On December 30, 2020, the IPO of Zhejiang Qianjin HVAC Technology Co., Ltd. (Company abbreviation: Qianjin Technology) was reviewed, but was rejected by the GEM Listing Committee, becoming the first company since the official implementation of the registration system. Two GEM IPO companies that failed to pass the meeting.
The main business of Qianjin Technology is the research and development, production and sales of aluminum alloy condensing heat exchangers, and provides professional supporting condensing heat exchangers for downstream gas wall-mounted boiler brand manufacturers. According to the announcement of the review results, the Listing Committee raised four main questions about Qianjin Technology, all of which centered on its high dependence on a single customer. The company's future business development growth has been questioned.
Previously, we published a report entitled "Qianjin Technology should thank us for reminding it that it urgently changed the nationality of its directors, but it is heavily dependent on a certain customer and cannot change it." The article mentioned that in addition to relying heavily on a single major customer, There are doubts about the authenticity of Qianjin Technology’s financial data, the company’s business predecessor may also have financial fraud, and the company’s vice chairman Li Ning may have been involved in dual nationality issues.
Major British customers contribute 80% of revenue, and the ability to continue operating is questioned
According to the prospectus, from 2017 to the first quarter of 2020, Qianjin Technology’s operating income was 160.9545 million yuan. , 207.057 million yuan, 216.5857 million yuan, 45.2229 million yuan, more than 80% of which came from the British heating brand Ideal Boilers Ltd (hereinafter referred to as "Ideal").
From the perspective of end customers, during the reporting period, Advance Technology’s sales revenue to Ideal was 130.7839 million yuan, 167.8404 million yuan, 176.5442 million yuan, and 39.0016 million yuan, respectively, accounting for 10% of operating revenue. 81.26%, 81.06%, 81.51%, 86.24%, the proportion is always higher than 80%, and even exceeded 85% in the last period.
So, does Advance Technology’s high reliance on Ideal stem from Ideal’s monopoly in the downstream gas wall-hung boiler market?
According to statistics from the BSRIA research institute on the sales of various wall-mounted boiler brands in the European market in 2016 and 2017, the French Atlantic Group (Atlantic) to which Ideal belongs has a market share of 4.92%. The top four brands, Bosch, Vaillant, BDR, and Viessmann, have market shares of 19.06%, 17.80%, 13.57%, and 5.72% respectively. It can be seen that Ideal's market share is still more than ten percentage points behind the leading brands.
It is worth noting that Ideal ceased production in the second quarter of 2020, and orders for Qianjin Technology were significantly reduced. In the first half of 2020, Qianjin Technology's operating income fell by 43.88% year-on-year to 54.5235 million yuan, while net profit attributable to the parent company and net profit after non-attribution to the parent company decreased by 3.57% and 48.36% year-on-year respectively, amounting to 26.8389 million yuan and 13.8726 million yuan respectively. Ten thousand yuan.
The GEM Listing Committee believes that Qianjin Technology’s business is highly dependent on a single customer. The customer’s market share and industry status have no obvious advantages. During the epidemic, the customer’s operating conditions have had a significant impact on Qianjin Technology’s business. Adverse effects, high reliance on a single customer may lead to significant uncertainty in its ability to continue operating in the future.
Compared with competitors, it is even more dependent. It has only developed 5 customers in 17 years of operation.
In our previous "Qianjin Technology should thank us for reminding it before urgently changing the nationality of its directors, but it relies heavily on a certain customer." In the article "Can't Change", a horizontal comparison was also made regarding the dependence of large customers. Suzhou Mingzhi Technology Co., Ltd. (securities abbreviation: Mingzhi Technology, stock code: A20230.SH) is the main competitor of Qianjin Technology. It has been a supplier of Ideal since 2017 and achieved batch supply in 2019. According to its prospectus, in 2019 and the first half of 2020, Mingzhi Technology’s revenue from selling heat exchanger castings to Ideal was 15.2116 million yuan and 12.0488 million yuan respectively.
In addition, Mingzhi Technology is also a supplier of Vaillant, BDR, and Bosch.
Although Qianjin Technology stated in its prospectus that Mingzhi Technology’s heat exchanger casting business has a high customer concentration, in fact, from 2017 to 2019, Mingzhi Technology’s investment in Vaillant The sales revenue accounted for 53.83%, 66.77%, and 52.10% of its heat exchanger casting business revenue respectively, which is still far behind the 80% concentration ratio of Qianjin Technology on Ideal. Moreover, heat exchangers only contributed 38.30% of Mingzhi Technology’s main business income in 2019, while Qianjin Technology’s share of this business was as high as 99.93%.
