Shanxi'S First Meeting Held In The Past Five Years: Shanxi Huhua IPO Or "Implicated" By Sponsor

As early as June 15, Shanxi Huhua passed the examination of the national development and Examination Commission, but now it has been more than a month, and the approval of Shanxi Huhua (Shanxi Huhua Group Co., Ltd.) has not been implemented.

The 21st century economic report reporter learned that the IPO of Huhua, Shanxi Province, was blocked, or related to the punishment of its sponsor, Guangfa Securities. As the sponsor and underwriting business of GF Securities was suspended for six months, the IPO progress of Huhua, Shanxi Province, was also interrupted.

In the view of industry insiders, the problems encountered by Shanxi Huhua are also bringing new variables and references to the IPO market. When the issuers choose sponsors, on the one hand, they should avoid the securities companies that may have risky projects, on the other hand, they can also sign contracts with multiple underwriters to carry out "insurance".

Happiness and misfortune of Huhua, Shanxi Province

It seems that Shanxi Huhua's IPO in recent five years has not been successful.

According to public data, in the past five years, only Dongjie intelligent company in Shanxi Province completed the IPO at the end of June 2015 under the sponsorship of CITIC Securities, and since then, there has been no IPO project in Shanxi Province for nearly five years.

"The structure of new economy enterprises in Shanxi is relatively small, and many industries such as coal and steel have certain overcapacity and backward production capacity, which are usually considered as industries not suitable for listing and financing. Therefore, it is not easy to have an IPO project." From the perspective of Shanxi's guozihua group, it should be said that Shanxi's guozihua group has broken through many obstacles

In fact, as early as 2015, Shanxi Huhua tried to impact the IPO of Shanghai Stock Exchange, but its IPO application was rejected by the national development and examination commission two years later due to the decline in performance.

In the second sprint, on June 15 this year, the IPO of Huhua, Shanxi Province, was finally approved by the development and examination committee.

According to its prospectus, Huhua, Shanxi Province, which was established in 1994, is a high-tech enterprise based on the in-depth research and development and application of civil explosives, committed to the R & D, production and sales of all kinds of civil explosives.

In recent years, the achievements of Huhua in Shanxi Province have been continuously accumulated. Data shows that in 2016, 2017, 2018 and the first half of 2019, the company's operating revenue was 355 million yuan, 436 million yuan, 457 million yuan and 216 million yuan respectively, and the net profit after deducting non attributable parent was 24.19 million yuan, 38.67 million yuan, 56.07 million yuan and 36.35 million yuan respectively.

It is worth mentioning that, because its gross profit margin is higher than the average level of comparable companies in the same industry, its distributors, abnormal gross profit margin, the necessity of raising investment projects and safety production issues have become the focus of attention of the IEC.

Although many problems have been paid attention to, the NDRC still pressed the approval vote for Shanxi Huhua; however, the IPO of Shanxi Huhua has encountered new challenges in the approval stage.

According to Shanxi, the sponsor of Huhua was suspended for 6 months due to the fact that the sponsor of Huhua was suspended for 6 months.

This also means that the lucky Huhua of Shanxi Province has encountered a new "misfortune" after the meeting. Even though it passed the "examination" of the IEC, it was still unable to avoid being affected by the punishment of intermediary agencies.

"It is rare that intermediary agencies are suddenly suspended from their business qualification after a meeting of projects like this, but there is also a very small possibility that the regulatory authorities will" open up one side of the net ", otherwise the disciplinary effect of regulatory penalties will be greatly reduced."

Behind "implicating"

In the view of industry insiders, for Shanxi Huhua, which has difficulty in obtaining approval documents, it may face two choices: one is to wait six months for GF Securities to resume its qualification of recommendation and underwriting business, and then promote IPO; the other is to replace the sponsor and underwriting institution, but this method may also increase the uncertainty of its IPO process.

"In fact, Shanxi Huhua's bad luck is that its approval document did not come down before GF Securities was fined." A person close to Huhua in Shanxi said.

According to public information, Guangfa Securities has had five successful IPOs since this year. In addition to Shanxi Huhua, there are four issuers, namely Hangzhou jushun New Material Co., Ltd., Chongqing Baiya sanitary products Co., Ltd., Wuxi xinjieneng Co., Ltd., and Shanghai Liren Cosmetics Co., Ltd.

Among them, only two companies, Shanxi Huhua and Liren Lizhuang, have passed the meeting and have not yet obtained approval.

However, different from Huhua group, Li makeup seems to have been prepared for the punishment of GF Securities long before it was declared at the meeting. That is, it adopts the mode of joint sponsor and underwriting by several securities companies. Its joint lead underwriter is Guangfa Securities and Huatai united, and the Deputy lead underwriter is Guangzhou securities.

According to the reporter, after the information of GF Securities punishment is implemented, the relevant recommendation and listing work of beauty beauty makeup may be replaced by Huatai Securities.

In contrast, it seems that Shanxi Huhua is facing a dilemma.

"If there was another joint underwriting company at that time, there might be plan B, but Guangfa is the only institution in Huhua at present." Those close to Shanxi Huhua said frankly.

Meanwhile, a series of impacts brought about by the fine of GF Securities have also brought some new impacts on the IPO preparation of the issuer. Some people in the industry believe that in order to hedge the tail risks caused by the investigation and punishment of intermediaries, the issuer can consider choosing two or more underwriters to participate in the project.

"Because a lot of investment banking businesses are linked, if they are filed for investigation or even punished, they will have an impact on the projects in hand. As a precaution, the issuer can actually change the sponsor at a critical time through the mode of joint lead underwriting, so as to avoid the risk of being punished or investigated by the intermediary." "Of course, this kind of scheme may also face relatively high costs, but for some large-scale projects, it is still meaningful," said an investment bank of a securities firm in Shanghai

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