A Group Of Bulls Who Have A Huge Share Of The Bonus And "Raise Money"?

The high-profile "sockets" IPO is expected to meet in November 21st. According to the prospectus, the bull Group intends to land on the main board of the Shanghai Stock Exchange, issuing no more than 60 million shares and raising funds of 4 billion 887 million yuan.

Prior to May, the bull group disclosed in the updated prospectus of the prospectus that there was a pending lawsuit against the invention patent dispute filed by Tongli technology, involving two patents, and the total amount of litigation claims totaled 999 million yuan, setting the highest record of claims for patent infringement litigation by domestic enterprises.

In July 3rd, the Bulls group said that it had received the decision of the Patent Office of the State Intellectual Property Office of the Patent Office of the State Intellectual Property Office for the examination of the request for invalidation, and the two patents involved were declared null and void. The Bulls group IPO patent barrier was initially cleared, and the final litigation result remains to be decided.

At the same time, the Bulls group is still facing IPO's surprise attack on the night before, related transactions, and the decline in gross margin.

Cumulative dividends in three years 3 billion 200 million

The prospectus shows that the Bulls group focuses on the R & D, production and sale of civilian electrical products with the core of converters and wall switches and sockets, mainly including converter, wall switch sockets, LED lighting, digital accessories and other power connections and power extended products, and widely applies electric fields such as Yu Jiating and office.

Its predecessor was the bull electric appliance jointly established by Ruan Liping and Ruan Xueping brothers in 1995. In the past more than 20 years, the Bulls group has gradually expanded and formed the business combination of "safety socket", "decorative switch", "LED eye lamp" and "digital fast charging accessories" from the "subdivision" of "socket". It has become a "socket elder brother" with annual revenue of nearly 10 billion.

The prospectus shows that in the 2016-2018 years, the bull group achieved revenues of 5 billion 366 million yuan, 7 billion 240 million yuan and 9 billion 65 million yuan respectively, up 20.35%, 34.91% and 25.21% compared to the same period last year, and realized net profit of 1 billion 407 million yuan, 1 billion 285 million yuan, 1 billion 677 million yuan, an increase of 40.78%, -8.67%, and 40.78% over the same period. In the same period, the Bulls group also had a good cash flow performance. In the 2016-2018 years, the net operating cash flow of the bull group was 1 billion 779 million yuan, 1 billion 164 million yuan and 1 billion 910 million yuan respectively.

According to the prospectus, by the end of 2018, the balance of cash and cash equities of the Bulls group was only 218 million yuan.

On the eve of launching the listing, it had made a big dividend.

In September 2018, the Bulls group disclosed the prospectus for the first time, raising funds of 4 billion 887 million yuan. Prospectus shows that in 2015 -2017, the bull Group paid 500 million, 500 million and 2 billion 200 million respectively, accounting for 35.54%, 38.91% and 131.19% of the current net profit, totaling 3 billion 200 million.

Before the transfer of 4.124% shares to the 7 parties, such as Gao Ling Dao Ying, on 4 December 2017, all the shares of the bull group were owned by two people from Ruan Liping and Ruan Xueping brothers, which means that the 3 billion 200 million dividends in the three years almost all flow to the two brothers of Ruan Liping and Ruan Xueping.

The big dividends on the eve of the listing raised many questions. However, Shen Meng, executive director of Xiang song capital, told the twenty-first Century economic news reporter that the system of A shares does not need financing to be listed, so the situation of raising funds on the stock market without frequent lack of money is common. IPO only reviews performance, and does not make any request for undistributed profits. Therefore, splitting cash is also a benefit for former shareholders.

According to the latest prospectus, the Bulls group did not have a bonus plan in 2018.

With regard to dividend distribution policy, prospectus shows that according to the articles of Association (Draft) and the shareholder return plan for three years after the listing, under the premise that the company is profitable and accumulative undistributed profit is positive, the company makes at least one profit distribution every year. When the cash dividend conditions are met, the annual profit allocated in cash shall be no less than 10% of the distributive profit realized in that year.

The bull group's "bad money" is also reflected in its recent purchases of financial products. In the past 2016-2018 years, the amount of other current assets of the company was 1 billion 870 million yuan, 1 billion 326 million yuan and 2 billion 231 million yuan respectively, of which the funds used for bank financial products and other investments were as high as 1 billion 863 million yuan, 1 billion 302 million yuan and 2 billion 216 million yuan, respectively, amounting to 5 billion 381 million yuan.

Lower gross margins

In the past more than 20 years, mainly relying on converters and wall switch sockets, the bull group's revenue has reached 9 billion 65 million yuan in 2018, approaching the 10 billion level. However, there are worries behind the decrease in gross profit margin of main products.

The prospectus shows that in 2015 -2018, the revenue generated by converters and wall switches and sockets occupied the vast majority of the Bulls group's income. Among them, the proportion of converter revenue accounted for over 50%, and the total revenue from wall switch socket business accounted for 94.95%, 91.76%, 88.02%, 84.51%, respectively, and maintained at over 80%.

However, the gross profit margin of the two core businesses declined significantly during the reporting period. Prospectus shows that in 2016 ~2018, bull group's main business gross profit margin was 45.21%, 37.79%, 36.62%. In the same period, the gross margins of converters were 44.86%, 33.37% and 33.26%, respectively, and the gross margins of wall switches and sockets were 49.94%, 49% and 46.74% respectively.

In the prospectus, the bull group said that the fluctuation of gross margin in the company's reporting period, especially since 2017, has been significantly reduced. The main reasons include the increase in the total sales of new products, such as the overall increase in raw material purchase prices, the LED lighting and digital accessories with low gross margins, and the upgrading of the new national standard of the converter products in 2017, resulting in the increase in production costs, while the company has not increased the price in proportion to reduce the gross profit margin of the mature products strategically. If the relevant external or internal factors that affect the gross margin will be more unfavorable to the company's future changes, the gross profit margin of the company will still drop.

In terms of "low gross margin LED lighting", in the 2016-2018 years, the gross profit margin of LED lighting business was 28.51%, 29.4% and 29.31% respectively, while the average gross profit margin of the same industry company was 33.05%, 31.61% and 29.79% respectively.

The bull group is listed on the market to raise 4 billion 887 million yuan for the production of 410 million sets of wall switch socket production bases, "the annual output of 400 million sets of converters automatic upgrading project", "the annual output of 180 million sets of LED lamp production base construction project", "R & D center and headquarters base construction project" "information construction project" and "channel terminal construction and brand promotion project". The Bulls group said that the above investment projects are based on the good prospects for wall switch sockets, converters, LED lighting industry, as well as the company's excellent technical ability and steady development trend.

In addition, frequent associated transactions have also attracted attention.

Prospectus shows that in 2016 ~2018, bull group related sales revenue were 72 million 35 thousand and 800 yuan, 113 million yuan, 125 million yuan. It is worth noting that the price of related products sold by the Bulls group to related parties is higher than the average selling price of their products. According to the prospectus, the average selling price of the bull group converter, wall switch socket, LED lighting and digital accessories in 2018 was 14.45 yuan, 7.19 yuan, 9.54 yuan and 13.32 yuan respectively, while the average price of the products sold by the Bulls group to the main related parties were 14.98 yuan, 7.61 yuan, 9.89 yuan and 15.29 yuan respectively.

Shen Meng believes that if the products sold to related parties are not different from the products sold in the market, then this transaction with related parties does not exclude the suspicion of interest transmission.

In response, the reporter called the bull group in November 18th and sent an interview outline, which has not yet been received as of press release.