The big boss wanted to become the first stock in the industry, but was stopped by the Shenzhen Stock Exchange!

Its performance, equity, and positioning attributes have all been questioned by regulators and the market. Duyuan Outdoor, which intends to become the "No. 1 RV and yacht stock," may have difficulty in listing.

After three rounds of inquiries, there are still many doubts, and Duyuan Outdoor's IPO has been suspended for review

On April 26, the official website of the Shenzhen Stock Exchange showed that the IPO of Xiamen Duyuan Outdoor Products Co., Ltd. (hereinafter referred to as " Duyuan Outdoor " ) was suspended for review at the GEM meeting that day .

According to the Shenzhen Stock Exchange's review results announcement , there are three reasons why Duyuan Outdoor's review was suspended:

1. Share ownership issues

The latest prospectus shows that the current largest shareholder of Duyuan Outdoor is still Lin Xizhen, while Lin Yubai ranks second with 17.1% of the shares. In July 2019, Lin Yubai's brother Lin Yusong transferred his 14% equity to Lin Yubai at a transfer price of 3 yuan per share, but in September of the same year, the fair value of Duyuan Outdoor's equity was 62.7 yuan per share . In addition, from August 2019 to date, the equity of five companies under Lin Yusong's name has been frozen by the court.

In response, the Shenzhen Stock Exchange requires Duyuan Outdoor to explain the reasons and rationality for Lin Yusong's low-price transfer of equity based on the time and price of the equity transfer, the freezing of equity, and the fair value of equity during the same period; and to explain whether there is a situation in which Lin Yubai holds shares on behalf of others and affects the clarity of the ownership of Duyuan Outdoor shares.

Since its establishment, Duyuan Outdoor has had a strong flavor of "family business". The actual controller Lin Xizhen and his partner Lin Chunnu (direct shareholding) and subsidiary manager (indirect shareholding) Lin Qiuqun are brothers and sisters; Lin Xijian is the actual controller's former cousin, and Lin Ledong is the actual controller's cousin's brother-in-law.

In addition, Seaflo Marine, a company controlled by the ex-wife of the actual controller, is the first customer of Duyuan Outdoor, and its sales revenue accounts for the bulk of its overseas market revenue, which has also become a point of doubt for the Shenzhen Stock Exchange.

2. Overseas income issues

From 2020 to 2022, Duyuan's outdoor sales to Seaflo Marine were RMB 38.2172 million, RMB 48.3195 million and RMB 54.3032 million, respectively, accounting for 75.43%, 76.03% and 77.32% of overseas revenue.

In response, the Shenzhen Stock Exchange requested an explanation of the reasons and rationale for the continued growth in Seaflo Marine's sales and the large fluctuations in Q4; and an explanation of whether there are major uncertainties in the business cooperation with Seaflo Marine.

As the largest customer, Duyuan Outdoor's revenue is largely dependent on Seaflo Marine . First, the overseas market is Duyuan Outdoor's main market, accounting for 83% of its revenue, and the revenue from Seaflo Marine accounts for 77% of its overseas revenue. If Seaflo Marine encounters risks such as improper operation, Duyuan Outdoor will inevitably be greatly affected.

3. R&D investment issues

From 2020 to 2022, Duyuan Outdoor's investment in research and development was RMB 9.2273 million, RMB 13.2424 million, and RMB 13.9511 million, respectively, of which employee salaries reached RMB 3.6612 million, RMB 5.8505 million, and RMB 6.6444 million, respectively. The number of R&D personnel did not increase much in the three years (27, 40, and 35, respectively), but salary expenditure almost doubled.

In this regard, the Shenzhen Stock Exchange hopes that Duyuan Outdoor will explain the reasons and rationality for the increase in employee salaries in R&D expenses, and whether the collection of R&D expenditure costs is true and accurate.

