Liyuan Hengkechuang Board To Test Songhe Capital

Guangdong Liyuanheng Intelligent Equipment Co., Ltd., a company to be listed on the science and technology innovation board, which was "inverted" in the issue and registration process, launched a new sprint to the science and technology innovation board.

On the evening of September 22, the Shanghai Stock Exchange once again accepted Li Yuanheng's application for listing on the science and technology innovation board. At this time, the failure of its first listing is about to expire one year.

On March 22, 2019, Liyuanheng appeared as one of the first nine enterprises accepted by the science and technology innovation board. Since the opening of the science and technology innovation board for more than a year, the fate of these nine enterprises has been different. Among them, Liyuanheng, Hechuan chip and Anhan technology have terminated their IPO applications, and the remaining six have successfully landed on the board.

From the perspective of the three companies that terminated IPO, Liyuanheng is probably the most regretful company. Because it has reached the final registration stage, it suddenly withdrew its listing application on October 15, 2019. The outside world laments that it "wins at the starting line, but loses before the finishing line".

Why did Liyuanheng terminate its listing at the time of "one foot at the door"? According to the reporter of 21st century economic report, Li Yuanheng encountered on-the-spot inspection after the meeting, which may be the main reason for withdrawing the application.

A year later, Liyuanheng quietly restarted the listing, but the original high-speed growth performance suddenly stopped at this time.

Even if the performance in 2019 drops sharply, Li Yuanheng, who has made the IPO of the second time, has a stronger "background" of shareholders.

Ups and downs of listing

According to public information, Liyuan Hengke Innovation Board listing application was accepted by the Shanghai Stock Exchange on March 22, 2019, which is one of the first batch of enterprises to accept.

But under the halo of the first batch of enterprises, Li Yuanheng's IPO road has many twists and turns.

On April 4, 2019, the Shanghai Stock Exchange's inquiry on Li Yuanheng officially began, and there have been three rounds of inquiries since then.

It is worth noting that Li Yuanheng's audit institution is Guangdong Zhengzhong Zhujiang certified public accountants. The latter was investigated by China Securities Regulatory Commission for suspected violation of securities related laws and regulations. As a result, Liyuanheng's audit status was once "suspended". Fortunately, Li Yuanheng took the lead in restoring the "inquired" status on June 4. On June 25, Li Yuanheng held a successful meeting. On June 27, the status was updated to "submit for registration.".

On the evening of October 16, 2019, the notice on the official website of China Securities Regulatory Commission (CSRC) indicated that it had decided to terminate the registration procedure of Liyuanheng. At this time, 111 days have passed since the company submitted for registration. According to the announcement, this is Li Yuanheng's initiative to withdraw the registration application documents.

Why did the application suddenly withdraw at the last stage of listing? The public information did not disclose the reasons for Li Yuanheng's voluntary withdrawal. 21st century economic reporter learned from close regulators and investment bankers that Li Yuanheng's withdrawal application was mainly due to the on-site inspection of supervision.

What kind of problems are found in the on-site inspection? It has not been publicly disclosed. However, some sources said it was related to the criminal history or financial problems of the actual controller's related parties.

Huizhou Liyuanheng Precision Automation Co., Ltd., the "predecessor" of Liyuanheng, was established in 2009, mainly engaged in the production and sales of precision automation equipment and mold. In October 2014, Zhou Junhao, general manager and legal representative of Liyuanheng Precision Co., Ltd., was detained by Dazhi Public Security Bureau for the crime of falsely issuing VAT special invoice, which made Liyuanheng precision unable to operate normally.

In November 2014, Zhou Junxiong, Lu Jiahong and Zhou Junjie, other shareholders of Liyuanheng precision, invested in the establishment of Liyuanheng, acquired the relevant main assets of Liyuanheng precision, and undertook the main business and personnel of the former. Since the establishment of Liyuanheng, the most important work is to undertake the precision business of Liyuanheng.

