Risk tips on the first day of listing of Qingdao W

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The company and all members of the board of directors guarantee that the contents of the announcement are true, accurate and complete, and there are no false records, misleading statements or major omissions

the company and all members of the board of directors guarantee that the contents of the announcement are true, accurate and complete, and there are no false records, misleading statements or major omissions

with the consent of the Shenzhen Stock Exchange "notice on the listing of ordinary shares in Qingdao Weilong Valve Co., Ltd. that people can display the results through a digital display or PC" (SZS [2017] No. 295), the RMB ordinary shares initially issued by Qingdao Weilong Valve Co., Ltd. (hereinafter referred to as "the company" or "the company") are listed on the Shenzhen Stock Exchange, The securities are abbreviated as "Weilong shares (22.160, 6.77, 43.99%)" and the securities code is "002871". The number of shares issued by the company in the initial public offering is 17million, all of which are new shares. There is no transfer of old shares in this offering. It has been listed and traded on Shenzhen Stock Exchange since May 11, 2017

the company solemnly draws the attention of investors: investors should fully understand the risks of the stock market and the risk factors disclosed by the company, effectively improve their risk awareness, avoid blindly following the trend "speculation" in the initial stage of IPO, and should make prudent decisions and invest rationally

now the relevant matters are prompted as follows:

I. The recent operation of the company is normal, and the internal and external business environment has not changed significantly. At present, there are no undisclosed major matters

II. After inquiry, the company, its controlling shareholders and actual controllers have no major matters that should be disclosed but not disclosed, and the company has no major foreign investment, asset acquisition, sale plan or other major matters in the planning stage that should be disclosed but not disclosed in the near future. The investment project of the company's raised funds was implemented according to the plan disclosed in the prospectus, and there was no significant change

III. The company hired Shandong Hexin Certified Public Accountants (special general partnership) to audit the financial statements of the company in 2014, 2015 and 2016, and issued the standard unqualified Hexin Shen Zi (2017) No. 000034 audit report. According to the audit report, the main financial data of the company during the reporting period are as follows:

(I) main data of the consolidated balance sheet

unit: Yuan

(II) main data of the consolidated income statement

unit: Yuan

(III) main data of the consolidated cash flow statement

unit: Yuan

(IV) main financial indicators

IV A brief description of the company's operation and financial status after the audit deadline of the financial report

(I) operation

from the audit deadline of the financial report to the disclosure date of this announcement, the industry in which the company is located has not undergone major adverse changes, the company operates normally, the business model has not undergone major changes, and the directors, senior managers and core technicians have remained stable, There are no other major events that may affect the judgment of investors

(II) description of financial situation

the company expects the performance of the first quarter of 2017 to continue to grow rapidly. In 2017, the company's operating revenue was 57.0281 million yuan, an increase of 52.668 million yuan year-on-year, an increase of 8.28%, and the net profit attributable to the parent company was 10.96 million yuan, an increase of 8.778 million yuan year-on-year, an increase of 24.85%. The growth of the company's revenue and net profit is mainly due to the improvement of the company's brand awareness year by year, the in-depth expansion of sales channels, the continuous enrichment of product design and the continuous improvement of product quality

v. the company specially reminds investors to pay close attention to the following risk factors

(I) overseas market expansion risk

eight years after the outbreak of the international financial crisis, the economic recovery trend of developed economies is different, and many emerging economies are also facing the challenge of declining growth, and there is still some uncertainty in the prospects for global economic growth

the company's products are mainly exported. In 2014, 2015 and 2016, the proportion of the company's product export revenue to the main business revenue was 82.41%, 81.50% and 86.98% respectively, and the proportion of product export was large. With the implementation of fund-raising projects and the expansion of the company's business scale, the company is facing certain risks of overseas market expansion

(II) risk of raw material price fluctuation

the main raw materials of the company's valve products are castings, pig iron and scrap steel, among which the change of casting price mainly depends on the change of steel price. During the reporting period, the cost of raw materials accounted for about 60% - 70% of the company's main business costs. In recent years, affected by the global economic downturn, the steel price has been on a downward trend on the whole, but since 2016, the steel price has rebounded. In the future, if the prices of raw materials such as steel enter the upward cycle, the company's product costs will fluctuate, and the company is facing the risk of raw material price fluctuations

