IPO Observation: Uneven Financial Control and Dependence on Foreign Customers|IPO Observation
Guangdong Optoelectronic Materials Co., Ltd. (hereinafter referred to as "Optoelectronic Materials") is currently in the third round of review for its IPO process.
According to understanding, Optoelectronic Materials focuses on the development, production, and sales of special engineering plastics such as PPSU, modified PPSU, PSU, modified PSU, PES, modified PES, and bisphenol S, as well as general engineering plastics like modified PA and PP. The company also provides various products.
Latest financial data shows that in the first half of 2023, Optoelectronic Materials' operating income and net profit both performed well. The operating income reached RMB 2.58 billion, with a net profit of RMB 0.52 billion, and the annual net profit is expected to exceed RMB 1 billion.
According to previous agreements, if Optoelectronic Materials fails to successfully complete its first public offering of shares by December 31, 2024, it will trigger the repurchase clause. Although the relevant agreement has been terminated, Optoelectronic Materials still needs to face many challenges to achieve listing before the end of this year....
Non-recurring gains and losses "normalization",
as a means for actual controllers to write off their losses in maternal care!
In 2020, during the COVID-19 pandemic, Optoelectronic Materials began producing melt-blown cloth and masks through its wholly-owned subsidiary Guangdong Goldin Biotechnology Co., Ltd. (hereinafter referred to as "Goldin Biotech"). Prior to that, Optoelectronic Materials and its subsidiaries had limited involvement in the medical equipment industry.
According to the prospectus, in 2022, Optoelectronic Materials' melt-blown cloth production capacity utilization rate was only 21.53%, while that of bisphenol S was as low as 4.13%. In 2021, Optoelectronic Materials recorded an impairment loss of RMB 1397.75 million for its fixed assets related to pandemic prevention; in 2020 and 2021, it recorded a write-down of RMB 57.80 million and RMB 112.69 million, respectively.
What's worth noting is that melt-blown cloth and masks are businesses newly added by Optoelectronic Materials in 2020. Whether it's product-related or performance-related, this business does not have sustained profitability. However, Optoelectronic Materials has included the profits from these pandemic prevention products into its recurring gains and losses, which raises concerns about non-recurring gains and losses "normalization".
Financial control and irregularities,
lending to actual controllers and related parties!
In terms of financial control, Optoelectronic Materials has issues with lending large amounts of money to related parties and actual controllers. In 2019 and 2020, the company lent RMB 1.13 billion and RMB 750 million, respectively.
...and so on.