Exchange's inquiry letter is as follows: heat pipes, the main raw material is copper, the average unit price in the first half of 2021 was 3.55 yuan per PCS, and the average unit price in 2020 was 3.47 yuan per PCS, with a price increase of 2.31%; while for hardware, the company replied in the Shenzhen Stock Exchange's inquiry letter that "the price of the main hardware materials purchased is stable and there is no abnormal fluctuation"; aluminum, the company showed in the reply to the inquiry letter: the average unit price in the first half of 2021 was 18.23 yuan per PCS, and the average unit price in 2020 was 15.36 yuan per PCS, with a price increase of 18.68%; However, in terms of the futures prices of Lun copper, Lun aluminum, and Shanghai rebar, the amplitude is much higher than this.
We know that in order to successfully go public, companies often record less costs and more revenue to make their statements look better, but if they exceed common sense and are out of reality, it will backfire. futures price is the current transaction price of metals. The growth of futures prices is real and visible to the naked eye. There is no falsehood. In fact, not only copper, aluminum, and steel are increasing prices, but almost all other raw materials are growing in an international environment with huge water supply, and are truly and visible at a rate that is visible to the naked eye. Especially chemical materials, they are also restricted by environmental factors, and some have increased dozens of times in a year, such as the negative electrode material of electric vehicles, lithium iron carbonate.
Valuation Home believes that the price increase of raw materials is a major trend. The most important thing is that it is transmitted to the downstream, causing the final product price to rise at a relative speed. How to adapt to such an inflation environment, outperform inflation and eventually survive is victory. You cannot deceive yourself, you must treat it objectively.
The company did not achieve objective and practicality in the information disclosed, and was suspected of under-counting costs, and inflated profits . The increase in raw material prices disclosed in is much smaller than the increase in metal futures prices. As raw material prices rise, terminal products prices also need to rise, so as to maintain the survival of the company. This is the only way to go, the key is whether the product technology can achieve competitiveness in the broad sense of the market and thus be invincible.
In summary, Valuation Home believes that in the inquiry letter, did not fully disclose the risk of the company's gross profit margin decline and the risk of the decline in profitability due to the rise in raw material prices. In order to successfully go public, the company may deliberately conceal the cost pressure caused by the rise in raw material prices and the competitiveness of the terminal product market.
④ The company is suspected of under-counting overseas transportation and miscellaneous expenses of RMB 30.29 million in 2021. The risk of a sharp increase in overseas freight will have a huge impact on 's profit 's
The company's overseas transportation and miscellaneous expenses in 2021 were RMB 34.6524 million, and in 2020 it was RMB 21.6464 million, with an increase of RMB 13.006 million, and a growth rate of 60.08%. Due to the epidemic, there have been cases of container loading and unloading queues, loading and unloading workers and truck drivers. The efficiency of international logistics and transportation has been greatly reduced, and has promoted a significant increase in maritime transportation costs.
According to a report released by the Dongguan Municipal Committee of the China Council for the Promotion of International Trade on November 23, 2021, the container freight index (SCFI) of the Shanghai-Europe route in June 2020 has been less than US$1,000/TEU per TEU, and has jumped to about US$4,000/TEU by the end of 2020, and has soared to US$7,395 by the end of July 2021. It rose 6.4 times from its lowest point.In addition, according to the China COSCO Shipping 2021 performance report announcement, the average value of China Export Container Freight Rate Comprehensive Index (CCFI) is 2,615.54 points, and increased 165.69% year-on-year. There is also a serious phenomenon in shipping terminals, and some of them have not been unloaded for one month, which will increase the company's transportation efficiency and other miscellaneous expenses.
In summary, the company responded to the Shenzhen Stock Exchange's inquiry letter that the company's overseas transportation fees in 2021 only increased by 60.08% year-on-year compared with 2020. This is inconsistent with the data of most export companies. Valuation Home believes that the company has far underestimated the data on freight and miscellaneous fees in 2021. Considering that 75% of the company's revenue comes from overseas sales, and Europe represented by Russia is the main sales place of the company, it must rely on container shipping. Valuation Home conservatively estimates that its overseas freight and miscellaneous fees will triple, that is, the company's overseas freight and miscellaneous fees in 2021 will be three times that of 2020, that is, 64.9392 million yuan. The company expects to underestimate the overseas freight and miscellaneous fees of 30.2868 million yuan. The company is expected to disclose that the net profit in 2021 will be 66.1062 million yuan (unaudited). If the above-mentioned shipping costs are less calculated, the net profit will be reduced to 24.5048 million yuan. After the reduction, the company's net profit in 2021 will be 41.6014 million yuan, a year-on-year decrease of 59.89%.
⑤ The ratio of the company's export tax rebate to the total profit is too high, showing that the company is more dependent on export tax rebate
From the above data, it can be seen that during the reporting period, except for the ratio of the export tax rebate to the total profit in 2020 was 21.43%, the remaining periods were above 80%, of which more than 90% in 2018 and the first half of 2021 were 93.27% and 94.46% respectively, and it also reached a high proportion of 81.86% in 2019, indicating that the company is more dependent on export tax rebates and "living" by relying on export tax rebates. China's export tax rebate was reduced from 17% to 16%, and then from 16% to 13%. assumes that the country will continue to reduce the VAT export tax rebate ratio in the future, which will have an adverse impact on the company's operations.
