CJS(SH:600176) Sou Hu Cai Jing·2025-07-12 03:58Group 1 - The China Securities Association recently announced the second batch of companies for on-site inspections for IPOs in 2025, including Zhenstone Co., Ltd., which submitted its application materials at the end of June [1] - Zhenstone Co., Ltd. specializes in the research, production, and sales of fiber-reinforced materials in the clean energy sector, but faces significant challenges regarding its independence due to heavy reliance on China Jushi and its controlling shareholder, Zhenstone Group [2][15] - The company's financial performance has shown a downward trend, with revenue and net profit declining over the past three years, and operating cash flow being negative for two of those years [2][9] Group 2 - Zhenstone's production capacity utilization has been low, projected at just over 80% in 2024, while the company plans to raise 3.98 billion yuan for significant capacity expansion despite existing overcapacity in the industry [2][5] - The company has a high level of accounts receivable, with the balance nearing half of its revenue, indicating potential cash flow issues [10][11] - Zhenstone's cash flow has been poor, with negative operating cash flow in two of the last three years, and a high debt-to-asset ratio, raising concerns about its financial stability [11][12] Group 3 - The company has announced a large cash dividend of 1.14 billion yuan prior to its IPO application, which is approximately 73% of its net profit for the same period, raising questions about its financial prudence [12][13] - Zhenstone's reliance on China Jushi for raw material supply is significant, with over 68% of its purchases coming from this single supplier, which poses risks to its operational independence [15][16] - The management team of Zhenstone has strong ties to China Jushi, with many executives having backgrounds in the parent company, further complicating the company's independence [17] Group 4 - The company has faced scrutiny regarding its pre-IPO capital increases, with concerns about the valuation and potential conflicts of interest among management [19][20] - Zhenstone's financial internal control has been questioned due to instances of irregularities, including improper financial practices, although the company claims to have taken corrective actions [23] - The upcoming on-site inspection raises uncertainty about Zhenstone's IPO prospects, given the various issues highlighted [23]