According to the Red Star Capital Bureau, Shengzhong Watch Group Co., Ltd. (hereinafter referred to as "Shengshi Shares"), which was originally scheduled to attend the meeting on May 26, "withdrew the order" on the eve of the meeting, ending the nearly one-year IPO process. trip.

　　According to the official website of the China Securities Regulatory Commission, Shengshi has applied for the withdrawal of the application materials, and decided to cancel the review of the company's issuance application documents at the 60th working meeting of the 18th Issuance Examination Committee in 2022.

　　Shengshi Co., Ltd. is a watch dealer, backed by the watch king "Hendry", the annual sales volume of watches exceeds 1.6 million, and the revenue has exceeded 10 billion yuan.

However, the Red Star Capital Bureau noticed that there are endless related transactions of Shengshi shares, with a total amount of billions of yuan every year.

　　In addition, Shengshi shares have distributed a total of 1.16 billion yuan in dividends in the past three years. As of the end of June 2021, there are still more than 1 billion yuan of monetary funds lying on the account.

Under this circumstance, Shengshi still planned to raise 1 billion yuan to supplement the working capital, and the rationality of the raised investment was questioned.

Backed by the watch king "Hendry"

Annual sales of 1.6 million watches

　　Shengshi Co., Ltd. is a watch omni-channel distribution service provider, specializing in the retail and wholesale business of mid-to-high-end watches, and providing after-sales service and peripheral products of watches.

According to the prospectus, Shengshi shares are partners of Swatch Group, Richemont Group, Rolex Group, LVMH, etc. It sells more than 1.6 million watches every year and has more than 2 million registered members.

　　The predecessor of Shengshi Co., Ltd. was Xinyu Zhou Yuzan, which was jointly funded and established in May 2008 by Hengdeli China and Zhuhai Zhou Yuzan.

Hengdeli China is a wholly-owned subsidiary of Hengdeli Holdings (3389.HK), a Hong Kong-listed company.

　　In the following two years, Hengdeli China successively acquired the remaining shares of Xinyu Zhou Yuzan, becoming the wholly-owned parent company of the latter, and renamed Xinyu Zhou Yuzan as Xinyu Co., Ltd.

　　In 2016, Hengdeli China adjusted its shareholding structure, and finally transferred its 100% stake in Xinyu Co., Ltd. to Zhang Yuping, the actual controller of Hengdeli Holdings. Zhang Yuping later established Yufeng Co., Ltd. as a holding company of Xinyu Co., Ltd. 100% equity holding platform.

　　Subsequently, Xinyu Co., Ltd. carried out 5 more equity transfers, introducing JD Company (the actual controller is Jingdong Group), Quangda Qianfan (the actual controller is Haier Group), Dexin Company (the actual controller is the Agricultural Bank of China), Shanghai Guoqiang, Shenchuang Investment and other investors, and changed to a joint stock limited company in December 2020.

　　Before this issuance, Zhang Yuping held a 35% stake in Shengshi shares through Yufeng Co., Ltd. and was still the actual controller.

　　Hengdeli was originally engaged in the retailing of mid-to-high-end international famous watches, customer service and maintenance, watch accessories manufacturing and e-commerce in Hong Kong, Macau, Taiwan and Malaysia.

In 2020, Hendry terminated the operation of all physical watch stores by selling or closing stores, ending the operation of the watch retail business as a whole.

Since then, there has been no horizontal competition between Hengdeli and Shengshi shares.

　　Even so, there are still many stores in Shengshi that use "Hendry" as the store sign, and many subsidiaries use "Hendry" as the registered name.

　　According to the prospectus, from 2018 to the first half of 2021 (reporting period), Shengshi shares achieved operating income of 9.11 billion yuan, 9.521 billion yuan, 10.379 billion yuan and 6.313 billion yuan, of which over 90% of the income came from mid-to-high-end watches; In the same period, the net profit attributable to the parent company was 501 million yuan, 595 million yuan, 536 million yuan and 461 million yuan respectively, and the net profit in 2020 declined slightly.

The volume of related procurement is huge

Rely on Swatch Group

　　The huge volume of related transactions is a major concern of Shengshi shares.

　　Shengshi shares directly have related transactions with Hengdeli.

