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IPO Observation | Performance fell off a cliff, Feiwo Technology may be difficult to “take off”
Source: Financial Investment News
On July 22, the GEM Listing Committee will review the IPO application of Hunan Feiwo New Energy Technology Co., Ltd. (abbreviation: Feiwo Technology).
A reporter from the Financial Investment News noticed that Feiwo Technology, which bears the title of “new energy” and produces “screws” for wind power fasteners, intends to pass the The second IPO raised funds to expand production.
At the same time, Feiwo Technology not only has problems such as high accounts receivable and high debt ratio, but also faces the impact of losses from subsidiaries.
Significant decline in operating performance
Founded in July 2012, Feiwo Technology is a national high-tech enterprise specializing in the research and development, manufacture of high-strength fasteners and providing customers with overall fastening system solutions. The main products are high-strength fasteners for wind power. It is the key basic components for connecting wind turbine blades and the main engine, each section of the tower, the whole machine and the ground foundation.
In terms of performance, from 2019 to 2021, Feiwo Technology‘s operating income was 526 million yuan, 1.196 billion yuan, and 1.130 billion yuan, respectively, with year-on-year change ratios of 92.69%, 127.22%, and -5.52%, respectively; the corresponding net profits attributable to the parent were respectively It was 66.28 million yuan, 160 million yuan, and 78.2 million yuan, and the year-on-year change ratios were 102.14%, 141.77%, and -51.20%, respectively.
It can be seen that the performance of Feiwo Technology has changed from high growth for two consecutive years to a major decline.
(Financial indicators of Feiwo Technology)
Regarding the decline in performance, Feiwo Technology explained in the prospectus that the wind power industry has experienced a drop in demand due to the installation peak brought about by the rush to install in 2020, resulting in a year-on-year decrease of 7.56% in the company’s main business revenue in 2021, and the unit price of main products. There have been various degrees of decline, and the superimposed raw material prices have risen, resulting in a significant year-on-year decline in net profit.
At the same time, the market competition in the wind power fastener industry has intensified, resulting in a decline in the unit price of the company’s main products and the gross profit margin of its main business in 2021. Among them, the unit prices of the main products embedded screw sleeves and anchor bolt components have dropped significantly; and, in the first half of 2021, the price of steel has risen rapidly, but there is a certain lag in the company’s transmission of price pressure to customers, which has also led to a decline in product gross profit margins.
Specifically, the embedded screw sleeve products are the traditional superior products of Feiwo Technology, with a high market share. The data shows that from 2019 to 2021, the embedded screw sleeve will achieve operating income of 398 million yuan, 666 million yuan, and 426 million yuan, accounting for 83.28%, 60.52%, and 41.89% of the total revenue, respectively. In 2021, affected by the increase in industry production capacity and intensified market competition after the rush to install, under the dual pressure of raw material price hikes and price wars, the market share of embedded screw sleeves will drop significantly, from 72.95% in 2020 to 57.61%.
In the first quarter of 2022, Feiwo Technology’s performance will still increase revenue but not profit. The company achieved operating income of 270 million yuan, an increase of 29.31% from January to March 2021, but the gross profit margin of its main business decreased by 6.40% compared with the same period last year.
The prospectus shows that Feiwo Technology issued no more than 13.47 million shares this time, and raised 557 million yuan, of which 320 million yuan was used for wind power high-strength fastener production line construction projects, and 117 million yuan was used for non-wind power high-strength fasteners. Production line construction project, 70 million yuan to purchase workshops and 50 million yuan to supplement working capital. So, in the context of rising raw material prices and declining sales prices for its main products, can Feiwo Technology find new profit space?
Accounts receivable grow year by year
It is worth mentioning that the reason why Feiwo Technology rushed to the capital market under the huge pressure of performance decline may be due to its insufficient working capital.
