Chinachem Technology: Big Cross-Border, Is The Actual Controller Using The Opportunity To Use The Funds Of Listed Companies Or Really Break Through The Neck Technology?

The continuous hot photoresist concept in the secondary market attracts many capitals to enter the market.

Chinachem technology, whose main business is automotive airbag materials, can't help but "cross-border" this hot track, and continues to increase its size.

A few days ago, Chinachem Technology (603306. SH) announced that it plans to increase its subsidiary with its own funds and set up a joint venture to promote the industrial layout in the field of semiconductor materials.

Photoresist is one of the "bottlenecks" in China's semiconductor industry chain. Increasing the investment in domestic photoresist materials is in line with the needs of industrial development. However, the investment of Chinachem technology frequently leads to doubts from the market and supervision.

As soon as the above announcement was made, the Shanghai stock exchange immediately inquired whether it was suspected of arbitraging the funds of the listed company.

More doubts lie behind.

Since the transfer of control rights last year, Chinachem technology has made large cross-border investments for many times. Its main target of photoresist production, Xuzhou Bokang, has been questioned by many parties.

Investors can't help asking, what is the big investment of Chinachem technology in the field of photoresist?

Photoresist: borrowing a lot but not investing directly

According to the latest announcement, Chinachem technology plans to increase the capital of its wholly-owned subsidiary Chinachem (Dongyang) new materials Co., Ltd. (hereinafter referred to as Chinachem Dongyang) with its own funds, and Huamao Dongyang will increase the capital of the partnership Dongyang Kaiyang science and technology innovation and development partnership (limited partnership) (hereinafter referred to as Dongyang Kaiyang) with its own funds.

At the same time, Dongyang Kaiyang, together with Xuzhou Bokang information Chemicals Co., Ltd. (hereinafter referred to as Xuzhou Bokang), Dongyang Jintou Holding Group Co., Ltd. (hereinafter referred to as Dongyang Jintou) and the actual controller yuan Jinqing, jointly established a joint venture company Dongyang Xinhua Electronic Materials Co., Ltd. (hereinafter referred to as Dongyang Xinhua), and signed the joint venture agreement to engage in the R & D, production and sales of lithographic materials, Among them, Dongyang Kaiyang subscribed 280 million yuan.

Through a series of capital increase and cooperation, Chinachem has achieved its goal of expanding the field of photoresist materials.

The main business of Chinachem technology is automotive airbag materials, and its cross-border story starts with the completion of the transfer of control rights last year.

In October 2020, Chinachem technology announced that the registration procedures for the transfer of shares by Jinwei international agreement had been completed. Dongyang Huasheng held 15.9% of the company's shares and Ningbo Xindian held 9.1% of the shares, with a total shareholding ratio of 25%. Dongyang Huasheng became the controlling shareholder of the listed company by signing a voting power entrustment with Ningbo Xindian. Shanghai Huawei Investment Management Co., Ltd. (hereinafter referred to as "Huawei investment") is the executive partner of Dongyang Huasheng. Yuan Jinqing and Lin Hui, the main shareholders of Huawei investment, have become the actual controllers of the listed company.

In the process of the transfer of control right, there were also some Oolong incidents. Although Chinachem stressed in the announcement that Huawei's investment in this transaction has no relationship with Huawei Technology Co., Ltd. registered in Shenzhen and its sole shareholder, Huawei Investment Holding Co., Ltd., due to their similar names, the market once thought that Huawei, the technology leader, had taken over a listed company.

After Yuan Jinqing and Lin Hui succeeded in becoming the host, they started a series of capital operations.

In January 2021, Chinachem said that its industrial fund Dongyang Kaiyang signed the investment agreement and its subsidiary documents with Fu Zhiwei, Shanghai Bokang and Xuzhou Bokang on December 30, 2020. Chinachem technology, through Dongyang Kaiyang, has invested in Xuzhou Bokang and will enter the field of photoresist, a key semiconductor material.

The transaction is divided into three parts: first capital increase, equity conversion and additional investment right. Dongyang Kaiyang increased the capital to Xuzhou Bokang with 30 million yuan. After the capital increase, it held 1.186% equity of Xuzhou Bokang. At the same time, Dongyang Kaiyang provided Fu Zhiwei, the actual controller of Xuzhou Bokang, with a convertible loan of RMB 550 million, and had the right to purchase the equity of Xuzhou Bokang held by Fu Zhiwei, It has the right to transfer the equity of Xuzhou Bokang held by Fu Zhiwei with an investment of 220 million yuan.

