New stock news | Yueyuan Construction plans to go public in Hong Kong, the China Securities Regulatory Commission requires clarification on the compliance of the equity structure establishment.

On January 3, the China Securities Regulatory Commission issued the "Supplementary Materials Requirements for Overseas Issuance and Listing Review (December 27, 2024 - January 2, 2025)". The China Securities Regulatory Commission issued supplementary material requirements for four companies including Yueyuan Construction. Among them, the CSRC requested Yueyuan Construction to explain the compliance of the equity structure establishment, equity freeze, litigation status, and standardized operations. It is reported that Yueyuan Construction submitted its listing application to the main board of the Hong Kong Stock Exchange on October 31, 2024, with Grande capital limited as the sole sponsor. Specifically, the CSRC requested Yueyuan Construction to provide supplementary explanations on the following matters, and to have lawyers verify and provide clear legal opinions: 1. Regarding the compliance of the equity structure establishment, please explain: 1. The company gradually acquired the equity of the domestic operating entities Shenzhen Yueyuan and its subsidiaries Yueyuan Aluminum Products and Yueyuan Curtain Wall through capital increases in August and October 2024. Please explain the consideration for the two capital increases, pricing basis and fairness, payment situation, tax declaration and payment, and whether they comply with the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors. 2. Conclusion on the legality and compliance of the offshore structure and return investment involving foreign exchange registration, overseas investment, and foreign investment regulatory procedures. 3. The reasonableness of the price of new shares issued by new shareholders in the past year, and whether there is any situation of benefit transfer. 2. Regarding the equity freeze, there is a situation where the equity of the main domestic operating entities Yueyuan Aluminum Products and Yueyuan Curtain Wall are frozen. Please explain the specific reason for the equity freeze, the progress of related matters, whether the situation constitutes the situation where overseas issuance and listing is not allowed as stipulated in Article 8, Paragraph 5 of the Measures for the Administration of Issuance and Listing of Securities Overseas, and whether it constitutes a substantial obstacle to this issuance and listing. 3. Regarding the litigation situation, Shenzhen Yueyuan, as a defendant, has large pending lawsuits. Please explain the specific litigation situation, including basic facts, current progress, and whether the amount of pending lawsuits accounts for a significant proportion of the issuer's financial statements, and whether it poses significant operational risks or constitutes a substantial obstacle to this issuance and listing. 4. Regarding standardized operations, 1. Please summarize the situations in the past three years where the company and domestic operating entities operated non-standardly in project approval, environmental protection, safety production, fire safety, etc., and the situation of receiving administrative penalties from relevant regulatory authorities, and explain the current rectification measures for the above situations, whether they constitute a substantial obstacle to this issuance and listing, and whether they fall under the restrictions on securities financing as stipulated in the Notice of the State Council on Further Strengthening Enterprise Safety Production. 2. Please explain whether the existing, under construction, and current investment projects are high energy-consuming, high emission projects, and provide relevant basis. The prospectus shows that Yueyuan Construction is a curtain wall total solutions provider, headquartered in Guangdong Province, China. The company designs, processes, assembles, and installs custom curtain walls for projects of China State Construction Engineering Corporation. Curtain walls hung on building structures are non-load-bearing exterior walls, mainly made of light materials such as aluminum, glass, steel, and stone, used to enhance the beauty of building facades, improve energy efficiency, and protect them from external environmental factors such as wind, water, dust, heat, cold, noise, and light. According to industry reports, based on revenue for 2023, the group ranks eighth among non-state-owned curtain wall solution providers in Guangdong Province, China, with a market share of approximately 0.2% in the curtain wall industry in China. Yueyuan Construction provides various types of curtain walls and other related items, including metal roofs, outdoor doors and windows, and light steel structure projects. The company has production facilities in Huizhou City, Guangdong Province, China, for processing custom curtain wall products and other related items, with an annual production capacity of up to 944,500 square meters. In the fiscal years of 2021, 2022, 2023, and the first half of 2024, the utilization rate of the production facilities was approximately 94.9%, 85.5%, 88.9%, and 90.1%, respectively.