Failed quality inspection fined, Emma’s electric bike IPO road is difficult and long
Since the initial disclosure of the prospectus on June 29 last year, Emma Technology has been lining up for six months. On December 21, Emma Technology received feedback from the Securities and Exchange Commission's initial public offering. The Securities and Futures Commission raised 58 questions on Emma Technology's prospectus in three broad categories, asking the sponsor and Emma Technology to make a written reply within 30 days.
If the IPO is successful, Emma Technology will become the third domestic listed electric vehicle manufacturer after Yadi (01585.HK) and Xinri (603787.SH).
Failure to pass quality inspection
Recently, the Beijing Municipal Market Supervision and Administration Bureau issued the “Public Quality Inspection Results of Electric Bicycles”. The results of the random inspection showed that 36 batches of electric bicycles sold in the Beijing market had various non-conformities. Among them, Tianjin Emma Bicycle Industry The five batches of electric bicycles produced by Technology Co., Ltd. have substandard problems, including problems such as maximum speed, vehicle quality, pedaling ability, reflectors and horns, undervoltage, and overcurrent protection.
However, it is not this time that the Emma electric bicycle failed the quality inspection. In April of this year, the Beijing Municipal Bureau of Market Supervision announced the results of quality inspections of electric bicycles, showing that the maximum speed, vehicle quality, and pedaling capacity of 22 electric bicycles did not meet the standards, including those produced by Tianjin Emma Vehicle Technology Co., Ltd. Two "Emma" electric bicycles, two electric bicycles produced by Luyuan Electric Bicycle (Shandong) Co., Ltd., and two "small bird" electric bicycles produced by Tianjin Taifeng Little Bird Electric Vehicle Co., Ltd.
The report said that the Beijing Municipal Bureau of Market Supervision and Administration will penalize sellers of substandard goods in accordance with the relevant provisions of the Product Quality Law. Publicly announced non-conforming product manufacturers and relevant distributors shall actively take measures to remove non-conforming products in accordance with the requirements of relevant laws and regulations, and protect the legitimate rights and interests of consumers.
High marketing costs
Data from the National Bureau of Statistics and the China Bicycle Association show that in the past ten years, the production of electric bicycles has climbed from 21.886 million in 2008 to a maximum of 36.95 million in 2013, an increase of 68.8%.
After five years of rapid development, China's electric bicycle industry has rapidly developed from sporadic use to large-scale popularity. However, since 2013, the production of electric bicycles has shown a trend of turbulence and decline. By 2017, the output of electric bicycles has been Reduced to 31.133 million, the decline of the market means that the variable market is transformed into a stock market, and competition is more intense and cruel.
As an early starter in the electric vehicle industry, Emma Technology will usher in its 20th birthday in September this year. By virtue of employing the famous singer Jay Chou as the spokesperson in the past ten years, it has expanded its brand awareness and its long-term market The market share ranks among the top three in the industry.
The prospectus showed that Emma Technology accounted for more than half of the sales expenses in advertising and business promotion expenses. Advertising costs in 2016 reached more than 100 million yuan, and by 2017, advertising costs had doubled, reaching 210 million yuan, an increase of 48% year-on-year, accounting for 57% of sales expenses for the year.
The board of directors of Emma Technology told the Times reporter that the company currently has sufficient monetary funds and net profit. Although the company suffered from fierce industry competition, price wars and share payments in 2017, its operating profit and net profit declined, but its net profit The decline is in line with the trend of comparable listed companies in the same industry.
IPOs line up for more than a year
Tianyan inspection showed that Tianjin Emma Vehicle Industry Technology Co., Ltd. was established on April 7, 2014, with a registered capital of RMB 100 million. Jiangsu Aima Vehicle Technology Co., Ltd. is its 100% controlling shareholder. Emma Technology Group Co., Ltd. (hereinafter referred to as Emma Technology) is a 100% controlling shareholder of Jiangsu Emma Vehicle Industry Technology Co., Ltd.
It is worth noting that since the first disclosure of the prospectus on June 29, 2018, Emma Technology has been in line for more than a year. On December 21, 2018, Emma Technology received the initial public offering feedback from the Securities and Futures Commission. The Securities and Futures Commission raised 58 questions on Emma Technology's prospectus in three broad categories. A written response has been given and is now overdue.
Emma Technology is an electric vehicle production company. The prospectus shows that the company intends to issue 65 million shares on the Shanghai Stock Exchange and plans to raise funds of about 1.681 billion yuan for the company's electric vehicles, bicycles, parts processing and manufacturing, and complete painting production lines. Wait for the construction and upgrade of 12 projects, and supplement the working capital.
In addition, according to the feedback of the Securities and Futures Commission, Emma Technology has been repeatedly punished for violations and potential illegal acts.
Among them, out of the seven companies involved in the manufacturing business of the issuer, two companies, Sichuan Emma Car Industry and Guangdong Emma, do not currently hold pollutant emission permits. During the reporting period, the issuer and its subsidiaries were punished with RMB 40,263, RMB 50,000, and RMB 60,000 for violations of environmental protection regulations.
In 2017, the issuer was fined 10,000 yuan and 30,000 yuan respectively for failing to make timely changes to the declaration of occupational disease hazards and failing to provide protective masks that meet national or industry standards for some workers in the spray shop.
Mobike is the number one customer
The electric vehicle market entered the Red Sea market in 2014 and competition is fierce. After a few years of silence, with the rise of the sharing economy concept in 2017, Emma Technology has made a new market.
According to its prospectus, Emma Technology had 1,454 dealers, 1,476 and 1910 dealers nationwide in 2015, 2016, and 2017, a year-on-year increase of 29% in 2017; operating income of 5.9 billion yuan in 2015 and 64 in 2016 Billion yuan, 7.8 billion yuan in 2017, with year-on-year increases of 8.99% and 20.96%, respectively.
The larger year-on-year increase in 2017 was due to the addition of Mobike (Beijing) Information Technology Co., Ltd., the company's top ten customers, with sales of 340 million yuan that year, accounting for 4.44% of total revenue, becoming the largest customer of Emma Technology.
While Emma Technology has improved sales and performance, operating profit and gross profit margin have declined. Gross profit margin fell from 26.04% in 2015 to 4.69% in 2017. The summary of the income statement also shows that the total profit in 2017 was 380 million yuan, a year-on-year decrease of 35.19%, compared with 590 million yuan in 2016.
Although sales topped the list, the marketing cost of Emma Technology is also high. From 2008 to 2017, Emma Technology and Jay Chou signed an advertising endorsement for 9 years. In 2017 and 2018, Emma Technology was selected by CCTV to launch "CCTV National Branding Plan" is the only company in the industry that has been selected into the plan for two consecutive years.
The industry has low entry barriers, so it is already a Red Sea market, and the competition is very fierce. It is a common choice for survival to focus on large-scale expansion through listing.