"Harbor Business Watch" Huang Yi
On April 19, Rongda Hezhong (Xiamen) Technology Group Co., Ltd. (hereinafter referred to as "Rong Da Hezhong") submitted a prospectus on the Hong Kong Stock Exchange, and Yuexiu Capital was the exclusive sponsor.
The Hong Kong stock IPO is not Rongda Hezhong's first sprint listing. It had previously signed an agreement with Guojin Securities Co., Ltd. to issue shares for the initial public offering and listing in China. On July 1, 2021, it was registered by the Xiamen Regulatory Administration of China Securities Regulatory Commission for the record, and then voluntarily terminated before the tutoring was finished. In the revocation announcement, Rong Dahezhong gave the reason that considering the capital market environment and after discussion with IFC Securities, it automatically withdrew its application for A-share listing.
01
The performance declined in 2023, and the capacity utilization decreased sharply.
According to the prospectus, Rong Dahezhong's operating income from 2021 to 2023 ("during the reporting period") was 3.OnlinecasinodepositbonusThe net profit was 29.276 million, 37.447 million and 27.603 million respectively, and the adjusted net profit was 33.285 million, 4.56 million and 36.208 million respectively; the gross profit margin was 23.5%, 22.8% and 24.5% respectively; and the net profit margin was 7.7%, 9.5% and 7.9%, respectively.
It is clear that Rong Dahezhong's revenue fell in 2023 after a brief rise in 2022, with revenue and net profit even lower than in 2021. In response, Rong Dahe said frankly that the decline in revenue for fiscal year 2023 was mainly due to a decline in sales in China, Europe and the United States.
ExceptOnlinecasinodepositbonusWith the sharp fluctuation of revenue, the income share of Rong Dahezhong's product line has also fluctuated. According to the prospectus, Rong Dahezhong's main products include printing equipment, weighing instruments, POS terminals and PDA and accessories and other purchased products. During the reporting period, the proportion of income from printing equipment was 74.7%, 77.4% and 74.9% respectively; that from weighing instruments was 12.9%, 9.1% and 13.5% respectively; that from POS terminals and PDA was 6.2%, 6.0% and 4.7% respectively; and that from accessories and other purchased products was 5.7%, 6.5% and 4.4%, respectively.
Among them, in addition to the proportion of income from weighing instruments has increased, the other three types of products have declined. In response, Rong Dahe said that the decline in revenue from sales of printing equipment was mainly due to a 33.5 million decrease in sales to customer C, one of the top five customers, compared with fiscal year 2022. Customer C has traditionally ordered printing equipment in bulk every four to five years. At the same time, the decline in revenue from POS terminals and PDA and accessories and other purchased products was mainly affected by a decline in sales from overseas customers.
In addition to the decline in sales, Rong Dahezhong's capacity utilization has also declined significantly. During the reporting period, the capacity utilization rates of printing equipment were 88.8%, 49.6% and 43.5% respectively, and the capacity utilization rates of weighing instruments were 76.4%, 52.6%, 58.7% and 72.0%, 51.3% and 34.6%, respectively.
In addition, in terms of sales volume and unit price, during the reporting period, the sales of printing equipment were 1.618 million, 1.631 million and 1.241 million respectively, with an increase of 0.80% and-23.91%, and the unit price was 176,187,210 yuan respectively. The unit price increased by 6.25% and 12.30% respectively. The sales of weighing instruments were 41000, 30000 and 34000 respectively, with an increase of-26.83% and 13.33% respectively; the unit price was 1194 yuan, 1192 yuan and 1390 yuan respectively, and the unit price increased by-0.17% and 16.61% respectively. It is not difficult to see that the unit prices of printing equipment and weighing instruments have increased significantly in 2023.
In addition, although the unit price of the product is rising gradually, the gross profit margin of some products does not increase with it. During the reporting period, the gross profit margins of printing equipment were 22.2%, 22.6% and 21.3%, respectively, and those of weighing instruments were 33.9%, 22.2% and 34.2%, respectively. The gross profit margins of POS terminals and PDA were 16.4%, 19.4% and 26.9%, respectively; and those of accessories and other purchased products were 27.0%, 31.2% and 36.0%, respectively. Among them, the printing device is the four products, the unit price increase is the highest, but the gross profit margin is the only product that has declined.
Although it can not be directly pointed out that the rise and fall of the unit price will affect sales, combined with raw material costs account for 84.4%, 82.7% and 82.6% of the total sales cost, respectively. In other words, it is not easy for Dahezhong to be sandwiched between upstream and downstream.
During the reporting period, the revenue from the top five customers was about 141 million, 165 million and 126 million respectively, accounting for 37.1%, 41.9% and 36.2% of the total revenue in the same period.
