(Image source: Visual China)
Blue Whale News, September 4 (Reporter Shao Yuting) On September 3, Huihan Co., Ltd. (301600.SZ) announced that the GEM IPO had a total of 3,5,100 online winning numbers. Each winning number can only subscribe for 500 shares. The winning rate for this online pricing offering is about 0.0225%. According to reports, the total number of shares issued this time is 17.55 million, the subscription price is 39.84 yuan/share, and the price-earnings ratio of the issue is 22.57 times.
Four years ago, Huihan Co., Ltd., which was on the verge of entering the capital market, suddenly withdrew its order. Now, after switching to GEM, it has finally ushered in the dawn. However, in this IPO's fund-raising project, the company plans to use 0.2 billion yuan to purchase real estate, which has attracted key regulatory attention. Currently, the performance of Huihan Co., Ltd. depends on SAIC Motor Group, the largest customer, but SAIC Motor Group, which is both a customer and shareholder, already reduced its holdings by a large amount before Huihan Co., Ltd.'s IPO.
After the meeting, the order was withdrawn and moved to GEM, raising 0.2 billion yuan to buy a house, raising questions
Huihan Co., Ltd. was founded in 2008 and is mainly engaged in R&D, production and sales of smart terminals for connected vehicles and smart modules for the Internet of Things. In 2023, Huihan Co., Ltd.'s connected car TBOX had a 5.59% share in the Chinese passenger car market and 8.78% in the own-brand passenger car market.
As early as April 2020, Huihan Co., Ltd. began sprinting to the Science and Technology Innovation Board, planning to raise 0.531 billion yuan, and successfully passed the meeting in August of that year. However, in February of the following year, the company received an on-site inspection notice from the Securities Regulatory Commission and immediately withdrew its listing application. In response, Huihan Co., Ltd. stated that due to the relatively small scale of revenue and profit at the time of the previous filing, it voluntarily withdrew the application materials.
In July 2022, Huihan Co., Ltd. moved to GEM. A year later, it successfully passed the conference, and was registered and effective in June of this year. In this IPO, the amount of capital raised was increased to 0.713 billion yuan, smart car safety system R&D and industrialization projects were added, the previous 5G connected T-BOX R&D and industrialization project and R&D center construction project were retained, and the supplementary working capital item was removed.
Huihan Co., Ltd.'s fund-raising projects mainly revolve around R&D. According to the prospectus, the company's R&D expenses rate is far below the average of comparable companies. In the 2021-2023 reporting period, Huihan Co., Ltd.'s R&D was 32.8675 million yuan, 41.9135 million yuan, and 54.1832 million yuan, respectively. The R&D expenditure rates were 7.79%, 7.23%, and 6.66%, respectively, while the average values of comparable companies in the same industry were 15.28%, 22.64%, and 19.45%, respectively.
However, in the R&D center construction project, the company mainly used the amount of capital raised to buy houses, and this was also the focus of supervision. According to the prospectus, Huihan Co., Ltd. plans to invest 0.262 billion yuan to establish a R&D center, of which 0.204 billion yuan will be used to purchase a property as an R&D center office building in Fuzhou, Fujian Province.
A Blue Whale News reporter noticed that Huihan Co., Ltd. had no own real estate until now. Most of the office space was leased from other companies controlled by Chen Guoying, the actual controller of the company, and none of the leased properties have gone through filing procedures.
According to the prospectus, from 2021 to 2023 (hereinafter referred to as the “reporting period”), the price of the company leased properties from the related party Guomai Technology (002093.SZ) was 1.2271 million yuan, 1.2221 million yuan, and 1.2166 million yuan, respectively. However, according to Guomai Technology's annual report, from 2021 to 2023, the rental income confirmed by Guomai Technology to Huihan Co., Ltd. and its subsidiary Huihan Smart Rental Real Estate was 1.8203 million yuan, 1.8695 million yuan, and 1.8964 million yuan respectively, with a certain difference in value.
Based on this rent price, the 0.2 billion yuan capital raised to buy a house can pay Guomai Technology's rent for more than 100 years. Therefore, with regard to the use of raised funds to buy a house, the regulation requested the company in an inquiry letter to explain the financing necessity of using the raised funds for real estate purchases, whether there is a rental and sale plan for the relevant property, and whether it involves a situation where the funds raised are disguised for real estate development.
