CJS(SH:600176) Sou Hu Cai Jing·2025-07-31 00:38Core Viewpoint - Zhejiang Zhenshi New Materials Co., Ltd. (Zhenshi Shares) is making a high-profile return to the A-share market after a six-year privatization, aiming to raise 3.981 billion yuan despite concerns over its declining revenue and strong ties with China Jushi and Zhenshi Group [1][2][24]. Group 1: Company Background and History - Zhenshi Shares, originally established as Hengshi Limited in September 2000, faced losses from 2000 to 2003 before restructuring and forming a partnership with Zhenshi Group in 2004 [5][6]. - The company successfully listed on the Hong Kong Stock Exchange in December 2015, but struggled with revenue stagnation and liquidity issues, leading to its privatization in 2019 [7][9][10]. Group 2: Financial Performance - Zhenshi Shares reported revenues of 5.267 billion yuan, 5.124 billion yuan, and 4.439 billion yuan for 2022, 2023, and 2024 respectively, indicating a continuous decline in revenue [16][19]. - The company’s net profit for the same period was 781 million yuan, 793 million yuan, and 610 million yuan, with a notable 23.11% decrease in 2024 [20][23]. Group 3: Debt and Cash Flow - The company has seen a significant increase in accounts receivable, with 2024 figures showing that nearly half of its revenue was on credit, leading to cash flow challenges [2][21]. - Zhenshi Shares adjusted its debt structure, reducing short-term debt while increasing long-term loans by 13.18 billion yuan, a growth of 118.19% [3][22]. Group 4: Dividend Distribution - Prior to the IPO, Zhenshi Shares distributed approximately 1.14 billion yuan in dividends over 2022 and 2023, with a significant portion benefiting the controlling shareholders [4][21]. Group 5: Related Party Transactions - The company has a high dependency on related party transactions, with over 60% of its procurement costs linked to China Jushi and Zhenshi Group, raising concerns about its independence [24][25].