What Is The Regulatory Logic Behind The Increase Of Yungao'S IPO To 4 In The Year?

Even with the approval of green channel for IPO examination in Tibet, the IPO application of Tibet Yun hi tech energy Co., Ltd. (hereinafter referred to as "Yungao stock") has not been approved.

In the 22nd issuance review meeting in 2021, among the three listed companies, Yungao's IPO application on the main board was rejected by the IEC, becoming the fourth case in 2021 to be rejected.

According to the prospectus, Yungao is a leading clean energy supplier in Tibet, committed to the development, investment, construction and operation of solar photovoltaic power stations. The sponsor of this issuance is Changjiang Securities, which plans to issue no more than 51.25 million shares and raise 411 million yuan, of which 186 million yuan is used to purchase the daily 100% equity of Qushui, 74.8068 million yuan is used for 32mwh mechanical energy storage project, and 150 million yuan is used to repay bank loans.

In April 2019, Yungao submitted its IPO application to the CSRC, and released its feedback in September of that year. The meeting was held on February 25, 2021. However, in the nearly two years of queuing up for audit, the outside world has been constantly questioning Yungao: "relying on a single customer" and "revenue mainly depends on subsidies". In addition, one year before the IPO application, the company's revenue was just over 100 million yuan, and the company had no more than 30 employees, which was nicknamed "the most pocket sized IPO enterprise" by the outside world.

In addition, recently, the industry generally believes that regulation has clearly released the signal of IPO tightening. The reporter noted that since 2021, the number of IPO companies, including Yungao shares, has quietly increased to four, and the focus of regulatory attention may be found from the reasons why they were rejected.

The truth of Yungao's IPO failure

Looking at A-share IPO companies, high customer concentration is a quite common phenomenon. What's more, the top five customers' concentration ratio is as high as 90%, but it does not absolutely constitute an issue obstacle.

However, such as Yun Gao shares only one customer is really rare.

Yungao's main business is centralized photovoltaic power generation, and its main products are electric power, which are all concentrated in Tibet. According to the prospectus, the power generated by the company's existing power stations is supplied to Tibet power grid. From 2016 to the end of June 2019, the company's revenue from Tibet power grid accounted for 100% of the total revenue of the same period.

The regulatory authorities have also paid attention to the above problems. In the previous feedback, the company was required to explain whether there is a possibility that the supplier list could not be removed by Tibet power grid due to its failure to meet the above conditions in combination with the provisions of Tibet power grid on the screening conditions of upstream power generation and power sales enterprises and the agreement on the qualification and conditions of the power seller in the relevant power purchase and sales contract, so as to explain whether there is a possibility that the supplier list can not meet the above conditions continuously, thus leading to sustainable profitability in the future Force faces significant risk of uncertainty.

Even if the problem of a single customer can be justified, but in terms of policy and subsidy risk, Yun Gao failed to convince the regulatory authorities.

At the meeting, the regulatory authorities raised four major questions: the impact of recent policy changes in the photovoltaic power generation industry on the company's performance, the high proportion of renewable energy price subsidies in the main business income, the potential impact of limited power operation due to power grid consumption, and accounting treatment related issues.

In recent years, the photovoltaic sector in the capital market is booming, behind which are the changes in the photovoltaic industry policies, including abandoning light and limiting electricity, subsidizing and so on. This is obviously disadvantageous to Yungao shares, and subsidies have a great impact on the company's revenue.

According to the prospectus, from 2016 to 2018 and the first half of 2019, Yungao achieved revenue of 32 million yuan, 85 million yuan, 100 million yuan and 48 million yuan respectively. Although the company's revenue has increased year by year, its revenue relies on new energy subsidies. During the reporting period, Yungao's new energy subsidy income was 25 million yuan, 67 million yuan, 85 million yuan and 43 million yuan respectively, accounting for 78%, 79%, 85% and 90% of the current revenue. In the same period, the net profits of Yungao were 17.31 million yuan, 41.11 million yuan, 57.91 million yuan and 23.67 million yuan respectively.

A senior investment banker in Shanghai pointed out to reporters, "Yungao's IPO is not surprising to the market. The structure of its customers is extremely single. Its revenue mainly depends on government subsidies. The supervision pays more attention to the ability of the enterprise to continue its operation."

What's more, Yungao shares are registered in Tibet and enjoy the "green channel" preferential policies opened up by the CSRC. The reporter learned that the so-called "green channel" refers to the application of the policy of "immediate report, examination and issuance" when applying for IPO, while the audit time of Yungao shares has been nearly two years.

"Although China Securities Regulatory Commission (CSRC) has preferential policy support for IPO in poverty-stricken areas, the audit process of Yungao shares has not been simplified in terms of time and process, and the conditions for IPO and listing have not been reduced. This also more shows that Yun Gao shares have a hard injury. " The investment bank said.

For the arrangement after the IPO was rejected, on March 1, the reporter repeatedly called Yungao shares, but the phone call was not answered.

Regulatory logic behind IPO

Recently, the withdrawal of IPO applications on the science and technology innovation board has been frequent, which has aroused the market's attention to the pace of IPO review. The official said recently that since this year, IPO has maintained its normal issuance, neither tightening nor relaxing.

However, in the eyes of market participants, whether Yungao shares IPO was rejected, in a sense, revealed the atmosphere of strict entry control in IPO audit.

Yungao is the first company to be rejected after the Spring Festival in 2021. The cases that were rejected before were Suda shares, JiuHeng barcode and Canxing culture. The focus of regulatory attention may be found in the four cases that have been rejected.

Zhengzhou Suda shares, whose IPO of gem is not approved, is supervised. The primary concern is the issue of actual control right. Secondly, there are many related party transactions between the company and Zhengmei Machinery Co., Ltd., and there are overlaps between customers and suppliers. Therefore, the regulatory inquires whether the relevant transactions are fair or not.

JiuHeng barcode, which applied for listing on the main board, was also concerned about the amount of money exchanged with suppliers and customers, and was asked whether there was interest transmission. Secondly, the regulatory authorities paid attention to the company's large accounts receivable and overdue amount, large fluctuation of net cash flow and performance gambling.

Canxing culture is a star company and used to be the "king of variety show" in the past, but its IPO application on GEM was still rejected in February. The primary concern of its supervision is the issue of control right, the root of which is that the equity setting is too complex. In the history of Canxing culture, there were situations of building and dismantling red chip structure. Shenzhen Stock Exchange asked the company to explain the reason why Tian Ming, one of the co controllers, was still holding shares through the multi-level limited partnership structure when the red chip structure had been dismantled. In addition, Canxing culture is also concerned about goodwill, pending litigation and other issues.

From the above-mentioned cases, there are still many similarities between the enterprises that have been rejected or not. The most important concern of supervision is the ownership of the IPO company's control right and the compliance with suppliers and customers.

"In fact, the above questions ultimately point to whether the company's operation is stable and sustainable." Said the investment bank.

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