According to the reply to the first round of inquiry, Li Yuanheng precision's crime time occurred from June to December 2013, and the whole crime process was led and arranged by Zhou Junhao, the then general manager, without the participation of other management or shareholders of Liyuanheng precision. In the above cases, Zhou Junhao was the person in charge directly responsible, and there was no other person directly responsible.

According to the prospectus, Zhou Junxiong, the actual controller of Liyuanheng, served as the executive director and general manager of Liyuanheng precision from April 2009 to April 2013, and served as the executive director from May 2013 to December 2016. This means that the position of "general manager" was held by Zhou Junxiong, the actual controller of Liyuanheng, in April 2013, two months before the above-mentioned criminal acts occurred.

It is worth noting that the Shanghai Stock Exchange also paid more attention to the case. In the first and second rounds of inquiry, the Shanghai Stock Exchange asked about the details of the case, and asked Zhou Junhao about the relevant situation again at the meeting of the municipal Party committee.

Performance changes

From the financial data, the fundamentals of Li Yuan Heng are not without flaws.

Based on this, the company mainly provides solutions for the production and sales of high-end battery and anti lithium equipment for the automotive industry.

From 2016 to 2018, Liyuanheng's revenue and net profit showed a trend of rapid growth, with operating revenue of RMB 229 million, RMB 403 million and RMB 681 million respectively; and the net profit attributable to the parent company in the same period was RMB 12.603 million, RMB 41.5815 million and RMB 129.0076 million respectively.

From 2016 to 2018, the annual growth rate of the company's revenue was about 70%, with an accumulative growth rate of 1.97 times; the annual growth rate of net profit was more than 200%, with a cumulative growth rate of 9.23 times.

The rapid growth of Liyuanheng's performance has aroused widespread concern. But behind the rapid growth, it is also questioned that the quality of growth is not high.

From 2016 to 2018, the net cash flows from Liyuanheng's operating activities were -15953900, 9676600 and 64290400 respectively. While the revenue and net profit increased significantly, the amount of net cash flow was not high.

Behind it is the rapid increase in accounts receivable. As of the end of each reporting period, notes receivable and accounts receivable of Liyuanheng were RMB 134 million, RMB 269 million and RMB 301 million respectively, accounting for 46.02%, 36.71% and 26.68% of current assets respectively, accounting for 58.5%, 66.7% and 44.2% of current operating income respectively.

Meanwhile, as of the end of the reporting period, the book balance of Liyuanheng inventory was 125 million, 349 million and 482 million respectively, accounting for 42.4%, 47.5% and 42% of the company's current assets at the end of the reporting period. It can be seen that by the end of the reporting period, the company's total receivables and inventories accounted for nearly 70% of current assets.

In terms of liabilities, as of the end of each reporting period, the asset liability ratio of Liyuanheng parent company was 94.53%, 77.48% and 57.76%, while the average asset liability ratio of the same industry was 49.74%, 48.22% and 50.83%. Liyuanheng's asset liability ratio is higher than the average level of the same industry. The company claims that the parent company accounts for a large proportion of accounts in advance, resulting in a large scale of liabilities.

Will the above situation be improved by 2019?

According to the latest prospectus, in 2019, the company achieved revenue of 889 million yuan and net profit of 93.0865 million yuan. Although there are minor accounting adjustments in the previous two years, the impact is not significant. According to the latest financial data, in 2019, the company's net profit will drop by 26.5% and the non net profit will decrease by 37.3%.

Li Yuanheng explained that after deducting non-profit in 2019, the main reason is that the growth rate of R & D expenses is relatively large, followed by the increase of management expenses and sales expenses. In the future, if the company's revenue can not keep growing continuously, or the growth rate of expenses continues to be greater than the growth rate of revenue, the growth rate of the company's operating performance may slow down or even decline 。

In the first edition of the prospectus registration draft, the company's performance forecast for the first half of 2019 is: the net profit attributable to the parent company will change by - 7.76% to 1.02% year-on-year, and the non net profit will decrease by 4.11% to 12.97% on a year-on-year basis.

