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Blue Whale News, September 18 (Reporter Wang Xiaonan) Due to the pain of the transition period, Jinan Hi-Tech (600807.SH) urgently needed a “blood transfusion.”

Since a fixed increase of 0.4 billion yuan was proposed to related parties in June last year, it has taken more than a year. After experiencing the first round of inquiries, Jinan Hi-Tech's fixed increase has made no new progress. In 2022, Jinan Hi-Tech spent more than 0.5 billion yuan to acquire the high-tech company in vitro diagnostics, but due to industry demand, revenue from its related testing business declined. 2024 was also the last year of gambling on performance. However, in the first half of this year, Ikwell Biotech's net profit was only 8.9191 million yuan.

While not bringing more performance growth to Jinan Hi-Tech, Exway Biotech also brought huge accounts receivable to listed companies. Jinan Hi-Tech, which continues to divest its assets and focuses on its new main business in life and health, has yet to enjoy the sweetness brought by the transformation. In order to ease the pressure on working capital, it had to start a fixed increase “blood transfusion” to overcome the pain of the transition period.

The related party subscribed for a fixed increase of 0.4 billion yuan, and the shareholders “covered the bottom”

On September 18, Jinan Hi-Tech updated financial data on the documents relating to the application for issuing A-shares to specific targets. On June 26, 2023, Jinan Hi-Tech disclosed the “2023 Plan to Issue A Shares to Specific Targets”. On January 19 of this year, the fixed increase was accepted by the Shanghai Stock Exchange. Subsequently, on February 4, the first round of inquiry letters was issued. Since then, on April 9 and 30, Jinan Hi-Tech has responded to related issues separately.

After more than a year, Jinan Hi-Tech plans to increase its “blood transfusion” funding of 0.4 billion yuan to related parties, and there has been no new progress.

According to the prospectus, Jinan Hi-Tech plans to invest in issuing no more than 0.163 billion A-share shares to the relevant party Shunzheng. The number of shares issued will not exceed 30% of the company's total share capital before this issuance, the issue price will be 2.44 yuan/share, and the total capital raised will not exceed 0.4 billion yuan. After deducting the issuance fee, all of them will be used to supplement working capital.

Shunzheng Investment was founded on May 9, 2019. It is an enterprise jointly funded by Jinan High-tech City Construction and Development Co., Ltd. (hereinafter referred to as “Hi-Tech City Construction”) and Jinan High-tech Holding Group Co., Ltd. (hereinafter referred to as “Jigao Holdings”). The shareholding ratios are 60% and 40% respectively. It is a subsidiary actually controlled by Jinan Hi-Tech's controlling shareholders, and is mainly engaged in equity investment and investment management.

As of June 30, Gaoxin Urban Construction and its co-actors were the controlling shareholders of Jinan Hi-Tech. The total shareholding ratio of the company was 28.92%. The actual controller of the listed company was the Jinan High-tech Industrial Development Zone Management Committee. After the issuance is completed, members who are co-actors of Jinan Hi-Tech's controlling shareholders will add Shunzheng Investment, and Gaoxin Urban Construction and its co-actors will hold a total of 40.04% of the company's shares.

Since the above shares will exceed 30% of the company's issued shares, it will trigger the tender acquisition obligation stipulated in the relevant regulations. Jinan Hi-Tech has held meetings on June 25 and July 21, 2023, respectively, to review and pass the “Proposal on Submitting Shareholders' Meeting to Consider and Agree to Exempt from Issuing Offers”, agreeing that subscribers to this offering are exempt from issuing offers.

Currently, Jinan Hi-Tech has signed a “Share Subscription Agreement” with Shunzheng Investment. The latter will subscribe in cash for the shares issued to specific targets. However, in 2023, Shunzheng Investment had an operating income of 0 yuan and a net profit loss of 0.124 billion yuan. The main reason was that at the end of 2022, in order to support the development of Jinan Hi-Tech's main business focusing on life and health, Shunzheng Investment undertook part of the real estate sector of listed companies. With the handover of some of the real estate projects undertaken and revenue confirmed, from January to June 2024, Shunzheng Investment's operating income was 0.261 billion yuan, but the net profit still lost 21.5793 million yuan.

