news

한어Русский языкEnglishFrançaisIndonesianSanskrit日本語DeutschPortuguêsΕλληνικάespañolItalianoSuomalainenLatina

Introduction: On August 7, 2023, only one week after Feiyu Technology submitted its registration application for listing on the Beijing Stock Exchange, Kaiyuan Securities, which is known for its early advantage in the layout of related businesses on the Beijing Stock Exchange, tried to be "foresighted" and took the lead in launching a new share subscription report on the Beijing Stock Exchange entitled "Feiyu Technology: Supplier of automotive precision parts, with significant development results in new energy vehicles, energy storage, and 5G fields". When mentioning possible risks, the above subscription report of Kaiyuan Securities stated that Feiyu Technology had "risks of insufficient customer stability, risks of leakage of core technologies, and risks of downstream market development". Kaiyuan Securities at that time probably never dreamed that the biggest risk of Feiyu Technology would be the failure of listing.

This article was exclusively published by Koukou Finance (ID: koukouipo)

Author: Zhao Qing@Beijing

Editor: Zhai Rui@Beijing

Four months ago, KK Finance exclusively reported the story behind the fact that Suzhou Feiyu Precision Technology Co., Ltd. (hereinafter referred to as "Feiyu Technology") had submitted its application for listing on the Beijing Stock Exchange for nine months but failed to obtain the registration. At that time, it had set a record for the longest registration process for listing on the Beijing Stock Exchange.

At the end of the relevant article, Kekou Finance also mentioned that it will continue to pay attention to Feiyu Technology's unusual listing journey, in order to answer a series of questions such as "How will Feiyu Technology's listing end? How far will it break the record for the longest registration period for listing on the Beijing Stock Exchange? Can the rationality of its huge financial management on the one hand and fundraising to replenish cash flow on the other hand still be recognized under the current "strong supervision" model of the China Securities Regulatory Commission?" (For details, see the relevant report of Kekou Finance "Rare! The Beijing Stock Exchange has submitted its registration application for nearly 9 months without success. Behind Feiyu Technology's record-breaking listing: "Yida" capital is lurking! On the one hand, it raises funds to replenish cash flow, and on the other hand, it uses tens of millions of idle funds to buy bank wealth management products").

It is about to enter late August 2024. When Feiyu Technology continues to refresh its own record of the longest registration process for listing on the Beijing Stock Exchange in the list of companies waiting for registration and listing on the Beijing Stock Exchange, Kekou Finance has once again exclusively learned that the answers to the above series of questions will soon be released.

How will Feiyu Technology's listing end?

The result that will come to fruition soon is something Feiyu Technology obviously does not want to see but has to face.

"Feiyu Technology has decided to submit to the CSRC the registration materials for withdrawing its listing on the Beijing Stock Exchange. If nothing unexpected happens, it will receive a notice from the CSRC in the near future to terminate its registration procedures with the Beijing Stock Exchange." On August 19, 2024, an insider close to the regulatory authorities told Kekou Finance.

On the same day, another insider from Feiyu Technology also confirmed the above news to Kekou Finance.

The insider admitted that Feiyu Technology had started discussing the termination of its listing on the Beijing Stock Exchange more than a month ago at the end of June. At that time, it was about to expire one year since Feiyu Technology submitted its registration for listing on the Beijing Stock Exchange to the China Securities Regulatory Commission.

Public information shows that Feiyu Technology officially submitted its listing application to the Beijing Stock Exchange on December 30, 2022 under the sponsorship of Soochow Securities and was accepted.

Like most companies planning to go public, Feiyu Technology passed the initial listing review process relatively smoothly. After two rounds of inquiries from the Beijing Stock Exchange, on July 12, 2023, Feiyu Technology had the opportunity to go to the Listing Committee meeting to accept a vote on whether it met the Beijing Stock Exchange's issuance conditions.

Like most lucky companies planning to go public, Feiyu Technology successfully obtained the approval of the listing committee members at the 35th review meeting of the Beijing Stock Exchange Listing Committee in 2023.

