Plans to raise 20 billion yuan.

Recently, the IPO prospectus application draft of JD Digital Technology Holdings Co., Ltd. (hereinafter referred to as "JD Digital") on the Science and Technology Innovation Board has been accepted by the Shanghai Stock Exchange. On October 16, JD.com submitted a response to the inquiry letter to the Shanghai Stock Exchange.

According to the prospectus, JD Digital was independently operated in 2013. In its early days, it mainly provided inclusive financial services to merchants and consumers based on the JD Group’s e-commerce platform. In 2018, "JD Finance" was renamed JD Digits. In June this year, JD Digits Co., Ltd. was completely changed to a joint stock company.

In the reporting periods from January to June 2017, 2018, 2019 and 2020, JD Digits’ operating income was 9.07 billion yuan, 13.616 billion yuan, 18.203 billion yuan and 10.327 billion yuan respectively. ; The net profits attributable to shareholders of the parent company were -3.82 billion yuan, 130 million yuan, 790 million yuan and -670 million yuan respectively, with large fluctuations.

In this IPO, JD Digits plans to raise 20.367 billion yuan. If calculated based on the fundraising valuation, JD Digits’ valuation will be around 200 billion yuan after listing on the Science and Technology Innovation Board. The wealth of Liu Qiangdong, chairman and CEO of JD.com Group, controlling shareholder and actual controller of JD.com, has also increased.

Time Finance reviewed the prospectus and feedback and found that JD Digits still has problems such as incomplete information disclosure, large changes in directors and senior executives, heavy reliance on JD Group, and doubtful independence.

Letter approval is incomplete

In the chapter "Equity Structure and Organizational Structure of the Issuer", the prospectus does not comply with Article 41 of the "Guidelines for the Content and Format of Information Disclosure by Companies Offering Securities to the Public". No. - Prospectus of Science and Technology Innovation Board Companies for information disclosure. JD Digits’ disclosure of its shareholding structure is relatively simple, and there is no diagram showing the relationship between shareholders.

In addition, the prospectus did not disclose in detail how many subsidiaries JD Digits controls and participates in. It only introduces that there are 14 major holding subsidiaries and 1 joint-stock company, which does not comply with relevant regulations.

Time Finance consulted Tianyancha and found that the ownership structure and ultimate beneficial shareholders of JD Digits are very complex, with as many as 4 or 5 levels. The company-level structure of its control and participation is also very complex, with some having as many as 5 or even 7 levels.

The regulatory authorities also noticed this problem in the review inquiry letter and required JD Digits to fully disclose the brief information of its holding subsidiaries and shareholding companies.

However, in its response to the inquiry letter, JD Digits still only stated the number of companies, that is, a total of 158 domestic and overseas holding subsidiaries, 174 joint-stock companies, and 332 companies. Among them, only 15 companies have disclosed "brief information", and the remaining 317 companies have not yet "completely disclosed".

Dr. Ding Huiren, an expert and auditing expert from the China Association of Certified Tax Agents, told Time Finance that according to relevant regulations, JD Digits’ disclosure was too simple and suspected of omissions. It should be disclosed in accordance with relevant requirements. Otherwise, it would be inconsistent with the disclosure. The required completeness is not met.

Actual Controller Risk

As of the date of signing of the prospectus, the controlling shareholder and actual controller of JD Digits is Liu Qiangdong, who directly and indirectly controls the number of shares of the issuer. The total share capital before the issuance was 50.35%, and the total voting rights controlled by JD Digits accounted for 74.77% of the total voting rights before the issuance.

Does JD Digits also have actual controller risks? The prospectus only reminds in the last part of "Risk of infringement of shareholders' interests caused by the special voting rights mechanism": "Under special circumstances, the interests of the company's controlling shareholders and actual controllers may be inconsistent with the interests of other shareholders of the company, especially small and medium-sized shareholders. This may harm the interests of other shareholders, especially small and medium shareholders.

"This part is actually the "actual controller risk", which needs to attract investors' attention.

In view of the ownership structure of JD Digits and Liu Qiangdong's relatively strong control position, changes in directors and senior executives during the reporting period also Investors need to pay attention.

The prospectus shows that Liu Qiangdong served as the manager of JD Digital from September 2012 to September 2018, and as the chairman of JD Digital from September 2012 to February 2020. . Then, it was said that Liu Qiangdong would no longer serve as chairman due to personal reasons on January 8, 2018. There was a time gap between the two statements in the prospectus.

