Two robot companies failed in their A-share IPOs

Collective Braking, is this so difficult?

In April, two companies related to the robot industry chain, Weiben Intelligent Electromechanical (Shanghai) Co., Ltd. (hereinafter referred to as "Weiben Intelligent") and Suzhou Jieruisi Intelligent Technology Co., Ltd. (hereinafter referred to as "Jieruisi"), successively withdrew their IPO application materials and terminated their GEM listing plans.

In fact, since the beginning of the year, the army of robot A-share listed companies has been sluggish in the capital market. Many companies including Kefeng Intelligent, Sheng'an Transmission, and Wangyuan Technology have withdrawn their IPO applications one after another.

The active withdrawal of various companies also reflects the severe survival dilemma faced by the current primary market of robots. Against the backdrop of many problems to be solved, such as weak technological innovation, intensified internal competition, blocked financing channels, and weak performance, the stringent new regulatory rules cast a shadow on the companies charging on the front line of A-shares.

Weiben Intelligence: Performance plummets, and there are many hidden worries

On April 2, 2024, the Shenzhen Stock Exchange issued the "Decision on Terminating the Review of the Initial Public Offering and Listing of Weiben Intelligent Electromechanical (Shanghai) Co., Ltd. on the Growth Enterprise Market", officially announcing that the IPO dream of this nearly 30-year-old smart manufacturing solution provider was shattered and ultimately ended in failure.

Looking back at the IPO process of Weiben Intelligent, from the listing bet of the actual controller at the beginning of its establishment, to the formal submission of the application to the Shenzhen Stock Exchange in June 2023, to two rounds of heavy pressure inquiries, suspension of review to update financial data, and finally voluntary termination. This sprint road of more than a year has been extremely difficult for Weiben Intelligent.

Abnormal performance fluctuations and a cliff drop

According to the prospectus, the company's operating income increased year by year from 2020 to 2022, reaching 431 million yuan, 452 million yuan and 615 million yuan respectively, with a gratifying trend. However, this growth momentum came to an abrupt halt in the first half of 2023, when the company's profit suddenly turned negative, from 61.52 million yuan in 2022 to -23.64 million yuan, a year-on-year decrease of -138%, which surprised investors and regulators.

Even with the final sprint in the fourth quarter, the net profit attributable to the parent company will turn from loss to profit in 2023, but the revenue growth rate has fallen into negative growth, with a significant downward trend, making it difficult for regulators to recognize that it has sufficient profitability and growth prospects.

In addition, Weiben Smart's revenue during the reporting period has obvious seasonal fluctuations. From 2020 to 2022, Weiben Smart's fourth quarter revenue accounted for 48.99%, 65.52% and 49.27% ​​respectively, accounting for half of the annual revenue, which is also much higher than the average level of its peers.

This phenomenon also attracted the attention of the Shenzhen Stock Exchange, which mentioned this issue in the first round of inquiries to the company. In response, Weiben Intelligent said that since the fourth quarter is the peak period for project acceptance, revenue will also be recognized in a concentrated manner, which is consistent with the industry practice of signing acceptance documents near the end of the year.

However, the Shenzhen Stock Exchange did not buy it, because according to data from comparable companies in the same industry, the fourth quarter revenue recognition ratios of companies in the industry in 2022-2023 were 31.98%, 32.86% and 34.74%, respectively, which was obviously different from the company's explanation. Therefore, in the second round of inquiries, the Shenzhen Stock Exchange continued to ask about the specific circumstances of the company's revenue recognition in June and December of each year during the reporting period, including customer lists, project content, execution cycle, etc., and asked for an explanation of the differences with the contract agreement.

This abnormal fluctuation in revenue recognition is bound to trigger market doubts about whether Weiben Intelligent has made surprise revenue recognition at the year-end and embellished financial statements. It is also the responsibility of the regulatory authorities to the majority of investors to remain highly cautious about the authenticity and compliance of the company's revenue recognition.

In addition, it is worth noting that the company had a large cash dividend of 30 million in 2021, which directly led to a sharp drop in cash flow in 2022 by -62% to 11.66 million.

