Home » Due to the issue of Lenovo’s sci-tech innovation board listing, the China Securities Regulatory Commission held CICC and penalized 5 employees, causing concern | Leifeng.com

Due to the issue of Lenovo’s sci-tech innovation board listing, the China Securities Regulatory Commission held CICC and penalized 5 employees, causing concern | Leifeng.com

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Recently, the China Securities Regulatory Commission issued a decision on the adoption of regulatory measures for China International Capital Corporation, Wang Sheng, Sun Lei, Zhao Peilin, Xing Ke, and Xie Jingxin. The decision stated that the investigation found that during the process of sponsoring Lenovo Group Co., Ltd.’s application for listing on the Science and Technology Innovation Board, CICC failed to perform full verification procedures on the issuer’s scientific and technological innovation attributes, and mainly relied on the explanatory documents provided by the issuer. Concluding observations, the relevant procedures and evidence obtained are not sufficient to support the disclosure content, and fail to fully and accurately evaluate the issuer’s scientific and technological innovation attributes. In accordance with relevant regulations, the China Securities Regulatory Commission decided to take supervision and management measures for the supervision of CICC, Wang Sheng, Sun Lei, Zhao Peilin, Xingke, and Xie Jingxin.

Due to the issue of Lenovo's sci-tech innovation board listing, the China Securities Regulatory Commission held CICC to account and fined 5 employees under it, causing concern

This year, Lenovo’s “flash back” on the Sci-tech Innovation Board triggered public opinion. From applying for IPO to terminating the IPO, Lenovo only took one working day and became the fastest company in the history of the Science and Technology Innovation Board to withdraw its listing application.

Judging from the public timeline, Lenovo submitted its prospectus on September 30 and was accepted by the Shanghai Stock Exchange. Then, on the first working day after the National Day, that is, on October 8, Lenovo submitted an application for withdrawing the public offering of depositary receipts and listing application documents on the Science and Technology Innovation Board. On the same day, the Shanghai Stock Exchange issued an announcement stating that it had been terminated. Review of Lenovo’s listing on the Science and Technology Innovation Board.

Due to the issue of Lenovo's sci-tech innovation board listing, the China Securities Regulatory Commission held CICC to account and fined 5 employees under it, causing concern

On October 10th, Lenovo Group explained that the withdrawal of the application was due to the company’s business scale and complexity. The financial information in the prospectus may expire during the review process of the application, but the official statement of Lenovo Group has not been recognized by the market. .

However, in the eyes of onlookers, Lenovo’s choice of listing on the Science and Technology Innovation Board around the National Day is very strange. As we all know, Lenovo has prepared for nearly a year for this sci-tech innovation board listing plan. As early as January 12 this year, Lenovo issued an announcement on the Hong Kong Stock Exchange, announcing that it would be listed on the A-share science and technology innovation board.

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As a result, a large number of voices against and criticizing Lenovo have been raised on the Internet. First, what is the real reason for Lenovo’s rapid withdrawal of the sci-tech innovation board listing application; the second is to question the company’s science and innovation attributes, whether Lenovo is a company that meets the sci-tech innovation board listing requirements; third, it is dissatisfied with the huge salary of Lenovo executives , Is the huge salary of executives reasonable?

Lenovo’s chairman and CEO Yang Yuanqing said that rumors about “Lenovo’s failure to meet the IPO standards of the sci-tech innovation board” are “completely non-existent.” Lenovo’s R&D investment in the last three fiscal years was 10.203 billion yuan, 11.517 billion yuan, and 12.038 billion yuan. , A total of more than 30 billion yuan, “this has greatly crossed the R&D threshold related to the science and technology innovation board.”

According to the IPO prospectus submitted by Lenovo on September 30, it also lists the “Science Innovation Attribute Evaluation Standard One” selected by the company, and four requirements are put forward:

1. R&D investment: the cumulative R&D investment in the last three years accounted for ≥5% of the cumulative operating income in the last three years, or the cumulative R&D investment in the last three years ≥60 million yuan;

2. R&D personnel: the proportion of R&D personnel to the total number of employees in the year is ≥10%;

3. Patent status: ≥5 invention patents (including national defense patents) that form main business income;

4. Operating income: The compound growth rate of operating income in the most recent three years is ≥20%, or the amount of operating income in the most recent year is ≥300 million yuan

Looking at the information disclosed in Lenovo’s prospectus, Lenovo’s R&D staff ratio and patent situation can be said to meet the specific requirements of 2 and 3 above. There is not much controversy; however, the two items 1 and 4 have caused huge dispute.