In addition, from JD Digits in January 2018. Comparing the list of directors who took office on June 8, 2020, there were also major changes. In the list of directors on January 8, 2018, Yu Rui was the chairman, including Zhang Zetian, Chen Shengqiang and others. Among the directors on June 20, 2020, only Chen Shengqiang remained as the former director, and all the other directors resigned, including Liu Qiangdong’s wife Zhang Zetian. The response to the inquiry letter revealed that none of the outgoing directors held any shares in JD Digits. In view of Zhang Zetian’s special status, his change in status may cause changes in JD Digits’ senior executives in 2018. On May 28, Chen Shengqiang became the general manager, and the prospectus disclosed that Liu Qiangdong served as the manager until June and no longer served as the general manager. Later, Su Yalei was added as the secretary of the board of directors.

Even so, the prospectus of JD Digits. Still stated that the above situation “does not constitute a major change in directors, senior managers, and core technical personnel. "

According to the answer to question 17 of the "Answers to Several Questions on IPO Business" (revised in June 2020), according to the IPO Measures, "the issuer needs to meet the issuance conditions that there are no major changes in directors and senior management personnel." , JD Digits does not seem to be satisfied.

The regulatory agency also mentioned in the inquiry letter that the prospectus disclosed that from January 2018 to January 2020, Liu Qiangdong was the chairman. On January 8, Liu Qiangdong ceased to serve as a director due to personal reasons, and nominated Mr. Yu Rui as a director. When the company's shareholding reform occurred on June 20, 2020, the board of directors changed significantly, and Mr. Liu Qiangdong became the chairman of the board of directors. Explain the reasons and rationality for the significant changes in the issuer's board of directors members in June 2020, whether the original directors are still serving at the issuer, and further explain whether there have been any significant adverse changes in the issuer's directors in the past two years.

JD Digits responded: “This change of board of directors further improves the board structure with reference to the relevant requirements of listed company governance; it is conducive to improving the operational efficiency of the issuer’s board of directors; the addition of independent directors is also more conducive to safeguarding the rights and interests of the issuer and small and medium-sized shareholders. ; It does not affect Mr. Liu Qiangdong’s control over the issuer as the issuer’s actual controller, and is more conducive to safeguarding the rights and interests of the issuer and minority shareholders; It does not affect Mr. Liu Qiangdong’s control over the issuer as the issuer’s actual controller. "Therefore, "the changes in the issuer's directors in the last two years do not constitute material adverse changes. ”

Dependence on JD Group

Although JD Digits claims that it has the ability to operate independently and directly face the market, its complex relationship with JD Group makes its independence questionable.

JD Digits originated from JD Group and is an integral part of JD Group’s ecosystem. In its early days, JD Digits was mainly based on JD Group’s e-commerce platform, providing financial services to merchants and consumers, and cooperating with JD Retail and JD.com. Logistics and other business sectors have jointly built the JD ecosystem and established highly strategic and synergistic business relationships with various sectors of JD Group.

First of all, in terms of equity, in addition to the actual controller Liu Qiangdong, JD Group. It also controls a domestic enterprise, Suqian Polymer, through an agreement with a wholly foreign-owned enterprise established in its territory, and indirectly holds 36.80% of the company's shares through Suqian Polymer, with a corresponding voting right ratio of 18.69%. The relationship is clear at a glance.

Secondly, the proportion of related-party transactions is relatively large. In terms of sales, in each reporting period, the amount of goods sold and services provided by JD Digits to JD Group was 2.675 billion yuan, 3.960 billion yuan, 5.312 billion yuan and 3.086 billion yuan respectively, accounting for 29.50% and 3.086 billion yuan of operating income in the same period respectively. 29.08%, 29.18% and 29.89%.

In terms of procurement, the amount of goods and services purchased by JD Digits from JD Group was 993 million yuan, 909 million yuan, 712 million yuan and 357 million yuan respectively, accounting for the operating costs and period expenses of the same period respectively. 8.13%, 8.91%, 4.68% and 3.73%. In terms of other income, part of JD Digital's income comes from transactions with third-party merchants and consumers on the JD retail platform under JD Group, which relies to a certain extent on the application scenarios of JD retail.

