IPO Observations | Receivables High, Some Assets from Listed Companies, Doubts on Double Lion's IPO
IPOs that repackage old wine as new have been repeatedly seen in the market. This time, it's Double Lion Group Co., Ltd. (hereinafter referred to as "Double Lion") with its IPO. What is the significance of this IPO?
On November 3rd, Double Lion, a battery company, updated its IPO review status on the Shenzhen Stock Exchange and responded to the first round of inquiries from the exchange. The company entered the second round of inquiries on November 23rd.
This IPO aims to issue no more than 119,423,000 shares, with a total fundraising amount of approximately ¥15.75 billion, with CITIC Securities as the sponsor. The funds raised will be used for the production of 2.5 GWh lithium-ion batteries, research and development center construction projects, and supplementary working capital.
In Double Lion's response to the first round of inquiries, there were 19 questions related to its business, industry development, and relevant information disclosure. The company needs to focus on its assets that may come from listed companies, major related parties, accounts receivable, and accounts payable.
Notably, some of Double Lion's assets may come from listed companies that have gone private, which could raise concerns among investors.
Some Assets May Come from "Delisted Companies"The prospectus shows that Double Lion's main business is the research and development, production, and sales of battery products, with major products including lead-acid batteries (including systems) and lithium-ion batteries (including systems). The company mainly applies its products to communication base stations, data centers, household power storage, and other fields. It ranks first in China among companies in the global communication base station power storage market.
From Double Lion's response to the inquiry, it is clear that there may be a possibility of re-listing some assets.
Double Lion's "Reply to Inquiry" disclosed on page 139 that: "After the company was established in December 2011, it successively acquired battery business assets from Yang Shengji and his son Yang Rui, as well as machinery equipment and fixed assets from Jiangsu Double Lion, Futi Technology, and Nan Research Institute. Some of these assets may have formed during the period when Yangsheng controlled the company." Therefore, some of Double Lion's assets may come from listed companies that have gone private.
It is also worth noting that some of Double Lion's board members and senior management personnel once worked at Longyuan Real Estate or its subsidiaries.
Notably, Double Lion did not fully disclose the acquisition of these assets in its prospectus.
Except for these related transactions, the company's sales of lead-containing waste and spent batteries to Tianpeng Refining also received attention.
Similarly, the company's receivables turnover ratio has always been relatively low. In the same period, the company's accounts receivable turnover ratio was 2.3, 2.1, and 2.72, respectively, which is lower than that of comparable companies in the industry.