Weifeng Electronics (Guangdong) Co., Ltd. mainly provides high-end precision connector products and solutions, mainly engaged in the research and development, design, production and sales of industrial control connectors, automotive connectors, and new energy connectors. It is currently sprinting to the Shenzhen Stock Exchange GEM IPO.
According to the prospectus, Weifeng Electronics has more than 20 years of experience in connector research and development, design, production and sales. Its main products have reached the same technical level as international first-class manufacturers. It is a representative enterprise of domestic industrial control connectors. As of the end of 2021, Weifeng Electronics has obtained 98 domestic patents, including 6 invention patents, 90 utility model patents, 2 appearance design patents, and 1 German utility model patent.
From 2019 to 2021, Weifeng Electronics achieved main business revenue of RMB 229.8374 million, RMB 271.6828 million, and RMB 405.576 million. Its main customers include Hefei Xinshuo Electric Technology Co., Ltd., Taike Electronics Co., Ltd. (hereinafter referred to as Taike Electronics), Shenzhen Huichuan Technology Co., Ltd. (Securities abbreviation: Huichuan Technology, stock code: 300124.SZ), Delta Electronics Industry Co., Ltd. and other electronic component traders, terminal manufacturers and brand customers. The products are sold to domestic and European, American, Japanese, Korean and other countries and regions.
However, our research found that Weifeng Electronics' prospectus may miss related parties, and the disclosure of the shares investment matters of the actual controller's relatives seems to be inconsistent, and the quality of information disclosure may need to be improved. In addition, during the reporting period, Weifeng Electronics seemed to relax its credit policy for customers, and its core personnel also served in major customers for a long time.
Source: Photo Network
Affiliated parties may have disclosed that there may be omissions. The core personnel have worked in the main customers
Luo Shaochun, Li Wenhua and Li Ruixin are the actual controllers of Weifeng Electronics. Luo Xiangchun and Chen Changwei are Luo Shaochun's sister and brother-in-law. Shanghai Weikun Electronic Technology Co., Ltd. (hereinafter referred to as Weikun Electronics) is an enterprise controlled by Luo Xiangchun and Chen Changwei and is an affiliate of Weifeng Electronics.
Industrial and commercial information shows that the business premises of Weifeng Electronics Business Department (hereinafter referred to as Weifeng Electronics Business Department) in Huangpu District, Shanghai is the 2A23A shop in Shanghai Seg Electronics Market, No. XXX, Beijing East Road, Shanghai, and the 2021 business annual report of Weikun Electronics is No. XXX, Beijing East Road, Huangpu District (the same name as the business address of Weifeng Electronics Business Department) 2A23A, which seems to be in the same shop as Weifeng Electronics Business Department. At the same time, the operator of Weifeng Electronics Management Department is Chen Changwei, who has the same name as Luo Shaochun's brother-in-law. However, Weifeng Electronics' prospectus does not mention Weifeng Electronics' business department.
Connate (Shenzhen) Industrial Investment Partnership (Limited Partnership) (hereinafter referred to as: Connate) is the employee shareholding platform of Weifeng Electronics, and Kunshan Weikang Electronics Co., Ltd. (hereinafter referred to as: Kunshan Weikang) is a subsidiary of Weifeng Electronics.
industrial and commercial information shows that Hengyang Weikang Electronics Co., Ltd. (hereinafter referred to as Hengyang Weikang) is mainly engaged in the production and sales of precision computer connectors and computer peripheral cables, which is similar to Weifeng Electronics' business. At the same time, it seems to share the "Weikang" business with Kunshan Weikang.
Hengyang Weikang's contact number in the 2017 industrial and commercial annual report is 1XXX919XXX8, which is the same as the contact number in the 2020 industrial and commercial annual report. In addition, Dongguan Weifeng Hardware and Electronics Co., Ltd. (hereinafter referred to as Weifeng Co., Ltd.) is the predecessor of Weifeng Electronics. The contact number in the environmental impact assessment report of the "Dongguan Weifeng Hardware and Electronics Co., Ltd. (Relocation and Expansion)" project is also 1XXX919XXX8. I wonder if Hengyang Weikang has an undisclosed relationship with Weifeng Electronics?
According to the "Guidelines for Implementation of Related Transactions", according to the principle that substance is more than form, natural persons who hold more than 10% of the shares of a listed company's holding subsidiaries should be recognized as affiliates of the listed company. WCON ELECTRONICS EUROPE S.R.L (hereinafter referred to as: European Weifeng) is a holding subsidiary of Weifeng Electronics. Quadrio Alberto holds 48% of the shares of European Weifeng, but Weifeng Electronics' prospectus does not identify Quadrio Alberto as an affiliate of Weifeng Electronics.
Tyco Electronics is Weifeng Electronics' largest customer in 2019 and 2020, and the second largest customer in 2021. Zhou Songlin is Weifeng Electronics' core personnel and marketing manager.
weifeng Electronics' prospectus stated that from October 2007 to April 2020, Zhou Songlin served as the quality supervisor and procurement supervisor of Taike Electronics (Shanghai) Co., Ltd. (hereinafter referred to as Shanghai Taike Shenzhen Branch). In July 2020, Zhou Songlin joined Weifeng Electronics. In November, Weifeng Electronics implemented equity incentives for Zhou Songlin.
