IPO Observation | Equity Concentration Rate Over 90%, Asset-to-Equity Ratio Less Than 20%: Reasonability and Necessity of Tianfu Long IPO Uncertain

IPO is an important means of corporate financing, but it's not the only one. The reasonability and necessity are the key factors for a company to go public.

Recently, Jiangsu Tianfu Long Group Co., Ltd. (hereinafter referred to as "Tianfu Long") updated its IPO application review dynamics on the Shanghai Stock Exchange, completing the financial data update according to the Shanghai Securities Exchange's rules for reviewing IPO applications, and conducted a first-round inquiry.

According to reports, Tianfu Long submitted its prospectus for the initial public offering (IPO) on June 9, 2023, with plans to issue no more than 1.2 billion shares on the Shanghai Stock Exchange's main board, raising funds of approximately 10.9 billion yuan. The funds raised will be used for projects such as the production and sales of low-melting-point polyester fiber, research and development center construction, and replenishing working capital.

Or the risk of actual control person's improper control

Data shows that Tianfu Long was established on May 11, 2009, with its main business being the research, production, and sales of differentiated polyester fibers. The company has expanded its product line to include composite fibers and new materials, covering various scenarios such as commerce, transportation, home furnishing, health care, and clothing.

Tianfu Long's equity concentration rate is high, with actual control persons holding a significant proportion of the shares. For example, Zhu Daqing holds 61.81% of the company's shares, while Chen Hui holds 17.49%. The actual control persons also have a joint action agreement, which allows them to control the company's voting rights.

Notably, Tianfu Long's board of directors consists of nine members, including the chairman Zhu Daqing and his family members. This creates a typical situation where family members dominate the company's decision-making process.

Sugar cane annual decline in profit margin

In recent years, Tianfu Long has experienced a decline in its gross profit margin due to the rise in raw material prices and intensified competition in the industry.

Against this backdrop, Tianfu Long's IPO application has raised concerns about the reasonability and necessity of its listing.