Another cross-border company rushes for IPO! Generous dividend of 800 million

In recent years, outdoor sports have continued to be popular, and cross-border sellers have also ushered in broader market opportunities.

Weibang Sports seized the business opportunity early on and became a leader in this field. It is currently actively rushing to go public to gain more market opportunities.

Weibang Sports is heading for IPO

It is understood that Weibang Sports has launched a sprint towards the main board market of the Shanghai Stock Exchange, and the IPO status is shown as inquiry has been made.

On May 18, 2023, Weibang Sports' IPO application was accepted by the Shanghai Stock Exchange.  

On May 19, 2023 , Weibang Sports released the prospectus ( draft) for its initial public offering and listing on the main board.

It is worth noting that not long ago, Weibang Sports' listing review was suspended because the financial information recorded in the listing application documents had expired. Later, Weibang Sports updated the financial data in the first round of inquiry letters, and it has now returned to the normal listing review process.

In this IPO, Weibang Sports plans to raise 1.6 billion yuan and issue no more than 100 million shares, accounting for no less than 20% of the total share capital after issuance. The funds are planned to be invested in new expansion projects, technical transformation and upgrading projects, R&D center construction projects, marketing system and brand promotion construction projects, and to supplement working capital.

Weibang Sports Technology Group Co., Ltd. was established in 1995 and registered in Jinhua, Zhejiang. It is a long-established outdoor sports product company, mainly engaged in the research and development, design, production and sales of outdoor sports products such as core accessories of above-ground swimming pools, outdoor sports products and core accessories of inflatable sports products. Weibang Sports has built 5 large-scale production bases in Jinhua, Zhejiang, Xiamen, Fujian, Nantong, Jiangsu and other places.

Weibang Sports' products involve many subcategories. The core accessories of above-ground swimming pools include swimming pool stands, water treatment equipment, and special swimming pool escalators; outdoor sports products include outdoor rocking chairs, swivel chairs, and folding chairs, which are widely used in outdoor activities; the core accessories of inflatable sports products mainly include motors and air pumps.

Weibang Sports' main customers include well-known companies in the industry such as Roewe International, Mingda Industry, GCI, Ningbo TAG Heuer, and Aosen Electronics. Weibang Sports' products have been widely recognized in overseas markets for their excellent quality and innovative design. The products are sold well in many countries and regions such as America, Europe, and Oceania.

At present, Weibang Sports is the manufacturer of core accessories for above-ground swimming pools with the largest market share in the world, and its customer Mingda Industrial ranks second in market share. The two companies occupy the main market share of core accessories for above-ground swimming pools in the world.

Weibang Sports once distributed 800 million yuan in cash dividends! But it still faces multiple risk factors

In November 2021, Weibang Sports paid a one-time cash dividend of 800 million yuan. It is understood that this dividend has been paid in succession from 2021 to 2022.

However, it is worth noting that Weibang Sports ' profit attributable to shareholders of the parent company for the whole year of 2021 was 433 million yuan , but it was able to pay out nearly twice as much money for dividends.

Regarding the dividend distribution of Weibang Sports, the Shanghai Stock Exchange also raised questions in the review inquiry letter, and asked Weibang Sports to explain the specific decision-making procedures and compliance of the cash dividend distribution.

The Shanghai Stock Exchange requires it to provide a detailed explanation based on the shareholders' investment price, investment and dividend time, dividend amount and dividend funding source, actual dividend payment time, and the actual use of dividends by shareholders, as well as whether there is any borrowing for dividends or other profit transfer or other circumstances that damage the interests of the issuer.

In terms of the amount of pre-tax dividends, the company's actual controller Chen Xiaobo and Weibang Holdings controlled by him received pre-tax dividends of 253 million yuan and 547 million yuan, respectively.

Regarding the specific use of the dividends, Weibang Sports said that it was mainly used to directly or indirectly increase the capital of the issuer and return the funds occupied by Chen Xiaobo and Chen Xiaowei, as well as to pay personal income tax and family living expenses. Weibang Sports pointed out that the remaining funds were kept in the Weibang Holdings Bank account and did not flow directly or indirectly to customers, suppliers and their affiliates, key personnel, nor did it advance costs and expenses on behalf of the issuer or circulate funds outside the body.

It is also worth noting that Weibang Sports had previously planned to raise 400 million yuan through an IPO to supplement working capital, but in the latest response, it suddenly announced the cancellation of this fundraising plan. This may be affected by market and regulatory requirements, but on the other hand, it can also be seen that this is a comprehensive consideration of the company's current financial situation and future business plans.

Weibang Sports' performance has fluctuated in recent years.

From 2020 to 2022, Weibang Sports' operating income was RMB 1.657 billion, RMB 3.188 billion and RMB 2.3 billion respectively, and its net profit attributable to shareholders after deducting non-recurring gains and losses was RMB 285 million, RMB 446 million and RMB 362 million respectively.

In 2021, Weibang Sports' revenue increased by 92.34% year-on-year, but in 2022, the company's revenue fell by 27.86% year-on-year.

Regarding the decline in the company's performance in 2022, Weibang Sports explained that this was due to multiple factors such as unstable international geopolitical conditions, high inflation in Europe and the United States, and declining terminal demand, which led to a decline in the company's overseas product sales.

In 2023, Weibang Sports' revenue was 1.438 billion yuan, a year-on-year decrease of 37.46%; net profit was 233 million yuan, a year-on-year decrease of 37.65%.

Regarding the reasons for the company's performance decline in 2023, Weibang Sports said that favorable factors such as the epidemic have been gradually eliminated, and the downstream market is in the stage of destocking. The company's operating income for the whole year of 2023 is at the low point of the company's regular performance cycle, and the company's operating income is expected to increase in 2024.

Weibang Sports stated in its prospectus that the trade policies of the United States and European countries also have a certain impact on the company's operations. Weibang Sports' products are mainly sold to Europe and the United States, among which the core accessories of above-ground swimming pools and inflatable sports products are sold to domestic customers who are then responsible for exporting them, while outdoor sports products are directly exported and sold to foreign customers.

A very big problem of Weibang Sports is that its customers are too concentrated.

From 2020 to 2022, the sales revenue of Weibang Sports' top five customers accounted for 96.73%, 97.58% and 98.19% of the main business revenue respectively , among which Roewe International's sales accounted for 70.13%, 77.94% and 79.04% respectively , showing an increasing trend year by year.

In response to inquiries from the Shanghai Stock Exchange, Weibang Sports also admitted that it has a significant reliance on Roewe International. If the operating conditions of major customers change in the future or the company's products fail to meet customer requirements, it may have an adverse impact on the company's production and operations.

Under the influence of multiple risk factors, whether Weibang Sports can finally go public successfully, Yien.com will continue to pay attention.

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