IPO Observation | Prior Dividend of 4.5 billion, Post-IPO Supplementary Cash Injection of 7 billion, Anhui Tangxing Equipment Listed Reasonable
On one hand, there was a dividend payment to original shareholders, and on the other hand, IPO fundraising to supplement working capital. Anhui Tangxing Equipment Technology Co., Ltd. (hereinafter referred to as "Tangxing Equipment") took the initiative to clarify that the operation was in line with the background of cash dividend payments and continuous investment activities during the reporting period.
In recent days, Tangxing Equipment disclosed its first-round inquiry response, and the Shanghai Stock Exchange paid attention not only to dividend payment but also to "analysis of changes in gross profit margin and deviation from industry trends", "significant increase in accounts receivable", etc.
Why Dividend Payment Again?
Data shows that Tangxing Equipment was established on January 26, 2005, located in Huaibei City, Anhui Province. The company is a national high-tech enterprise specializing in the development, design, manufacture, sale, leasing, and service of non-excavation comprehensive equipment. The actual controller is Tang Sushu, Tang Xiuming, and Ma Yunshu, who collectively control 95.94% of the company's shareholding rights through direct and indirect means.
The company's main products are top-mounted machine sets, widely used in urban construction, city rail transportation, underground comprehensive pipeline networks, oil and gas pipeline networks, and tunnel excavation projects, etc.
This time, Tangxing Equipment plans to list on the Shenzhen Stock Exchange's ChiNext board, raising a total of 4.26 billion yuan, with China Everbright Securities Co., Ltd. (000728) as the sponsor.
7 billion yuan will be used to supplement working capital, which has received attention from the Shanghai Stock Exchange because Tangxing Equipment had previously distributed cash dividends of 3.5 billion yuan and 1.05 billion yuan in 2020 and 2022, respectively.
Not only that, but during the reporting period, Tangxing Equipment also continuously purchased some trading financial assets and other investment products, which has led to confusion among investors - if working capital is insufficient, why is there still money for dividend payment and purchasing investment products?
The Shanghai Stock Exchange requires Tangxing Equipment to "fully explain the necessity and appropriateness of cash dividend payments, as well as their impact on financial statements and shareholders' interests, and provide an explanation of the use of funds after cash dividend payments", and "combine with the background of cash dividend payments and continuous investment activities to further analyze the rationality and necessity of the supplementary working capital project".
In its first-round response, Tangxing Equipment stated that cash dividend payments reflect shareholders' reasonable demands, which can unify company development, shareholder returns, and employee incentives, allowing management and employees to share in the benefits of company operations. The cash dividend payment does not have a significant impact on existing financial statements, making it rational and appropriate.
Regarding the purchase of investment products, Tangxing Equipment stated that all purchased products are low-risk, short-term bank investment products. "Cash management will not affect the health of operational funds, which meets the interests of all shareholders and is reasonable."
Therefore, Tangxing Equipment believes that part of the fundraising will be used to supplement working capital, which can meet the company's continuous technology research and development needs as well as capacity expansion, enhancing its profitability and risk resistance capabilities, making it rational and necessary.
Gross Profit Margin Fluctuation Deviates from Industry Trend
From 2020 to 2022, Tangxing Equipment achieved operating revenues of 2.31 billion yuan, 2.78 billion yuan, and 3.23 billion yuan, respectively, with net profit attributable to shareholders of 6.4159 million yuan, 5.87162 million yuan, and 6.69552 million yuan, respectively.
In the first half of 2023, Tangxing Equipment achieved operating revenues of 1.72 billion yuan and net profit attributable to shareholders of 3256.36 million yuan.
However, from the perspective of gross profit margin, Tangxing Equipment's gross profit margins in 2020 to 2022 and the first half of 2023 were 44.98%, 40.22%, 38.60%, and 41.29%, respectively, with significant fluctuations.
The Shanghai Stock Exchange requires Tangxing Equipment to "substantially analyze the reasons for changes in gross profit margins and the differences in growth rates between product categories", as well as "analyze the rationality of gross profit margins deviating from industry trends".
In its first-round response, Tangxing Equipment stated that different product categories have varying gross profit margins due to factors such as material procurement prices, sales structures, market competition, and other reasons, making it reasonable.
As for the deviation from industry trend, Tangxing Equipment's explanation is that "the company belongs to the top-mounted machine set category, which has no comparable listed companies. Due to differences in product categories, pricing strategies, application scenarios, business types, and sales structures, etc., the company's gross profit margins are higher than those of comparable companies, and the fluctuation trend deviates from industry trends, making it reasonable.".