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Jiangsu Xihua New Energy's surprise dividend accounted for 60% of the net profit during the reporting period, stepping on the red line of the Shanghai Stock Exchange's strict management of "clearance dividends". In addition, there are also many opaque, inaccurate and illogical aspects of the information disclosure in the prospectus of Jiangsu Xihua, such as the existence of historical equity holdings, mysterious shareholders raiding shares and lightning withdrawals and other strange phenomena, especially the mysterious person Wang Jianping, who has the background of Guolian Group, suddenly withdrew from the shares after two months, and gave the opportunity of IPO to others.

"Clearance dividends" stepped on the red line of the Shanghai Stock Exchange

Another company to be listed on the stock market was forced to reduce the amount of cancellation due to the "surprise dividend" before the IPO.

According to the official website of the Shanghai Stock Exchange, Jiangsu Xihua New Energy Technology Co., Ltd. (hereinafter referred to as "Xihua Technology") recently updated its prospectus and continued to attack the main board of the Shanghai Stock Exchange. According to the latest version of the prospectus, Xihua Technology adjusted the total amount of funds raised from the previous 2.048 billion yuan to 1.498 billion yuan, and canceled the fundraising of the "supplementary liquidity" project (550 million yuan).

According to public information, Xihua Technology was established in 2001, mainly engaged in the research and development, manufacturing and sales of special components for large-scale high-end equipment, the product structure is mainly based on special components for wind power gearboxes, supplemented by thick special parts for injection molding machines, and the products are mainly used in the field of large-scale wind power equipment and injection molding machines.

In May 2023, Xihua Technology disclosed its prospectus to be listed on the main board of the Shanghai Stock Exchange. According to the prospectus, Xihua Technology plans to issue no more than 120 million new shares, and plans to raise 2.048 billion yuan, which will be used for three projects: wind power core equipment industrialization project (phase I), R&D center construction project and supplementary working capital, respectively, to invest 1.448 billion yuan, 49.4376 million yuan and 550 million yuan.

The plan for the use of funds raised in the first version of the prospectus of Xihua Technology

According to the prospectus, in 2022, the year before the company officially submitted its IPO, Xihua Technology will pay a large dividend of 350 million yuan, which also raises questions from the outside world about its "dividends first, and then listing money". In this regard, in the first round of review and inquiry letter, the Shanghai Stock Exchange made key inquiries about Xihua Technology's behavior of first distributing dividends and then financing replenishment, and required the company to explain the calculation basis and reasonableness of the raised funds for supplementing the scale of liquidity in combination with the large cash dividends and monetary fund balances in the reporting period.

Xihua Technology stated in the reply letter that the company's cash dividends are reasonable, and in order to meet the company's business development needs, the actual controller will further increase the capital of the company with a large proportion of funds after dividends, and the funds raised this time are to meet the company's future business development needs; The company's existing monetary fund balance cannot fully meet the needs of future business development, and the calculation of the scale of supplementary liquidity is sufficient and reasonable.

However, with the promulgation of the "National Nine Articles", the Shanghai and Shenzhen stock exchanges have strengthened the supervision of the surprise "clearance dividends" of enterprises planning to IPO. In this context, Xihua Technology will reduce the amount of funds raised for the "supplementary liquidity" project twice in November 2023 and November 2024, first reducing the supplementary funds from 550 million yuan to 200 million yuan, and then completely canceling the fundraising of the project.

In fact, in recent years, the regulator has always held a negative attitude towards the "clearance + overdraft" dividends such as large dividends on the front foot of the company to be listed, and fund-raising to repay debts or make up the flow of debts on the back foot. On March 15, 2024, the China Securities Regulatory Commission (CSRC) issued four major policies in succession. Among them, the "Opinions on Strictly Controlling the Access to Issuance and Listing and Improving the Quality of Listed Companies from the Source (Trial)" clearly states that it is strictly forbidden to blindly seek listing and excessive financing for the purpose of "making money", and it is necessary to pay close attention to whether the enterprises to be listed have pre-listing surprise clearance dividends, etc., strictly prevent and strictly investigate, and implement responsible list management.

