The leading domestic fitness equipment enterprise SHUA sports once again “broke into A”, but the key financial data in its prospectus are quite different, and the investment in research and development is A roadblock for its successful IPO.

Xinhua News Agency, Beijing, June 19 (reporter Ding Feng) SHUA Sports, A leading domestic fitness equipment enterprise, failed to break into A last year. After A year, in early June, the CSRC published its latest prospectus on its website, which once again impacted the IPO. The proposed listing on the Shanghai Stock Exchange raised 0.5 billion yuan and issued no more than 50 million shares.

In this summer, Haosha fitness, a well-known fitness chain company with the same origin as SHUA Sports, fell into a financial dilemma, and the meteor generally fell. The huge conduction effect has made the already tired fitness industry fall into the wind.

The rise of Jinjiang and its relationship with Anta Tebu

SHUA Sports was founded in 1996. Like Anta, Tebu, 361 Degrees and other well-known sporting goods companies, they all started from Jinjiang, Fujian, the famous hometown of sports industry.

In the 1980 s, Zhang Weijian, the founder of the company, began to start a business at the age of 15, developing a small furniture processing workshop into a small enterprise with more than 100 people and completing the original accumulation of capital.

In 1996, Anta ushered in an important turning point and held the first national agent conference. Zhang Weijian also founded SHUA Co., Ltd. at the age of 24, transforming the fitness equipment manufacturing industry, which was still unpopular at that time, thus stepping into Jinjiang sports industry.

The development of large and medium-sized enterprises in SHUA cannot be separated from the support and support of Jinjiang villagers. According to the revenue data in 2018, the company’s second largest business, with display rack business income of 0.389 billion yuan, accounting for 33.35 percent of the main business income. Anta and Tebu, as the first and third major customers of this business, generated 0.226 billion yuan of income for SHUA, accounting for about 58% of the total operating income of exhibition shelves, accounting for nearly 20% of the total revenue.

There are videos on the Internet reflecting the relationship between Zhang weijian and Jinjiang sports bosses: he has eight people, including Ding Shizhong, Tebu International Ding Shuibo, and Haosha fitness boss Shi Hongyan, join hands on the stage and sing Minnan people’s favorite divine comedy “Love fight will win”.

According to the SHUA sports prospectus, the controlling shareholder SHUA invested in holding 73.8546 percent of the company’s shares, while Zhang Weijian directly held 4.6361 percent of the company’s shares, zhang weijian and his wife are the actual controllers of the company by indirectly controlling SHUA sports by directly holding 95.00 percent of the equity invested by SHUA.

In 2015, Linzhi Anda Investment Co., Ltd. held 5.75 percent of the shares of SHUA sports through debt-to-equity swap, becoming the second largest shareholder of the company. Through the eye check, it can be seen that Ding Shizhong, CEO of Anta Sports, and his brother Ding Shijia hold 70% of the equity of Linzhi Anda in total, which is the actual controller.

According to media reports, apart from business cooperation, Zhang Weihe and Ding Shizhong are both members of Jinjiang business group. They are the same age. Ding is slightly two years old and has a good personal relationship. Ding Shizhong likes to organize relatives and friends to take home for vacation during the Spring Festival, and Zhang Weijian is one of the members of this private circle of friends.

The CSRC put forward 55 feedback opinions on the first prospectus of SHUA sports, including a mysterious capital transaction: ding Shuibo, the actual controller of Tebu Sports, once paid the contribution to SHUA on behalf of Zhang Weijian.

For this reason, the CSRC questioned whether the pricing of SHUA sports products sold to Anta Sports and Tebu was fair? Is there a situation that benefits are transferred through holding SHUA sports equity or other means, does it constitute commercial bribery, and does it form dependence? SHUA are there any other commercial or interest arrangements for sports, Anta Sports and Tebu sports?

These tough questions are the roadblocks of whether SHUA sports can successfully IPO. It is not difficult to explain why SHUA sports will replace the unknown Hua Jing Securities, the sponsor of 2018, with the powerful CITIC Securities. However, Huajing Securities is also closely related to CITIC Securities. Liu Wei, a former member of CITIC Securities executive committee, became the general manager of Huajing securities in 2017.

The seventh largest shareholder of SHUA Sports, Jinshi Xiaoxiao, whose shareholding ratio is 3.37%, is the wholly-owned Sun Company of CITIC Securities Holdings. Or the parties involved in the transaction avoided suspicion, CITIC Securities retreated behind the scenes last year. However, at present, the situation of entering the customs is grim, and only “old handsome” can do it in person.

Gross profit continues to decline, and the key financial data of the prospectus are quite different

in the prospectus, SHUA sports introduced itself as a professional and scientific supplier of sports health solutions. The company’s main business is the research and development, production and sales of fitness equipment and display stand products, of which fitness equipment accounts for of the main income.

The cold and warm of the domestic fitness industry is closely related to the company’s performance. In may, at the china international sporting goods expo held in shanghai, the reporter noticed that the booths related to fitness equipment occupied two thirds of the entire exhibition area, and the fierce competition in the industry was evident.

Statistics show that the total output value of China’s fitness equipment industry reached 38.29 billion yuan in 2017, and 275 fitness equipment manufacturing enterprises above designated size increased by% compared with 240 in 2014.

China’s huge population base brings huge consumption demand to the sports industry. Sportswear and sneakers well-known domestic enterprises climbed out of the bottom with this, and Anta Sports, Li Ning and Tebu continued to perform well in recent years. However, the performance of related fitness equipment enterprises is not satisfactory.

As shown in the following figure:

SHUA the operating income of sports in 2016-2018 was 1.063 billion, 1.132 billion and 1.182 billion yuan respectively, the net profit was 0.134 billion, 0.127 billion and 0.118 billion yuan, and the profit margin declined significantly, fall into a strange circle of increasing income and not increasing profits.

