Listing is breaking, which seems to have become the "main theme" of the listing of new shares in April. Among these new stocks, Tianjin Jianfa (02515) fell the most.
Zhitong Finance APP noted that Tianjin Jianfa successfully landed on the Hong Kong Stock Exchange on April 23. The company opened its report on the same day.Arcadeworld.88 Hong Kong dollars, then fluctuated downwards, closing at HK $1.52 on the first day of trading, down nearly 40 per cent from its offering price of HK $2.50, with a market capitalization of just HK $328 million. The company's share price rebounded over the next two days, but then declined again, falling to a new low of HK $1.42 on April 29.
It is worth noting that Tianjin Jianfa had already heard the listing through the main board of the HKEx as early as December 21, 2023, but the listing plan was postponed because the offering price could not be determined within the specified time.
Judging from the company's current trend, the postponement of listing does not seem to have brought expected surprises to the company. Why on earth did Tianjin Jianfa, which is listed on the market, be abandoned by the market?
Revenue is good, earnings fluctuate.
As a private construction group in Tianjin, Tianjin Jianfa was established in 2010, mainly focusing on municipal public works in Tianjin. According to Frost Sullivan, Tianjin Jianfa ranks fourth among Tianjin municipal utility private companies in terms of revenue generated by municipal utilities in 2022.
In terms of performance, Tianjin Jianfa's revenue continued to grow in 2021, 2022 and 2023, with revenue of 275 million yuan (RMB, the same below), 288 million yuan and 319 million yuan, respectively, with a compound annual growth rate of 7.7%.
From a business point of view, municipal public works, foundation works and construction projects are the most important sources of income for Tianjin Jianfa. It should be noted that the revenue share of the company's various businesses is quite volatile.
During the reporting period, the income of Tianjin Jianfa's municipal public works business was 145 million yuan, 86.469 million yuan and 186 million yuan respectively, accounting for 52.6%, 30% and 58.3% of the income respectively. The company's income from foundation engineering business was 89.153 million yuan, 20.476 million yuan and 83.265 million yuan respectively, accounting for 32.4%, 7.1% and 26.1%, respectively. In the same period, the income contributed by the construction business was 19.236 million yuan, 171 million yuan and 41.155 million yuan respectively, accounting for 7%, 59.5% and 12.9% of the corresponding income.
In addition, the company also has petrochemical engineering business and itsArcadeworldHis business, but the revenue of the two businesses is relatively small, accounting for less than 3% of the combined revenue of the two businesses in 2023.
Zhitong Financial APP noted that the continued fluctuation in the revenue share of Tianjin Jianfa may be related to the fact that its business is too concentrated in Tianjin and that the company's business is very dependent on the prosperity of the engineering construction industry. Up to now, the company has 25 qualifications related to engineering construction business, including petrochemical engineering construction general contracting first-class qualification and foundation engineering professional contracting first-class construction qualification. Thanks to this, the company is able to undertake projects of different types and sizes throughout the country.
At present, it seems that the company has expanded its business to many provinces and cities, including Shaanxi Province, Guizhou Province and Jiangxi Province, but from the proportion of revenue, the company's revenue is still very dependent on Tianjin. In recent years, about 90% of the company's revenue comes from Tianjin. It can be seen that the company is heavily dependent on Tianjin, a single market. Although the company's share of revenue from Shaanxi Province also increased to 6.2% in 2023, compared with the high proportion of Tianjin, it can be seen that the company's business expansion in other provinces and regions has not yet become a climate.
In addition, compared with rising revenue performance, the company's profitability is fluctuating downwards. The gross profit margin of the company during the period was 26.1%, 25.2% and 25.1%. At the same time, the company's net profit also continued to fluctuate. Tianjin Jianfa's net profit during the reporting period was 41.414 million yuan, 35.09 million yuan and 41.045 million yuan respectively, of which there was a negative year-on-year growth in 2022.
The future outlook is fraught with risks.
At the same time, the company also faces the risk of relying on big customers. During the reporting period, the five major customers of Tianjin Jianfa accounted for 63.5%, 77.0% and 81.6% of the total revenue respectively, and the proportion continued to increase.
Zhitong Financial APP learned that the "prepayment model" is quite common in project contracting enterprises. In the process of winning the bid, the money generated by the construction will basically be advanced by the engineering party, and then Party A will deliver the relevant money to the company. Tianjin Jianfa has said that the company may need more than one year after the completion of the relevant project to receive the corresponding payment for the construction project. Therefore, cash flow management and capital sources have always been the limiting factors faced by relevant enterprises.
Due to the industry characteristics and the dependence of major customers, the company's accounts receivable performance fluctuates under multiple pressures such as the company's lack of voice. During the reporting period, the company's trade receivables and notes receivables were $90.7 million, $124 million and $233 million respectively. At the same time, the average turnover days of the company's trade receivables increased significantly, to 83.3 days, 141.5 days and 216.0 days respectively during the reporting period.
Under the high accounts receivable, the cash flow situation of Tianjin Jianfa is also unstable. In 2023, the company has a negative net operating cash flow. In addition, during the reporting period, the company's cash and cash equivalents also showed a fluctuating downward trend, of 11.3 million yuan, 20.2 million yuan and 6.4 million yuan.
It can be seen that under the fluctuating cash flow situation, Tianjin Jianfa is facing great financial pressure. At the same time, the company's main customers include government agencies or state-owned enterprises, which usually have more internal metering and settlement procedures, or further prolong the company's settlement time.
In addition to financial pressure, the company's growth prospects are not optimistic.
Although for a long time, the engineering construction industry, as one of the pillar industries in China, plays an important role in the development of the country. However, the growth rate of related industries is expected to slow in the future. Data show that from 2018 to 2022, the total income of the municipal utility industry in Tianjin, which is deeply ploughed by Jianfa in Tianjin, increased from 26.5 billion yuan to 45.9 billion yuan, corresponding to a compound annual growth rate of 14.7 percent, which is expected to gradually slow to 9.2 percent from 2022 to 2027.
与此同时，随着行业的高度成熟，形成了高度分散的市场竞争环境。于2022年，就市政公用工程收入而言，五大及十大市政民营建筑公司分别占天津市所有市政公用工程公司的总市场份额为3.0%及4.0%。而行业排名第四的天津建发仅有0.2%的市占率。在这样的背景下，公司业绩的“天花板”似乎已经显现。
综合来看，天津建发不仅盈利表现持续波动，还面临着大客户依赖、资金压力等多重风险。 与此同时，市占率仅有0.2%的天津建发还面临着行业增长前景放缓的困境。可见公司“上市即破发”并非毫无来由，成功上市虽可作为天津建发历史发展的重要里程碑，但如何获得资本市场的关注并确立市场优势，天津建发似乎还有很长的路要走。