The reply to the review inquiry letter pointed out that the prospectus disclosed that during the reporting period, JD Digital and JD Group had various types of related transactions, including marketing and promotion, technical services, comprehensive risk management services, payment services, Factoring services, financing services, etc. The amounts of the above-mentioned recurring related transactions accounted for 29.93%, 29.25%, 31.41% and 33.20% of the operating income respectively.

JD Digits responded: In 2017, 2018, 2019, and January to June 2020, the proportion of revenue from outside the JD Group’s ecosystem was 53.75%, 52.37%, 54.98%, and 56.39% respectively. , accounting for more than 50%, showing an upward trend. Therefore, although the issuer and JD.com Group are enterprises controlled by the same actual controller, the issuer is independent from JD.com Group and maintains independence in operating decision-making and business.

However, according to data provided by JD Digits, the proportion of revenue from JD Group’s ecology in 2017, 2018, 2019, and January to June 2020 were 46.25%, 47.63%, and 45.02% respectively. and 43.61%. JD Digital’s independence remains in doubt.

Thirdly, in view of the complex relationship between JD Digits and JD Group, a series of agreements have been signed between the two, mainly non-competition agreements and related transaction agreements.

Regarding the non-compete agreement, according to the agreement with JD.com, except for certain exceptions agreed by both parties or with the consent of the other party, JD.com shall not engage in, carry out or participate in the JD.com Group’s business agreed by both parties, or with Jingdong Group competes for the agreed business of Jingdong Group; Jingdong Group shall not engage in, carry out or participate in the agreed business of Jingdong Digital, or compete with Jingdong Digital for the agreed business of Jingdong Digital. However, under certain circumstances, both parties may make passive investments in the agreed business of the other party from time to time after meeting specific requirements. Under the non-competition arrangement, if JD Digital’s future business expansion involves areas that are deemed to be the business of JD Group or its reasonable expansion, JD Digital’s business expansion will be affected.

In terms of the related-party transaction agreement, the important business cooperation relationship between JD Digits and JD Group has been agreed upon. Including "Data Information Cooperation Agreement", "Resource Cooperation Agreement", "Financing Agreement", "Cooperation Agreement", "System Support Service Agreement", "Workplace Leasing Agreement", "Comprehensive Support Service Agreement", etc.

In addition, there are long-term cooperation agreements involving intellectual property, data and traffic. In terms of intellectual property cooperation, JD Group licenses the company and its subsidiaries to use some intellectual property rights such as patents, copyrights, trademarks, and domain names related to and required by its own business; in terms of data and traffic cooperation, JD Digital and JD Group are based on Their respective data and traffic resources, on the premise of legal compliance, agree to share the relevant data and information owned by them with each other free of charge through an agreement, and bring each other site traffic resources to each other.

If the cooperation model or conditions with JD.com changes in the future, the agreement expires and cannot be renewed, or there are other major changes that are not beneficial to JD.com, there may be a risk of conflict of interest with JD.com. .

Fined 30 million yuan

During the reporting period, three subsidiaries of JD Digits - Online Banking, Banghui Factoring and Dingding Insurance Agency were subject to administrative penalties by relevant departments for violating regulations. The total amount of penalties, fines and confiscations was 31.52 million yuan.

After the equity penetration of Online Banking Online (Beijing) Technology Co., Ltd. (hereinafter referred to as "Online Banking Online"), JD Digits holds 100% of the shares, and its main business is third-party payment services. At the end of June 2020 , with total assets of 3.05 billion yuan and a net profit of 316 million yuan from January to June 2020, it is one of the main holding subsidiaries of JD Digits.

On November 20, 2019, online banking violated regulations by transferring domestic foreign exchange overseas and was fined 29.4327 million yuan by the Beijing Foreign Exchange Management Department of the State Administration of Foreign Exchange.

Previously, on February 20, 2019, Online Banking Online failed to carry out online payment services as required, violated the relevant provisions of the "Bank Card Acquiring Business Management Measures" and provided inter-bank clearing and settlement for multiple financial institutions without permission. services, in violation of the relevant provisions of the "Measures for the Administration of Payment Services of Non-Financial Institutions", the Business Management Department of the People's Bank of China imposed a fine of 904,800 yuan and confiscated illegal income of 874,800 yuan, totaling 1.7796 million yuan.

