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Yangtze Business Daily News● Yangtze Business Daily reporter Shen Yourong

After more than a year, Shanghai Yutian Guanjia Technology Co., Ltd. (hereinafter referred to as "Yutian Guanjia") finally completed the inquiry and will go to the meeting for review on August 23.

Yutian Guanjia is an automotive sports parts manufacturer with automotive sunroofs as its main products. It has broken the years of foreign capital monopoly and become the second largest automotive sunroof supplier in China.

In 2023, Yutian Guanjia's net profit attributable to parent company shareholders (hereinafter referred to as "net profit") unexpectedly doubled to 160 million yuan.

Yutian Guanjia's R&D expense rate has continued to decline and is lower than the industry average. In recent years, the company has been frequently sued by peers for product infringement.

In this IPO, the company plans to raise 75 million yuan to supplement working capital. Before the IPO, the company distributed 60 million yuan in cash dividends, all of which went into the pockets of Wu Jun's family. In addition to the equity transfer, Wu Jun's family cashed out about 115 million yuan before the IPO.

Yutian Guanjia had prominent safety issues and was punished by relevant departments three times within one year.

Yutian Guanjia still has many shortcomings, including high customer concentration, frequent personnel changes, the family of Wu Jun, the company's actual controller, controls nearly 90% of the company's voting rights, and there are internal control risks.

The actual controller is busy cashing out before the IPO

Before the IPO, Wu Jun, the actual controller of Yutian Guanjia, was busy cashing out, which aroused some suspicion.

According to the updated prospectus submitted on August 16, Yutian Guanjia was established in November 2004 with a registered capital of US$8 million. After changes and share reforms, as of October 2021, the company's shareholders are Shanghai Yusu Industrial Co., Ltd. (hereinafter referred to as "Shanghai Yusu"), Wu Jun, and Wu Peng, with shareholding ratios of 70%, 25.455%, and 4.545%, respectively.

Wu Peng is Wu Jun's younger brother. Shanghai Yusu is wholly owned by Wu Jun, Li Xiaoming and their daughters Wu Hongyang and Wu Yuyang.

Since then, the company has increased its capital four times and transferred its equity twice. Among them, in October 2022, Wu Jun transferred 1,546,387 shares of Yutian Guanjia to Jiaxing Juntong Equity Investment Partnership (Limited Partnership) (referred to as "Jiaxing Juntong") by agreement, with a total transfer price of RMB 50 million.

In May 2023, Wu Jun transferred his 638,250 shares in the company to the employee shareholding platform Shanghai Song Yuhuang Enterprise Management Consulting Partnership (Limited Partnership) for a transfer amount of RMB 4.6 million.

Through two equity transfers, Wu Jun cashed out 54.6 million yuan.

Yutian Guanjia also made two rather strange cash dividends.

On August 3, 2020, Yutian Guanjia held an extraordinary shareholders' meeting and approved the distribution of cash dividends of RMB 10 million to shareholders. The dividend distribution was completed on June 22, 2021.

On April 8, 2021, Yutian Guanjia held a shareholders meeting and approved the distribution of cash dividends of 50 million yuan to shareholders. The dividend distribution was completed on March 24, 2023.

According to the equity structure of Yutian Guanjia at that time, the total dividend of 60 million yuan all went into the pockets of Wu Jun's family.

The second cash dividend was 50 million yuan. It took nearly two years from the shareholders' meeting to the approval of the dividend plan to its implementation.

Why did such an abnormal situation occur? At the end of 2021, Yutian Guanjia had 352 million yuan in cash and 319 million yuan in corresponding debt.

It is worth mentioning that in 2020 and 2021, Yutian Guanjia also borrowed 33.5 million yuan from the real estate company actually controlled by Wu Jun.

Yutian Guanjia's operations have been questioned as it borrowed money from related parties while distributing dividends to the family of the actual controller.

Through equity transfer and dividends, before the IPO, Wu Jun's family cashed out a total of approximately 115 million yuan.

In this IPO, Yutian Guanjia plans to raise 575 million yuan, and the company plans to use 75 million yuan of it to supplement working capital.

Frequently involved in patent infringement lawsuits

In terms of R&D, Yutian Guanjia has obvious shortcomings.

Yutian Guanjia is an automotive sports parts manufacturer with car sunroofs as its main product. It has the integrated capabilities of car sunroof design, research and development, and production. Yutian Guanjia repeatedly emphasized that the company is an excellent first-tier supplier of automotive parts.

In the prospectus, Yutian Guanjia also emphasized that since Webasto invented the first folding roof in 1932, the domestic and foreign automotive sunroof markets have been monopolized by foreign sunroof giants. The company gradually broke the domestic sunroof market monopolized by foreign capital. In 2023, Yutian Guanjia's automotive sunroof sales volume was 2.311 million units, with a market share of 16%. It has become the second largest supplier in China's automotive sunroof market. It is also the only automotive sunroof company born in China among the top five suppliers in China's sunroof market as of 2022, and the sales gap with the giant Webasto is narrowing year by year.

Yutian Guanjia claims that it attaches great importance to R&D, but the company's R&D investment has grown slowly.