Shunzheng Investment, whose own performance is already poor, will allocate 0.4 billion yuan of subscription capital. The regulatory authorities also paid attention to the source of this fixed increase in the inquiry letter. Jinan Gaoxin said that shareholders “undercover” it. The shareholders of Shunzheng Investment, Gaoxin Urban Construction and Jigao Holdings, will provide financial support for this subscription in the future according to the actual situation. By the end of 2023, Hi-Tech City Construction held 0.299 billion yuan in monetary capital and 12.237 billion yuan in current assets; Jigao Holdings held 14.884 billion yuan in monetary capital and 82.378 billion yuan in current assets.

Regarding the reason for presenting a fixed increase plan to related parties this time, Jinan Hi-Tech stated that it was to reduce debt levels and ease the pressure on working capital. At the end of 2021-2023 and the end of June 2024, Jinan Hi-Tech's balance ratio was 89.63%, 79.15%, 74.23%, and 74.18%, respectively, at a high level. As of the end of June 2024, the company's short-term loan balance was 0.111 billion yuan, non-current liabilities due within one year were 0.267 billion yuan, and the long-term loan balance was 23.3333 million yuan. The company faced certain debt repayment pressure.

As of the end of June 2024, Jinan Gaoxin's monetary capital was only 93.0958 million yuan. After deducting the amount of usage restrictions, its monetary fund balance was 45.5495 million yuan. Meanwhile, Jinan Hi-Tech said in a reply letter that it can be seen from the capital gap estimates that the company's capital gap amount is 0.8 billion yuan.

The transformation to in vitro diagnosis was painful, and the decline in performance should have risen

Jinan Hi-Tech has engaged in businesses such as in vitro diagnosis, real estate development, leasing and property services, garden engineering, financial services, and mining of precious metals such as gold. Jinan Hi-Tech, which operates a diverse range of businesses, has continued to advance strategic transformation in recent years, investing in asset-heavy businesses such as mining and real estate, acquiring Ickway Biotech, a high-tech company for in vitro diagnostics, and entering the life health and life technology industry.

Currently, the main business segments of Jinan Hi-Tech include the in vitro diagnosis business segment and real estate business segment. Among them, the in-vitro diagnosis business segment is carried out by the company's holding subsidiary Exway Biotech, and the real estate business segment is carried out by the company's holding subsidiaries Ji'an Enterprise, Yongan Real Estate, and Jigao Life Services.

In 2022, Jinan Hi-Tech's wholly-owned subsidiaries Jigao Industrial, Jigao Finance, and JiGoldman Sachs jointly invested 0.504 billion yuan to acquire 60% of the shares of Exwell Biotech held by Xilong Science. At the same time, Xilong Science entrusts the voting rights of its remaining shares to be exercised by Jigao Biotech. After the acquisition was completed, Ikwell Biotech was included in the scope of the company's merger.

As the main source of revenue for Jinan Hi-Tech, the in vitro diagnostic sector is mainly engaged in R&D, production and sales of molecular diagnostic reagents and equipment. The products are mainly used in fields such as infectious disease prevention and control, pathogenic microorganism testing, and food safety testing. In 2023 and January-June 2024, the pathogen testing business returned to normal, and Ikwell Biotech's revenue declined significantly, from 0.517 billion yuan in 2022 to 0.118 billion yuan in the first half of 2024, and even the net profit for the first half of this year was only 8.9191 million yuan. At the same time, there are currently a small number of orders in progress from Ikwell Biotech.

Although Jinan Hi-Tech has concentrated resources on the main industries of life, health and biotechnology, due to the impact of various aspects such as the company's implementation of strategic transformation and divestment of capital-intensive businesses, the company's net profit to mother was 14.685 million yuan, 18.3532 million yuan, -95.1013 million yuan, and -296.339 million yuan respectively, with a certain decline in performance.