During the reporting period, Shengshi Co., Ltd. purchased decoration and advertising services from Hengdeli Holdings and its subsidiaries, with an amount of 16.9624 million yuan, 22.2298 million yuan, 26.1177 million yuan and 9.8418 million yuan, accounting for the proportion of the company's decoration and advertising related expenses were 13.25%, 19.07%, 15.53% and 11.10%, respectively.

　　Shi Zhongyang, director of Hengdeli Holdings, is also a director of Swiss Watch Shanghai, a watch supplier of Shengshi shares.

Swiss watch Shanghai was a related party of Shengshi shares in 2018.

At that time, Shengshi shares purchased watch brands under the Swatch Group except Omega, Longines and Radar from Swiss Watch Shanghai. The purchase amount was 3.526 billion yuan, accounting for 48.17% of the total purchase in 2018.

　　In addition, Shengshi shares held 10% equity of Ruiyunda and had the right to assign a director to Ruiyunda. During the reporting period, Zhang Yuping served as its director and then resigned in July 2018.

During the reporting period, Shengshi Co., Ltd. purchased Omega, Longines, and Radar brand watches from Ruiyunda. The purchase amount was 2.618 billion yuan, 2.723 billion yuan, 2.979 billion yuan and 1.691 billion yuan, accounting for 3.576 billion yuan in total purchases in each reporting period. %, 36.02%, 35.97% and 35.81%.

　　It is worth mentioning that both Swiss Watch Shanghai and Rui Yunda are subsidiaries of Swatch Group.

During the reporting period, the proportions of Shengshi's watch purchases from Swatch Group were 83.93%, 82.01%, 71.18% and 68.56% respectively, and each period exceeded 50%, which means that there is a certain degree of purchase dependence.

However, Shengshi shares said that it did not constitute a material adverse effect.

　　Swatch Group is the world's largest watchmaking company, operating 18 watch brands, including Breguet, Blancpain, Omega, Jacques Dro, Longines, Tissot and other well-known brands. The share is 25.25%.

　　Judging from the current deep binding between Shengshi and Swatch Group, such large-scale related transactions will continue in the future.

1 billion in cash in hand but raised 1 billion to supplement the flow

More than half of total assets are inventories

　　In the original IPO, Shengshi shares planned to raise 2.507 billion yuan, which will be used for the construction and upgrade of the terminal retail network (1.331 billion yuan), the upgrade of the maintenance business system (176 million yuan), and the supplementary working capital (1 billion yuan).

　　But Shengshi shares does not seem to be short of money.

As of the end of June 2021, its monetary funds on its books were about 1.026 billion yuan.

In addition, Shengshi Co., Ltd. is also very generous in distributing cash dividends to shareholders. In 2020 alone, it has distributed 550 million yuan in surprise dividends, and has distributed a total of 1.16 billion yuan in dividends in the past three years.

　　The above operation of Shengshi shares makes people unable to understand.

In the initial feedback, the China Securities Regulatory Commission asked Shengshi to explain the rationality and necessity of using the raised funds to make up after dividends, whether there was any damage to the interests of the company, and whether there was any damage to the interests of small and medium investors.

　　During the reporting period, the asset-liability ratio (consolidated) of Shengshi shares was 38.28%, 46.38%, 47.45% and 48.06%, lower than 50%.

However, it said that there is a large amount of inventory in the assets, and the actual debt pressure is still relatively large.

　　At the end of each period of the reporting period, the inventory of Shengshi shares was 4.041 billion yuan, 4.123 billion yuan, 4.683 billion yuan and 4.862 billion yuan respectively, accounting for 56.88%, 53.76%, 57.11% and 52.46% of the total assets at the end of each period.

　　In this regard, Shengshi shares explained that the main reasons include: first, in order to maintain the brand image of the physical store, it is necessary to display representative watches in each store. These display watches are often expensive and expensive. Models are abundant; second, in order to meet the purchase demand of downstream dealers, it is necessary to maintain a certain number of watch safety stocks.

　　Red Star Capital Bureau will also continue to pay attention to whether Shengshi shares will attack A shares again after the withdrawal of the order.

　　Red Star News reporter Yu Yao Yu Dongmei