On July 25, 2023, Feiyu Technology implemented the review meeting opinions of the Listing Committee as required. Six days later, on July 31, 2023, it formally submitted its listing registration application to the China Securities Regulatory Commission.

"The company has decided to terminate its listing on the Beijing Stock Exchange due to adjustments to its future strategic development plans and comprehensive consideration of the company's actual situation and other factors." The above-mentioned insider from Feiyu Technology gave a "general" reason as to why the company finally decided to give up the further promotion of its listing on the Beijing Stock Exchange.

The termination of Feiyu Technology’s registration is not surprising.

After all, before this, it had been stuck in the listing registration process of the Beijing Stock Exchange for a long time, becoming a veritable "listing difficulty company."

Although in the IPO review of the Shanghai and Shenzhen stock exchanges, it is common for the registration applications of companies planning to go public to remain unsuccessful for more than half a year, but for the Beijing Stock Exchange, which has a lower listing threshold, it is a very rare existence since the market opened in November 2021. In the past two years, under the registration system, a total of 174 companies planning to go public on the Beijing Stock Exchange have obtained approval from the China Securities Regulatory Commission and been granted listing registration. The vast majority of these companies that have successfully listed on the Beijing Stock Exchange in the past have completed the entire process from submitting registration applications to obtaining results within half a month.

If Feiyu Technology's decision to voluntarily give up registration is officially implemented in the near future, it will become the second company to fail in the registration process after passing the review since the opening of the Beijing Stock Exchange.

On August 9, 2023, the registration procedure for listing on the Beijing Stock Exchange of Hechuang (Beijing) Technology Co., Ltd. (hereinafter referred to as "Hechuang Technology") was officially halted by the China Securities Regulatory Commission.

Hechuang Technology's listing application was reviewed and approved by the Beijing Stock Exchange Listing Committee on December 7, 2022. On December 15, 2022, Hechuang Technology immediately submitted its listing registration documents to the China Securities Regulatory Commission and was accepted.

Hechuang Technology is also the first company planning to go public on the Beijing Stock Exchange that failed in the registration process.

After Hechuang Technology's failed listing on the Beijing Stock Exchange, another company that planned to list on the Beijing Stock Exchange - Guangzhou Polymer New Materials Technology Co., Ltd. (hereinafter referred to as "Polymer Technology") withdrew its application for listing after passing the review of the Listing Committee, but from beginning to end, it never entered the registration process.

"The result of Feiyu Technology's listing on the Beijing Stock Exchange is still very regrettable." The above-mentioned insider close to the regulatory authorities revealed to Kekou Finance that if it were not for the chain effect caused by some accidental factors, Feiyu Technology would have been very likely to obtain the registration for listing on the Beijing Stock Exchange a year ago. "At that time, Feiyu Technology was almost within reach of obtaining the issuance approval."

According to Kekou Finance, both Feiyu Technology’s internal personnel and intermediary agency personnel who have been paying attention to its listing once expected that it would obtain listing approval from the Beijing Stock Exchange in early August 2023.

At that time, Kaiyuan Securities, a domestic brokerage firm known for its keen ability to capture listing information on the Beijing Stock Exchange, publicly released a Beijing Stock Exchange new stock subscription report for Feiyu Technology as early as August 7, 2023, in an attempt to seize the market opportunity.

Kaiyuan Securities has always had the practice of writing new share subscription reports for companies listed on the Beijing Stock Exchange, but most of them are only announced when the listed companies are about to enter the issuance stage after obtaining registration approval.

Now, with the failure of Feiyu Technology's IPO, this new share subscription report that Kaiyuan Securities couldn't wait to release a year ago has become a big "joke".

1) Who disturbed Feiyu Technology’s dream of going public?

Feiyu Technology is about to become the second company planning to go public on the Beijing Stock Exchange that failed in the registration process.

Prior to this, Hechuang Technology was the only company that failed in the registration process since the launch of the Beijing Stock Exchange.

