IPO mystery of Red Star Meiling: why big customers are willing to cancel



Since 2019, goat milk enterprises have started to attack the A-share market one after another. Shaanxi Red Star Meiling Dairy Co., Ltd. (hereinafter referred to as “Red Star Meiling”) has also joined this camp and started to sprint “goat milk first share”. Recently, the official website of Shenzhen Stock Exchange shows that red star Meiling has updated its reply to IPO inquiry. Throughout the prospectus of Red Star Meiling, Wuxi shede Biotechnology Co., Ltd. (hereinafter referred to as “shede bio”) has become an important role that has to be mentioned. As soon as the company was established, it has become a customer of Red Star Meiling, and the relationship between the two companies is getting closer and closer. In 2017 and 2018, shede bio ranked the first largest customer of Red Star Meiling. However, since 2019, shedebao has disappeared from the top five customers list of Red Star Meiling and will be cancelled in 2020. The appearance and cancellation of shede biology make red star Meiling’s IPO suspicious.


红星美羚IPO谜局:大客户舍得生物缘何注销

Intimate relationship with shede

According to the prospectus of Red Star Meiling, in 2017 and 2018, shede bio was the company’s largest customer.

According to the data, red star Meiling’s main business is the R & D, production and sales of goat milk products based on goat milk powder, including infant formula milk powder, children’s and adult milk powder, etc. Shede biology was established in September 2014, and its main business is goat milk powder, food and medical devices for the elderly health industry. It is worth mentioning that as soon as shede biology was founded, it became a partner with red star gazelle.

In 2015, red star Meiling sold about 12.9121 million yuan to shede bio, and its main products were children’s and adult milk powder.

For the above situation, red star Meiling also explained that the company started to establish cooperation with the interest group composed of the actual controller of shede biology and his close relatives in 2013, and the counterpart of the group and the company was Wang shuangshuangshuang. During this period, Wang shuangshuangshuang or his employees, relatives and other personnel’s personal accounts will be collected, and the company’s unified account will be included in Wang shuangshuangshuang’s name. This also means that Wang Shuangshuang cooperated with red star gazelle in his own name before the establishment of shede creature.

In the view of economist song Qinghui, the transaction between IPO companies and individual businesses is easy to breed the problem of interest transmission, which is also the focus of regulators.

After the establishment of shede creature, the relationship between red star gazelle and it became more and more close. From 2016 to 2018, the sales amount of Red Star gazelle to shede biology increased year by year, which were about 47.522 million yuan, 48.2834 million yuan and 86.3852 million yuan respectively. In addition, in 2017 and 2018, shede bio was the largest customer of Red Star Meiling, and the sales amount accounted for 18.47% and 27.48% of the company’s main business income, respectively.

Based on the good cooperative relationship, shedebao also discussed with red star Meiling on the issue of shareholding, but it failed in the end. At the end of 2014, red star Meiling was ready to be listed on the new third board. At that time, shede biology intended to take a share. Finally, after informal private oral discussion and communication between the chairman of Red Star Meiling and the actual controller of shede biology, the two sides reached a preliminary intention to take a share.

In December 2014, red star Meiling received 1.5 million yuan from Zhu Yongju, the actual controller of shede biology. Red Star Meiling believed that it was a shareholder on behalf of shede biology, but was denied by shede biology, and finally did not accept Zhu Yongju as a shareholder. The matter has also triggered disputes between red star Meiling and Zhu Yongju.

After the above event, shede biology did not actually invest in Red Star Meiling.

Cancellation of former largest customer

As an important customer of Red Star Meiling, shedebao withdrew from the company’s top five customers list in 2019 and cancelled it in 2020, which also aroused the attention of the regulatory authorities.

According to the prospectus, since 2019, shedebao has disappeared from the top five customers list of Red Star Meiling. However, there was still cooperation between the two sides in that year. In 2019, the sales amount of Red Star gazelle to shedebao was 6.7128 million yuan, which was more than 90% lower than that in 2018.

Shenzhen Stock Exchange also questioned the reasons for the large amount of cooperation with shede biology in the early stage and the reduction of cooperation in 2019. In this regard, red star Meiling said that due to the large sales volume of shede biology, the company provided it with more preferential sales policies. During the reporting period, the company optimized the product structure on the basis of expanding production and sales scale, vigorously promoted infant formula milk powder with higher added value, and continued to increase cooperation with shede biology, which was not in line with the company’s overall strategic orientation. In order to improve the company’s gross profit level, adjust the product structure, take the initiative to reduce the cooperation with shede biology.

