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introduction: in recent years, in the a-share market, both market participants and regulators have been controversial about li dongsheng and the tcl system he controls, especially in terms of some capital operation methods and management issues of listed companies. they have been criticized by many parties and have been fined for this. although it will not directly affect the eligibility of kone holdings' ipo, in this public opinion environment, whether kone holdings' ipo can be successfully approved to further expand tcl's capital map, the attitude of the regulators remains to be seen.

this article was exclusively published by koukou finance (id: koukouipo)

author: fang zhiyue@beijing

editor: zhai rui@beijing

after acquiring its third a-share listed company by dishonorable means, the pace of li dongsheng and the "tcl group" he controls in further conquering the domestic capital market has visibly slowed down. after more than a year, the fourth a-share listed company that was originally within tcl's capital map has yet to be acquired by it.

as early as july 28, 2023, when the shenzhen stock exchange announced that at the 58th review meeting of the listing meeting in 2023 held on the same day, the ipo of tongli technology co., ltd. (hereinafter referred to as "tongli co., ltd.") successfully passed the review with the conclusion that it "met the issuance conditions, listing conditions and information disclosure requirements", the outside world began to bluntly say that li dongsheng, who was 66 years old at the time, had created six listed companies.

indeed, if tongli’s ipo is approved and listed as expected by the outside world, it will become the sixth listed company under li dongsheng’s control and the fourth a-share company.

as the helmsman of tcl group, li dongsheng already owns three a-share listed companies, including tcl technology (000100.sz), tcl central (002129.sz), and oma electric appliances (002668.sz), and two hong kong-listed companies - tcl electronics and huaxian optoelectronics.

in tongli holdings, which mainly engages in the odm business of acoustic products and smart products, li dongsheng actually controls 77.46% of the voting rights through tcl industrial holdings co., ltd. (hereinafter referred to as "tcl industrial"), and is its actual controller.

tongli group's a-share ipo journey can be traced back to september 16, 2022. at that time, under the escort of huatai united, tongli group successfully submitted its application for listing on the shenzhen stock exchange's main board to the china securities regulatory commission and was accepted.

in march 2023, with the implementation of the registration system reform of the main board, tongli holdings' ipo, along with hundreds of existing companies planning to go public, will "transition" to the shenzhen stock exchange to start a new round of review process.

the initial review process also went relatively smoothly. in just over four months, tongli group's ipo successfully conquered the shenzhen stock exchange's listing committee members and gained the opportunity to advance to the registration process.

but this is also where the changes began.

it was clear that at the listing committee meeting at the end of july 2023, tongli co., ltd.'s ipo was approved by the listing committee members on the grounds that "no further implementation matters were required", but its registration application was not accepted by the china securities regulatory commission until november 6 of the same year.

what tongli co., ltd. probably did not expect was that after finally entering the ipo registration process, it would face a longer wait.

to date, it has been a year since tongli shares' ipo passed the review of the shenzhen stock exchange listing committee. calculated based on the time it submitted its ipo registration, nearly ten months have passed. however, tongli shares' ipo still shows no signs of being registered and approved by the china securities regulatory commission.

according to the review information published on the shenzhen stock exchange’s website, tongli co., ltd.’s registration review has been suspended for more than four months since march 31, 2024 due to the need to supplement and update financial data.

on august 12, 2024, after updating and submitting relevant financial information, it has restarted the registration process.

however, what the shenzhen stock exchange did not clearly disclose is that during this period, in addition to the impact on the listing progress due to the updating of financial data, the problematic intermediary institutions also caused substantial obstacles to tongli’s ipo for a time.

the accounting firm responsible for the ipo of tongli shares is dahua accounting firm (hereinafter referred to as "dahua").

on may 10, 2024, the jiangsu regulatory bureau of the china securities regulatory commission issued an administrative penalty decision to dahua, suspending its securities services business for 6 months due to its violations in providing financial audits to the listed company jintongling.

the intermediary agency lost its service qualifications, which naturally had a direct impact on the progress of tongli shares' ipo.

although the shenzhen stock exchange's website shows that the re-registered tongli group is still using dahua to conduct its ipo audit, according to exclusive information from kekou finance, tongli group had decided to change its ipo audit agency after dahua suspended its business and had recently completed the replacement process.