In addition, since three of the company's top four customers are Russian customers, due to the war between Russia and Ukraine or Sino-US trade frictions, the company's exports will be reduced, and will also bring challenges to the company's existing business model, namely the model of survival relying on invisible subsidies for export tax rebates.
2
Audit agency exposed serious professional quality problems in the company's IPO counseling, and the sponsor also had missed supervision and negligence in work
① Audit agency encountered serious professional quality problems in the IPO counseling
On January 31, 2021, the company was selected by the regulatory agency for on-site inspection, exposing serious professional quality problems in the accountant's professional quality problems. In the inquiry letter, the Shenzhen Stock Exchange stated that after on-site inspection, it was found that Zhongqin Wanxin signed certified public accountant is not familiar with the basic situation of the company; in the execution of the inventory monitoring program, auditor did not analyze and adjust the differences displayed in the inventory table; the preparation of audit drafts was chaotic, the catalog number of paper drafts was chaotic, there was no index between paper documents and electronic documents, and it was impossible to verify the necessary cross-checking relationship ; the review records were incomplete, and the authenticity and validity of the firm's quality control was not verified; the audit report was issued in July 2020, but as of March 2021, the audit report had not been archived.
Judging from the above disclosed issues, there are indeed great problems with the internal control of the auditor in . It is questionable whether the audit results are sufficiently accepted. We say that intermediary institutions, especially the main person in charge, must understand the business to do a good job in auditing , otherwise they will be easily restrained by the company without a sense of direction, and will eventually be confused.
In its review inquiry letter, the Shenzhen Stock Exchange pointed out directly that the signed certified public accountant is not familiar with the basic situation of the company. How can he lead the audit team to provide high-level guidance? Such a phenomenon shows at least two problems: one is that it may not be responsible. The chaos in the audit draft disclosed above and the disorganization proves that this is a dispersed audit team without the main force; the other is that it is just a mess, signing with eyes closed, taking advantage of the situation, trying to get away with it.
②Sponsor's work failure and negligence
The sponsor of the company is Zhongtian Guofu. In some work, it did not fulfill its diligence responsibilities during the sponsorship and counseling process. For example, when interviewing overseas customers with videos, the interviewee was not required to present a work permit or business card for identity verification. The video background could not confirm the interview location, and the relationship between the interviewee and the relevant customers was not fully verified. In addition, when writing the company's prospectus, the company's production and sales rate formula was reversed and converted, causing inconsistencies, resulting in low-level error , which are all unprofessional manifestations. It also reflects that the sponsor did not have the third-level review system for before handing over the prospectus product, so it is difficult for people to believe in their sponsorship ability. With such a level, people have to doubt that as the lead underwriter, are they really serious about their jobs? Are the other content presented in also wrong? In addition, we also noticed that Zhongtian Guofu is also the lead underwriter of Xinyong Bio's IPO, which was rejected by the first order of GEM in 2022. He received a regulatory warning letter due to "serious errors in information disclosure" in the project. He listed the "Taiwan" region as a "country", resulting in Xinyong Bio's IPO being rejected directly.
3
During the reporting period, the company had a surprise investment from directors and secretary of the board of directors, and the investment price was far lower than the additional issuance price
In July 2019, the company issued 2.5 million new shares to director Huang Congli, with the stock issuance price of 2.94 yuan per share. In January 2020, the company issued 645,000 shares to Liu Heli, secretary of the board of directors and deputy general manager, and the stock issuance price was also 2.94 yuan per share. However, the company's two capital increase prices in November 2019 and May 2020 were both 14.1 yuan per share. On February 5, 2021, the China Securities Regulatory Commission issued the "Guidelines for the Application of Regulatory Rules - Information Disclosure of Shareholders of Companies Applying for Initial Offer Listed Enterprises" (hereinafter referred to as the "Guidelines"). "If an issuer adds new shareholders within 12 months before submitting an application, the basic situation of the new shareholders, the reasons for the investment, the investment price and the pricing basis of the investment are fully disclosed in the prospectus." The newly revised "Guidelines" will modify the period for "shock investment" of the GEM from the original 6 months before submitting the IPO application to 12 months. The company submitted a prospectus in September 2020, and according to the newly revised "Guidelines", the company's secretary caused a "shock investment". How do you explain that the company's executives' investment price is 2.94 yuan, while the investment price of other institutions is 4.8 times that of their executives. What is the rationality? This is probably one of the reasons why the company failed to pass the IPO issuance review with its peak financial data in 2020 in early 2021.
In summary, company lacks strategic thinking when making decisions and does not consider it comprehensively from the perspective of listing. This kind of sudden investment has always been the focus of supervision. However, the company knows that there is a tiger in the mountain, and it hits the gun. missed the beautiful data of the company's peak status in 2020 as the best listing opportunity and initiative in the latest reporting period. A small unbearable situation will cause chaos. This lesson is profound.
This article is from Valuation Home