At the same time, Mingzhi Technology disclosed in its prospectus that the company has obtained 81 invention patents and its core technologies have independent intellectual property rights, while Qianjin Technology has not yet obtained any invention patents.
According to the prospectus, Qianjin Technology has been a supplier of Ideal since 2006, and then successively developed Bekaert and Daikin Turkey in 2011 and 2015 respectively. Overseas customers. In January 2017 and July 2018, Advance Technology began selling products to Bekaert's Chinese subsidiaries Bekaert (China) Technology R&D Co., Ltd. and Bekaert Heating Technology (Suzhou) Co., Ltd. respectively. In September 2019, the company began to contact the French Atlantic Group (Atlantic) to which Ideal belongs, and officially supplied the goods in May 2020. In other words, in the 17 years since Qianjin Technology’s business was launched, the number of customers the company has developed can be counted on one hand.
The audit results show that compared with companies in the same industry, Qianjin Technology’s customer concentration is relatively high. It is difficult to develop new customers and has made little progress. There is a risk of losing orders from a single major customer and it may be difficult to improve in a short period of time. There is significant uncertainty as to whether it has the ability to directly face the market and operate independently as a going concern.
The GEM Listing Committee considered that the issuer did not consider whether the issuer’s high reliance on a single customer may lead to significant uncertainty in its ability to continue operating in the future, and whether the issuer has the ability to directly face the market and continue to operate independently. Full explanation, does not meet the issuance conditions, listing conditions and information disclosure requirements. On the same day, the Shenzhen Stock Exchange decided to terminate the review of Advance Technology’s application for initial public offering of shares and listing on the GEM.
Many data are conflicting, and the original actual controller of the subsidiary may have had dual nationality
In addition to relying heavily on a single major customer, we found that Qianjin Technology also has some other problems.
Previously, we published a report entitled "Qianjin Technology urgently changed the nationality of its directors because of our reminder, but it was unable to change due to its heavy reliance on a certain client." The article mentioned that there are doubts about the authenticity of Qianjin Technology’s financial data.
On the one hand, alloy aluminum ingots are the main raw material used by Qianjin Technology to produce aluminum alloy condensing heat exchangers. Based on the calculation of the purchase amount and purchase unit price of alloy aluminum ingots provided in the prospectus, during the reporting period, Advance Technology's purchase amounts of alloy aluminum ingots should be 3683.84 tons, 4306.32 tons, 3926.74 tons, and 755.13 tons respectively. However, the prospectus stated that the purchase volumes during the reporting period were 4310.09 tons, 5007.49 tons, 4463.34 tons, and 755.13 tons respectively. The data from 2017 to 2019 obviously did not match.
On the other hand, the operating income of subsidiary Mainland Suppliers Limited (hereinafter referred to as "Mainland") in the first quarter of 2020 was only 641,200 yuan, but it should be The amount of accounts collected increased by 5.5525 million yuan compared with the beginning of the period, which is obviously not in line with basic financial common sense.
At the same time, the business predecessor of Qianjin Technology, Zhejiang Qianjin Nonferrous Metal Casting Co., Ltd. (hereinafter referred to as "Qianjin Nonferrous"), also has the possibility of financial fraud.
We found that Qianjin Nonferrous, its supplier Lanxi Asia Pacific Metal Chemical Co., Ltd., and related party Zhejiang Wanzhuo Trading Co., Ltd. formed a closed loop of funds, which gave the payment for goods paid by Qianjin Nonferrous an opportunity to flow back to the actual controllers Yang Jun and Yang Jie. In our hands, this may also be an important reason why the company established a new listing entity and abandoned Qianming Nonferrous.
In addition, Li Ning, the original actual controller of Meiland, has been the vice chairman of Qianjin Technology since July 2019. The prospectus states that Li Ning is a Chinese national and has obtained permanent residence in the UK. However, our inquiry on December 25, 2020 found that in the Meiland industrial and commercial information published by the British Industrial and Commercial Bureau, Li Ning is a British national. A few days later, Li Ning’s nationality information declared with the British Industrial and Commercial Administration was changed to Chinese.