"if the accounting firm is not changed and the 'problematic intermediary' continues to be used, the csrc will not allow it to proceed with the registration process." on august 29, 2024, an insider close to tongli co., ltd. revealed to kekou finance that once an ipo project encounters a "problematic intermediary", most of them will choose to change institutions, and tongli co., ltd. is no exception.

according to the above-mentioned person familiar with the matter, tongli co., ltd. has finalized ernst & young hua ming accounting firm (special general partnership) as its new ipo audit firm, and the latter also completed the review of all materials required for the replacement of the intermediary agency in early august.

so, after updating the latest financial data and successfully resolving the problems caused by the "problematic intermediary", will tongli shares' ipo go smoothly and obtain the csrc's listing approval as soon as possible?

the answer may not be that simple.

"in recent years, in the a-share market, both market participants and regulators have been controversial about li dongsheng and the tcl system he controls, especially in terms of some capital operation methods and management of listed companies. they have been criticized by many parties and have been fined for this. although it will not directly affect the eligibility of kone holdings' ipo, in this public opinion environment, whether kone holdings' ipo can be successfully approved to further expand tcl's capital map, the attitude of the regulators remains to be seen." an investment banker from a chinese brokerage firm told kekou finance.

in addition, according to koku finance, the typical sudden liquidation-style dividend distribution behavior that tongli co., ltd. has carried out in the past few years is also one of the main reasons for the repeated delays in its ipo.

even though tongli holdings has tried its best to rectify the problem of liquidation-style dividends in recent years, it still cannot escape the outside world's doubts about its "huge dividends on the one hand and huge financing to replenish capital on the other hand."

public information shows that tongli co., ltd. intends to issue no more than 100 million new shares through this ipo to raise 1.015 billion yuan to invest in projects such as "precision manufacturing technology transformation and upgrading of smart products", "headquarters technology innovation and r&d center", and "capacity expansion of electroacoustic products", and will use 200 million yuan of the funds to supplement working capital.

it is worth noting that in mid-2021, on the eve of tongli co., ltd. officially applying for this ipo, its cash dividend for that year was as high as 575 million yuan. it should be noted that its non-net profit in the same period was only 258 million yuan, which almost divided up all the profits of previous years.

1) the “tcl system” that has been repeatedly embroiled in controversy

good at dancing with long sleeves.

the "tcl group", which already has several listed companies under its umbrella, and its actual controller li dongsheng should be very familiar with the various rules and maneuvers of the capital market.

it was precisely by using these rules and means, whether explicit or implicit, that li dongsheng successfully acquired his third a-share listed company two years ago - oma electric appliances, which has now been renamed tcl smart home.

the illegal acquisition of oma electric appliances has also caused the controversy among the outside world and regulators regarding li dongsheng and the "tcl group" he controls to reach a peak in recent years.

after oma electric appliances encountered liquidity risks in 2018, at the end of 2020, tcl home appliances group co., ltd. (hereinafter referred to as tcl home appliances), controlled by li dongsheng, successively raised its stake in oma electric appliances through judicial auctions of shares, centralized bidding in the secondary market, and block transactions, and finally successfully acquired controlling stake in oma electric appliances in 2021 after several increases in holdings.

it was not until august 30, 2022 that an announcement from oma electric appliances revealed the unknown side behind the above-mentioned capital expansion of the "tcl group".

on the same day, oma electric appliances announced that tcl home appliances, which had become its controlling shareholder, was suspected of violating securities laws and regulations during the acquisition of oma electric appliances and was investigated by the china securities regulatory commission.

after more than four months of investigation, in early 2023, the fact was revealed how the "tcl group" controlled by li dongsheng disregarded relevant regulations and brutally "invaded" oma electric appliances.

on january 30, 2023, the guangdong regulatory bureau of the china securities regulatory commission simultaneously announced five administrative penalty decisions, all of which pointed to relevant personnel in tcl home appliances' acquisition of oma electric appliances.

according to the investigation results of the regulatory authorities, on january 6, 2021, relevant personnel of tcl home appliances management arranged for their subordinates to form a preliminary plan to acquire oma electric appliances, clearly stating that tcl home appliances would be the acquisition entity, as well as the considerations and specific operational methods for participating in judicial auctions and secondary market transactions to acquire oma electric appliances shares.

afterwards, relevant persons from tcl home appliances contacted a number of third-party institutions and asked them to secretly assist them in acquiring relevant shares of oma electric appliances. during this process, tcl home appliances not only concealed its relationship as a person acting in concert with these institutions, but also failed to make an announcement as required by the requirements for raising the placard, and also caused insider trading.

not only that, during the above-mentioned acquisition of oma electric appliances by tcl home appliances, it also borrowed four securities accounts of four subsidiaries of a third-party company, bought oma electric appliances shares through the secondary market, and then transferred the shares back to tcl home appliances through block transactions.