A year ago, when the China Securities Regulatory Commission halted Hechuang Technology's listing on the Beijing Stock Exchange, it admitted to the outside world the reason for its failure - "in view of the fact that the company's financial data failed to continue to meet the listing standards", it withdrew its application documents for public issuance of shares to unspecified qualified investors and listing on the Beijing Stock Exchange.

That year, Hechuang Technology chose the second set of listing indicators stipulated in the "Beijing Stock Exchange Stock Listing Rules (Trial)" (hereinafter referred to as the "Listing Rules") as the application criteria.

That is, "the market value is not less than 400 million yuan, the average operating income in the last two years is not less than 100 million yuan, and the operating income growth rate in the most recent year is not less than 30%, and the net cash flow generated by operating activities in the most recent year is positive."

During the initial review and even during the approval process, Hechuang Technology met the above standards.

However, during the period when Hechuang Technology submitted its registration application for listing on the Beijing Stock Exchange, its performance changed drastically. Its year-on-year revenue growth rate in 2022 was only 17.76%, lower than the 30% required for listing indicators, and could no longer meet the second listing standard of the Beijing Stock Exchange.

Changes in post-period performance are an important factor that leads to the ultimate failure of most companies seeking to go public.

However, Feiyu Technology does not have the problem of financial data not meeting listing standards.

Feiyu Technology chose the first set of standards of the "Listing Rules" for its listing on the Beijing Stock Exchange: "market value of not less than 200 million yuan, net profit of not less than 15 million yuan in the most recent two years and the weighted average return on net assets of not less than 8%, or net profit of not less than 25 million yuan in the most recent year and the weighted average return on net assets of not less than 8%."

According to the latest Beijing Stock Exchange listing prospectus (registration draft) currently published by Feiyu Technology, between 2020 and 2022, it recorded operating income of 222 million, 362 million and 428 million, respectively, and the corresponding non-net profit was 16.202 million, 32.566 million and 33.7201 million. Although the weighted average return on net assets failed to reach more than 8% in 2020, it reached 13.28% and 12.12% in 2021 and 2022, respectively.

In the past 2023, Feiyu Technology's operating situation has been relatively stable.

According to the 2023 annual report data previously updated by Feiyu Technology, in mid-2023, although its operating income fell by 10.19% year-on-year to 385 million yuan, its non-net profit increased instead of falling, up 2.71% year-on-year to 34.633 million yuan, and the weighted average return on net assets also remained above 10%.

It is obvious that the obstacles encountered by Feiyu Technology in its listing are completely different from those encountered by Hechuang Technology.

So, what exactly caused Feiyu Technology’s dream of going public to fail?

Regardless of whether Feiyu Technology admits it or not, being involved in the "sensitive shareholder" incident is a "minefield" that it cannot avoid in its listing on the Beijing Stock Exchange.

"The registration and promotion process for Feiyu Technology's listing was mainly affected by sensitive shareholders." As early as early April 2024, a person from an investment bank close to the Beijing Stock Exchange told Kekou Finance.

In the past few years, the most typical case of a listed company encountering the influence of sensitive shareholders in the A-share IPO market is the "Jiuding Group" incident.

In 2018, due to the impact of the investigation and other events, the well-known domestic investment institution "Jiuding Group" fell into the quagmire of the negative "list". Since then, all IPO projects in which it participated were collectively stopped by the regulatory authorities. At that time, Kekou Finance also exclusively reported the relevant news at the first time. Until now, six years have passed, "Jiuding Group" still seems to have not really gotten out of the haze of being cautiously treated by the regulatory authorities.

Although Feiyu Technology does not have any "Jiuding Group" funds, it has shareholders with "sensitive" identities similar to the "Jiuding Group" back then.

In mid-2023, a well-known investment institution was involved in an official corruption case. Affected by this, major exchanges and even the China Securities Regulatory Commission began to be cautious about the planned listing projects invested by this investment institution.