However, it should be pointed out that in 2020, shedebao will be cancelled. As for the reason and rationality of the cancellation of shede bio, red star Meiling said that because shede bio is mainly connected with the company’s business, and the registered capital is not high, the relevant sales business is mainly completed by the sales channels of other related enterprises, and there are many similar enterprises under Wang shuangshuangshuang and Xu Changcheng families, so it is no longer necessary to exist. It is understood that the real controller of shede biology is Wang Shuangshuang and Xu Changcheng, the father of Wang Shuangshuang’s spouse.

After the withdrawal of shede bio, Nanning aoliyuan Trading Co., Ltd. (hereinafter referred to as “aoliyuan trading”) has become the largest customer of Red Star Meiling in 2019 and 2020. However, from the sales data, the sales amount of Red Star Meiling to aoliyuan trading is far less than that of shedebao.

According to the data, in 2019 and 2020, the sales amount of Red Star Meiling to aoliyuan was about 22.5539 million yuan and 20.9111 million yuan respectively, accounting for 6.6% and 5.76% of the company’s main business income. In 2018, the sales amount of Red Star Meiling to aoliyuan was about 14.483 million yuan.

In response to relevant issues, a reporter from Beijing business daily sent an interview letter to Red Star Meiling. In the reply letter, the other side said: “the company has been developing new customers. Under the background of the gradual expansion of the company’s sales scale and the increasing penetration rate of the product industry, relevant new customers have cooperated closely with the company, and the transaction amount has increased. The reason for the substantial increase in the sales amount of the company to aoliyuan is the inevitable result of its continuous expansion of sales channels, which matches the consumption habits of consumers in its terminal sales areas, that is, cities and counties in Guangxi. “

Former partners become competitors

In the past few years of cooperation with red star Meiling, Xu Changcheng has become more and more ambitious. He began to expand from downstream distribution channels to upstream production and manufacturing, and controlled Shaanxi Shengtang Dairy Co., Ltd. (hereinafter referred to as “Shengtang Dairy”), a goat milk production and processing enterprise in the same region as red star Meiling, which also made both sides become competitors.

According to Red Star Meiling, the Wang Shuangshuang and Xu Changcheng families were initially mainly engaged in the sales of health food in a single format. Now they have gradually developed into an enterprise cluster with diversified formats and complete chain. Jiangsu Boling Technology Group Co., Ltd., one of its core enterprises, has a registered capital of 50 million yuan. After five years of leapfrog development, it has developed into a company with goat milk as its main business and a collection of goat milk It is a comprehensive industrial group integrating scientific research, development, production and sales. Its industries include Wuxi Renmin Linggou Network Technology Co., Ltd., duoshihui big data Co., Ltd., Shengtang dairy, etc.

It is not difficult to see that Wang Shuangshuang and Xu Changcheng have strong capital. And the competitive relationship with red star Meiling should start from investing in Shengtang dairy.

In September 2018, Xu Changcheng invested in Shengtang dairy, with a shareholding ratio of 34%, becoming the controlling shareholder and actual controller of Shengtang dairy. Shengtang dairy and hongxingmeiling are goat milk production and processing enterprises in the same region.

Red Star Meiling also admitted that although the company’s performance has not been significantly affected after no longer cooperating, because the company and Shengtang dairy have formed substantial competitive relationship in the purchasing end and sales end, if Shengtang dairy relies on Xu Changcheng’s inherent sales channel advantages to refine its internal skills and develop rapidly, there will be adverse risks of seizing the company’s market share and affecting the company’s performance.

According to the financial data, from 2018 to 2020, the operating revenue of Red Star Meiling is about 314 million yuan, 342 million yuan and 363 million yuan respectively, and the corresponding attributable net profit is about 41.0449 million yuan, 44.8877 million yuan and 55.0915 million yuan respectively.

Zhu danpeng, an analyst of China’s food industry, said in an interview with Beijing Business Daily that due to the diversified and differentiated demand of goat milk, the goat milk racetrack has been crowded since 2019. At present, the domestic goat milk consumer group is still expanding. It is expected that goat milk enterprises will continue to increase in the future and the competition will also increase. “Red Star Meiling is a relatively large goat milk enterprise in Northwest China. In the competition of the whole goat milk market, there is still a big gap between domestic goat milk and foreign-funded and super large dairy enterprises in terms of brand effect, scale effect and channel layout. This time, red star Meiling is seeking to be listed. It also wants to use the capital market to enhance the comprehensive strength of the company and speed up the pace of its nationwide distribution through the empowerment of capital. ” Zhu said.

Beijing Business Daily reporter Dong Liangma

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