"Debut Day Surge: Who Benefits from 753% Gain in Huicheng Vacuum's Trading Halt?"

Introduction: As a supplier in the fruit chain, Huicheng Vacuum was warmly welcomed by the market as soon as it went public, with a surge of over 750% on its first trading day, becoming the stock with the largest first-day increase among new shares within the year. The "crazy" Huicheng Vacuum has made the venture capital "sponsors" behind it earn a lot, and the wealth of the Li family, as the actual controller, has also risen accordingly.

The "King of Increase" of new shares within the year has changed, and Huicheng Vacuum has triggered two temporary suspensions.

On June 5, Huicheng Vacuum's first trading day saw a surge of 753%, triggering two temporary suspensions in a row, with a share price of 104.06 yuan/share, becoming the stock with the largest first-day increase among new shares within the year.

It is reported that Huicheng Vacuum issued 25 million shares upon listing, including 10.875 million shares issued online, with an issue price of 12.20 yuan/share and an issue price-earnings ratio of 16.31 times. Dongguan Securities is the sponsor.

This listing, Huicheng Vacuum raised 235 million yuan, of which 100 million was used for the research and development production base project, 75 million for the vacuum coating research and development center project, and 60 million for supplementary working capital.

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It is worth noting that the sharp rise of Huicheng Vacuum has also benefited a group of investors of the company. Among them, Qianhai Pengchen's Shenzhen Qianhai Pengchen Chuangzhi Investment Management Enterprise (Limited Partnership) and Shenzhen Qianhai Pengchen Yuan Tuo Investment Enterprise (Limited Partnership) (hereinafter referred to as "Pengchen Chuangzhi" and "Pengchen Yuan Tuo") have benefited a lot.

Venture capital Qianhai Pengchen "eats meat"

Thanks to the dazzling performance of Huicheng Vacuum in the secondary market, Qianhai Pengchen, one of the "Bole" of the listed company, has benefited a lot.

Public information shows that Huicheng Vacuum was established in 2006 and is a leading domestic provider of vacuum application solutions. After listing, the actual controller and legal representative Li Zhirong directly holds 22.89% of the company's shares.

It is reported that the company's main business is the research and development, production, sales, and technical service of vacuum coating equipment, with the main products or services being vacuum coating equipment and supporting process service support. Its vacuum coating equipment is currently mainly used in consumer electronics fields such as smart phones, screen display, and optical lenses.On its debut day in the Growth Enterprise Market, Huicheng Vacuum demonstrated an astonishing "money-sucking" capability with a surge of 752.95%, undoubtedly benefiting the many investors behind the listed company. Upon examining the equity structure of Huicheng Vacuum, it can be discovered that Qianhai Pengchen is one of the big winners.

Public information reveals that Pengchen Chuangzhi and Pengchen Yuantuo underwent private fund registration procedures on November 24, 2016, and June 15, 2017, respectively, with fund types being equity investment fund and venture capital fund, and both funds are managed by Qianhai Pengchen.

Data from Tonghuashun shows that currently, Pengchen Chuangzhi and Pengchen Yuantuo hold 2,972,100 and 1,509,100 shares of the listed company, respectively, totaling 4,481,200 shares. Calculated with today's closing price, the value of these shares amounts to approximately 466 million yuan.

Specifically, information disclosed in Huicheng Vacuum's prospectus indicates that Pengchen Chuangzhi invested in Huicheng Vacuum on March 15, 2016, holding 3.96% of the company's shares before going public; a year later, Pengchen Yuantuo held 2.01% of the company's shares.

In fact, behind Qianhai Pengchen's substantial gains, there is also the assistance of winning bets.

"Bet Out" Winners

Through betting, Qianhai Pengchen has benefited by approximately 56 million yuan.

On January 19, 2017, Pengchen Chuangzhi, Zhu Xuesong, Xizang Jiadejia, Xiahou Zaoyao, Shenzhen Ningmengrui as Party A, Huicheng Limited as Party B, and the actual controller, Xinyu Bishui as Party C, jointly signed an investment agreement with betting clauses. Subsequently, a series of agreements to lift or reinstate the execution of betting-related agreements were signed, which included arrangements such as performance commitments and compensation, share repurchase, and special shareholder rights clauses.

According to the prospectus content, the betting agreement requires Huicheng Vacuum to complete its initial public offering and listing on the Shenzhen Stock Exchange or Shanghai Stock Exchange within 4 years from the date of signing.

