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Recently, another company launched its issuance at the last minute before its approval expired.

Recently, Anhui Jialiqi Advanced Composite Materials Technology Co., Ltd. ("Jialiqi") disclosed its prospectus. According to the announcement, it will conduct a preliminary inquiry on August 13, 2024, and start subscription on August 19, 2024 after the issue price is determined.

At this point, nearly 11 months have passed since it obtained the approval from the China Securities Regulatory Commission on September 13, 2023.

According to the relevant regulations of the regulatory authorities, the IPO registration approval is valid for 12 months from the date of approval. Since August 2023, the A-share IPO rhythm has been adjusted, and a large number of approved companies have been stuck in the IPO process. Since the beginning of this year, companies such as Xintong Pharmaceutical, Qiaolong Emergency, Runyang New Energy, and Kezhi Shares have failed in their IPOs due to the expiration of their approval documents.

In comparison, Jialiqi is undoubtedly the "lucky one" among the group of hurdle-breakers. Two days ago, Xiaofang Pharmaceutical, which received approval on the same day and plans to be listed on the Shanghai Stock Exchange Main Board, also entered the pre-issuance preparation stage.

"Passing at the last minute" or "leaving in disgrace" is becoming the "watershed" for this group of companies that will be registered with the China Securities Regulatory Commission in the second half of 2023.

Last minute release

Public information shows that Jialiqi is mainly engaged in the research and development, production, sales and related services of aviation composite parts, and is currently one of the important suppliers of aviation composite parts in China.

Jialiqi's GEM IPO application was accepted on May 31, 2022, passed the review on December 12 of the same year, submitted for registration on August 18, 2023, and the registration took effect on September 12, 2023.

Generally speaking, after obtaining the approval of the China Securities Regulatory Commission, companies will start the IPO issuance work as soon as possible, but Jialiqi was "stuck" for nearly 11 months at a critical time. Although it did not disclose the specific reasons, many market participants speculated that it might be affected by the company's declining performance in 2023.

According to Jialiqi's 2023 interim report, the current operating income was only 270 million yuan, a year-on-year decrease of 2.39%, and the non-net profit was approximately 60.1429 million yuan, a year-on-year decrease of 0.45%.

Among them, the company expects its operating income from January to September 2023 to be 345 million yuan to 400 million yuan, a change rate of -8.36% to 6.24% compared with the same period last year; it expects the net profit attributable to the parent company's owners from January to September 2023 to be 84 million yuan to 98 million yuan, a change rate of -4.65% to 11.24% compared with the same period last year; it expects the net profit attributable to the parent company's owners after deducting non-recurring gains and losses from January to September 2023 to be 68 million yuan to 82 million yuan, a change rate of -13.95% to 3.76% compared with the same period last year.

Judging from the prospectus, Jialiqi's performance has declined, but the decline is not large.

However, some media reported that Jialiqi's annual operating income in 2023 totaled 463 million yuan, a year-on-year decrease of 21.8% from 2022, and its non-net profit was only 78.3664 million yuan, a year-on-year decrease of 44.25%.

"The market is very sensitive to changes in the performance of newly listed companies. Especially in the current fragile market environment, supervision will inevitably be strict to avoid the situation where the fundamentals of the companies planning to go public do not meet the basic requirements for listing." A senior securities firm sponsor representative in South China pointed out in an interview.

However, since entering 2024, Jialiqi's performance has rebounded. According to media reports, in the first half of 2024, Jialiqi's revenue was 269 million yuan, basically the same as the same period in 2023, and its non-net profit was 45.4188 million yuan, a year-on-year decline of 26.15%. However, compared with the second half of 2023, the decline has been greatly narrowed, showing signs of recovery.

At the same time, Jialiqi expects that its operating income in 2024 will return to around 555 million yuan, a year-on-year increase of nearly 20% compared to 2023. Its non-net profit is expected to reach 84.9191 million yuan, a year-on-year increase of 8.3%.

