Joyo Smart's IPO Observations: After 7 Months, Joyo Smart's IPO Application Was Stopped Again Due to Outstanding Receivables and Overdue Clients Becoming Enforcement Targets, with Over CNY 2 Million in Frozen Funds

As of March this year, Joyo Smart Equipment Co., Ltd. (hereinafter referred to as Joyo Smart) has not yet submitted its registration despite having "passed" the examination. The company's financial data has expired and is currently in a state of being "stopped" for issuance of an IPO application. Although it has "passed" the examination, Joyo Smart still faces challenges including rapid revenue growth accompanied by outstanding receivables and the problem of overdue clients becoming enforcement targets. Behind this is the risk that these overdue receivables may become bad debts, affecting future operations.

7 Months After "Passing" the Examination, Still No Registration

Currently in a State of Being "Stopped" for IPO Application, with Three Previous Instances of being "Stopped"

In accordance with the Shenzhen Stock Exchange's official website, on March 17th this year, the Shenzhen Securities Trading Committee passed Joyo Smart's IPO application.

Behind the examination process, two major issues have become the focus: financial internal control regulations and sales service commercial rules.

Regarding financial internal control regulations, the SEC meeting pointed out that according to the issuer's reported materials, as of 2019 and 2020, the remaining balance of other receivables at the end of the period was RMB 3,069.00 million and RMB 1,763.98 million respectively, which were formed by actual controller Wang Haiyan's personal credit transactions.

The SEC meeting required explanations for the specific reasons behind these transactions, whether there were financing occupation situations; (2) whether there were financing external circulation formation sales revenue and shouldering costs fee situations; (3) whether internal control systems had been improved and effectively implemented.

Despite having "passed" the examination, Joyo Smart has not yet submitted its registration and is still in a state of being "stopped".

The latest news shows that as of September 30th this year, Joyo Smart Equipment Co., Ltd. was stopped from issuing an IPO application due to the expiration of financial data recorded in the IPO application file.

Outstanding Receivables Balance Increased by 1.40 Times Over Three Years

Overdue Outstanding Receivables Accumulated Over CNY 2 Billion, with Some Clients Becoming Enforcement Targets

Despite Joyo Smart having "passed" the examination, its recent revenue growth accompanied by outstanding receivables has raised concerns about potential bad debts. Meanwhile, some clients have become overdue and are at risk of becoming enforcement targets.

According to Joyo Smart's response to the SEC meeting, as of 2022 year-end, the company's outstanding receivables balance increased by 1.40 times over three years, mainly due to changes in macroeconomic conditions and industry development, resulting in delayed payments from customers and potential bad debts.

As of September 30th this year, Joyo Smart had an outstanding receivables balance of CNY 51,271.53 million, with some clients becoming overdue and at risk of becoming enforcement targets.