However, in 2023, in the prospectus submitted by Weiben Intelligent, it was clearly proposed to raise 450 million yuan by issuing no more than 15.9 million new shares to invest in two major projects, namely "intelligent production line capacity improvement construction" and "R&D center upgrade construction", and 80 million yuan of it will be used to supplement working capital.

This practice of paying dividends while raising funds inevitably makes people wonder whether the company is "raising money" by going public. Therefore, the Shenzhen Stock Exchange also asked Weiben Intelligent to fully demonstrate the necessity and appropriateness of its cash dividends in the inquiry letter, and explain the impact on its financial status and shareholder interests.

Frequent employee resignations and loss of key personnel

In addition to the income issue, Weiben Intelligence's high turnover rate during the reporting period is also eye-catching.

The number of employees who resigned from the company from 2020 to the first half of 2023 was as high as 66, 100, 83 and 53 respectively, with the highest turnover rate reaching 21.37%.

Among them, many management personnel including former director and general manager Gong Xuepei, former assistant general manager and director of system control department and project management department Yue Hongda, and former general industrial R&D director Fan Jun resigned during the reporting period.

Moreover, Xie Leping, the former secretary of the board of directors, left the company only seven months after joining in October 2020. During this period, he acquired 1.43 million shares of the company, and after leaving, he transferred 720,000 shares back to the company's controlling shareholder. Such frequent changes in equity, coupled with the short tenure, make people wonder whether there is some hidden secret behind it.

A series of personnel changes also exposed various problems in Weiben Intelligent's internal management. A stable management team is crucial to the long-term development of an enterprise, and frequent personnel changes not only affect the continuity of management, but may also aggravate internal conflicts and hinder the company's development.

Therefore, the Shenzhen Stock Exchange continued to ask questions about this incident, requiring Weiben Intelligent to explain the specific reasons for the high turnover rate and its impact on the company's production and operations, as well as whether there are risks such as non-competition restrictions, failure of confidentiality measures leading to technology leakage, and loss of customer resources.

JRS: Performance decline, insufficient innovation

Suzhou Jieruisi Intelligent Technology Co., Ltd. is a technology-based enterprise specializing in the research and development, design, production and sales of intelligent testing equipment and intelligent production and assembly equipment. Its downstream customers cover multiple industries such as 3C electronic products, new energy and semiconductors.

On June 30, 2022, JRS submitted its GEM IPO application to the Shenzhen Stock Exchange and was accepted. After more than a year of review and inquiry, JRS finally announced the termination of its IPO on April 11, 2024.

The main reason why Jie Rui Si stopped its operations may be that its innovation strength and sustainable operating capabilities are at risk.

From 2020 to 2022, Jie Rui Si's revenue scale was 434 million yuan, 557 million yuan and 627 million yuan respectively, and its non-net profit was 21.4239 million yuan, 53.1404 million yuan and 77.5681 million yuan respectively. Both figures showed an increasing trend year by year.

However, after entering 2023, Jie Rui Si's performance also showed a downward trend. In the first half of 2023, Jie Rui Si only achieved a revenue of 191 million yuan, and its non-net profit was only 1.4088 million yuan.

For the company's full-year performance in 2023, JRS expects revenue to be 739 million yuan, a year-on-year increase of 17.84%; non-GAAP net profit is 78.6802 million yuan, a year-on-year increase of 1.43%. Although the full-year data has increased compared with the previous year, judging from the semi-annual report data, the growth momentum is not enough to support JRS's overall performance level.

In addition, the proportion of Jie Rui Si's accounts receivable balance to operating income has always remained above 60%, which is much higher than the level of the same industry, and the accounts receivable turnover rate has also been declining year by year, posing obvious cash flow risks.

It is worth noting that during the reporting period, the total amount of tax incentives enjoyed by Jie Rui Si was RMB 14.3818 million, RMB 23.349 million, RMB 16.9727 million and RMB 13.9481 million, respectively, accounting for 48.97%, 36.2%, 20.25% and 623.81% of the total profit for the period, respectively, indicating a high degree of tax dependence.