For example, in item 4, the Science and Technology Innovation Board has given two requirements, either the compound growth rate is greater than or equal to 20%, or the operating income of the most recent year is greater than or equal to 300 million yuan-Lenovo’s past three financial The annual revenues were 411.62 billion yuan, 352.676 billion yuan and 342.383 billion yuan respectively, and the compound growth rate did not meet the requirements at all.

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Therefore, Lenovo chose to use the absolute value of the total revenue of the most recent year (411.62 billion) as a condition, easily exceeding the 300 million yuan crossing standard.

Look at the most critical R&D investment.

The prospectus shows that Lenovo’s R&D investment in the past three fiscal years was 10.203 billion yuan, 11.517 billion yuan and 12.038 billion yuan, accounting for 2.92%, 3.27% and 2.98%, respectively.

Due to the issue of Lenovo's sci-tech innovation board listing, the China Securities Regulatory Commission held CICC to account and fined 5 employees under it, causing concern

From the perspective of the total amount of R&D investment, Lenovo’s R&D investment is very high in absolute value, and indeed meets the second requirement of more than 60 million yuan. However, from the perspective of the proportion of R&D investment, Lenovo’s R&D investment in the past three years accounts for a large percentage. Less than 5%.

Look at the situation of listed companies on the Science and Technology Innovation Board. According to data from the 2020 annual report, the median R&D investment of companies that are currently listed on the Science and Technology Innovation Board is 9%. Not only that, data shows that as of July 2021, in the “new generation of information technology” industry selected by Lenovo during its listing process, the R&D investment of listed companies on the Science and Technology Innovation Board accounted for an average of 16.67%.

Therefore, in terms of absolute amounts, Lenovo is considered to be in line with the standard-but in terms of the proportion of R&D investment, Lenovo is not only too far away from the threshold, but also too far away from the science and technology board companies that have been listed.

Many critics believe that this approach of Lenovo is using its own volume to “take a loophole”, which is unreasonable.

Tao Yong, a well-known IT writer and author of “Lenovo Makes Huawei Stronger”, believes that it is meaningless to use the absolute amount of revenue and R&D investment to try to “cross the line” for a company of Lenovo’s level. One thing that can really measure its science and innovation attributes should be the proportion of R&D investment; however, Lenovo’s R&D investment is too low and its profit margin is too low.

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He also believes that the Sci-tech Innovation Board is aimed at new-type technology companies or start-up companies with the attributes of science and technology innovation and rapid growth, while Lenovo has been a veteran company for 20 to 30 years. The key is that the growth is not good and the attributes of independent innovation are not good. Not strong; even if Lenovo wants to land on the Sci-Tech Innovation Board, it should split a certain business entity that focuses on the development of core technologies (such as chips), rather than climbing the Sci-Tech Innovation Board as a whole.

Regarding Lenovo’s science and innovation attributes, Dr. Zhang Jun, Chairman of China Europe Capital, also believes that from the perspective of Lenovo Group’s revenue composition, Lenovo is still a typical “trade, industry and technology” model. It invests too little in research and development, mainly based on trade. Do system integration, and then it also has some research and development, but its research and development did not touch the core technology of the PC industry, such as “lack of core and less soul”, that is, chip and core software including operating system, database, middleware and industrial software For example, CAD, EDA, etc.; its path is completely different from that of Huawei. Huawei has accumulated core technologies, such as 5G patents, through a large amount of R&D investment, so it was suppressed by the United States.

Dr. Zhang Jun also said that Lenovo’s overall R&D expenses are too low, the debt ratio is too high, and the executive salaries are too high. From a macro perspective, it is not in line with the general background of the country’s common prosperity and anti-monopoly policy orientation. Lenovo and Ant Financial The suspension of service listings has the same effect.

In addition, many people in the investment field also said that if a company with such a low R&D ratio submits an application for the Sci-tech Innovation Board, it will basically be rejected; that is to say, if such a company succeeds in listing on the Sci-Tech Innovation Board, then the Sci-Tech Innovation Board will be rejected. There is no “prestige” at all, even if the company is Lenovo. (Leifeng(Public account: Leifeng.com)

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