Huachang Daguan GEM Dongfeng Motors Hitch

This Thursday, Hubei Huachangda's IPO meeting will become another sprint IPO auto parts company. From the perspective of the pre-disclosed materials, Huachang Da has contributed to the rapid development of the “Dongfeng System”, which is both an important customer and an indirect shareholder.

The pre-disclosed materials show that Huachangda's main set of intelligent automatic production equipment systems is mainly used in the automotive, construction machinery and other fields. The company plans to issue 21.7 million shares this time, and the total share capital after issuance is 86.7 million shares. It will raise 200 million yuan to invest in the construction of automation equipment production line.

The financial report shows that Hua Changda's performance in the last three years has increased by leaps and bounds. In 2008, the company's net profit was only 5.612 million; in 2009 it increased to 14.985 million yuan, an increase of 1.7 times year-on-year; 2010 profit was 310.76 million yuan, which was an increase of about 1 time compared with the same period of last year.

Interestingly, Hua Changda has a deep relationship with Dongfeng Motor Co., Ltd. The actual controllers of the company, Yan Hua and Luo Hui, used to serve in Dongfeng’s company and established Hua Changda in 2003. The prospectus shows that from 2008 to 2010, Dongfeng Limited has been the largest sales customer of Huachang Da. In 2008, its sales accounted for 63.61% of sales revenue, which fell to 48.69% in 2009 and 21.26% in 2010. If you count the sales of other customers of Dongfeng Department, the proportion is even higher.

Based on the close business relationship, Dongfeng Motor has obtained the "privilege" for low-priced shares. In August 2010, as a prelude to sprinting the IPO, Huachang Da generously increased its capital and expanded shares, introducing 20 natural person shareholders and 3 corporate shareholders. The value of registered capital of RMB1.81 per 1 yuan was corresponding to a 2009 diluted P/E of approximately 15 times. Among them, 20 natural persons are employees of the company, and three legal persons are Shanghai Jiahua, Tianjin Boguan (Limited Partnership) and Guangzhou Cornerstone (Limited Partnership). Among them, Shanghai Jiahua and Tianjin Boguan respectively recognized 11.94 million yuan to subscribe for 635,000. Yuan funding.

The information disclosed that Shanghai Jiahua is a holding subsidiary of Dongfeng Motor; Shanghai Jiahua also holds 40% equity of Tianjin Boguan and is its financial investor. As a result, Dongfeng Motor indirectly controls 6.1616% of Huachangda.

It is worth noting that the multiple relationship with the "Dongfeng System" has increased Huachangda's IPO path. Prior to the IPO, the parts companies Shengrui Drive and Luen Ming Machinery had serious customer dependence, and their sales revenue exceeded 90% from Weichai Group and General Motors respectively.

Although Hua Changda's reliance on the “East Wind System” is not as high as the first two, it has generated a large number of connected transactions due to the Dongfeng Auto Access Unit. Therefore, Hua Changda's prospectus materials expend a great deal of ink and ink to explain its dependence on the "East Wind System."

Huachang Da said that the proportion of the company’s combined sales with “Dongfeng” customers has dropped from 84.19% in 2008 to 41.93% in 2010, and to 18.87% in January-June 2011. There is no high There is no performance-dependent situation in the persistence of proportional sales. In addition, the company's top five customers accounted for 87.55% of sales in 2009 from 90.94% in 2008, 72.01% in 2010, and 51.19% in January-June 2011, and the top five customers are constantly changing. Hua Changda also stated that the company's downstream customers are expanding from auto manufacturing companies to construction machinery manufacturers, and further reduction in customer concentration is an inevitable trend in the future.

Another worrying macro background is that since the beginning of this year, due to policy changes and other factors, the growth rate of domestic auto sales has continued to decline, and the risk of cyclical fluctuations has increased. As a result, the performance of some parts and components companies in the first half of the year has declined.