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IPO tightening, overcapacity in the photovoltaic industry, some photovoltaic industries are queuing up to withdraw their listings. But this has no impact on photovoltaic glass company Haida Solar - on June 28 this year, the company also updated the exchange's inquiry letter response information, ready to go all the way.
Haida Solar is an authentic family business.
Public information shows that the actual controllers of the company are Zhu Quanhai, Lu Binwu, Zhu Lina and Zhu Guangda. Zhu Quanhai, Zhu Lina and Zhu Guangda are father and daughter, father and son; Zhu Quanhai and Lu Binwu are father-in-law and son-in-law; Lu Binwu and Zhu Lina are husband and wife - Zhu Quanhai, Lu Binwu, Zhu Lina and Zhu Guangda, together control 88.84% of the company's shares and have signed a "Concerted Action Agreement". In short, they are all a family.
Zhu Quanhai's family also owns another listed company: Haidar, a precision slide rail company that will be listed on the Beijing Stock Exchange in 2023.
Now, do you think this is all the wealth of Zhu Quanhai, who is 70 years old? Not really!
The prospectus shows that he has been serving as deputy general manager of Jiangsu Hengyuanxiang Cashmere Products Co., Ltd. since July 2013. Zhu Quanhai, who has long achieved financial freedom, has been working for Hengyuanxiang and learning closely from Hengyuanxiang's boss Liu Ruiqi.
Long-term learning not only trained Zhu Quanhai's business acumen, but also increased his risk awareness in running a business and improved his risk control awareness.
The Macau entrepreneur who had held shares on his behalf for 17 years became a defaulter in the second year after he terminated the relationship. Haida Solar's largest customer was also a defaulter.
However, Haida Solar was not affected by this, and its business grew bigger and bigger.

01The major shareholder turned out to be a dishonest person who had been holding shares on behalf of the boss for 17 years!

Zhu Quanhai, actual controller of Haida Solar

Zhu Quanhai was born in 1954, which meant he did not start his business career that early.

The prospectus shows that he served as general manager of Wuxi Haida Container Factory from May 1998 to June 2013. This enterprise should be the first enterprise founded by Zhu Quanhai, and it also opened his entrepreneurial journey.

At the end of December 2001, Zhu Quanhai, who had achieved financial freedom, joined Hengyuanxiang.

There are few reports about Zhu Quanhai in the media, but the wealth story series "Sheep Travels the World" Hengyuanxiang's Ups and Downs once gave a vivid description of Zhu Quanhai:

On December 28, 2001, Hengyuanxiang Cashmere Products Co., Ltd. was established and the groundbreaking ceremony for the new factory was held in Hengyuanxiang Industrial Park (formerly Hengyuanxiang Knitting Industrial Park) in Outang, Wuxi... Among the leadership of all Hengyuanxiang's franchised factories, a very interesting person emerged. He was the general manager of the Cashmere Products Company, Zhu Quanhai, who was known as the district director of Hengyuanxiang Industrial Park.

Zhu Quanhai, a man with a sturdy figure, a full forehead, and a kind face and a blessed expression like Maitreya Buddha!He is different from Chen Boqing and Mao Erdu.When he joined Hengyuanxiang, he already had a fortune, owning a container factory, a safety glass factory, a leasing company and many other businesses.One of the important purposes of his joining Hengyuanxiang was to "listen to Mr. Liu's (Liu Ruiqi) lectures" and "listen to Mr. Liu's speeches" during meetings.

My God, what a studious senior worker this is. Liu Ruiqi is also really wise and powerful, with great personality charm. It is worth mentioning that "working" and "studying" at Hengyuanxiang did not interrupt Zhu Quanhai's own career.

More than a year after joining Hengyuanxiang, in March 2003, Haida Container Factory controlled by Zhu Quanhai established a joint venture with Macau Xinhuahai - Wuxi Haida Safety Glass Co., Ltd. (the predecessor of Haida Solar). The company's registered capital was US$850,000, with Haida Container holding 70% of the shares.

As the name suggests, Macau Xinhuahai is a foreign-funded enterprise.

Its executive director and controller is Xing Zengyi, who is three years younger than Zhu Quanhai. Xing Zengyi was once an employee of the Infrastructure Department of the Guangdong Provincial Building Materials Bureau, and has been engaged in the glass industry since then. In 1997, Xing Zengyi obtained permanent resident status in Macau and established Jiangmen Yinhui Safety Glass Co., Ltd. in the same year.

Because of Xing Zengyi's foreign status, Haida was able to enjoy various policy benefits of the joint venture at that time, such as tax incentives.

This went on for seventeen or eighteen years, and the careers of both Zhu Quanhai and Xing Zengyi underwent tremendous changes.