On April 12, 2024, the Shanghai Stock Exchange clarified the definition of surprise liquidation dividends for IPO enterprises, that is, "the cumulative dividend amount in the three years of the reporting period accounts for more than 80% of the net profit in the same period; or the cumulative dividend amount in the reporting period accounts for more than 50% of the net profit in the same period and the cumulative dividend amount exceeds 300 million yuan, and the total proportion of replenishment and loan repayment in the raised funds is higher than 20%".

According to the financial report data, from 2021 to 2023, Xihua Technology will achieve net profits of 216 million yuan, 184 million yuan and 177 million yuan respectively, and the cumulative net profit in three years will be 577 million yuan. Based on this calculation, the dividend amount of 350 million yuan in 2022 of Xihua Technology accounts for about 60.64% of its total net profit from 2021 to 2023, which has exceeded the red line indicator of "the cumulative dividend amount in the three years of the reporting period accounts for more than 50% of the net profit in the same period and the cumulative dividend amount exceeds 300 million yuan". At the same time, the company's 550 million yuan of replenishment accounted for 27% of the company's total financing amount, which also exceeded the indicator of "the total proportion of replenishment and loan repayment in the raised funds is higher than 20%".

It is not difficult to see that Xihua Technology has fully met the Shanghai Stock Exchange's definition of "IPO enterprise surprise clearance dividends".

Public information shows that since March last year, a number of IPO companies have been rejected by the Shanghai Stock Exchange because of the surprise "clearance dividend". For example, Zhengzhou Hengda Intelligent Control Technology Co., Ltd., which plans to be listed on the Science and Technology Innovation Board, will terminate its IPO in May 2024. The company's cumulative dividend from 2020 to 2022 was 1.4 billion yuan, accounting for 83.5% of the cumulative net profit in the same period. After the surprise dividend during the reporting period, Zhengzhou Hengda Intelligent Control plans to raise 2.5 billion yuan in the prospectus, of which 250 million yuan will be used to supplement liquidity.

Another example is Changchun Jieyi Automotive Technology Co., Ltd., which was originally planned to be listed on the main board of the Shanghai Stock Exchange, but terminated its IPO on April 24, 2024. From 2020 to 2022, Changchun Jieyi paid a cumulative dividend of 770 million yuan, and the cumulative net profit in the same period was only 819 million yuan. In the prospectus, Changchun Jieyi proposed to raise 1.2 billion yuan, of which 360 million yuan was used to supplement liquidity.

The brother of the actual controller borrowed money to buy shares

The reason why Xihuake paid dividends on the eve of the IPO may be closely related to the large proportion of shares held by the company's controlling shareholders.

The controlling shareholder of Xihua Technology is Xihua Investment, with a shareholding ratio of 77.98%. The actual controllers of the company are Wang Rongzheng and Lu Yanyun, who hold 92% and 8% of the shares of Xihua Investment respectively. In addition, Wang Rongzheng also directly holds 9.12% of the company's equity, and controls the voting rights corresponding to 4.56% of the company's equity by serving as the executive partner of Taizhou Yisheng, Wuxi Hongchuangying and Wuxi Huachuangying. Based on this calculation, Wang Rongzheng and Lu Yanyun together control the voting rights corresponding to 91.66% of the company's equity.

In addition to Wang Rongzheng, Lu Yanyun and his wife holding a large proportion of shares, the two immediate family members of the actual controller Wang Rongzheng also hold shares of Xihua Technology. Among them, Wang Guozheng is the elder brother of Wang Rongzheng, who directly holds 4.10% of the company's shares and is the third largest shareholder of the company; Wang Aihua is the sister of Wang Rongzheng, who directly holds 0.27% of the shares of Xihua Technology and is the thirteenth largest shareholder of the company.