The quarterly report of inpays, the first listed fitness equipment company in A shares in 2019, shows that due to the impact of the industry environment, gross profit margin continued to decline in the first quarter, dropping to, while profit fell by nearly 60% year-on-year. At present, the stock price of uppers is not only in the deep break, but the market value is nearly 80% from the high level.

Any business activity of an enterprise is to earn net cash inflow of real money. Compared with net profit, the net cash flow of operating activities can better reflect the real operating status of the enterprise.

According to the first prospectus of SHUA sports in 2018, the net cash flow generated by business activities in each period from 2015 to 2017 was 0.123 billion yuan, 0.0947 billion yuan and 0.0567 billion yuan respectively. The csrc questioned this: please analyze the reason why the net cash flow generated by business activities continues to decline, the impact on the issuer’s operation, and whether the issuer faces the risk of shortage of funds?

In the face of inquiries from regulators, in the second prospectus issued by sports in June 2019, SHUA, this key financial data made a 180-degree gorgeous turn: from 2016 to 2018, the net cash flow generated from each period of business activities was 0.1448 billion yuan, 0.0739 billion yuan and 0.1325 billion yuan respectively.

It is obvious from the above table that the same company has two prospectus separated by only one year, there is a huge difference of 50 million-17 million yuan in key financial data between 2016 and 2017.

What is more amazing is that in 2018, the net cash flow of the company’s operating activities not only stopped the trend of cliff diving, but also rose 79.3 percent.

Whether the revised financial data can really dispel the worries of regulators about the risk of the company’s shortage of funds needs a big question mark.

The industry has changed dramatically. The R & D project has not changed a word for one year

with the Haosha fitness of Jinjiang series crashing down. At the beginning of June, the two major domestic head fitness chain enterprises Wales and one trillion Wade also reported the news of CEO leaving due to the continuous decline in performance. Some insiders said pessimistic that the fitness industry should prepare for the winter in advance.

SHUA Sports said frankly in the prospectus: sports consumption is not a rigid demand of consumers. If the economy enters a downward cycle in the future, consumers may reduce the purchase of fitness equipment, the sales volume and gross profit margin of the company’s products will be greatly affected. Therefore, there is a risk that the company’s performance will decline due to macroeconomic fluctuations.

Pan Ziqi, CEO of Panzi Sports, told the reporter that the equipment stock that should not be underestimated should be updated to the market, and the health awareness is deeply rooted in the hearts of the people. If domestic manufacturers can continuously develop intelligence that is more suitable for consumers’ needs, fashionable fitness equipment products can offset the cyclical impact of economic fluctuations on fitness equipment to some extent.

China’s fitness equipment manufacturing industry started in the 1980 s. Under the background of economic globalization after 1990 s, relying on the advantages of production cost, China has undertaken a large number of international orders, mainly producing products with relatively low added value. At present, American brands such as Aikang, Lijian, keindeed and tinojian have gained a relatively high market share in the world, and also hold the most profitable middle and high-end market in China.

Reporters learned in interviews with industry insiders that the most critical factor for the success of Aikang, which occupies the top of the market pyramid, is continuous research and development and innovation, such as shock absorber, heart rate sensing, personal training network connection, etc, many technologies have brought revolutionary changes to the industry.

In the prospectus, SHUA Sports claimed 124 patents. However, after careful inspection, 122 patents are utility models and appearance patents, and only two invention patents with high gold content are real.

In 2016, the company’s R & D expenses were only over 700 million yuan, accounting for of the revenue. Near the IPO level, the research and development fees of SHUA Sports in 2017 and 2018 have increased to some extent, but it is still far from Anta, Li Ning and other enterprises.

Recently, the American star family fitness company, which was established for only seven years, also submitted IPO application documents Peloton.

The Peloton and treadmill developed fitness bike are full of technology. Although the price is as high as US $2000-4000, it cannot stop consumers from praising them. The rapidly rising Peloton grabbed 7.3 percent of the market share from Aikang, the overlord of American fitness equipment.

In addition to the introduction of hot fitness bike, online treadmill, dumbbell, heart rate monitor and other accessories, Peloton also provides users with paid fitness video courses, through the display screen on the fitness equipment, users can receive remote guidance from coaches.

These courses include running, walking, stretching, yoga and strength training. Users need to subscribe to the courses for at least one month, and the starting cost is $20. Currently, there are more than one million subscribers.

According to a Bloomberg report in February this year, Goldman Sachs and JPMorgan Chase will become underwriters Peloton, with a valuation of over $8 billion, which has become a unicorn on the fitness track “.

In the past year, many subdivisions of the domestic and international fitness industry have undergone disruptive changes. Peloton content + rapid iteration of fitness technology products, the walkingpad home walking machine launched by Xiaomi ecosystem has rapidly impacted the traditional treadmill market……

Facing the increasingly fierce internal and external environment, what goals do SHUA sports want to achieve through listing and raising funds? The reporter carefully compared the two prospectus in 2018 and 2019 and found that 14 specific projects remained unchanged in one word, which had the most profound influence on the future development of the company’s “proposed fund-raising investment in the construction of R & D Center, as in 2019, 2018 was cloned.

A whole year has been used to “observe the trend of the industry”, but it has not been able to exchange the company’s subtle adjustment to the fund-raising research and development project, as if the development of the outside world has stagnated.

The Dilemma of the domestic fitness industry seems to be that there is oversupply in the market. However, considering from another perspective, the supply of real high-quality products is still insufficient. “it is that the research and development and innovation of the upstream and downstream in the whole fitness field cannot meet the real needs of consumers, which is the shackle of development.” Pan Ziqi said.