As of now, there are many questionable issues in the materials disclosed by Duyuan Outdoor. Prior to this, it had gone through three rounds of inquiries by the Shenzhen Stock Exchange, but still failed to resolve all the doubts. After this meeting, it was suspended for review by the Shenzhen Stock Exchange.

But in fact, since the announcement of its listing, in addition to regulatory authorities, Duyuan Outdoor has also been subject to market doubts.

Is it a fake product? The core product has too weak a connection with outdoor activities

Perhaps since it had the intention to go public, Duyuan Outdoor changed its name and positioning itself as an "outdoor" company.

But when it was first established in 2012, the company was named "Xiamen Huiliyuan Import and Export Co., Ltd." and its shareholders were Lin Xizhen and his ex-wife Ye Yaoru.

It was not until November 2020 that the company was changed into a joint-stock company and changed its name to "Xiamen Duyuan Outdoor Products Co., Ltd.", making its positioning clearer in the name, but its "outdoor" origin has been repeatedly questioned.

It can be seen from the prospectus that its core product is marine water pumps. Although it is related to RV and yacht accessories , its outdoor attributes are very vague. In addition, it also compares itself with fitness equipment companies such as Impulse , Shuhua Sports , Jinling Sports, and Kangliyuan in the prospectus , which is very inconsistent.

On Amazon, Duyuan Outdoor's marine water pumps and other related products have long been on the Best Seller list, and even ranked No. 1 on the BS list; many of its products are also on the Amazon choice list .

The company is positioned in the manufacturing industry of cultural and educational, arts and crafts, sports and entertainment products, but Duyuan Outdoor's main products, small and micro pumps, are mainly used in expensive goods such as RVs and yachts, and therefore it has been subject to multiple rounds of inquiries from the Shenzhen Stock Exchange.

In addition, Duyuan Outdoor's performance, growth, GEM positioning, and various internal control flaws have all been the focus of controversy . In order to respond to inquiries, it has updated its prospectus several times .

Just when the critical period of going to the board meeting was finally approaching, issues such as Duyuan Outdoor's shareholding ownership, revenue share, and R&D investment were again questioned.

"Misfortunes never come alone", Duyuan Outdoor's performance and revenue last year were also poor.

In the first year of its listing journey ( 2022), Duyuan Outdoor's revenue and net profit both declined by more than 10% . In the first quarter of this year , its downward trend has not stopped, with revenue down 15.26% from the same period last year .

At the same time, affected by the decline in orders, the capacity utilization rate of many products under Duyuan Outdoor has also declined rapidly, and the gross profit margin has also dropped from 51.59% in 2020 to 43.42% last year.

Although compared with its peers, Duyuan Outdoor's gross profit margin and annual compound growth rate of revenue are far ahead of its peers, its own brand SEAFLO also has good sales and market attention on Amazon.

However, in the eyes of regulators and the market, these data contain many doubts and are not convincing enough.

Not only that , there are also many irregular operations in Duyuan Outdoor:

1. The subsidiary Fujian Ai obtained working capital loans of nearly 9 million yuan from suppliers or related parties ;

2. The subsidiary Kangyuan Precision discounted the bank acceptance bill issued by its customer Sanjie Technology (Xiamen) Co., Ltd. to an unqualified third party to obtain funds;

3. Directly borrow funds from related parties or third parties totaling nearly 20 million yuan;

4. Collect payments through employees or use personal accounts to receive and pay external funds.

The subsidiary Fujian Ai has also faced two administrative penalties in the past two years : a fine for fire protection products that did not meet requirements and were not rectified within the deadline ; and a fine for false customs declaration violations.

After multiple rounds of inquiries and several updates to the prospectus, at the end of March this year, the Shenzhen Stock Exchange suspended its listing review due to expired financial data. It was "unlocked" only after submitting the latest financial information in April October. But less than half a month later, the Shenzhen Stock Exchange suspended its review again. Many of the contents disclosed by Duyuan Outdoor still lacked persuasiveness, and the road to listing was full of ups and downs.

Listing

Suspension