It is not difficult to see that most of the above-mentioned 350 million yuan dividends of Xihua Technology have flowed into the pockets of the company's actual controllers Wang Rongzheng, Lu Yanyun and his wife, as well as Wang Rongzheng's brothers and sisters. Xihua Technology rushed to pay dividends before listing, obviously unwilling to share the company's dividends with shareholders in the secondary market.

It is worth noting that although Wang Guozheng's shareholding ratio is much higher than that of his sister Wang Ronghua, part of his funds come from loans provided by Wang Aihua. In this regard, the Shanghai Stock Exchange requires Xihua Technology to explain the background of the capital increase of the Kingdom's borrowing, the repayment of the relevant loans and the source of repayment funds, and whether there are any share holding or other benefit arrangements.

According to the prospectus, Xihua Technology has had abnormal phenomena such as equity holding on behalf of the company, and mysterious shareholders raiding and withdrawing shares, which has also raised questions about the standardization and accuracy of its information disclosure.

The predecessor of Xihua Technology was "Wuxi Xihua Foundry Co., Ltd." (hereinafter referred to as Xihua Co., Ltd.), which was jointly funded and established by Wang Rongzheng and Chu Fang (Wang Rongzheng's ex-wife) on June 22, 2001. In November 2003, Chu Fang transferred all the shares of Xihua Co., Ltd. held at that time to Wang Rongzheng's brother Wang Guozheng and withdrew. In this equity transfer, 36% of the equity (corresponding to the registered capital of 360,000 yuan) was entrusted by Wang Rongzheng to be held by Wang Guozheng, and 13.5% of the equity (corresponding to the registered capital of 135,000 yuan) was actually + transferred by Wang Guozheng himself. It was not until September 2021 that Wang Guozheng transferred his 12% equity in Xihua Co., Ltd. (corresponding to the registered capital of 360,000 yuan) to Wang Rongzheng at a price of 1 yuan, completing the restoration of the shareholding on behalf of Wang Rongzheng. So far, Wang Rongzheng and Wang Guozheng's limited investment in Xihua has been changed to 95.5% and 4.5%.

Since then, in order to meet the company's capital needs in the process of production and operation, Xihua Co., Ltd. has increased its registered capital from 3 million yuan to 150 million yuan in two steps in January and March 2022. Among them, the kingdom is subscribing an additional capital contribution of 6.615 million yuan in March 2022. However, due to the fact that there is still a certain gap in the contribution of its own funds, the kingdom is borrowing 3.4 million yuan from his sister Wang Aihua in March 2022, and finally fully fulfills the obligation of paid-in capital contribution.

The mysterious man has been a shareholder for two months

In July 2022, "Wuxi Xihua Foundry Co., Ltd." was renamed "Jiangsu Xihua New Energy Technology Co., Ltd." At the same time, the company's business scope has also added "wind farm related system research and development, new energy prime mover equipment manufacturing".

In August 2022, a month after Xihua Technology changed its name, the company carried out a new round of financing. Among them, 9 shareholders, including Taihu Bay Fund, Wuxi Dianshi, Taibo Investment, Wang Aihua (Wang Rongzheng's sister), and Wang Jianping (natural person), contributed a total of 155 million yuan and invested at a price of 22.22 yuan per share.

In October 2022, Wang Jianping, a natural person, transferred 0.41% of his shares to Xianghe Yongjun 2 months after investing in Xihua Technology, at a price of 22.22 yuan per share.

In this regard, in the first round of review and inquiry letter, the Shanghai Stock Exchange asked Xihua Technology to explain in detail the specific situation of Wang Jianping and the source of funds for the shares, his relationship with Xianghe Yongjun, the reasons and reasonableness of the withdrawal within a short period of time after the company's shareholding, and whether the company's behavior violated laws and regulations.