Over a long period of time, many IPO projects in which the investment institution had a stake were halted one after another, and some projects that had passed the review of the Listing Committee meeting have been delayed in further progress.

This investment institution implicated in the relevant case is also one of the most important shareholders of Feiyu Technology.

"At the end of 2023, we had a Beijing Stock Exchange listing project in the acceptance stage. The Beijing Stock Exchange required us to issue a special document stating that no relevant sensitive shareholders existed after the shareholder list was penetrated before issuing an acceptance letter," the person from an investment bank close to the Beijing Stock Exchange once revealed to Kekou Finance.

Public information shows that the funds controlled by this rather sensitive investment institution currently hold a total of 7.75% of Feiyu Technology's shares, ranking it as its third largest shareholder, second only to the two actual controllers of Feiyu Technology.

According to Kekou Finance, after the above-mentioned official's corruption case was exposed, the China Securities Regulatory Commission has not yet approved the registration of any of the companies that the investment institution has invested in and plans to go public.

Previously, the regulators seemed to have loosened their "cautious" attitude towards this sensitive shareholder. In March 2024, another company invested by the institution and planned to be listed on the Science and Technology Innovation Board finally had its registration application accepted by the China Securities Regulatory Commission nine months after the meeting. However, in this company, the shareholding ratio of sensitive shareholders is relatively small, about 3%.

This also gave Feiyu Technology, which was struggling with registration difficulties, hope for a successful listing.

However, the above-mentioned investment bank personnel close to the Beijing Stock Exchange have never been optimistic about Feiyu Technology's listing prospects. They believe that with the CSRC's repeated statements of "strong supervision" on initial public offering projects, and its repeated reiteration of "eradicating the soil and conditions for corruption in the capital market, intensifying the high-pressure situation of combating corruption, and persisting in using reform methods to compress the space for power rent-seeking, reduce discretionary power, improve the institutional mechanism to prevent the breeding and spread of corruption, continue to strengthen the construction of regulatory transparency, and severely punish bribery in the capital market", "strictly and tightly rectify the 'revolving door' between government and business, focus on the key issue of reducing the 'position value' of resigned personnel proposed by the CSRC's Discipline Inspection and Supervision Group, insist on viewing and reforming from a political perspective, taking comprehensive measures on the business and management sides, and deepening special rectification". Against this background, it is obviously not easy for Feiyu Technology, which is caught in a sensitive shareholder turmoil, to achieve its goal of listing in the short term.

Sure enough, just as the above-mentioned investment banker said, Feiyu Technology is ultimately about to fail in its listing.

2) Buyback pressure is coming

On August 7, 2023, only one week after Feiyu Technology submitted its registration application for listing on the Beijing Stock Exchange, Kaiyuan Securities, which is known for its early-mover advantage in the layout of related businesses on the Beijing Stock Exchange, tried to be "foresighted" and took the lead in launching a Beijing Stock Exchange new stock subscription report entitled "Feiyu Technology: Supplier of automotive precision parts, with significant results in the development of new energy vehicles, energy storage, and 5G fields."

In the report, Zhu Haibin, general manager of Kaiyuan Securities' Beijing Stock Exchange Research Center, said that Feiyu Technology "is expected to benefit from the high prosperity of downstream industries in the future, and its gross profit margin in the automotive field will be higher than that of comparable companies", "the fundraising and investment is intended to break through the bottleneck of production capacity, and aims to deepen cooperation with high-quality customers such as AVIC Optronics and Breakthrough Innovation Aviation", and said that the median price-to-earnings ratio (PE) of Feiyu Technology's comparable companies has reached 34.8 times, and the average has also reached 33.3 times.

When mentioning possible risks, the above-mentioned subscription report of Kaiyuan Securities stated that Feiyu Technology faces "risks of insufficient customer stability, risks of leakage of core technologies, and risks of downstream market development."

Kaiyuan Securities probably never dreamed that Feiyu Technology’s biggest risk now would be the risk of failure in listing.

