Qinshang shares withdrew its 687 million additional issuance and failed to

On November 28, Qinshang Shares issued an announcement stating that the company decided to apply to the China Securities Regulatory Commission to withdraw the application documents for the non-public issuance of A shares.

Checking the previous announcements of listed companies, Qinshang Shares’ non-public issuance of shares will lead to a change in control. With this announcement, it means that the "change of ownership" of Qinshang shares failed.

In fact, this is the second time Qinshang Shares has planned a change of control in the past year.

Two consecutive plans to change control

Qinshang Shares announced in June this year that the company planned to issue 451 million company shares at an issue price of 1.52 yuan per share, raising a total of 687 million yuan, and to raise additional funds from Dongguan Jingtengda Enterprise Management Partnership, which is directly controlled by Li Junfeng.

If the issuance is completed, Li Junfeng will hold 451.847 million shares of Qinshang Shares through Jingtengda, accounting for 23.08% of the total share capital of Logistics Shares issued; at the same time, Li Xuliang, Wen Qi and his wife and Qinshang Group have promised not to issue shares within 36 months after the completion of the issuance. Revoking the revocation of the voting rights corresponding to the 160,000,000 shares of Qinshang Shares held through Qinshang Group, Li Junfeng will hold 451,847,000 shares of Qinshang Shares with voting rights through Jingtengda, accounting for 25.13% of the total number of shares with voting rights.

In other words, if the additional issuance is finally completed, Jing Tengda will become the controlling shareholder of Qinshang Shares, and Li Junfeng will become the actual controller of Qinshang Shares. As Qinshang Shares announced in this announcement that it would withdraw its application documents for the non-public issuance of A shares, the change of control rights of Qinshang Shares was ultimately not completed.

In terms of planning changes in control at the end of 2021, Qinshang Shares pointed out that the company received the "Notice on Planning Changes in Control" issued by the controlling shareholder Qinshang Group on December 27, 2021. Qinshang Group is planning related matters related to changes in control. Specific plans include but are not limited to non-public issuance of shares to Mr. Li Junfeng or entities controlled by him. The specific plans are subject to relevant agreements signed by all parties. If the above matters are finally reached, it will lead to changes in the company's controlling shareholder and actual controller.

A week later, Qinshang Shares announced that Qinshang Group has decided to terminate the planning of matters related to the change of control.

It is worth noting that "Li Junfeng" appeared in both "changes of ownership", but in the announcement of Qinshang Shares, Li Junfeng and the Dongguan Jingtengda Enterprise Management Partnership directly controlled by Li Junfeng were not introduced.

According to Aiqicha’s information, Dongguan Jingtengda Enterprise Management Partnership was established in August 2021 with a registered capital of 10 million yuan. Its business scope is: enterprise management; enterprise management consulting; engaging in investment activities with its own funds; office services; commercial complex management services; and information consulting services.

In terms of ownership structure, Dongguan Xinda Zhihe Enterprise Management Co., Ltd. holds 99% of its shares, and Li Junfeng holds 1% of its shares; while Dongguan Xinda Zhihe Enterprise Management Co., Ltd. was also established in August 2021, and Li Junfeng holds 95% of its shares. In addition, the two companies' business scope is consistent.

For such a new company with a low registered capital, it has to participate in a 687 million yuan private placement project. It is unclear whether Li Junfeng and his company have sufficient strength. But the final result was that the two "changes of ownership" of Qinshang shares ended in failure.

Behind the attempt to change ownership: the education and training business is losing ground

In 2016, Qinshang Shares began to seek the development of the dual main businesses of "semiconductor lighting + education and training", and successively acquired 100% equity of Guangzhou Longwen, 40% equity of Yinglun Education, 10% equity of Aobu Education, 10% equity of Siqi Education, 30% equity of Yipole Sports and Liuzhou Little Red Riding Hood through the issuance of shares, payment of cash, capital increase, etc.

However, investment in education and training has not brought profit returns to Qinshang Shares. Among them, Guangzhou Longwen was in the red from 2019 to 2021, and its net profit losses in 2020 and 2021 were both hundreds of millions. In the same year, the net profits of Qinshang Shares attributable to shareholders of listed companies were 45.1879 million and -862.4096 million respectively.

In addition, the "double reduction policy" introduced in July 2021 has made the development of the education and training business more difficult. Therefore, Qinshang Shares announced in March this year that it planned to transfer 100% of the equity of Guangzhou Longwen and 99% of the equity of Beijing Longwenyun to Zhuhai Huizhuo for a consideration of 1 yuan. In addition, Qinshang Shares also ceased operations and canceled operations of Qinshang (Beijing) Consulting Management Co., Ltd. and Beijing Longju Yunxing Technology Co., Ltd., its main subsidiaries (grandsons) in the education and training sector.

The impact of the divestment of the education and training business on the performance of Qinshang Shares is still continuing. In the third quarter of 2022, the performance of Qinshang Shares is as follows:

In response to the decline in revenue, Qinshang Shares pointed out that it was mainly due to the company shutting down and divesting off-campus training business during the reporting period, and the relevant accounting subject data decreased.

Conclusion

A high-profile entry into the education and training industry ended in disgrace. Looking back at the failure of Qinshang’s cross-border business, the reason is probably related to Qinshang’s lack of understanding of the education and training industry.

The predecessor of Qinshang Co., Ltd. is Dongguan Qinshang Hardware and Plastic Products Co., Ltd., which is mainly engaged in semiconductor lighting application business. Until 2016, Qinshang shares did not have the education gene, and entering the education and training industry was tantamount to a big gamble for it.

The semiconductor lighting application business, another main business of Qinshang Shares, has performed steadily in recent years. From 2018 to 2021 and the first half of 2022, this business achieved revenue of 607 million yuan, 616 million yuan, 496 million yuan, 500 million yuan, and 311 million yuan respectively.

It is not easy for an elephant to turn around. Faced with reality, Qinshang Shares finally chose to divest the education and training business that continued to lose money, and sought to change the actual controller. Although the two changes of ownership ended in failure, it is still unclear whether it will continue to open a new chapter of development at the expense of giving up control in the future.