Xihua Technology said in the reply letter that Wang Jianping withdrew through equity transfer in October 2022 after holding shares for a short time, mainly because he had temporary capital needs and hoped to quickly obtain liquidity by transferring the issuer's equity. At the same time, Xianghe Yongjun has the investment willingness to transfer the equity of Xihua Technology, and Wang Jianping transferred all the equity he holds to Xianghe Yongjun.

However, there are many doubts about the above explanation of Xihua Technology.

Dolphin Finance noticed that Wang Jianping invested about 15 million yuan in Xihua Technology in August 2022, and in October 2022, Wang Jianping transferred the original price of his shares in Xihua Technology to Xianghe Yongjun without any gains.

According to the prospectus, Wang Jianping has been engaged in investment activities as a freelancer since 2011 and has very rich investment experience. Wang Jianping holds shares in a number of listed companies, some of which were original shares obtained before listing, such as his 0.34% stake in Hunan Huashu Hi-Tech (currently listed 688433 on the Science and Technology Innovation Board), and his holding of Xi'an BLT Additive Technology (688333. SH) 1.89% of the shares, and also holds a 10.78% stake in Hangzhou Shuliang Technology, a listed company on the New Third Board. In the legal opinion disclosed by Hunan Huashu Hi-Tech in 2022, Wang Jianping's cumulative foreign investment amount totaled 174.63 million yuan. In addition, public information shows that from August to October 2022, Wang Jianping held about 230 million yuan of outstanding shares of BLT, a listed company on the Science and Technology Innovation Board, and made huge profits at that time.

If Wang Jianping really has a "temporary capital need", he can sell the shares of listed companies with better liquidity to cash out, why should he transfer the original shares of Xihua Technology with poor liquidity and greater profit potential in the future? Is there another hidden reason for Wang Jianping's shareholding and "flash retirement"?

According to the reply letter of Xihua Technology, Wang Jianping served as the investment manager of the asset management department of Guolian Securities Co., Ltd. from February 2009 to March 2011; Since March 2011, he has been working as a freelancer and engaged in personal investment activities. However, according to the disclosure of Shuliang Technology (832670), a listed company on the New Third Board, Wang Jianping served as the investment manager of the asset management department of Guolian Securities from September 2010 to January 2012, and has been a freelancer since 2012, and has been the chairman of the board of supervisors of the joint-stock company since December 26, 2014.

The content of the announcement of Shuliang Technology

It is not difficult to see that there is an obvious conflict between Xihua Technology and Shuliang Technology's resume of Wang Jianping, especially the inconsistency of his employment information in Guolian Securities. Why didn't Xihua Technology, its sponsors, and law firms find such a simple information error? What is Wang Jianping's real resume? What are the real reasons for its stake and exit? I am afraid that Xihua Technology needs to provide a more reasonable explanation to the exchange and investors.

It should be pointed out that Wang Jianping's tenure from 1994 to 2011 included two state-owned enterprises, both of which were closely related to Wuxi Guolian and Jiangsu Guoxin Group. Wang Jianping's first Wuxi Kaiyuan Machine Tool Group Co., Ltd., which has worked for 10 years, is the major shareholder of Jiangsu Guoxin Group; The main shareholder of Guolian Securities is Guolian Group.

In August 2022, Wang Jianping made a surprise stake in Jiangsu Xihua New Energy 12 months before the declaration, and at the same time invested in a number of private equity funds funded by Wuxi state-owned assets and Jiangsu state-owned assets; In addition, Wang Jianping made a surprise stake in Hunan Huashu Hi-Tech in December 2021, and two private equity funds under Wuxi state-owned assets also invested in the shares. Is it a coincidence that Wang Jianping and Wuxi state-owned assets simultaneously raided the above-mentioned IPO company or is there another hidden reason? Do Jiangsu Xihua New Energy and its sponsor have any information that should be disclosed but has not been disclosed?

The stock market is risky, and investors need to be cautious.

(Redirected from: Dolphin Finance).