It is worth mentioning that before Jialiqi, Xiaofang Pharmaceutical, which had been waiting for more than 10 months, has also entered the issuance process. It conducted a preliminary inquiry on August 12 and planned to start subscription on August 15.

The validity period of approval documents for 4 enterprises is less than 100 days

According to the reporter's statistics, as of now, there are still four companies in the IPO queue whose approval documents are valid for less than 100 days.

Among them, the one with the shortest validity period is Electronic Network, which obtained the approval of the CSRC on the same day as Xiaofang Pharmaceutical and Jialiqi, but its current situation is not as fortunate as the latter two.

Electronics Network is a wholly-owned subsidiary of Shenzhen Huaqiang (000062.SZ), a listed company on the Shenzhen Stock Exchange's main board. It is an industrial Internet B2B comprehensive service provider for the vertical industrial chain of electronic components.

Although the registration approval date for Electronic Network’s IPO was September 13, 2023, it was not until February 20, 2024 that it obtained the listing “pass” from the China Securities Regulatory Commission, which was nearly five months late.

Shortly after it successfully obtained the registration approval, on April 12, 2024, the new "Nine National Regulations" were introduced. The second article emphasized the need to "strictly control the access to issuance and listing" and "strictly supervise the spin-off listing."

In addition to changes in the regulatory situation, the performance of Electronic Network has also fluctuated. The main reason behind its performance surge in 2021 and 2022 was the large-scale "shortage" in the electronic components market. As the market gradually stabilized, the company's performance also showed signs of decline.

In the first half of 2023, Electronic Network's operating income was only 853 million yuan, a 40% decline from 2.068 billion yuan in the same period of 2022, and its net profit was halved to only 89 million yuan.

Shenzhen Huaqiang's 2023 annual report also shows that in 2023, Electronic Network achieved operating income of 1.967 billion yuan and net profit of 149 million yuan. Based on this calculation, in 2023, Electronic Network's operating income fell by 48.96% year-on-year, and its net profit fell by 46.65% year-on-year.

The other three companies, Hehe Information, Fute Technology and Hongshi Laser, obtained approval from the CSRC on September 28, 2023, October 20, 2023 and November 2, 2023, respectively. The approval documents are valid for only 46 days, 68 days and 81 days, respectively.

Among them, Hehe Information mainly provides digital and intelligent products and services, and owns a number of products such as CamScanner, CamCard, and Qixinbao. The sponsor is CICC. From 2020 to 2022 and the first half of 2023, the operating income was 578 million yuan, 806 million yuan, 988 million yuan and 565 million yuan respectively, and the net profit attributable to the parent was 130 million yuan, 144 million yuan, 284 million yuan and 187 million yuan respectively.

In the early days of Hehe Information's development, its scientific and technological innovation attributes were questioned by the market, and the Science and Technology Innovation Board Listing Committee also made inquiries on related issues on many occasions.

In June this year, the China Securities Regulatory Commission issued the "Eight Measures on Deepening the Reform of the Science and Technology Innovation Board to Serve Innovation and the Development of New Productivity" (commonly known as the "Science and Technology Eight Measures") to strengthen the "hard technology" positioning of the Science and Technology Innovation Board.

However, compared with the "Guidelines for the Evaluation of Science and Technology Innovation Attributes (Trial)" revised by the China Securities Regulatory Commission in April, Hehe Information meets the requirements for IPO companies on the Science and Technology Innovation Board, such as "the cumulative R&D investment in the past three years is more than 80 million yuan" and "more than 7 invention patents that are applied to the company's main business and can be industrialized."

The prospectus shows that the cumulative R&D investment of Hehe Information in the past three years accounts for 28.88% of the cumulative operating income in the past three years, and the cumulative R&D investment in the past three years is 685 million yuan; as of December 31, 2022, 89 of the 117 invention patents of Hehe Information are applied to its main business.