Recently, Shenzhen Spit Technology Co., Ltd. (hereinafter referred to as "Spit"), which has withdrawn its IPO application, has become a member of this wave of withdrawal of applications.
From the perspective of the prospectus and inquiries, the biggest constraint behind the company's withdrawal is its performance. On the one hand, the growth rate of performance has declined significantly; most importantly, the net profit in the most recent year has not reached the threshold of 60 million yuan.
In fact, not meeting performance standards is one of the main reasons for this wave of withdrawal of applications. Compared with the past, the new rules for listing have appropriately raised the financial indicators for listing. Among them, the main board has further raised the performance threshold for large-cap blue-chip stocks, and the performance gap between the main board, the ChiNext board, and the STAR board has been further widened, with greater emphasis on stability in performance scale; the ChiNext board has raised the profitability threshold, highlighting the company's ability to resist risks. This has created a ladder among the various boards, making the board levels more distinct and the characteristics more prominent.
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Performance growth rate decline
Spit mainly produces industrial-grade and automotive-grade magnetic components and power modules for new energy vehicle charging piles, with products mainly used in the fields of new energy vehicles, charging piles, photovoltaic energy storage, and data communication. Among them, the sales revenue of magnetic components accounts for about 80%, and the charging module accounts for 20%.
The top five customers include Huawei, Inbol, Sunshine Power, Shangneng Electric, Youyou Green Energy, Xinrui Technology, ABB, ZTE, Zhongheng Electric, Xu Ji Power Supply, etc.
The prospectus shows: from 2020 to 2022, Spit's operating income was 292 million yuan, 411 million yuan, and 561 million yuan, respectively; the net profit attributable to the company was 1.3372 million yuan, 30.9579 million yuan, and 60.6306 million yuan.
In the above three years, Spit has developed at a rate of doubling. Among them, the net profit in 2021 increased by as much as 22 times year-on-year, and in 2022 it also increased by 96%.
However, entering 2023, the company's growth rate began to decline sharply. According to the 2023 performance forecast, Spit's operating income for 2023 is expected to be 600 million yuan, a year-on-year increase of 7.46%, a decline of 29 percentage points from 2022; the net profit is expected to be 60.5218 million yuan, a year-on-year decrease of 0.18%; the net profit attributable to the company after deducting non-recurring gains and losses is expected to be 58.2142 million yuan, a year-on-year increase of only 0.55%.
The decline in performance during the application period is the "big taboo" for companies planning to go public, which will become a point of doubt about the sustainability of performance and future growth.Investigating the reasons, the primary cause is the overall decline in revenue from new energy vehicles and data communication sector clients for Spbit in 2023. For instance, in 2023, Spbit's sales revenue from its largest client, Huawei, amounted to 81.2517 million yuan, a decrease of 21.43% compared to the previous year. Specifically, sales revenue from data communication products to Huawei fell by 27.63% year-on-year, and sales revenue from photovoltaic energy storage products to Huawei decreased by 36.47% year-on-year. In 2023, sales revenue to Yingboer declined by 27.06%.
Spbit stated that with the continuous increase in the penetration rate of the new energy industry, some areas have experienced a slowdown in growth or overcapacity, such as local overcapacity in the upstream photovoltaic industry, including silicon materials and wafers. If the overcapacity situation extends to the photovoltaic inverter industry chain, it may have a certain negative impact on the company's business in the photovoltaic field.
Additionally, there is a situation where a client's shareholder has invested in the issuer. In 2022, an external investor, Cheng Guping, took a stake in the company, holding 4.6894% of the equity, and at the same time, Cheng Guping also holds 1.31% of the equity in Yingboer, one of the company's top five clients. During the reporting period, Spbit's gross profit margin and sales price for Yingboer showed an upward trend, and the sales price differs from similar products of the same type of clients.
So, is there any transfer of interests? Spbit claims that the gross profit margin of the products sold to Yingboer has been increasing year by year. First, the company continues to launch new products, which are priced relatively high at the initial launch. Second, as the company's production scale expands, it continuously optimizes its process level, leading to a decrease in the unit cost of products. Therefore, there is no situation of interest transfer in the sales to Yingboer.
Net profit does not exceed the threshold of 60 million yuan
Spbit has chosen a set of listing standards for its attempt to go public on the Growth Enterprise Market (GEM).
Before the new listing rules, the GEM's first set of standards was "net profits for the most recent two years are positive, and the cumulative net profit is not less than 50 million yuan." After the revision, the first set of standards moderately raised the profit threshold to highlight the company's risk resistance, increasing the cumulative net profit from not less than 50 million yuan to not less than 100 million yuan. At the same time, a new standard was added that the net profit for the most recent year should not be less than 60 million yuan.
The aforementioned net profit refers to the lower of the net profit before and after deducting non-recurring gains and losses, and Spbit's attributable net profit after deducting non-recurring gains and losses is 58.2142 million yuan, just "one step away" from the hard threshold of 60 million yuan.
During this period, there has been a significant increase in the withdrawal of IPO applications, including a considerable number of companies whose financial data do not meet the new regulations. For companies on the GEM that voluntarily withdraw their applications due to financial data below the new requirements, the "60 million yuan net profit in the most recent year" threshold is the main "bottleneck."
For example, Tangxing Technology, which withdrew its application on May 8th, chose the first GEM listing standard, but the company's net profit after deducting non-recurring gains and losses in the latest fiscal year (2022) was 59.7024 million yuan, just "brushing past" the 60 million yuan threshold.On June 10th, Yuancheng Technology, which withdrew its application, reported a net profit of 50.6557 million yuan for the latest fiscal year (2022) after deducting non-recurring gains and losses, which is also below the 60 million yuan threshold. Moreover, the company's net profit after deducting non-recurring gains and losses for the first half of 2023 was only 14.3767 million yuan, which is far from the annual target of 60 million yuan.
Previously, public data showed that, measured by the first set of criteria, since the implementation of the registration-based system on the Growth Enterprise Market (GEM), 531 companies have successfully gone public. Among them, more than 90% of the GEM companies with a market value exceeding 20 billion yuan met the new net profit standard requirements before going public. Overall, 154 companies did not meet the first set of criteria, with the vast majority failing to meet the net profit requirement for the most recent year (2022).
In response, some market experts believe that these companies could withdraw their applications first and then apply for listing using the second set of GEM criteria, which is "expected market value + net profit + operating revenue," with the requirement for net profit being simply positive.
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