in response to tcl home appliances' illegal acts of failing to fulfill its reporting, announcement and other information disclosure obligations and failing to issue a takeover offer, the guangdong securities regulatory bureau ordered tcl home appliances to correct its violations, issued a warning and imposed a fine of rmb 3.2 million. it also issued a warning to wang cheng, the then chairman of tcl home appliances, and xu luoluo, the then director, and imposed a fine of rmb 1 million on each of them.

although li dongsheng, as the actual controller of tcl home appliances, escaped the disaster and all the responsibilities were borne by others, li dongsheng was the most direct and biggest beneficiary of the acquisition of oma electric appliances.

although wang cheng and xu luoluo were warned and fined 1 million yuan, compared with the result of their successful acquisition of oma electric appliances, the price of the punishment was almost insignificant.

at that time, oma electric appliances announced that it was under investigation for illegal acquisition by its major shareholder, which was exactly two months after tongli shares filed for ipo.

whether the relevant events will have an impact on the ipo review of tongli co., ltd. has attracted much attention from the outside world since then.

judging from the results of the penalty determination, since wang cheng and others did not directly hold positions in kone holdings, and tcl home appliances was only an affiliated company of kone holdings' controlling shareholder, kone holdings' ipo finally successfully met the rigid listing conditions of "the issuer's directors and other senior management personnel must not have been subject to administrative penalties by the csrc in the past 36 months or public condemnation by the exchange in the past 12 months, etc."

wang cheng, who successfully acquired oma electric appliances for tcl and li dongsheng, would naturally not be treated unfairly. even though he did not hold a position in tongli shares, which was applying for a listing, the "incentive" to obtain the original equity was indispensable.

according to the equity structure of tongli holdings, a company named huizhou shengshuo electronic technology co., ltd. (hereinafter referred to as "huizhou shengshuo") currently holds a total of 10% of tongli holdings' shares, making it the second largest shareholder, second only to tongli electronic technology (hong kong) co., ltd., which is wholly owned by tcl industrial.

huizhou shengshuo suddenly acquired a stake in tongli on december 10, 2021, half a year before tongli co., ltd. submitted its ipo application. earlier this year, under the planning of wang cheng, li dongsheng officially took control of oma electric through illegal means.

according to the ipo filing materials of tongli holdings, huizhou shengshuo acquired 36.7218 million new shares of tongli holdings at 7.48 yuan per share.

industrial and commercial information shows that huizhou shengshuo was established on november 27, 2020. its legal representative is xu luoluo, the then director of tcl home appliances who was fined in the illegal acquisition case of oma home appliances. wang cheng, who was fined for the incident together with xu luoluo, directly holds 18.738% of huizhou shengshuo's shares, making him the largest shareholder with the largest number of shares.

through huizhou shengshuo, wang cheng indirectly holds approximately 6.716 million shares of tongli.

it is not difficult to predict that if tongli holdings is finally successfully listed, the 1 million yuan fine imposed on wang cheng by the regulator for assuming illegal responsibility when assisting li dongsheng in acquiring his third a-share listed company will be "compensated" many times in the process of the "tcl group" successfully acquiring its fourth listed company.

in addition to the illegal acquisition of oma electric appliances, in november 2022, li dongsheng, chairman of the listed company tcl technology, was also punished by the guangdong securities regulatory bureau for "failing to fulfill his commitments and failing to fulfill his obligations of loyalty and diligence."

the above-mentioned violations by li dongsheng were discovered by the guangdong securities regulatory bureau during an on-site inspection of tcl technology.

according to the warning letter and measures decision issued by the guangdong securities regulatory bureau, li dongsheng, as the largest shareholder of tcl technology, failed to fulfill his commitments to reduce related-party transactions and maintain the independence of the listed company.

for example, tcl technology clearly disclosed in 2019 that the company's largest shareholder and its persons acting in concert promised to "minimize related-party transactions between myself/the enterprise and the enterprises controlled by myself/the enterprise and tcl technology and its affiliated enterprises." upon investigation, it was found that li dongsheng was the actual controller of tcl industrial, and tcl industrial was a related party of tcl technology. in 2020 and 2021, the total amount of daily related-party transactions between tcl technology and tcl industrial was rmb 13.226 billion and rmb 18.349 billion, respectively, an increase of 157% and 218% over 2019.

that year, when li dongsheng reorganized tcl technology, he also promised that he and his associates would "maintain the independence of tcl technology in terms of assets, personnel, finance, business and institutions." however, after on-site inspections by the regulatory authorities, it was found that not only were some personnel of tcl technology involved in tcl industrial-related businesses, but the office systems of the two companies were not completely isolated, and tcl technology, tcl industrial and tcl group were not strictly distinguished in external publicity.

