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JS Hongxinlong plans to list on the Hong Kong Stock Exchange. China Securities Regulatory Commission requires it to disclose the dilution of shareholders holding 5% or more.

AInvestFriday, Jul 26, 2024 8:10 am ET
1min read

On July 26, China Securities Regulatory Commission (CSRC) published the requirements for supplementary materials for filing of overseas issuance and listing (July 19, 2024 - July 25, 2024). Among them, CSRC required Hongxinlong to provide a due diligence report on shareholders holding more than 5% of the shares. Recently, Hongxinlong submitted an application for listing on the Hong Kong Stock Exchange, and Cobo Capital was the exclusive sponsor.

Specifically, CSRC pointed out that Hongxinlong should provide the following explanations and legal opinions from the lawyers:

1. Please provide a due diligence report on shareholders holding more than 5% of the shares in accordance with the requirements of the "Guidance on the Application of the Regulatory Rules - No. 2 of Overseas Issuance and Listing".

2. Please explain the calculation method and basis for the number of shareholders.

3. Your business scope involves Class II value-added telecommunication services. Please explain whether you actually engage in such business.

4. Please explain the situation of the websites, APPs, programs, public accounts and other products developed and operated by your company, the scale of collecting and storing user information, the situation of data collection and use, the situation of providing information to third parties, and the arrangements or measures for personal information protection and data security before and after listing.

The prospectus shows that Hongxinlong is headquartered in Yangzhou, Jiangsu Province, and is a supermarket and convenience store chain operator, operating retail and wholesale businesses under the "Hongxinlong" brand. According to the prospectus, in terms of sales, Hongxinlong ranked second in Yangzhou supermarket operators in 2023, with a market share of 9.1%, and ranked fifth in supermarket operators in the central Jiangsu region, with a market share of 2.3%.

Financially, in 2021-2023, Hongxinlong achieved revenues of Rmb143 million, Rmb132.9 million and Rmb140 million respectively; corresponding gross profits were Rmb28.3 million, Rmb30.2 million and Rmb30.1 million respectively; and net profits were Rmb35.08 million, Rmb51.07 million and Rmb51.6 million respectively, with net profit margins of 2.4%, 3.8% and 3.7% respectively.

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