(III) increased risk of accounts receivable

at the end of 2014, 2015 and 2016, the book value of the company's accounts receivable of some large-scale and qualified water purifier manufacturers were 44.1413 million yuan, 50.7398 million yuan and 51.4713 million yuan respectively, accounting for 21.73%, 26.39% and 20.06% of the current assets at the end of the period, respectively. Generally speaking, the scale of the company's accounts receivable increased during the reporting period, but from the aging of accounts receivable, at the end of each reporting period, the company's accounts receivable are mainly accounts receivable within one year, and the recovery of payment for goods is good

although the main customers of the company are well-known valve manufacturers, dealers or large state-owned enterprises at home and abroad, with strong strength and reputation, the Ministry of industry and information technology, the Ministry of Finance and the China Insurance Regulatory Commission have further carried out research on the implementation and utilization of new materials, and the risk of bad debts is small. However, if there are major adverse changes in the macroeconomic situation and industry development prospects at home and abroad, and the operation of individual customers may be difficult, the company also has the risk of bad debts in accounts receivable

(IV) risk of inventory increase

the company's inventory mainly includes raw materials, goods in stock, self-made semi-finished products, products in process, etc. At the end of 2014, 2015 and 2016, the book value of the company's inventory was 75.6175 million yuan, 59.1168 million yuan and 50.6685 million yuan respectively, accounting for 37.23%, 30.75% and 19.75% of the current assets at the end of the period, respectively, showing an overall downward trend

the company mainly takes measures to participate in the APEC automotive working group meeting and WP29 meeting; Deepen the production mode of Sino Danish green maritime technology cooperation, organize procurement and production plans according to customer orders, and the company has formulated a strict inventory management system and has been effectively implemented. However, with the increase of customer orders and the expansion of production scale, the company's raw material reserves and finished product production will increase rapidly. If macroeconomic fluctuations, intensified market competition, difficulties in the operation of individual customers and other factors lead to the decline of product sales and prices, the company's inventory will be at risk of impairment

(V) the risk of new capacity not being digested in time

the production project of large-scale and special-purpose valves is an important deployment to achieve the company's development goals and strategic planning, which is of great strategic significance for further enriching the company's product structure and upgrading the company's existing products. Although the company has fully demonstrated the market prospect of the investment project and formulated corresponding countermeasures for the digestion of new production capacity, after the project is completed, there is still the possibility that uncertain factors such as product market demand, sales price and competitor strategy may differ from the expected production of the company, thus affecting the digestion of production capacity and the realization of expected income of this raised investment project

(VI) risks controlled by the actual controller

before this issuance, fan Qingwei and fan Yulong directly held 87% and 5% of the shares of the company respectively, fan Qingwei also indirectly held 5.82% of the shares of the company, and fan Qingwei and fan Yulong were the actual controllers of the company. After this offering, fanqingwei and his son still directly and indirectly control 73.36% of the company's equity (calculated by issuing 17million shares), and the shareholding ratio is still high

although the company has established a perfect corporate governance structure in accordance with the requirements of the company law, the securities law, the guidelines for the articles of association of listed companies and other laws and regulations and normative documents. However, as the actual controller, if it exerts adverse effects on the company's operation, financial decision-making, major personnel appointment and removal and profit distribution through the exercise of voting rights or other means, it may bring certain risks to the company and minority shareholders

(VII) overseas business risks

the company has two overseas wholly-owned subsidiaries in the UK and the United States, which are important external sales platforms of the company. The establishment of overseas subsidiaries will help further strengthen the development of overseas sales business of the company and play a positive role in promoting the international popularity of the company. However, there are certain differences between the above countries and China in terms of legal environment, economic policies, market situation, culture, language, customs, etc., which will also bring certain difficulties and risks to the management of the company. At the same time, if the economic situation and relevant economic policies of the above countries change, or the overseas subsidiaries fail to obtain information smoothly and effectively, it may have a certain impact on their business conditions, and the company has certain overseas business risks

it is hereby announced

Qingdao Weilong Valve Co., Ltd.

board of directors

May 11, 2017

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