"the ipo process of kone holdings also involved issues of related-party transactions and independence with major shareholders and actual controllers, as well as issues such as intra-industry competition. the various problems that li dongsheng was previously found to have faced in tcl technology will also raise questions about the compliance and effectiveness of kone holdings' internal controls," said the above-mentioned investment bank person.

2) once caught in the typical vortex of "sudden clearance dividend"

tongli co., ltd. actually had five months to complete its ipo registration, from submitting for registration in november 2023 to being terminated at the end of march 2024 due to supplementary financial data, and before it encountered a "problematic intermediary" in may 2024. however, the csrc delayed the approval during this period.

"it mainly involves the dispute over large cash dividends and financing through listing." the above-mentioned person familiar with tongli holdings told kekou finance.

in the three years before 2022, tongli shares were clearly a typical example of "clearance-style" dividends.

according to the financial data disclosed by tongli holdings itself, between 2019 and 2021, its cash dividends reached 290 million, 123 million and 575.5 million respectively, totaling 988.5 million. during the same period, the corresponding non-gaap net profits were only 78.315 million, 169 million and 258 million respectively, totaling just over 500 million.

from the above data, it can be seen that the largest dividend of tongli co., ltd. in recent years occurred in 2021. the dividend scale of this year alone exceeded the total profit of the previous three years.

"the dividend plan for 2021 is generally made and implemented in mid-2022. tongli holdings just submitted its ipo application in june 2022. that is to say, tongli holdings carried out a surprise clearance dividend before applying for ipo." the above-mentioned investment bank person said.

after distributing its profits in large-scale dividends on the one hand, tongli co., ltd. submitted an ipo financing plan totaling more than 1 billion yuan to the china securities regulatory commission, which included a 200 million yuan cash flow replenishment plan.

in october 2023, fuhua chemical, a company that also plans to be listed on the main board of the shenzhen stock exchange, attracted public attention due to the problem of large dividends on the one hand and financing replenishment on the other hand during the reporting period. faced with the surging public opinion, the shenzhen stock exchange was also alarmed and publicly stated that "it will conduct a strict review of the company's application for issuance and listing, and handle it in accordance with the law."

not long after, fuhua chemical's ipo was officially halted. immediately afterwards, during the listing reporting period, the proposed ipo projects that had large-scale cash dividends were also viewed "cautiously" by the regulators.

at that time, people close to the regulatory authorities revealed to kekou finance that the regulatory authorities were formulating restrictive rules on cash dividends of ipo companies. prior to this, the review and promotion of ipo projects with large dividends and supplementary financing were temporarily slowed down (see the relevant report of kekou finance for details, "the first listing on the beijing stock exchange! suspended due to matters of media concern, why the "giant" hongdongfang was blocked from listing: sudden high dividends and huge financing caused controversy").

tongli shares' ipo naturally became one of the target projects that was cautiously promoted at that time.

in november 2023, although tongli shares were approved to submit ipo registration, it did not pay cash dividends in 2022. however, in the three years from 2020 to 2022, the scale of its cash dividends also exceeded 80% of the profits in the same period - from 2020 to 2022, tongli shares paid a total of 698.5 million in cash dividends, and its non-net profit in the same period totaled 844 million.

in april 2024, the regulatory authorities clarified the definition of ipo companies' surprise liquidation dividends, namely, "the cumulative dividend amount in the three years of the reporting period accounts for more than 80% of the net profit in the same period; or the cumulative dividend amount in the three years of the reporting period accounts for more than 50% of the net profit in the same period and the cumulative dividend amount exceeds 300 million yuan, and at the same time, the combined proportion of cash flow replenishment and loan repayment in the raised funds is higher than 20%" will not be allowed to be issued and listed.

at this point, tongli holdings, whose 2023 financial data has not yet been released, obviously does not meet the above-mentioned conditions for issuance and listing.

however, with the submission of the updated 2023 financial data of tongli holdings to the regulatory authorities a few days ago, its turnaround may appear. if tongli holdings' 2023 non-gaap net profit can successfully exceed 477 million, then in the "recent three years" from 2021 to 2023, the proportion of its cumulative dividend amount to the profit in the same period may be lower than 50%. in this way, tongli holdings, whose ipo fundraising replenishment ratio is just about to reach 20%, can completely get rid of the regulatory controversy over "surprise liquidation dividends" of ipo companies.

tongli holdings has not yet disclosed its financial data for 2023, and it is also unknown whether its non-gaap net profit in the most recent year can exceed 477 million yuan.

according to the 2023 interim report released earlier by tongli co., ltd., in the first half of 2023, its non-gaap net profit was 231 million yuan, less than half of 477 million yuan.

(over)