Zhu Quanhai's career is getting more and more prosperous:

(1) His position in Hengyuanxiang has become increasingly important. From July 2013 to date, he has served as deputy general manager of Jiangsu Hengyuanxiang Cashmere Products Co., Ltd.

(2) He founded Haidar in 2012 and entered the precision rail business. In 2023, Zhu Quanhai even pushed Haidar to successfully list on the Beijing Stock Exchange.

(3) The financial indicators of the joint venture Glass Haida Solar have met the threshold requirements for listed companies.

However, Lao Zhu's partner Xing Zengyi was not so lucky.

(1) Xing Zengyi owned several glass companies, including Jiangmen Yinhui Glass Engineering Co., Ltd., Jiangmen Yinhui Safety Glass Co., Ltd., and Jiangmen Yinhui Glass Industrial Co., Ltd., but most of them were not doing well.

(2) Due to business management issues, Xing Zengyi and the companies he controlled were involved in multiple disputes and lawsuits.

Haida Solar, co-founded by Zhu and Xing, has preliminary plans to go public in 2020.

As a result, the fact that Macau Xinhuahai (controlled by Xing Zengyi) held shares on behalf of Zhu Quanhai came to light: "The sponsor and the issuer's lawyer confirmed through interviews that Zhu Quanhai and Xing Zengyi had verbally agreed that Macau Xinhuahai only held the relevant shares on behalf of Zhu Quanhai and did not actually enjoy any shareholder rights nor participate in the actual operations of the company."

That is: Haida Solar has nothing to do with Xing Zengyi, but only with Zhu Quanhai.

In August 2020, Zhu and Xing terminated their proxy holding relationship. According to Zhu Quanhai's instructions, Macau Xinhuahai returned 30% of the company's equity (corresponding to a registered capital of US$450,000) to Zhu Quanhai. Zhu Quanhai paid Xing Zengyi a 2 million yuan proxy holding management fee in return for his 17 years of proxy holding work.

Xing Zengyi, who was in deep financial difficulties, successfully cooperated with Zhu Quanhai to complete the equity transfer procedures, and made it clear to the sponsor and the issuer's lawyer that Zhu Quanhai had no other interest arrangements with Macau Xinhuahai and himself, and there were no disputes or potential disputes.

I don't know if it was a coincidence or sheer luck, or some other reason, but in the second year after the termination of the proxy holding relationship, Xing Zengyi became a dishonest person. Haida Solar's reputation and Zhu Quanhai's property were both preserved, and were not implicated by Xing Zengyi. He is really a good brother!

02Haida’s largest supplier is also a dishonest person!

The fact that Zhu Quanhai terminated the proxy holding relationship with Xing Zengyi, who was at risk of defaulting, in advance shows that he had considerable foresight. However, being able to continue doing business with a company that had already defaulted shows that Zhu Quanhai has strong risk control capabilities.

Haida Solar's prospectus shows that the company's largest supplier, Jinxin New Energy Technology and its affiliated companies, are also dishonest persons, just like Xing Zengyi.

The exchange’s inquiry letter states:

"From 2019 to June 2022, the company's largest supplier was Tangshan Jinxin New Energy Company (hereinafter referred to as "Jinxin New Energy") and its affiliated companies (including Guangxie Technology and Jinxin Solar Energy). Public information shows that Jinxin New Energy is a dishonest debtor, and its purchases from it accounted for 41.84%, 37.92%, 30.22% and 29.05% in each period."

Why did Haida Solar still cooperate with Jinxin when it knew that Jinxin New Energy was a dishonest debtor?

The entities that have transactions with Haida Solar Energy among Jinxin New Energy and its affiliates include Jinxin New Energy, Jinxin Solar Energy, Guangxie Technology and Jinxin Man-Made Panel Industry, all of which are enterprises controlled by "Tangshan Jinxin" and its actual controller.

Haida Solar mainly purchases glass sheets (ultra-white embossed glass for photovoltaic modules) from Tangshan Jinxin, and also settles a small amount of water and electricity charges for leasing factories.

The company has been cooperating with Jinxin New Energy since 2016, and learned that Jinxin New Energy was listed as a dishonest debtor in 2017. Haida Solar determined that the cooperation with Jinxin was necessary and reasonable.

(1) Before the relevant entities of Tangshan Jinxin were listed as dishonest debtors, Jinxin New Energy had already entered the company's supplier system, with stable supply and good performance in all aspects.

(2) After being listed as a dishonest debtor, Jinxin Glass is still one of the main suppliers of photovoltaic glass raw materials in the industry.

(3) Jinxin’s breach of trust was not due to poor management of its photovoltaic glass business. There were other peers purchasing from it, and their cooperative relationship did not come to a standstill due to Jinxin Glass’ breach of trust.

