New Stock Preview | B-round investors have unrealized losses of nearly 40%, and the impending IPO of Xindeco Technology may hide hidden worries.

Shandong Xinde Technology Co., Ltd. (hereinafter referred to as "Xinde Technology") encountered setbacks in its listing process in Hong Kong. On June 5, the International Department of the China Securities Regulatory Commission issued supplementary materials, focusing on core issues such as the equity structure of Xinde Technology, shareholder situation, employee stock ownership plan, and regulatory compliance. This included the need for a supplementary explanation on the rectification of the ban on military procurement for three years due to bid-rigging collusion. This regulatory inquiry seemed to have quickly triggered a chain reaction. On June 9, ICBC International quickly resigned as the overall coordinator, which made the market speculate about the "coincidence." Then, on June 30, the Hong Kong Stock Exchange disclosed the revised announcement of the overall coordinator of Xinde Technology, with ICBC International exiting and Zhongtai International being appointed as the sole lead underwriter. Changing from joint lead to single lead is generally considered a negative signal in Hong Kong IPOs. The market believes that this may indicate a lack of confidence in the issuer's books management, or concerns about the compliance of the project and the likelihood of passing the hearing. Undoubtedly, this has added uncertainties to Xinde Technology's Hong Kong IPO. Industry insiders point out that if a new overall coordinator or cornerstone investor is not introduced in the future, the pricing and fundraising scale of Xinde Technology's issuance may face significant pressure. Having failed three times in attempting to list on the A-share market, the investors in the B round have suffered a floating loss of 37.46%. Xinde Technology's IPO journey could be described as a series of setbacks - starting from the failed attempt to list in Singapore in 2005, it has been a turbulent 21-year journey. Its entanglement with the Chinese capital market began in 2008. In 2008, Xinde Technology's first attempt to list on the A-share market was rejected because the approval document for its raised fund product from the Ministry of Agriculture was not obtained, which was considered a technical error; in 2010, the company made a second attempt to list on the A-share market, but it was rejected by the review committee for unfair pricing of related party transactions and suspected profit transfer as the controlling shareholder Li Chaoyang gave the core trademark "free license" to Weifang Xinde controlled by himself. After more than a decade of silence, Xinde Technology resumed preparations in 2021 for its third attempt to list on the A-share market, signing an IPO cooperation agreement with Zhongtai, Zhitong Huisuo, and Zechang Law Firm. However, in the bidding for the avian and animal epidemic prevention supplies project of 140 million yuan by the Air Force Logistics Department in 2021, Xinde Technology was found to have colluded in bidding and was punished with a "3-year ban on military procurement," as well as a simultaneous ban on companies controlled/managed by the actual controller Li Chaoyang. This happened only half a year before the A-share listing guidance filing, and the compliance red line was closed off. Having failed to list on the A-share market three times over 14 years, Xinde Technology's IPO journey reveals a trajectory from "technical difficulties" to "governance loopholes" to "lack of integrity" behind three rejections, reflecting a systematic collapse of its internal control system and a breach of compliance bottom line. The fact that ICBC International withdrew from the joint lead sponsor after the regulatory inquiry seems rather "meaningful," leading the market to certain associations. It is worth noting that due to bans on military procurement and the industry entering a downturn, Xinde Technology's valuation in the C round financing in 2025 had significantly decreased compared to the B round. After the B round financing in 2021, Xinde Technology's post-investment valuation was 2.878 billion RMB, but the post-investment valuation in the C round was only 1.8 billion RMB, a discount of about 37.46%. This means that the B round investors introduced in 2021 have all suffered losses and are heavily invested. If the Hong Kong IPO price is discounted compared to the C round, these investors may incur further losses.