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China Fund News reporter Nan Shen

On the evening of July 23, the official website of the Shenzhen Stock Exchange disclosed that Hainor Environmental Protection Industry Co., Ltd. (hereinafter referred to as Hainor) and its sponsor Shenwan Hongyuan withdrew their application for issuance and listing. According to relevant regulations, the Shenzhen Stock Exchange decided to terminate its review of its issuance and listing on the Growth Enterprise Market.

It is worth noting that Hainor's listing application was accepted on December 17, 2020, and approved by the Listing Committee meeting on November 5, 2021, but it has not been submitted to the China Securities Regulatory Commission for registration. After 32 months, its listing journey came to an abrupt end.

Hainor is a service provider focusing on domestic waste treatment in small and medium-sized cities, operating in the BOT, TOT, and BOO franchise models. According to the company's updated inquiry response on September 28, 2023, the company's post-period operating income was almost stagnant in the first half of 2023, while both net profit and non-net profit declined.

The filing documents show that Hainor has identified Luo Yili as its actual controller. His daughter Luo directly holds 22.26% of the company's shares and serves as a director and vice president of the company, but has not been identified as a joint actual controller. This situation has been inquired by the Shenzhen Stock Exchange.

Performance decline in the first half of 2023

According to Hainor's prospectus, the company is positioned as a domestic waste treatment service provider for small and medium-sized cities. It is one of the earliest pioneers in the domestic domestic waste treatment industry. It was the first to adopt the BOT, TOT, and BOO franchise models to tailor comprehensive solutions for urban domestic waste treatment that are suitable for the characteristics of small and medium-sized cities in China, and provide integrated and professional investment, construction and operation services for urban domestic waste treatment.

The filing documents and inquiry responses show that Hainor's incineration power generation business gross profit margin is higher than the average of comparable companies, partly because the company's incineration power generation projects are located in Sichuan and Guangxi, while most of the comparable companies' incineration power generation projects are located in the southeast coastal areas or the central core city of Changsha. Therefore, the company has certain cost advantages in personnel, materials, project operation and maintenance, and its gross profit margin is higher than the average of comparable companies.

During the review inquiry, the Shenzhen Stock Exchange required the company to further quantify the impact of cost advantages on the issuer's gross profit margin and whether cost advantages are sufficient to explain the issuer's higher gross profit margin than comparable companies, based on the specific proportion of personnel, materials, operation and maintenance costs and the differences with comparable companies in the same industry. The Shenzhen Stock Exchange also required the company to disclose the latest performance and the expected performance in the next reporting period.

After data analysis, Hainor said that compared with comparable companies, the material, labor, and operation and maintenance costs required for the company's unit waste treatment volume are at an intermediate level, but the total project operating costs are relatively lower than those of comparable companies, and it has certain cost advantages. This is mainly because the company has formed relatively mature management experience after more than 20 years of development, with high project operating efficiency, good operating cost control, and relatively low unit waste cost.

Looking at the post-period performance, the company's most recent updated financial data was for the first half of 2023, and the results showed that its operating income was 327.4 million yuan, almost no increase compared with 327.3 million yuan in the same period last year; its net profit was 127 million yuan, a slight decline from 135 million yuan in the same period last year, and the company's net profit after deducting non-recurring gains and losses also declined.

The daughter of the actual controller holds 22.26% of the shares

Not identified as a joint actual controller

The filing documents show that Hainor has identified Luo Yili as the actual controller, and his daughter Luo directly holds 22.26% of the company's shares and serves as the company's director and vice president. The Shenzhen Stock Exchange requires the company to refer to the requirements of Question 9 of the "Questions and Answers on the Review of Initial Public Offerings and Listings of Growth Enterprise Market Stocks" to explain the reasons and rationality for not identifying Luo Yili and his children as joint actual controllers.

Hainor said that as a director and vice president of the company, Luo participated in the company's operations and management, but he was more of an assistant to the president in handling and executing daily affairs. The company's important business decisions were mainly made by Luo Yili, and Luo's role in important business decisions was limited.

In addition, Hainor said that since the last IPO application and listing on the New Third Board, Luo Yili has always been the company's single controlling shareholder with a voting power ratio of more than 50%, and Luo has always been the company's second largest shareholder. The company's identification and disclosure of the actual controller have not changed. Hainor believes that its identification of the actual controller meets the requirements of Question 9 of the "Questions and Answers on the Review of Initial Public Offering and Listing of GEM Stocks".

Hainor rarely added new shareholders after the application, and was also questioned by the Shenzhen Stock Exchange. Hainor explained that at 18:30 on the evening of December 17, 2020, the company received the acceptance notice of the Shenzhen Stock Exchange's IPO application materials. Before the market opened on December 18, 2020, the company applied to the National Equities Exchange and Quotation System for an emergency suspension through the sponsoring securities firm. However, due to the long approval process for the emergency suspension by the sponsoring securities firm, the company's stock failed to be suspended before the market opened at 9:30 in the morning, but was suspended from noon on December 18, 2020.

By comparing the shareholder lists on December 17, 2020 and December 18, 2020, during the morning trading hours on December 18, 2020, Hainor added two new shareholders, Sun Maozhen and Yang Guihong, who held 3,000 and 1,800 shares of the company respectively, with a total shareholding of 4,800 shares, accounting for 0.0043% of the shares.

However, Hainor believes that the addition of new shareholders after the company's declaration does not involve changes in the shareholding of the company's actual controller, does not affect the company's control relationship, and does not change the shareholding situation of the company's major shareholders. All of them are generated through the NEEQ's collective bidding trading system, and the equity changes are clear. There are no disputes or potential disputes, and they meet the issuance conditions stipulated in Article 12 of the Initial Public Offering Registration Measures.

Editor: Joey

Audit: Wooden Fish

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