At the time, Xilong Science also promised Exway Biotech. From 2022 to 2024, Exway Biotech's audited net profit after tax will not be less than 49 million yuan, 63 million yuan, and 78 million yuan respectively, with a cumulative total of not less than 0.19 billion yuan. In 2022, Ikwell Biotech completed the promised net profit of 0.112 billion yuan, with a completion rate of 228.76%; however, due to industry demand in 2023, revenue from related testing services declined. The net profit promised by Ikwell Biotech was 41.8639 million yuan, which achieved a cumulative performance commitment of 0.153 billion yuan, and completed 81.03% of the overall performance promise.

At a time when its own hematopoietic capacity is insufficient, Jinan Hi-Tech's accounts receivable continued to rise. In 2021-2023, the book value of the company's accounts receivable was 0.596 billion yuan, 0.908 billion yuan, and 416 million yuan, respectively. As of the end of June 2024, Jinan Hi-Tech's accounts receivable balance was 0.533 billion yuan, mainly from the in vitro diagnosis business, while the in vitro diagnosis business mainly came from pathogen testing services, and there were many corresponding government and enterprise customers.

In fact, as early as Jinan Hi-Tech acquired Exwell Biotech, listed companies also dealt “ahead of time” with the situation where their large accounts receivable had not yet been recovered. Zhang Guoning, a former shareholder of Exwell Biotech, promised to assist Exway Biotech to recover new accounts receivable from the second half of 2021 and the next three years (excluding accounts receivable from government agencies and public institutions). Zhang Guoning promised to provide corresponding compensation for those that have not completed the accounts receivable settlement assessment criteria.

According to the 2023 annual report, in the second half of 2021, Ikwell Biotech's new accounts receivable for non-governmental organizations and non-state-controlled enterprises and institutions was 19.2221 million yuan. By the end of 2023, the above accounts receivable had recovered 18.8957 million yuan, with a accounts receivable recovery rate of 98.3%. It has completed the 2023 accounts receivable assessment, and has completed the previous 2022 accounts receivable assessment.

However, if you take a close look at Jinan Hi-Tech's accounts receivable customers from the in-vitro diagnosis business portfolio, it is easy to see that there are not many customers that meet the accounts receivable assessment described above.

In the first half of 2024, the top five accounts receivable customers for the Jinan Gaoxin in vitro diagnostic package were Jinan Licheng District Health Bureau, Yantai Blue Pharmaceutical Valley Construction and Development Co., Ltd. (hereinafter referred to as “Blue Medicine Valley”), Jinan Shizhong District Health Bureau, Jinan Gaoxin East District Hospital (Shandong Health Group Jinan Hospital), and Guoyuan Life Science (Shandong) Co., Ltd. (hereinafter referred to as “Guoyuan Life”). The accounts receivable balances were 0.105 billion yuan, 97.3419 million yuan, 47.0095 million yuan, 47.0095 million yuan, and million yuan respectively. 44.0357 million yuan and 210377 million yuan, totaling 0.314 billion yuan.

Blue Whale News made separate calls to the top five accounts receivable customers mentioned above. Apart from the Jinan Shizhong District Health Bureau, no one answered, the other customers were unclear about whether they had business dealings with Ikwell Biotech and the status of accounts receivable.

Among them, in the first half of this year, the balance of accounts receivable from the in-vitro diagnosis business portfolio increased by 18.71% compared to the end of 2023. The company's in-vitro diagnosis business achieved revenue of 86.8857 million yuan for the Yantai Blue Medicine Valley Life Island project in the current period, and the corresponding accounts receivable increased simultaneously. Regarding accounts receivable with Blue Medicine Valley, Jinan Hi-Tech told Blue Whale News that it is a state-owned enterprise and is in the accounts receivable assessment promise.

However, with regard to government agencies such as the Jinan Licheng District Health Bureau and the Jinan Shizhong District Health Bureau, which have always been among the top five accounts receivable customers, Jinan Hi-Tech said that it depends on the company's own collection.