In addition, the first round of inquiries responded to Zhou Songlin worked at Shanghai Tyco Shenzhen Branch from October 2004 to April 2020, and there is a difference from the time of employment disclosed in the prospectus.
The relatives of the actual controller may be involved in low-priced investment, and the share payment fee may be insufficient
Li Luyin is the cousin of the brother-in-law of Luo Shaochun, the actual controller of Weifeng Electronics, and Xiao Jianlin is Li Luyin's spouse. In September 2020, Li Luyin increased capital to Weifeng Electronics at a price of 5.95 yuan per share, corresponding to Weifeng Electronics' overall pre-investment valuation was 298 million yuan; in December, Dongguan Guanjin Industrial Investment Partnership (Limited Partnership), Dongguan Humen Fumin Technology Venture Capital Co., Ltd., Dongguan Decai Yufeng Equity Investment Center (Limited Partnership), Qushui Zetong Enterprise Management Partnership (Limited Partnership), etc. increased capital to Weifeng Electronics at a price of 12.39 yuan per share, corresponding to Weifeng Electronics' overall pre-investment valuation was 626 million yuan. That is, in just three months, Weifeng Electronics' valuation has increased by more than doubled.
In this regard, during the first round of inquiries, the review center asked Weifeng Electronics to explain the reasons and rationality that there is a big difference between the shareholding price of the actual controller's relatives and the shareholding price of the external shareholders, and whether Li Luyin's shareholding price is fair.
In the first round of inquiry response, Weifeng Electronics said that Li Luyin's investment price was determined based on a comprehensive consideration of various factors such as kinship, net profit in 2019, and market environment. From this point of view, Weifeng Electronics seems to admit in the first round of inquiry response that Li Luyin's investment price considers kinship.
In December 2018, Weifeng Electronics implemented equity incentives to 42 employees. When calculating fair value, Weifeng Electronics referred to the price of Li Luyin's capital increase in Weifeng Electronics, rather than the capital increase price of external investors. In this regard, during the second round of inquiries, the review center asked Weifeng Electronics to explain whether the fair value of the equity incentive is reasonable based on the investment price of the actual controller's relatives.
In the second round of inquiry response, Weifeng Electronics said that Li Luyin and Luo Shaochun are distant relatives, and the distant relatives have no substantial impact on the fairness of the investment prices of both parties. That is, in the second round of inquiry responses, Weifeng Electronics denied that Li Luyin's investment price took into account kinship.
At the same time, the legal opinion (paper of the meeting) shows that Xiao Jianlin has a professional investment and financial background, and has many companies that invest and operate from abroad. He has provided suggestions for the actual controller of Weifeng Electronics, such as the company's business management, corporate development strategy, etc., and the two have a good personal relationship. Li Luyin's investment price takes into account the impact of kinship. In the three announcements of
Weifeng Electronics, there were many conflicts in the disclosure of Li Luyin's shareholding matters. So, has personal relationships and kinship affect Li Luyin's shareholding price? Is it reasonable for Weifeng Electronics to determine the fair value of equity incentives using the investment price of the relatives of the actual controller?
The disclosure quality of the prospectus may need to be improved. The credit policy was also relaxed during the reporting period
In addition to the aforementioned information disclosure of the shareholding price of the actual controller's relatives, there are also contradictions in Weifeng Electronic's disclosure of financial data.
prospectus stated that in 2019, Weifeng Electronics incurred an outsourced processing fee of 23.8897 million yuan, but the first round of inquiry response also stated that in 2019, Weifeng Electronics purchased outsourced processing from the top five outsourced suppliers to 23.9016 million yuan, that is, Weifeng Electronics purchased outsourced processing from the top five outsourced suppliers to be higher than its overall outsourced purchase amount.
Li Xiaocui is the sister of Li Wenhua and a related natural person of Weifeng Electronics. At the same time, Ren Weifeng Electronics' sales manager, but the prospectus does not list the salary paid by Weifeng Electronics to Li Xiaocui as an associated transaction.
In addition, during the reporting period, Weifeng Electronics also relaxed its credit policy to customers. The prospectus shows that at the end of 2021, Weifeng Electronics' contract liabilities were 2.3838 million yuan, a decrease from the contract liabilities of 3.9923 million yuan at the end of 2020, mainly because the credit policy for customers MCCOMPONENTS has changed from the first payment and then the goods to the monthly settlement of 30 days.
. Judging from the net profit and cash flow, in 2021, Weifeng Electronics achieved a net profit of 100.2618 million yuan, a significant increase from the net profit of 61.0943 million yuan in 2020, but the net cash flow generated by operating activities was 52.7029 million yuan, a decrease from 58.6921 million yuan in 2020. I wonder if it is related to Weifeng Electronics’ relaxation of its credit policy to customers?
In addition to the above issues, the "South China Headquarters Intelligent Manufacturing Center Construction Project" is one of the IPO fundraising projects of Weifeng Electronics. According to the environmental impact assessment report of the project, after the project is completed, Weifeng Electronics will add 980 million new industrial control connectors, 120 million automotive connectors, and 60 million new energy connectors. However, the prospectus shows that in 2021, the sales of Weifeng Electronics industrial control connectors, automotive connectors and new energy connectors were only 352 million pieces, 59.109 million pieces, and 45.0879 million pieces. I wonder if Weifeng Electronics' production capacity expansion is a bit radical?
