On the evening of September 25th, another IPO on the STAR Market was terminated, this time for Shenzhen-based He Mei Jingyi.
The website of the Shanghai Stock Exchange shows that due to the withdrawal of the application for listing by Shenzhen He Mei Jingyi Semiconductor Technology Co., Ltd. (hereinafter referred to as He Mei Jingyi) and its sponsor, Kaiyuan Securities, the Shanghai Stock Exchange has terminated its review of the listing application in accordance with relevant regulations.
He Mei Jingyi submitted its application for listing on December 27, 2023, and received the first round of inquiries on January 25th of this year. After half a year, the company responded to the inquiries on August 2nd. However, just over a month later, the company suddenly took the initiative to withdraw its application for listing.
He Mei Jingyi's main business is the packaging substrate for memory chips. The prospectus shows that the company's financial performance during the reporting period was very average, with a continuous and significant decline in gross margin, small net profit scale, and large fluctuations. This is the result after enjoying a considerable proportion of government subsidies and tax benefits.
He Mei Jingyi's original shareholders made a bet with Shenzhen Venture Investment and other six institutions on the listing. With this IPO failure, the buyback obligations of the company's original shareholders may be reinstated.
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Significant decline in gross margin
Small net profit scale, large fluctuations
The prospectus shows that since its establishment in 2007, He Mei Jingyi has been focusing on the field of IC packaging substrates, engaging in the research and development, production, and sales of IC packaging substrates. The company's main products are packaging substrates for memory chips, and it also produces a small amount of non-memory chip packaging substrates. The company claims to be "one of the few domestic manufacturers who have fully mastered the large-scale mass production technology of independently controllable IC packaging substrates."
In the first round of inquiries, the Shanghai Stock Exchange asked He Mei Jingyi to organize the "Business and Technology" section, to describe the essence of the business and market position objectively and accurately, and to improve the disclosure of information on industry conditions, market competition patterns, and core technology based on the content of the inquiry response. The Shanghai Stock Exchange specifically mentioned "to supplement the disclosure of the technical difficulties, breakthroughs, and specific manifestations of advanced technology in the R&D, production, and other links of IC packaging substrates, and whether the relevant technology belongs to mature or common technology in the industry."
Financially, during the reporting period (from 2020 to 2022, and the first half of 2023), He Mei Jingyi's operating income was 189 million yuan, 254 million yuan, 312 million yuan, and 162 million yuan, respectively, maintaining stable growth. However, the company's net profit is low and has large fluctuations, with 36.87 million yuan, 19.24 million yuan, 29.32 million yuan, and 15.21 million yuan for each period of the reporting period.Behind the low and highly volatile profits of HeMei Precision Art, lies the company's gross profit margin that has been continuously and significantly declining. From 2020 to 2022, and in the first half of 2023, the gross profit margin of the company's main business was 35.12%, 24.34%, 20.37%, and 20.78%, respectively. The company stated that the gross profit margin is mainly influenced by factors such as market supply and demand, the bargaining power of suppliers and customers, and the depreciation of fixed assets.
In the inquiry, the Shanghai Stock Exchange (SSE) requires the company to make a full risk disclosure and significant matters warning regarding the decline in gross profit margin.
Some betting clauses may be reinstated
According to the application materials, HeMei Precision Art or its original shareholders signed special investment terms with 24 investors. Before the application, all parties signed supplementary agreements to terminate the special investment terms.
Among them, the supplementary agreements with Shenzhen Venture Capital, Talent Fund, Hongfu Xinghe, Gaoxin Investment, Gaoxin Investment Yihua, and Teda Shenglin stipulate that the joint guarantee responsibility undertaken by HeMei Precision Art for the original shareholders' repurchase obligation is completely terminated and invalid from the date of signing of the agreement, and the repurchase obligation undertaken by the original shareholders is terminated from the date of acceptance of the company's listing application materials. The effectiveness will be restored if the listing is not successful.
With the failure of this IPO, it means that the share repurchase terms of the original shareholders of HeMei Precision Art may be reinstated.
The prospectus shows that the controlling shareholder and actual controller of HeMei Precision Art is Yue Changle, who directly holds 48.9676 million shares of the company, accounting for 27.59% of the company's total share capital. In addition, Yue Changle, Zhu Shengfeng (shareholding ratio 5.39%), Ju Yongming (shareholding ratio 4.04%), and He Fukuan (shareholding ratio 2.96%) signed a consistent action agreement. According to the agreement, Yue Changle controls a total of 39.98% of the voting rights before the company's issuance.