(4) More importantly, Haida Solar has already built supporting facilities around Tangshan Jinxin’s factory. “In order to build a complete photovoltaic glass industry chain, Tangshan Jinxin has introduced downstream photovoltaic glass deep processing enterprises through measures such as strengthening cooperation and building the Guangxie Science and Technology Industrial Park to provide industrial supporting facilities.The companies that have been introduced include: Haida Solar's subsidiary Tin Glass New Materials, Wuxi Liangsheng Special Glass Co., Ltd., Changzhou Huamei Optoelectronics New Materials Co., Ltd., Nantong Dongli New Energy Technology Co., Ltd. and Hongxie Glass, etc."

Glass deep processing companies that have settled in the park, including Haida Solar, are destined to be Jinxin’s main customers and are not likely to lose them.

(5) In this industrial park, Haida Solar has another business: the "Production Line Use Agreement" signed with Hongxie Glass shows that Hongxie Glass's OEM production line is specifically used by the company to provide entrusted processing services for Hongxie Glass and its designated units.

In addition, from 2019 to June 2022, the price of raw materials purchased by Haida from Jinxin New Energy was generally lower than that from other suppliers, with the price difference ranging from 6.27% to 15.29%.

However, Haida Light said in response to the exchange's inquiry that this reserve price sale is also reasonable:

"The price at which Jinxin Glass supplies the company is consistent with the price it supplies to other major customers. The differences in sales prices between different suppliers of raw materials are reasonable.Jinxin Glass does not suffer losses by supplying goods to the company at low prices.”

In other words, Jinxin Glass, the dishonest party, did not help Haida Solar to beautify its financial statements.

03Industries that have been strictly controlled are still waiting for a wave of capital market

The external risk control capability is very strong and the internal control management fully demonstrates the "family" characteristics.

The exchange noted that Haida had a number of irregularities. These irregularities occurred most frequently in 2020, the year Haida Solar planned to go public and the year it terminated its equity holding relationship with Xing Zengyi.

(1) In 2020, Haida Solar engaged in loan transfers in order to meet the entrusted payment requirements of the lending bank and improve the efficiency of fund use, involving an amount of RMB 64 million (Note from Gantanhao: loan transfer refers to a financial institution absorbing deposits and then lending to an enterprise. The subject of the loan transfer must be a financial institution, otherwise it may constitute a crime.)

(2) In 2020, Haida Solar had 8 bill endorsement transfers and collections without real transaction background.

Haidaguang emphasized that since November 2020, the above two types of violations have never occurred again.

(3) In addition, Haida Solar also engaged in borrowing and lending funds and making payments from personal accounts, some of which involved Haidar, a company under the same actual controller as Zhu Quanhai.

Of course, Haidar's listing on the Beijing Stock Exchange in 2023 also disclosed that "during the reporting period, there were irregularities in financial internal control, such as loan transfers, bill discounts without real transaction backgrounds, salary and commission payments by the spouse of the actual controller, cash transactions, and corrections of large prior accounting errors."

I hope that Haida Solar and Haidar have already passed the rectification measures and rectification of irregular internal control behaviors. Now that the supervision is so strict, the sponsoring securities firm of the two companies is Huaying Securities, so they should be careful and at ease in handling it.

In recent years, there have been few IPOs in the glass industry. This is because photovoltaic glass is also a high-energy-consuming industry and there is a certain amount of overcapacity.

According to the "Notice of the Ministry of Industry and Information Technology on Issuing the Implementation Measures for Capacity Replacement in the Cement and Glass Industry" (Ministry of Industry and Information Technology No. 80 [2021]), photovoltaic rolled glass projects in each province must be prepared by enterprises with project information and feasibility study reports, which must be verified and submitted step by step by the industry and information technology and development and reform departments at or above the county level. The provincial industry and information technology departments and development and reform commissions shall jointly entrust industry organizations or intermediary institutions to hold hearings, and the results of the hearings shall be reported to the Ministry of Industry and Information Technology and the National Development and Reform Commission. After they issue a low-risk warning opinion, the province shall publicize and announce the project information in accordance with relevant procedures before construction can begin.

The construction of photovoltaic rolled glass projects involves planning, land use, project establishment, environmental assessment, energy assessment, safety and other procedures, which should be handled at the relevant departments in accordance with regulations.

In September 2021, Caifu Glass was rejected for the second listing. In December 2023, Rainbow New Energy, which had already passed the review, withdrew its materials; and at the same time that Haida Solar updated its reply to the inquiry letter, Changli New Materials also terminated its IPO.

We will have to wait and see whether Haida Solar can successfully overcome the difficulties.