Xinxing Tools IPO, two licensed representatives participated in both projects together, and both failed. Isn't that just a coincidence?

Source: Fundamental Force

Recently, a company is applying for an IPO, the full name of the company is Zhejiang Xinxing Tool Co., Ltd., the stock abbreviation is Xinxing Tools, and the sponsoring institution is Huatai United Securities, with the sponsoring representatives being Liu Dong and Chen Jiamin.

Public information shows that Xinxing Tools produces tools for drilling, which is quite a traditional industry and product. In recent years, there hasn’t been much growth in performance, with net profit from 2022 to 2024 not exceeding 5% year-on-year, and this is achieved despite a cumulative growth in the core product output of over 20%, indicating the profit pressure faced behind this.

However, it should also be noted that despite Xinxing Tools’ small operating scale, with annual revenue not exceeding 500 million yuan, it is still a leader in its niche industry. The prospectus reveals: “The company’s core product is steel plate drills, with the global market size for related products being approximately 920 million yuan, and the company’s market share for existing products is relatively high, with a domestic market share exceeding 50%.”

But the problem arises here; this time, in the IPO application, Xinxing Tools’ fundraising projects are still centered around the company’s existing main business, with an expected annual increase in operating revenue of about 510 million yuan. Adding this to the company’s existing revenue scale of 467 million yuan, it surpasses the “global market size for related products” of 920 million yuan. Is this aiming to monopolize the global market?

That’s the general situation. The two sponsoring representatives for Xinxing Tools’ IPO, Liu Dong and Chen Jiamin from Huatai United Securities, are quite interesting. The “Sponsorship Report” discloses that their work experience has some overlap, primarily in the Shanghai Tuopu IPO project and the Zhiye Software IPO project.

I specifically took a look, and hey, both projects ended in IPO failure. Isn’t that a coincidence?

First, let’s talk about Shanghai Tuopu, which was first filed in June 2019 and withdrawn in December of the same year; it was then refiled in June 2020 and terminated in early 2021. The two adjacent filings had the sponsoring institution as China Merchants Securities (600999.SH), with Chen Jiamin initially as the project contact and later promoted to project co-organizer, while Liu Dong was consistently a project team member. The failure of this company’s listing is likely related to the stability of its performance, as it reported continuous losses from 2016 to 2019, with revenue fluctuating.

Now looking at Zhiye Software, this project is even earlier, with an IPO application in September 2017, also sponsored by China Merchants Securities, and terminated in May 2020. Additionally, in the prospectus released by Zhiye Software, I did not find the names of Liu Dong and Chen Jiamin in the section regarding sponsoring institutions and personnel; I wonder what the reason is?

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Editor: Gao Jia