Shanghai Banghui Commercial Factoring Co., Ltd. is also a 100% subsidiary of JD Digital after the equity penetration. Its total assets as of June 30, 2020 were 13.5 billion yuan. From January to June 2020 Net profit was 88.76 million yuan. On December 20, 2017, Shanghai Banghui Commercial Factoring Co., Ltd. was fined by the Shanghai Jiading District Market Supervision and Administration Bureau because some of its text was inappropriate and violated the relevant provisions of the Advertising Law when it cooperated with a product in a marketing campaign in 2017. 200,000 yuan.

Dingding Insurance Agency Co., Ltd. was punished during the reporting period. The punishment information is as follows: On September 30, 2018, JD Digits was fined 110,000 yuan by the Beijing Supervision Bureau of the China Insurance Regulatory Commission. The reasons for the punishment and the law The basis is: in June 2017, Dingding Insurance Agency Co., Ltd. failed to report the establishment of branches as required; when Dingding Insurance Agency Co., Ltd. changed its executive director and manager in August 2017, it failed to submit the appointment of the new director to the Beijing Supervision Bureau of the China Insurance Regulatory Commission. Qualification application was made, and personnel without qualifications were hired. The above situation violated the relevant provisions of the "Regulations on the Supervision of Professional Insurance Agencies" and the "Insurance Law of the People's Republic of China".

There is less information about Dingding Insurance Agency Co., Ltd. in the prospectus. Tianyancha shows that the company has 166 branches, 3 self-risks, 7 peripheral risks, and 184 early warning reminders.

The prospectus also stated that “the amount of penalties involved in the above-mentioned administrative penalties accounts for a small proportion of the issuer’s total assets, does not constitute a major violation of laws and regulations, and will not have any impact on the issuer’s business, financial status and operating results. "Major adverse impact."

Business risks

According to media reports, in May this year, JD Digits’ financial management company, Shanghai Dongjia Financial Services Investment Management Co., Ltd. (hereinafter referred to as "Dongjia") "Financial Services") sells two fund products from Cornerstone Capital, Oriental Value No. 1 and Oriental Value No. 5. When investors were told that the fund was invested in Station B and the stock price of Station B soared, the net value of the fund plummeted to only 30%, and it was still unable to be liquidated after expiration. Not only did the investors not make any money, but they suffered huge losses. .

In addition, another product of Cornerstone Capital, "Oriental Value Fund No. 14 Private Securities Investment Fund" sold by Dongjia Financial Services, has also received complaints from investors, mainly focusing on Oriental Value No. 14 The net worth data was falsified and asset certificates were forged for non-qualified investors.

The China Securities Regulatory Commission's "Interim Measures for the Supervision and Administration of Private Equity Funds" stipulates that qualified investors refer to those who have corresponding risk identification capabilities and risk-taking capabilities, and the amount invested in a single private equity fund is not less than 1 million yuan. And the personal financial assets are not less than 3 million yuan or the average annual personal income in the past three years is not less than 500,000 yuan.

Regarding the alleged falsification of Dongfang Value No. 14’s net worth data and forged asset certificates, Dongjia Financial Services has not responded directly to the outside world.

Tianyancha shows that Dongjia Financial Services Group just changed its industrial and commercial information on August 24. It has four wholly-owned subsidiaries, and many matters in its 2019 annual report have been chosen not to be disclosed.

In addition, the publicly reported "Diaoye Beef Brisket Crowdfunding Incident" also involves JD.com Crowdfunding, a subsidiary of JD Digits. The plan announced by JD.com Crowdfunding at that time stated that the funds raised from the project would be mainly used for the rent, decoration, equipment, operation and other related expenses of the Diaoye Beef Brisket Chaoyang Joy City (New) Store. Project financing limits individual investment to 10,000 yuan, and the total number of investors shall not exceed 200.

The investment period is 5 years. After 5 years, the investor’s equity will be repurchased by Diaoye Beef Brisket and the principal will be returned. Affected by the impact of this year's epidemic, Diaoye Beef Brisket crowdfunding fell into a capital chain crisis. Investors applied for buyback, but the Diaoye Beef Brisket operator was unable to implement the agreement to return investors' principal when due.

In response to the above issues, Time Finance called and wrote to JD Digits, but as of press time, no reply has been received.

This article comes from Time Finance