In response, Huihan Co., Ltd. stated that it was to avoid adverse effects on R&D work due to site lease expiration, relocation, etc. The purchased real estate will be used for the company's research and development purposes. There is no rental or sale plan. The capital raised will not be used or disguised for real estate development, operation, sales, etc., nor will it flow into the real estate development field through other means.
However, Huihan Co., Ltd. has not yet determined the specific location. If the purchase of the house fails, the company can also guarantee the implementation of the fund-raising project by means of additional rental properties.
Guomai Technology is a subsidiary of Guomai Group, the controlling shareholder of Huihan Co., Ltd. Guomai Group is actually controlled by Chen Guoying, his wife Lin Huirong, and daughter Chen Yi. According to Huihan Co., Ltd., there is a certain overlap between the main business areas of the company and Guomai Technology. Furthermore, Chen Guoying, Chen Guoying's son Chen Wei, and the company's chairman Sui Ronghua also work for Guomai Technology or its subsidiaries. Chen Wei is currently still the chairman of Guomai Technology.
Prior to the issuance, the actual controller of Huihan shares was Chen Guoying, who directly held 37.67% of Huihan's shares and indirectly controlled 44.91% of the company's shares through Guomai Group, which collectively controlled 82.58% of the company's shares.
Performance depends on SAIC Motor Group, and the valuation of equity transfers doubled in half a year before the IPO
During the reporting period, the operating income of Huihan Co., Ltd. was 0.422 billion yuan, 0.58 billion yuan, and 0.813 billion yuan, respectively; net profit was 59.1964 million yuan, 85.6261 million yuan, and 0.128 billion yuan, respectively. According to the semi-annual report, total revenue from January to June 2024 was 0.43 billion yuan, an increase of 31.13% over the same period last year, and net profit was 74.267 million yuan, an increase of 40.03% over the same period last year.
The steady growth in performance is inseparable from SAIC Motor Group. Combined with two prospectuses, SAIC Motor Group was always the company's largest customer from 2017 to 2023.
Huihan Co., Ltd. and SAIC Motor Group have cooperated since 2012, mainly selling connected car TBOX to Lianchuang Auto Electronics, a subsidiary of SAIC Motor Group. However, during the reporting period, Lianchuang Auto Electronics's procurement volume declined year by year. From 2021 to 2023, Huihan Co., Ltd.'s sales revenue for Lianchuang Auto Electronics was 15.2151 million yuan, 9.4029 million yuan, and 0.1176 million yuan, respectively.
In November 2022, the 4GT-BOX and 5GT-BOX developed by Lianchuang Automotive Electronics were mass-produced, and the cumulative shipment volume exceeded 0.2 million. Since the beginning of 2024, Lianchuang Auto Electronics' smart vehicle connectivity terminal T-Box has been designated by 4 car companies and 23 models. Therefore, in the future, SAIC Motor Group may directly use T-BOX products produced by its subsidiaries.
During the reporting period, the company's sales revenue from SAIC Motor Group was 0.183 billion yuan, 0.259 billion yuan, and 0.315 billion yuan respectively, accounting for 43.35%, 44.63%, and 38.77% of its total revenue, accounting for a decline.
Furthermore, SAIC Motor Group has an equity relationship with the company. In December 2014, SAIC Motor Venture Capital, a subsidiary of SAIC Motor Group, invested 20 million yuan in Huihan shares and obtained 5 million shares, with a shareholding ratio of 10%.
In the interval between the two IPOs of Huihan Co., Ltd., SAIC Venture Capital drastically reduced its holdings. In July 2021, SAIC Venture Capital transferred 3.5 million of these shares to Chen Guoying, the actual controller of Huihan Co., Ltd., at 7 yuan/share. The shareholding ratio was reduced to 2.85% and cashed out 24.5 million yuan. Compared with the price at the time of the shareholding period, the profit was only 4.5 million yuan.
Five months later, on January 15, 2022, Huihan Co., Ltd. increased its capital and expanded its shares at a price of 20 yuan/share. Among them, Yibin Chendao New Energy Industry Equity Investment Partnership (limited partnership), Fuzhou Development Zone State-owned Assets Operation Co., Ltd., and Ningbo Meishan Bonded Port Area Chaoxing Venture Capital Partnership (limited partnership) subscribed to the company for 37.8 million yuan, 10 million yuan, and 4.2 million yuan, respectively, and issued 1.89 million new shares, 0.5 million shares, and 210,000 shares.
Based on this calculation, the valuation of Huihan shares increased from 0.35 billion yuan to 1.052 billion yuan in less than half a year, an increase of nearly three times.