Shining 3D's Beijing Stock Exchange IPO Questioned: Authenticity of Overseas Revenue and Gross Margin of Distribution Model Under Scrutiny

*Source: Beijing Stock Exchange

DentalGoodNew｜Recently, the Beijing Stock Exchange (hereinafter referred to as "BSE") issued the first round of audit inquiry letter regarding the application documents for Shining 3D Tech Co., Ltd. (hereinafter referred to as "Shining 3D") to publicly issue shares and list on the BSE, raising questions on 11 aspects including control right stability, RMB 71.7 million loan arrangements among actual controllers, authenticity of overseas revenue, high gross margin of distribution model, and rationality of fundraising projects, requiring the issuer and sponsor institution to respond item by item within 20 working days.

The inquiry letter shows that Shining 3D currently has no controlling shareholder. Five actual controllers, Li Cheng, Li Tao, Huang Xianqing, Zhao Xiaobo, and Jiang Tengfei, collectively control 24.9977% of the company's shares through signing the "Concerted Action Agreement". Among them, Li Tao, Huang Xianqing, and Zhao Xiaobo borrowed RMB 38.5 million, RMB 19 million, and RMB 14.2 million from Li Cheng respectively, and as of now have not been repaid, with the total unpaid loan balance of the three people being RMB 71.7 million.

The BSE requires the company to explain the reasons and rationality of the formation of relevant loans, whether there is equity holding on behalf of others or special interest arrangements, whether there are disputes or potential disputes, and whether the relevant arrangements may have a significant adverse impact on the company's control right stability and continuous operation.

The authenticity of overseas revenue is also a key point of this round of review. During each reporting period, the company's overseas revenue was RMB 483.8768 million, RMB 615.6471 million, RMB 792.0027 million, and RMB 499.4296 million respectively, accounting for 63.17%, 60.76%, 65.96%, and 72.63% of the main business revenue respectively, with overseas sales regions mainly concentrated in Europe, Middle East, Africa, and the Americas markets.

The BSE requires the company to explain the compliance of the establishment and operation of overseas subsidiaries, the commercial rationality of cross-border transaction arrangements, and combining customs declaration, export tax rebates, settlement and exchange gains and losses, logistics and transportation records, third-party payment situations, distributor and end customer information, etc., to demonstrate the authenticity and sustainability of overseas revenue.

At the same time, the high gross margin level under the distribution model has also attracted regulatory attention. The inquiry letter discloses that during the reporting period, the proportion of the company's distribution revenue continued to rise, and in the highest period has exceeded 70%; during the same period, the gross margin of the distribution model was in the range of 65% to 73%, significantly higher than the direct sales model. The company explained that it is mainly related to the higher pricing in overseas markets.

Therefore, the BSE requires the company to further explain the division standards of distribution/direct sales/ODM, distributor management mechanisms, and combining distributors' purchase, sales and inventory, returns and exchanges, purchase frequency and purchase volume, sales flow, end customer situations, etc., to explain whether final sales have been achieved and whether there are situations such as inventory hoarding.

*Source: Shining 3D Announcement No. 2025-053

In terms of fundraising projects, Shining 3D plans to raise RMB 550 million, all of which will be invested in R&D projects, with more than 80% used for personnel expenses. Among them, the dental high-precision digital implant technology R&D project intends to use RMB 160 million of raised funds, accounting for 29% of the total raised funds. The inquiry letter raised concerns about the arrangement that more than 80% of the funds in the fundraising project are intended for personnel expenses, requiring the company to further explain the rationality and necessity of the relevant arrangements in combination with the specific content of the fundraising project, investment measurement basis, and R&D investment structure.

In addition, in terms of corporate governance, the BSE also pays attention to the risk of horizontal competition after Shining 3D has divested its industrial 3D printing business, and whether the multiple enterprises controlled by the actual controller and their related parties remain fully independent from the issuer, and whether there are situations such as fund occupation, interest transfer, or business confusion.

According to the requirements of the inquiry letter, Shining 3D and its sponsor institution need to respond to relevant questions item by item within 20 working days. The quality of responses to this inquiry and the adequacy of information disclosure will become an important observation point for the company's BSE IPO process.