The failure to list on the Beijing Stock Exchange and the failure to obtain large amounts of investment funds will not cause any trouble for Feiyu Technology.

After all, in the short term, Feiyu Technology is not short of money, because not long ago, it had a large amount of idle funds to purchase financial products.

On March 11, 2024, more than seven months had passed since Feiyu Technology submitted its unsuccessful application for listing on the Beijing Stock Exchange to the China Securities Regulatory Commission. The plan for listing and fundraising has not been implemented for a long time. However, Feiyu Technology suddenly issued a shocking announcement at this time: it plans to use idle self-owned funds with a total amount of no more than RMB 20 million to invest in the purchase of bank wealth management products.

Feiyu Technology said that this move is to make full use of the company's idle funds. On the premise of ensuring the company's daily operations and financial security, it plans to use the company's own idle funds to purchase financial products with high security, low risk and good liquidity from banks.

"The company's plan to use idle funds to purchase bank wealth management products is implemented on the premise of ensuring the working capital and capital security required for the company's daily operations, and will not affect the normal development of the company's business. Through moderate investment in bank wealth management products, the company's capital utilization efficiency can be improved and certain investment returns can be obtained, which will help further increase the company's overall profits and seek better investment returns for the company and shareholders." Feiyu Technology stated in a related announcement.

This also triggered doubts from the outside world about the rationality of Feiyu Technology's financing for its listing on the Beijing Stock Exchange - on the one hand, a large amount of idle funds were used to purchase financial products, while on the other hand, it planned to raise funds to supplement working capital.

According to the fundraising and investment plan submitted by Feiyu Technology to the regulatory authorities for its listing on the Beijing Stock Exchange, it intends to issue no more than 45.2 million new shares to unspecified qualified investors in order to raise 137 million yuan to invest in a precision metal parts production project. The production project plans to invest 97 million yuan of the raised funds, and the remaining 40 million yuan will be used to supplement working capital.

The greater impact of the risk of failed listing on Feiyu Technology may be the heavy pressure of repurchase brought to its actual controller after the "restoration clause" of the "bet" agreement is triggered.

According to the "bet" agreement previously signed by the actual controller of Feiyu Technology and some of its external investment shareholders, if Feiyu Technology "fails to complete its listing (i.e. this issuance and listing) before December 31, 2023" or "the issuer withdraws this application after the issuer first submits the relevant documents for this application, or the issuer's issuance and listing work is rejected, terminated or not registered by the regulatory authorities or the stock exchange", the relevant investors will regain the right to require the actual controller of Feiyu Technology to repurchase the relevant equity.

The above-mentioned investment institutions that have signed agreements with Feiyu Technology containing the terms for restoring the "bet" repurchase include CITIC Investment, Yonghe Jinfeng, Jinshi Zhiyu and natural person Huang Yafu.

In the list of shareholders of Feiyu Technology, Huang Yafu, CITIC Investment, Yonghe Jinfeng and Jinshi Zhiyu hold 7.5875 million shares, 5.4 million shares, 5.4 million shares and 3.24 million shares respectively, accounting for 4.9%, 3.49%, 3.49% and 2.09% of its current total shares.

Now, the termination of Feiyu Technology's listing on the Beijing Stock Exchange is a foregone conclusion, which means that the actual controller of Feiyu Technology may need to repurchase up to 21.6275 million shares, accounting for 13.97% of Feiyu Technology's total share capital.

In the above-mentioned prospectus (registration draft) previously released by Feiyu Technology, it also admitted in the risk factors column that if the repurchase clause is triggered, "the actual controllers of the issuer, Le Yong and Le Guopei, may repurchase the issuer's shares held by CITIC Investment, Yonghe Jinfeng, Jinshi Zhiyu and Huang Yafu in accordance with the agreed conditions. If the actual controller of the issuer cannot repurchase the shares as required by the repurchase object, disputes may arise between the actual controller of the issuer and the repurchase object."

(over)