Source: IPO Daily

A company listed on the STAR Market wants to start a merger and restructuring.

Recently, Chenghe Technology Co., Ltd. (hereinafter referred to as "Chenghe Technology", 688625.SH) announced that the company and its affiliates are planning to acquire a total of no less than 51% of the shares of Wuhu Yingri Technology Co., Ltd. (hereinafter referred to as "Yingri Technology") in cash.

After the completion of this transaction, the company will achieve a controlling stake in the target company, which is expected to constitute a major asset restructuring.

It is reported that Chenghe Technology and Yingri Technology are highly synergistic in the field of chemical synthesis process, and the cooperation between the two parties will help Chenghe Technology quickly enter the display industry and accelerate business expansion.

Drafting: She Shijie

Business collaboration

It is reported that Chenghe Technology was established in January 2002, located in Baiyun District, Guangzhou, and listed on the Science and Technology Innovation Board of the Shanghai Stock Exchange in 2021.

Chenghe Technology said that it has a very good synergy with Yingri Technology.

Chenghe Technology's nucleating agent products have the effect of improving the performance of display panel materials, and can be applied to display-related materials and components. After the company realizes the holding of the target company, it can play a synergistic effect in customer resource sharing and mutual promotion of brand influence, which will help the company quickly enter the display industry and accelerate business expansion.

Specifically, the new business of evaporation materials of the target company and the main products of Chenghe Technology belong to polymer organic materials, and there is a high degree of synergy with Chenghe Technology in the chemical synthesis process. Chenghe Technology has mature technology in organic synthesis and polymer material preparation, and the cooperation between the two parties can achieve complementary technical advantages, jointly overcome the technical problems in the preparation and application of organic materials in the display field, and accelerate the business progress of the target company in the evaporation material end.

After the acquisition of the target company, Chenghe Technology will share resources in supply chain collaboration, cost control, talent exchange, etc., improve the company's core competitiveness, and better meet the needs of customers in downstream industries.

According to the "Acquisition Intent Agreement", Chenghe Technology and its affiliates intend to acquire a total of not less than 51% of the equity of Yingri Technology in cash. After the completion of the acquisition, Chenghe Technology became the controlling shareholder of Yingri Technology.

It is understood that the overall valuation of Yingri Technology is 1.8 billion yuan, so the acquisition cash of Chenghe Technology is at least 918 million yuan. According to Chenghe Technology's 2024 performance report, its asset-liability ratio is 58.84%, and its cash reserves in the third quarter of 2024 are about 540 million yuan.

Therefore, Chenghe Technology needs to plan how to solve the shortfall in cash acquisition funds, which may be solved through M&A loans and related parties.

The IPO was withdrawn

The announcement of the merger and acquisition of Chenghe Technology did not disclose the latest financial data of Yingri Technology.

It is understood that the target company, Yingri Technology, applied for an IPO on the GEM of the Shenzhen Stock Exchange in April 2022, and withdrew its IPO application on February 27, 2023 after completing two rounds of inquiries.

According to the IPO prospectus at that time, the main business of Yingri Technology was the research and development, production and sales of high-performance sputtering targets.

From 2019 to 2021, the target company achieved operating income of 113 million yuan, 148 million yuan, and 315 million yuan respectively, a year-on-year increase of 31.05% (2020) and 113.42% (2021) respectively; The net profit attributable to the parent company was 12 million yuan, 27 million yuan and 84 million yuan respectively, an increase of 115.45% (2020) and 215.85% (2021) year-on-year respectively.

For the increase in performance, Yingri Technology said that in the context of the growth of downstream market demand and the acceleration of the localization process of target materials, the company relies on the accurate prediction of downstream demand, good R&D design and supporting capabilities, and stable product quality. The company's gross profit margin has also grown rapidly. From 2019 to 2021, the gross profit margin of Yingri Technology's main business was 27.45%, 31.70% and 38.25% respectively, mainly due to factors such as changes in product structure, decline in raw material purchase prices, process progress and scale effect.

However, it is worth noting that when Yingri Technology applied for its IPO in 2022, it planned to raise 505 million yuan, and after the completion of the raising, it would account for no more than 25% of the shares, that is, the issue valuation would be around 2.1 billion yuan.

The transaction is preliminarily estimated to have an overall equity value of RMB1.8 billion, a 10% discount from the issuance valuation three years ago.

At the same time, comparing the shareholding structure disclosed in the prospectus of Yingri Technology in 2022 and the shareholding structure of the simplified version disclosed in the announcement of the listed company today, it can be found that the shareholding structure of Yingri Technology has changed after withdrawing the IPO application, which may be the withdrawal of some shareholders.

According to the latest announcement, Zhang Bing, Tianjin Mattel Vacuum Technology Co., Ltd., Luo Yongchun, and Wuhu Yingxin Enterprise Management Partnership (Limited Partnership) hold a total of 53.04% of the shares of Yingri Technology.