Hong Ling power IPO: related transactions suspect bargaining power weak performance hidden worries
On December 17, 2021, the Gem Listing Committee of Shenzhen Stock Exchange approved the ipo of Weihai Honglin Electric Power Technology Co., LTD. (hereinafter referred to as “Honglin Electric Power”).The IPO, Hong Ling power plans to raise 699 million yuan.”Electric Eel Express” after investigation and research found that the company’s IPO prospectus there are still a lot of doubts, especially related party transaction suspicious, the actual control of the enterprise performance big “face change”, the chairman of the 565 risks are concerned by the market.”Electric Eel Express” noted that in 2017 and the reporting period, Honglin Power has carried out 7 asset restructuring transactions, including in July 2018, the issuer to Weihai Tiancheng acquired 4.14% of the shares of Dezhou Jincheng, according to the value analysis report issued by Asia (Beijing) Asset Appraisal Company,The total shareholder equity value of Dezhou Jincheng as of August 3, 2018 is 238,837,600 Yuan;In May 2019, the issuer sold 71.54% shares of Dezhou Jincheng to Chongqing Linbo. According to the appraisal report issued by Asia (Beijing) Asset Appraisal Co., LTD., the total shareholder equity value of Dezhou Jincheng as of December 31, 2018 was 116.100 million yuan.The exchange requires Hong Lin Power to explain the impact of the above 7 restructuring transactions on the profits and losses in the reporting period, and whether the relevant profits and losses are listed as non-recurring profits and losses;Explain the reasons and necessity of acquiring or selling weihai Xingbo, Beijing Hongbo, Huizhou Yute and Dezhou Jincheng shares to related parties, and whether there is capital occupation and other interest arrangements.”Electric Eel Express” noted that Hong Ling power related transaction problems, is also rare by the exchange three times.For example, in the second round of inquiry, the reporting period hong Lin power controlling shareholders and the actual controller, the actual controller’s close relatives control, common control, significant influence of other enterprises 21, transfer or cancellation of the related party a total of 30.The Exchange requires Hong Lin Power to explain whether the actual controller and his/her close relatives of the holding company’s other shareholders (other than the actual controller and his/her close relatives) have any financial or business dealings with the issuer, the issuer’s customers, suppliers and their shareholders;Explain the actual controller to invest in a number of BVI and other overseas subjects and successively cancel the reasons, and hong Ling power is related to the establishment, survival, cancellation of the above subjects and in foreign exchange, tax and other aspects of the legal compliance.Further explain the necessity, rationality and fair pricing of honglin power business before and after the cancellation of related parties, transfer, combined with the flow of funds, business transactions to explain whether there is the issuer to bear costs, interests transmission and other situations.The actual controller of the enterprise performance big “face” Honglin electric power control chi Shaolin, its current holding 63.49% of the company’s shares.It is worth mentioning that Chi was also the actual controller of HL GROUP, a Hong Kong-listed company.In terms of performance, HL GROUP’s operating income increased 31.9% year on year in 2011, but its net profit fell 24% year on year.Subsequently, in 2012, HL GROUP’s net profit did not increase, but lost 62.59 million yuan, compared with the profit of 119 million yuan in 2011.HL GROUP lost more money in 2013, and its net profit was -178 million yuan.HL GROUP s net profit continued to decline, showing a turnaround in performance.The stock price of HL GROUP(formerly reinstated) fell to HK $13.40 per share in May 2012, losing nearly 80 percent (77.29 percent) of its value.After Honglin Power was stripped from HL GROUP, in June 2019, Ningbo Shixi Chi, Shenzhen Venture Capital, Weihai Honglin became a shareholder of Honglin Power by subscribing for additional shares, and signed a betting agreement with Honglin Power and Chi Shaolin.The agreement stipulates that Hong Lin Power needs to submit IPO filing materials to the Shanghai and Shenzhen stock exchanges before the end of 2020;The net profit of Honglin Electric Power in 2019 should reach 100 million yuan (net profit is the lowest value before and after deducting non).Electric Eel Express also noted that the company’s performance changed immediately after listing. Only in the year of listing, there was a certain profit growth, and in the second year, the net profit decreased by 24% compared to the same year. After that, the company directly turned into a loss and the loss increased year by year.From the industrial chain, Honglin power has always been located in the middle reaches of the industrial chain of home appliances parts processing enterprises, upstream subject to the price of raw materials, downstream difficult to negotiate with home appliances giant enterprises, but also in the crack to survive.According to Tianyan, Chairman and general manager Chi Shaolin currently works in 20 enterprises, serving as a shareholder in 2 enterprises, serving as a senior executive in 19 enterprises, and actually controlling 24 enterprises.In particular, there were 297 risks around Chi Shaolin and 268 warnings.Dezhou Jincheng Denso Co., LTD., where Chi Shaolin is a senior executive, has been sued for disputes over sales contracts (5) and contract disputes (4). Chongqing Hongxi Technology Co., LTD., where Chi Shaolin is a senior executive, has been sued for disputes over labor contracts (3) and labor disputes (3).As executives of changshu wu bo communication technology co., LTD., has been charged with buying and selling contract dispute and (2), served as executive acquisitive jubilee of chongqing science and technology co., LTD., has been charged with recourse labor compensation disputes and (2), as the legal representative of weihai acquisitive spray power technology co., LTD works for the infringement disputes the right of communication information through network prosecuted (2)…The chairman actually controls 24 companies, and hundreds of risks are involved, so how can the interests of ordinary investors be protected?Will there be any transfer of benefits?