In 2019, the company's operating cash flow also deteriorated, with a net outflow of 91.2148 million yuan. Li Yuanheng explained that in the past three years, the net cash flow generated by the company's operating activities was lower than the net profit. The main reason was that the company's bank acceptance bill settlement was large and the business continued to grow, which led to the rapid growth of the company's procurement expenditure and the remuneration paid to employees.

Receivables are also growing. In 2019, the company's notes receivable and accounts receivable were 437 million yuan, accounting for 38.5% of current assets and 49.2% of current operating income; the book balance of inventory of the company was 447 million yuan, accounting for 39.3% of the company's current assets at the end of the period. The company's total receivables and inventories accounted for nearly 80% of current assets.

The debt ratio is still higher than that of peers. At the end of 2019, the asset liability ratio of Liyuanheng parent company is 59.15%, which is about 19 percentage points higher than the industry average.

However, the above financial situation may not constitute an obstacle to listing. "The performance decline is not restricted by the listing conditions of the science and technology innovation board, but it will affect the company's valuation and pricing." On September 23, Wang Jiyue, a well-known investment banker, told reporters.

Songhe capital escort

What changes have taken place in Liyuanheng in the 11 months since the withdrawal of the application in October last year?

21st century economic reporter noted that in March 2020, Liyuanheng increased its capital for the fourth time, and the investor was the famous Songhe capital.

According to the latest prospectus, in January 2020, Shenzhen Songhe growth equity investment partnership (limited partnership) subscribed for an additional registered capital of 1.2857 million yuan in cash, and Shenzhen Songhe Chuangzhi venture capital partnership (limited partnership) subscribed for additional registered capital of RMB 214300 in cash. After that, Songhe growth transferred its shares to Shenzhen Songhe innovation No.5 venture capital partnership (limited partnership).

After the above capital increase, the shareholding ratio of Songhe innovation is 2.0906%, and that of Songhe Chuangzhi is 0.3484%. Both of them are funds of Songhe capital.

According to the prospectus, the investment amount of Hesong is about 6000 yuan.

In April 2020, the next month after the above investment of Songhe innovation and other institutions was in place, Liyuanheng officially launched its second IPO plan, entered the pre listing counseling process, and formally submitted its re listing application to the Shanghai Stock Exchange after several months of guidance.

Where is Songhe Capital Sacred?

According to public information, Songhe capital is the representative of China's local venture capital institutions. Since its establishment for many years, its investment footprint is quite wide, with hundreds of investment projects.

The 21st century economic report reporter looked through its list of projects and found many familiar figures: for example, Shangtang technology in the field of artificial intelligence, Huada gene in the field of life science, BYD semiconductor, Yinghe technology, which has landed on the gem, Shengxiang biology and Guangfeng technology, which have landed on the science and technology innovation board, and Hanhong group, which is IPO on the science and technology innovation board.

It is worth mentioning that among the first batch of listed companies on the science and technology innovation board, Songhe capital was found in Guangfeng technology, hongruan technology, fangbang shares and Tianyi Shangjia. According to the first 25 listed companies, Songhe capital's investment hit rate in the first batch of Sci-tech Innovation Board enterprises was as high as 16%.

Behind Matsumura's past record, it has a close relationship with one of its founding partners.

According to public information, Li Wei was born in 1963 and graduated from Peking University in 1985. He received a Bachelor of science, a master of economics, and an EMBA degree from Guanghua School of management of Peking University. He is now the founding partner of Songhe capital, chairman of Shenzhen Hong Kong industry university research venture capital Co., Ltd., and chairman of Shenzhen Songhe growth care foundation.

When the first batch of science and technology innovation board was listed, Li Wei explained to the media that the four enterprises he invested in shared a common feature, and the helmsman of the enterprise was also the core technical personnel of the company. As an investor of these four enterprises, Li Wei attributed one of the important reasons to the characteristics of "entrepreneur + scientist" of the founders.

From the point of view of Li Yuan Heng's characteristics, it seems to be in line with this feature: Zhou Junxiong, the real controller and chairman of the board, is also the core technical personnel of the company, and graduated from computer science and technology.

This time, with the escort of Songhe capital, can Li Yuanheng successfully impact the science and technology innovation board?