It is not difficult to find that although the investment amount is as high as 800 million yuan, only 30 million yuan is used to increase capital and 550 million yuan is used to provide loans. At this time, it is only two months since the transfer of control right of the company.

The Shanghai stock exchange immediately issued a letter of inquiry, pointing out that this investment is not directly related to the company's existing business and belongs to cross industry investment. Moreover, the investment amount accounts for 99.38% of the company's monetary capital, and the company is required to explain the reasons and rationality of providing a large amount of loans but not directly investing in the target company, and whether it is a financial investment.

But this did not stop Chinachem's determination to increase the photoresist field.

In April this year, Chinachem announced that Dongyang Kaiyang will continue to promote its investment in Xuzhou Bokang according to relevant resolutions. It said that since its establishment, the company has been focusing on the field of textile materials for automobile airbag, and the business market is relatively stable, so the company will continue to actively expand new fields in the future.

In addition to the recent capital increase of 600 million yuan, Chinachem technology has invested 1.348 billion yuan in Dongyang Kaiyang through Chinachem Dongyang in 12 months, and the accumulated amount has exceeded 50% of the company's audited net assets in 2020.

The puzzle of related party transaction: huge investment flows to controlling shareholder investor

According to the investigation of 21st century economic reporter, there are many paradoxes in the process of equity transfer and capital increase of Chinachem technology.

The above-mentioned change of control right is rather strange. As the LP of Dongyang Huasheng, Yuan Jinqing and Lin Hui only invested 130 million yuan to control Dongyang Huasheng, which is 76% invested by Dongyang state owned Assets Investment Co., Ltd. (hereinafter referred to as Dongyang Guotou).

It is rare that dongyangguo has invested a large amount of money but has no control over the company. After that, the company's several large investments did not have a clear relationship with Dongyang state-owned assets.

The company announced on January 4 that it would provide a convertible loan of 550 million yuan to Fu Zhiwei. Coincidentally, Fu Zhiwei borrowed 250 million yuan from Dongyang Guotou in the early stage due to capital needs, which was provided for investment promotion in accordance with relevant cooperation agreements. Fu Zhiwei immediately used the money to repay Dongyang Guotou in advance (one year) after getting part of the investment loan of Chinachem technology.

In other words, the large amount of investment of listed companies will flow to the largest investor of controlling shareholders. The Shanghai Stock Exchange also issued a further inquiry, asking the company to verify and add whether the move constitutes a disguised capital occupation.

In addition, although Chinachem announced that this foreign investment does not constitute a related party transaction, according to public information, one of the partners of xingxiangyun, a shareholder of Xuzhou Bokang, is Jiang Chang. At the same time, one of the partners of Ningbo Xindian, the controlling shareholder of the company, acting in concert, is also Jiang Chang, with a partnership contribution ratio of 39.09%.

After being questioned by the Shanghai Stock Exchange, the company admitted that they were the same person, but he said that Jiang Chang, as a limited partner and financial investor, did not participate in the management and decision-making of Ningbo Xindian and xingxiangyun Shanghai, and had no contact with the Xuzhou Bokang project, so it did not form an associated relationship.

Back to the capital increase plan, one of the new investments is to set up a joint venture with Xuzhou Bokang, Dongyang Xinhua, which is located in Dongyang City and controlled by Dongyang Financial Bureau.

In this regard, a market person close to the regulation told the 21st century economic reporter, "as the base of Xuzhou Bokang company in the north of Jiangsu Province, why did Xuzhou Bokang go all the way to invest in Dongyang? Whether all this was planned in the equity transfer and whether it was a package plan? Although the company constantly denied, it was difficult to convince people."

Another thing that makes the market suspicious is that Dongyang Kaiyang's right to nominate directors of Dongyang Xinhua does not seem to be equivalent to the amount of shares it holds.

Chinachem will hold 40% of dongyangxin Huazhong, but the company has the right to nominate two of its five directors, the same number of directors as Xuzhou Bokang, which holds only 22.43%, according to the announcement. Similarly, in the early stage, it invested 800 million yuan in Xuzhou Bokang, holding 26.73% of the shares, but only obtained the nomination right of one of the eight directors.

"The shareholding ratio is not equal to the director's nomination right, and it is not equal to the director's nomination right obtained by other shareholders who are bidding. In the announcement, the company also admits that it will not control the bid, and it will only be used as a long-term equity investment. In this way, it means that the company will hand over its own money to others and dispose of it at the disposal of others. All this is only due to the company's pursuit of the concept of" photoresist. " Said the market person.