Data shows that from 2021 to 2023, the company's R&D expenses were 66.9256 million yuan, 62.2507 million yuan, and 68.4558 million yuan, respectively, with an average annual compound growth rate of only 1.14%. In these three years, the company's R&D expenses accounted for 3.95%, 3.08%, and 2.75% of its operating income, respectively, declining year by year, and below 3% in 2023.

Yutian Guanjia's R&D expense ratio is significantly lower than the average level of comparable companies in the industry. During the same period, the average R&D expense ratios of the industry were 3.90%, 4.97%, and 4.69%, respectively. Except for Jifeng Shares, Yutian Guanjia's R&D expense ratio is at the bottom.

What has attracted much attention is that Yutian Guanjia has been frequently involved in lawsuits due to patent infringement.

Yutian Guanjia and Webasto had a patent dispute over the invention patent of "roller shutter device for vehicles". In July 2020, the Shanghai Intellectual Property Court ruled that Yutian Guanjia should stop using the aforementioned invention patent and compensate Webasto for economic losses and reasonable expenses of 600,000 yuan.

In response to the inquiry, Yutian Guanjia stated that since the patent involved was declared invalid by the State Intellectual Property Office in accordance with the law during the appeal period, the patent involved is already in an unstable state. In fact, Webasto has already lost the case. At present, the company has applied for the utility model "a sunshade pull plate card connection structure" (application number/patent number: 2019224756771, already authorized) as a related alternative patent or technology through independent research and development.

However, Yutian Guanjia has another infringement case. In July 2020, the Shanghai Intellectual Property Court made a civil judgment, ordering Yutian Guanjia to immediately stop infringing the invention patent right named "shading device for motor vehicles" and compensate Webasto Roof Heating System (Shanghai) Co., Ltd. for economic losses and reasonable expenses totaling 600,000 yuan.

At present, Yutian Guanjia has paid the above compensation.

In addition to the intellectual property dispute with Webasto, in October 2022, Yutian Guanjia had a dispute with Dassault Systemes Simulia because the company used its ABAQUS series computer software without its permission. In April 2023, Yutian Guanjia reached a mediation agreement with the other party to stop using the infringing software and purchase and use genuine software. In December last year, the company paid the relevant purchase amount.

Frequent changes in financial managers raise security concerns

Yutian Guanjia’s frequent personnel changes have aroused market doubts.

Yutian Guanjia’s confidence in passing the IPO is that the company’s operating performance will surge in 2023.

In 2020, the company's operating income and net profit were 1.317 billion yuan and 73 million yuan, respectively. From 2021 to 2023, the company's operating income was 1.694 billion yuan, 2.021 billion yuan, and 2.491 billion yuan, respectively, with year-on-year growth of 28.63%, 19.32%, and 23.25%, all at a rate of about 20%. During the same period, the company's net profit was 43 million yuan, 71 million yuan, and 160 million yuan, respectively, with year-on-year changes of -41.68%, 66.63%, and 123.69%.

The company's net profit fell significantly in 2021, and its net profit in 2022 was slightly lower than that in 2020. However, its net profit in 2023 suddenly soared, with an increase far exceeding the current operating income.

Yutian Guanjia has a high customer concentration. From 2021 to 2023, the top five customers are basically dominated by Changan Automobile, FAW Group, Geely Automobile, GAC Group, SAIC Volkswagen, Great Wall Motors, etc. In the past three years, the company's sales revenue to the top five customers accounted for more than 70% of the company's main business revenue.

With a stable customer base, sales to the top five customers increasing steadily, and the company's operating income growing steadily, why is its net profit fluctuating so drastically?

Yutian Guanjia has experienced frequent personnel changes. For example, Jia Weili, who served as director and general manager, resigned from the company due to personal future development and career planning considerations; Yang Yan, who served as deputy general manager, resigned for personal reasons; Wu Hongyang, one of the actual controllers, resigned as the company's secretary, etc. At the core technical personnel level, the former core technical personnel Chen Qiang resigned from the company in November 2021. Before leaving, he was mainly responsible for the verification and approval of skylight products and other related work in the R&D center.

In addition, from 2020 to 2022, Yutian Guanjia successively had three financial directors: Cai Yuqin, Wu Zhaohui, and Han Deyin.

Yutian Guanjia is subject to the risk of actual control by the actual controller. At present, the actual controllers Wu Jun, Wu Hongyang, and Wu Yuyang, father and daughter, directly and indirectly control 82.70% of the company's shares. If the shares held by other members of Wu Jun's family are added, Wu Jun's family controls nearly 90% of the company's shares.

Yutian Guanjia has also been frequently fined for safety issues.

One of Yutian Guanjia's important subsidiaries is Xiangtan Yutian Guanjia. In February 2023, a safety accident occurred in Xiangtan Yutian Guanjia, resulting in the death of an employee. Xiangtan Yutian Guanjia was fined 400,000 yuan. Xiangtan Yutian Guanjia paid an additional 275,300 yuan (including wages, pensions, etc.) to the deceased's immediate family members.

In addition, in September 2023 and January this year, Chengdu Yutian Guanjia and Tianjin Yutian Guanjia were fined 15,000 yuan and 40,000 yuan respectively for violating relevant safety management regulations.

In summary, within one year, Yutian Guanjia and its subsidiaries were fined three times for safety issues, with a total fine of 455,000 yuan.