The prospectus shows that from 2019 to 2021, the net cash flows generated by Feiwo Technology’s operating activities were 2.7227 million yuan, -7.4659 million yuan and -122 million yuan, respectively, and continued to be negative in 2020 and 2021. As of the end of 2021, the company’s asset-liability ratio has reached 60.65%, and the company’s unrestricted monetary funds, bank acceptance bills that can be discounted at any time, and supply chain finance balances totaled 181 million yuan. Interest-bearing liabilities due in 2022 The principal and interest amount is 333 million yuan, and the financial pressure is very tight.
From 2019 to 2021, Feiwo Technology’s asset-liability ratios are 49.55%, 53.15%, and 60.65%, respectively, and the averages of comparable listed companies in the same industry are 42.07%, 16.39%, and 17.38%, respectively. In this regard, Feiwo Technology also admitted that the company’s asset-liability ratio is higher than the average level of listed companies in the same industry, mainly due to the rapid growth of the company’s revenue scale and large capital needs. Therefore, short-term loans, other payables, borrowings and accounts payable The scale of the loan is relatively large, resulting in a large current liability of the company.
Behind this is the accounts receivable that Feiwo Technology has grown year by year. During the reporting period, the net accounts receivable of Feiwo Technology were 202 million yuan, 377 million yuan and 470 million yuan respectively. As of the end of 2021, the company’s net accounts receivable accounted for 39.59% of the total current assets at the end of the period, both in terms of amount and proportion.
In this regard, the company explained that in 2021, affected by the short-term demand decline in the wind power industry, CRRC Zhuzhou,Mingyang IntelligenceLM, Zhongfu Lianzhong and other customers’ credit terms have been extended compared with 2020.
Two subsidiaries suffered significant losses
As of December 31, 2021, Feiwo Technology has a wholly-owned subsidiary, namely Shanghai Fanwo Precision Machinery Co., Ltd. (abbreviation: Shanghai Fanwo); two holding subsidiaries, Hunan Lobopolun Intelligent Equipment Co., Ltd. Company (abbreviation: Roboprom) and Hunan Feiwo Youlian Industrial Technology Co., Ltd. (abbreviation: Feiwo Youlian).
A reporter from the Financial Investment News noticed that two of the three subsidiaries mentioned above will suffer losses in 2021. The data shows that Shanghai Fanwo will lose 461,700 yuan in 2021, and Robopol will lose 259,100 yuan, and its total assets will be -4,480,500 yuan.
In addition, Feiwo Technology’s prospectus made selective disclosure of related parties. According to the “Guidelines for the Implementation of Affiliated Transactions of Listed Companies”, according to the principle of substance over form, natural persons, legal persons or other organizations that may cause the interests of listed companies to favor them, including natural persons, legal persons that hold more than 10% of the shares of listed companies’ controlled subsidiaries etc., should be recognized as a related party of the listed company.
Among them, Robopollan was established on September 29, 2017, Feiwo Technology holds 60% of its shares, and ROBOPLAN, LDA holds 40% of its shares.During the reporting period, Robo Pullen mainly carried out research and development, manufacturing and sales of grinding intelligence for wind turbine bladesrobotequipment business. ROBOPLAN, LDA holds more than 10% of the shares of the company’s holding subsidiary Robopol. For this reason, Feiwo Technology’s prospectus identifies ROBOPLAN, LDA as a related party.
Feiwo Youlian was established on September 5, 2019. Feiwo Technology holds 51% of its shares, Li Qun holds 25% of its shares, and Gong Saiwu holds 24% of its shares. During the reporting period, Feiwo Youlian mainly engaged in the production and sales of special flanges for wind power equipment. Similarly, Li Qun and Gong Saiwu both hold far more than 10% of Feiwo Youlian’s shares, but Feiwo Technology’s prospectus does not identify Li Qun and Gong Saiwu as related parties.
A reporter from the Financial Investment News sent the above questions to Feiwo Technology, but the company did not reply.
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