IPO Observation: Meike Optoelectronics Sees Second Attempt at Listing on Sci-Tech Board, Business Revenue and Real Estate Strongly Correlated, Attention Focuses on Distributor Identity

Mei's Group (000333) directly and indirectly holds a total of 56.70% stake in Meike Optoelectronics Co., Ltd. (hereinafter referred to as "Meike Optoelectronics"), which has twice attempted to list on the Sci-Tech Board, with the first attempt being halted due to financial data update issues.

Currently, as we enter the last month of 2023, Meike Optoelectronics has yet to update its semi-annual report and is still in a halted state. So, what kind of company is Meike Optoelectronics that is in this "halted" state?

The Road to Listing

Meike Optoelectronics primarily engages in the design, research and development, production, and sales of lighting and smart front-end products. In the smart front-end field, Meike Optoelectronics' main products include intelligent door locks, intelligent panels, and intelligent gateways.

In 2021, Meike Optoelectronics first attempted to list on the Sci-Tech Board, with its IPO application being accepted in June. Subsequently, Meike Optoelectronics underwent three rounds of inquiries and was still unable to pass the review.

In July 2022, Meike Optoelectronics voluntarily withdrew its initial public offering and applied for a listing on the Sci-Tech Board. Its first IPO journey thus came to an end.

On April 19, 2023, Meike Optoelectronics saw its second attempt at listing on the Sci-Tech Board approved, followed by the first round of inquiries.

In September 2023, Meike Optoelectronics halted its issuance and review process due to delayed financial data updates. At this point, Meike Optoelectronics' second attempt at listing on the Sci-Tech Board was once again suspended.

The "Hidden" Identity of Distributors

According to the prospectus, during the 2020-2022 period, Meike Optoelectronics' main business revenue was RMB 7.83 billion, RMB 9.22 billion, and RMB 9.10 billion, respectively. In terms of sales model, Meike Optoelectronics primarily adopts a distribution-based approach, with direct sales as supplementary, covering both online and offline channels.

During the 2020-2022 period, Honroy Electric Co., Ltd. (hereinafter referred to as "Honroy") was Meike Optoelectronics' most important distributor, ranking first, second, and third in terms of revenue, respectively.

Meike Optoelectronics sold products worth RMB 1.5 billion, RMB 1.61 billion, and RMB 0.92 billion to Honroy, accounting for 19.08%, 17.34%, and 10.14% of Meike Optoelectronics' respective main business revenue.

According to Tianyancha data, Honroy's actual controller is Huang Yueming, with a shareholding ratio of 100%. Prior to November 11, 2023, Honroy's actual controller was indeed He Weiming.

Tianyancha data shows that when Honroy was first established, He Weiming held an 80% stake, while Huang Yueming held a 20% stake; in February 2022, Honroy registered an increase of RMB 600,000 in its capital, with He Weiming still holding an 80% stake and Huang Yueming holding a 20% stake. As of November 11, 2023, He Weiming transferred his entire stake to Huang Yueming.

It is worth noting that He Weiming served as the chairman and legal representative of Zhilian Home Appliances from May 2016 to June 2016. Zhilian Home Appliances is a related party of Meike Optoelectronics.

The Correlation with Real Estate

Meike Optoelectronics primarily focuses on lighting and smart front-end products, which makes it closely connected to the real estate industry.

In the prospectus, Meike Optoelectronics describes its relationship with real estate as follows: "During the reporting period, although the company established strategic cooperation and actual supply contracts with a large number of terminal real estate customers, most of them are still in the early stages of cooperation, with relatively small transaction amounts. The majority of terminal real estate customers are concentrated."

Through its distributors and related parties, Meike Optoelectronics has access to a significant portion of clients from the real estate industry, including Mei's Real Estate and Evergrande Property.

The prospectus shows that during the reporting period, Meike Optoelectronics' main business revenue included actual sales to Mei's Real Estate worth RMB 1.31 billion, RMB 1.32 billion, and RMB 1.29 billion, accounting for 16.78%, 14.30%, and 14.21% of the corresponding periods' main business revenue, respectively; actual sales to Evergrande Property worth RMB 1.59 billion, RMB 1.60 billion, and RMB 9229.31 million, accounting for 20.26%, 17.30%, and 10.15% of the corresponding periods' main business revenue, respectively.

As early as 2020, these two companies contributed nearly 40% of Meike Optoelectronics' revenue.

In 2022, Meike Optoelectronics' bath products saw a growth rate decrease by 46.65 percentage points compared to the previous year, with an absolute value decrease of RMB 5206.34 million, primarily due to the decline in offline engineering sales resulting from the downswing in the real estate industry.

It is worth noting that Meike Optoelectronics' overall product market share has remained stable. According to the prospectus, since the offline channel cannot obtain accurate market data, Meike Optoelectronics uses the annual sales rankings and sales proportion of various platforms such as Tmall and JD.com to reflect its brand's market share situation.

During the 2020-2022 period, Meike Optoelectronics' lighting products had a market share of 2.42%, 2.25%, and 2.28%, respectively, ranking fifth, seventh, and sixth in the market; Meike Optoelectronics' smart front-end products had a market share of 0.46%, 0.30%, and 0.58%, respectively, ranking fifteenth, seventeenth, and fourteenth in the market.