Doubt about the gold content of investment target: technological breakthrough or boasting?

Put aside the above transaction level doubts, what is the gold content of Chinachem's cross-border investment?

At present, the photoresist production part is mainly responsible by Xuzhou Bokang. The company was established on March 25, 2010 in the chemical industry gathering area of Pizhou Economic Development Zone, Jiangsu Province, mainly engaged in the research and development, production and sales of pharmaceutical intermediates and photolithography materials. From 2018 to 2020, the company's main revenue comes from pharmaceutical intermediates and photolithography materials, of which pharmaceutical intermediates account for 32.95% in 2020.

According to the announcement at the beginning of the year, Xuzhou Bokang new production base is in the construction stage, and some production lines have begun to be debugged, and the formal production time can not be determined. After the new production base is completed and put into operation, Xuzhou Bokang will have a total production capacity of 1100t lithography materials and 10000t electronic grade solvent.

However, judging from the recent response of Chinachem technology on the interactive platform, the revenue share of photoresist business is still very small. From January to June 2021, the photoresist business income of Xuzhou Bokang was 4.3986 million yuan, accounting for 4.53% of the current operating income of Xuzhou Bokang.

The 21st century economic reporter learned from people close to Chinachem technology that "at present, the company's photoresist business is still in the stage of customer introduction."

It is worth noting that the main business scope and profitability of the company invested by Chinachem technology have been questioned by the market.

The operating revenue of Xuzhou Bokang from 2018 to the first three quarters of 2020 is 203 million yuan, 62.1664 million yuan and 119 million yuan respectively; The net profits were 15.2382 million yuan, - 26.61 million yuan and 133 million yuan respectively.

In the view of market participants, the net profit income significantly exceeds that of the main business, indicating that the company's profit mainly comes from non recurring profit and loss income, which may include government subsidies, asset disposal and other non main business income.

The recent Reply of Chinachem technology also shows that Xuzhou Bokang new factory has just started trial production on June 25, 2021, with a period of three months. The net profit in the first half of 2021 is negative, and there is significant uncertainty that the three-year performance commitment cannot be fulfilled.

Although photoresist is one of the key materials in semiconductor field, there are different opinions on photoresist monomer produced by Xuzhou Bokang.

"Many companies need to purchase photoresist raw materials from overseas, while Xuzhou Bokang's photoresist resin (photoresist monomer) can be controlled independently and has cost advantages," said a person close to Chinachem technology

The market participants close to the regulation believe that "the invested companies mainly produce photoresist monomers, pharmaceutical intermediates and other chemicals. The so-called photoresist monomer is just the most upstream chemical raw material of photoresist. Although it is a few words different, it is far from the technical content of photoresist itself."

As for Dongyang Xinhua, which is newly established by Chinachem, Dongyang Kaiyang is mainly responsible for assisting in obtaining suitable land, striving for industrial policies, obtaining factory buildings and production lines. Depending on the situation of its establishment, Dongyang Kaiyang should assist in obtaining funds needed for production and operation; Xuzhou Bokang is responsible for providing technology, manpower and resources, authorizing the use of relevant production process flow chart, product parameters, intellectual property rights, technical know-how and other production essential elements, and overall positioning of target products.

In this regard, a senior market person pointed out that "Dongyang Xinhua's personnel, products and production lines have not been set up, only relying on Xuzhou KangBo for technical guidance and training, whether it can produce high-quality products still needs to be a question mark. We should be careful to prevent the listed companies from becoming the actual controller operation platform and causing damage."

Back to the secondary market, there is no doubt that Chinachem's large investment in the field of photoresist has successfully attracted the attention of investors. Since this year, the company's share price has soared. From less than 23 yuan at the beginning of the year, it once rose to more than 50 yuan. The latest stock price was 45.48 yuan, with a total market value of nearly 14 billion yuan.

It needs to be pointed out that in the process of the soaring share price of Chinachem technology, the shareholder reduction is also in progress. Zhang Chuquan, director and general manager of the company, reduced his holding by 1% through block trading on September 3 and 0.76% on September 10 this year. The reduction plan has not yet been completed.

There are also plans for senior executives to reduce their holdings. Chen Shaolin, deputy general manager, Cao Yaofeng, and Cui Guangsan, deputy general manager, will reduce their holdings after September 22 due to their personal capital needs.

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