Rongpeng Shares' Second Round of Inquiry Response Delayed, Capacity Disclosure Suspect

 Authorized by "Chinese Merchandise"

Author: Zheng Yongkang

Editor: Zhang Jiamiao

July 9, Rongpeng Shares announced that the company's inquiry response to the second round of auditing and examination had been delayed for another 20 working days. The response will be submitted by August 6. This is the second time the company has applied for an extension since receiving the second-round audit inquiry on May 13.

Foreign Sales Situation Being Inquired

Rongpeng Shares primarily engages in the research and development, production, and sales of pneumatic tools. The company's products cover various product series, including pneumatic riveting guns, pneumatic spraying guns, pneumatic blowing machines, and painting machines.

From 2021 to 2024, Rongpeng Shares achieved revenues of 55,303.93 million yuan, 48,681.51 million yuan, 42,848.68 million yuan, and 51,254.22 million yuan, respectively, with net profits attributable to the parent company of 1,042.95 million yuan, 5,192.85 million yuan, 4,336.05 million yuan, and 5,403.26 million yuan, respectively.

The company's revenue declined from 2021 to 2023 due to the impact of overseas supply chain disruptions in 2021. As a result, downstream customers increased their inventory levels to avoid stock shortages, leading to a significant increase in orders for Rongpeng Shares. However, in 2024, foreign clients largely cleared their inventory and returned to normal purchasing patterns, resulting in an improvement in the company's performance.

According to the prospectus, Rongpeng Shares has established long-term and good cooperative relationships with international well-known tool companies such as Harbor Freight Tools (HFT), TTI (Jianshi Industry), Stanley Black & Decker (002588), Einhell (Anhai), and more than 100 countries and regions.

From 2021 to 2024, Rongpeng Shares' foreign sales revenue was 35,438.98 million yuan, 34,978.37 million yuan, 30,206.95 million yuan, and 34,894.71 million yuan, respectively, accounting for 64.80%, 72.47%, 71.18%, and 68.58% of the company's main business revenue.

The foreign sales situation is being inquired about by the northern securities exchange, which has requested Rongpeng Shares to provide more information on its foreign sales, including the distribution of sales and the situation with foreign clients.

According to the first-round inquiry response, Rongpeng Shares' top ten foreign clients include Techtronic Trading Ltd, which is a subsidiary of Jianshi Industry (0669.HK), Bloomington Forest (HK) Limited, and MDD ENTERPRISE LTD.

As for the capacity disclosure, the northern securities exchange also inquired about the reasonableness of the project's investment.

This IPO will issue no more than 1,850.00 million shares (excluding oversubscription options) or no more than 2,127.50 million shares (full exercise of the current stock issuance oversubscription option). The planned fund-raising is 20,153.67 yuan for the year-end production capacity project, digitalized intelligent factory upgrading and renovation project, and research center construction project.

According to the prospectus, the year-end production capacity project, digitalized intelligent factory upgrading and renovation project, and research center construction project "Tianzhou Research Center" (hereinafter referred to as "Tianzhou Project") have obtained pre-approval documents (Code 2408-331004-07-02-226066) and environmental impact assessment reports (Taiwan Ring Road [2024] No. 62).

The Tianzhou Project's pre-approval document shows that the project construction unit is Rongpeng Shares, with a planned construction period of three years and total investment of 18,740.85 million yuan, including fixed assets investment of 15,378.83 million yuan and floating funds investment of 3,362.02 million yuan.

However, the prospectus discloses that the total investment of the Tianzhou Project and research center construction project is 20,243.26 million yuan, with only the year-end production capacity project having a floating fund investment of 369.00 million yuan.

As for the company's second-round inquiry response, we will wait and see whether it can be submitted on schedule.