In addition, the parties agreed that Huicheng Vacuum's net profits for 2017 and 2018 should not be less than 37.5 million yuan and 41 million yuan, respectively; in 2018, the company introduced four investors including Nanshan Jiaqiao and Pengchen Yuantuo, and the parties agreed that Huicheng Vacuum's net profits for 2018 to 2020 should not be less than 50 million yuan, 65 million yuan, and 80 million yuan, respectively.It is not difficult to find that the ultimate vacuum failed to go public as scheduled. On August 17, 2021, the betting party executed the betting agreement, and Li Zhirong transferred 0.33% of the equity to Xiahou Zaoyao, 0.21% of the equity to Zhu Xuesong, 0.17% of the equity to Tibet Jia Dejia, 0.34% of the equity to Pengchen Chuangzhi, 0.02% of the equity to Nanshan Jiaqiao, and 0.38% of the equity to Pengchen Yuantuo. Luo Zhiming transferred the 814,000 shares of equity he held to Shenzhen Ningmeng Rui and Nanshan Jiaqiao, and Li Zhifang transferred the 515,500 shares of equity he held to Nanshan Jiaqiao.

Specifically, Qianhai Pengchen benefited from the bet by more than 56 million yuan. It is reported that Pengchen Chuangzhi received 257,780 shares of the issuer from Li Zhirong, corresponding to a proportion of 0.3437%; Pengchen Yuantuo received 284,580 shares of the issuer from Li Zhirong, corresponding to a proportion of 0.3794%. The total of 542,360 shares corresponds to the current market value of about 56 million yuan.

It is worth mentioning that the actual controllers of Huicheng Vacuum are Li Zhirong, Luo Zhiming, Li Zhifang, and Li Qiuxia. Before going public, Li Zhirong and Luo Zhiming directly held 30.52% and 20.46% of the company's shares, respectively, while Li Zhifang and Li Qiuxia directly and indirectly held 13.63% and 7.51% of the company's shares. It is reported that these four people are siblings and signed a unified action agreement on July 8, 2020. The four people directly and indirectly held 72.12% of Huicheng Vacuum's shares.

Fruit chain "dependence syndrome"

For a long time, Huicheng Vacuum has been relatively dependent on major customers. The prospectus shows that the total revenue realized by the company's top five customers is 35,021.50 million yuan, 34,522.54 million yuan, and 22,824.78 million yuan, accounting for 65.56%, 60.48%, and 43.72% of the current period's operating income, respectively, with a high proportion.

It is reported that the main reason for this phenomenon is the high concentration of the downstream consumer electronics industry and the company's implementation of a major customer strategy. The main customers include Foxconn, BYD, Apple, Jabil, and other well-known domestic and foreign enterprises.

Among them, Huicheng Vacuum's dependence on Apple is particularly obvious. The company explained this by saying that Apple's leading position in the consumer electronics market, many terminal customers involved in the Apple industry chain, the proportion of revenue from the Apple industry chain is at a high level, such as Zhixin Precision, Tongtai Ying, Liu Chun Technology and other companies, the proportion of revenue from the Apple industry chain in recent years has exceeded 70% or even a higher proportion.

However, the company is gradually changing this phenomenon. The content of the prospectus shows that from 2021 to 2023, Huicheng Vacuum's total sales to Apple industry chain manufacturers were 287,169,500 yuan, 203,387,300 yuan, and 121,790,800 yuan, accounting for 53.77%, 35.64%, and 23.34% of the main business income, respectively.Additionally, the gross profit from Apple's supply chain accounts for 61.95%, 49.74%, and 31.78% of the main business gross profit, respectively, indicating that the issuer's sales revenue and gross profit from Apple's supply chain have a high proportion. It is not difficult to find that Huicheng Vacuum is at risk of depending on Apple's supply chain, but the degree of dependence is showing a weakening trend.

In fact, in order to get rid of the form of being overly dependent on Apple, Huicheng Vacuum is also continuously expanding more customer sources. The prospectus shows that during the reporting period, Huicheng Vacuum gradually entered the supplier system of well-known domestic enterprises other than Apple's supply chain. There are 20 customers with annual revenue exceeding 10 million yuan, such as Zhejiang Rijiu New Material Technology Co., Ltd. and Shenzhen Zhenghe Zhongxin Co., Ltd., involving consumer electronics, other consumer goods, industrial products, scientific research institutions, and other fields.

The data disclosed in the prospectus shows that from 2021 to 2023, Huicheng Vacuum's non-Apple supply chain revenue was 246.94 million yuan, 367.35 million yuan, and 400.32 million yuan, respectively, showing an increasing trend year by year, and the proportion of main revenue increased from 46.23% in 2021 to 76.66%.

With the continuous expansion of Huicheng Vacuum's production capacity and capital scale, the company's dependence on Apple's supply chain will gradually decrease.