02
Cash flow plummeted and dividends exceeded net profit
During the reporting period, the net cash flow from Rong Dahezhong's business activities was 16.15 million, 60.436 million and 24.521 million respectively. At the same time, from 2021 to 2023 and March 31, 2024, Rong Dahe had bank loans of 57.7 million, 110 million, 86.8 million and 105 million respectively, accounting for 28.3%, 47.9%, 43.2% and 55.3% of the total liabilities on the same day.
As of March 31, 2024, 30 million of Rongda's bank financing has not been used, all of which have been pledged and unrestricted.
During the reporting period, the current ratio of Rong Dahezhong was 1.5 times, 1.4 times and 1.5 times, and the quick ratio was 0.7 times, 0.9 times and 0.9 times, respectively. The asset-liability ratio is 38.9%, 63.2% and 47.5% respectively, and the net debt-equity ratio is 28.2%, 49.8% and 39.3% respectively.
Among them, the asset-liability ratio increased from 38.9% in 2021 to 63.2% in 2022, mainly due to increased bank borrowing to finance the procurement of electronic components in fiscal year 2021.
Leisurely Dahezhong's quick ratio is always less than 1, and the net cash flow from operating activities shows that Rong Dahezhong's cash flow situation is not optimistic.
On the basis of this solvency, and under the background that the cash situation of Rong Dahezhong is not bright, its dividend is very willing.
During the reporting period, Rong Dahe has declared dividends of 1.2 million, 5 million and 35 million to shareholders, of which the dividend for fiscal year 2023 has exceeded 27.603 million of the net profit for that year. In addition, in January 2024, the company declared and paid a dividend of 1.5 million to shareholders, resulting in a total dividend of 42.7 million.
At present, Rong Da Hezhong is a family business. Data show that among the two founder brothers, the elder brother Xu Kaiming is the executive director, chairman of the board, president and general manager of the company, and his younger brother Xu Kaihe is the executive director and senior vice president of the company.
As a result, 93.05% of the shares of Rongda Hezhong are held directly and indirectly by the two brothers. Through Xiamen Rongxin Investment Co., Ltd. (formerly known as Xiamen Rongxin Management Consulting Co., Ltd.), Xiamen Gaoli Public Investment Partnership (limited partnership) (formerly known as Xiamen Gaoli Public Consulting Management Partnership (limited partnership)) and other companies such as indirect shareholding plus direct shareholding, jointly own Rongda Holdings. The vast majority of the above-mentioned dividends also flow into the hands of both.
Zhang Xuefeng, a financial commentator, pointed out that "Rong Da Hezhong's move to pay large dividends in the face of declining performance and pressure on cash flow may cause some concern." Although dividends are good for shareholders, it also means that companies may have to borrow to pay dividends, increasing the company's debt. In this case, the company needs to carefully balance the relationship between cash flow and shareholder returns to ensure that dividends will not lead to insufficient cash flow, affecting the company's operation and development. "
Under the large dividend, at the level of internal control, according to the prospectus, Rong Da Hezhong said in its prospectus that it had failed to pay full social insurance and housing provident fund for some employees during the track record period in accordance with the requirements of relevant Chinese laws and regulations.
During the reporting period, the total amount of social insurance and housing provident fund underpaid by Rong Dahezhong was about 5.5 million, 9 million and 9.5 million, which is not a small sum. For Rong Dahezhong, which is under pressure on cash flow, it is even more difficult to make up the above amount. However, if it is not made up in time, it may have an impact on its listing process.
Zhang Xuefeng further pointed out that "Rong Da Hezhong's underpaid social insurance and housing provident fund is also a worrying issue." Social insurance and housing provident fund are the legitimate rights and interests of employees, and the company shall pay in full in accordance with the requirements of relevant laws and regulations. If the company continues to pay less, it may face legal liability and damage the interests of employees and trust in the company. This may also affect the reputation and image of the company and have a negative impact on the development of the company. "
"underpayment of social insurance and housing provident fund may be regarded by regulators as bad behavior of the company, which may affect the listing process of the company. Regulators usually review the company's financial situation, internal management and other aspects, and may suspend or disqualify the company from listing if it is found to have serious illegal activities. "
"if the company chooses to make up the social insurance and housing provident fund, it may add a certain financial burden to the public, especially when the cash flow is already under pressure. Repayment of these payments requires a certain amount of capital expenditure, which may further worsen the company's cash flow. Therefore, the company needs to carefully assess the feasibility of back payment and find appropriate solutions to balance cash flow and financial risks. It may be necessary to develop a long-term financial plan to ensure the sustained and steady development of the company while protecting the rights and interests of employees. "
In addition, at the level of legal compliance, according to the Enterprise early warning pass and SkyEye check, Rong Dahezhong has a history of one person to be executed and two administrative penalties.
On January 17, 2023, in the (2023) Fujian 0212 case, Rong Dahezhong was listed as the person subject to execution by the people's Court of Tong'an District, Xiamen City, Fujian Province, and the object of execution was 15600 (15587 yuan). (produced by Harbor Finance)