The risk of Linglong tire reveals the problem of product quality frequently

IPO Observation Room 454 Issue link: Linglong tire risk revealed the problem of product quality frequently in the recent China Securities Regulatory Commission announced the IPO list, Shandong Linglong Tire Co., Ltd. (hereinafter referred to as Linglong tires) to be listed, the number of public offerings not more than 200 million shares, The sponsor organization is the Trust Securities Co., Ltd. Linglong Tire is a professional large-scale tire enterprises, export products accounted for a large proportion of the company's goods, 2011, the company exported tire value of 882 million U.S. dollars in the national export tires first, 2013 foreign exports in the same period of 2012 20.96%, the total import and export volume of nearly 1.6 billion U.S. dollars. First, the quality of products can not be ignored exquisite tires this application is the company's second attempt, after the company has been due to tire quality problems frequently, environmental pollution issues such as serious market. On the previous legacy product quality issues, the company's prospectus risk disclosure to do such a description: The quality of the tyre is directly related to the driving safety of automobiles. Therefore, the quality of tire products in China has set a series of standards and the implementation of compulsory product certification. The national standard has strict requirements on the compressive properties, durability, high speed running performance, noise and other parameters of the tyre. Tire production Enterprises in the production process if due to quality control problems or not detect the potential product quality risk caused by the user in the course of the quality of the accident, it may form a large number of products must be recalled, or even lead to suspension or cancellation of product certification risk. Although the company's tire products through the CCC, DOT, SmartWay, ECE, GCC, Inmetro, Latu, reach regulations, such as the world's major tire market certification, quality management system through the ISO9001, iso/ts16949 certification, Also achieved some product quality aspects of the honor, but can not completely avoid the occurrence of product quality problems. The prospectus suggests that there may be a problem with the tyre product, but there are no questions about the quality of the product, the Question Time, the prospectus. In China's automotive quality online, 2012 to 2014 Linglong tires have been complained about tire bulging and cracking problems. At the same time, according to media reports, there are consumers complain about the quality of tires, manufacturers have not been returned, but to do everything possible to prevarication, not resolved. Bao Chun owners complained that the use of less than 11 months, less than 7000 kilometers, four births all cracked. The owner then contacted the manufacturer, but was ignored. In April this year, the owner complained about the tyre bulge, which was found to be 9200 kilometers. He angrily said, "tires three months 5000 kilometers, if the insurance, and then problems, with the manufacturers have no relationship!" In addition to the more serious product quality problems, the company's future performance also has other risks: II, high asset-liability ratio and short-term debt-service risk December 31, 2011, December 31, 2012 and December 2013 31The company's asset-liability ratio (parent company) was 74.85%, 70.39% and 67.49%, with a flow rate of 0.78, 0.73 and 0.73 respectively. Affected by the operating characteristics of the tire industry, the company's assets and liabilities ratio is relatively high, the flow ratio is relatively low, the company faces a certain ratio of assets and liabilities and short-term debt risk. Iii. major litigation and arbitration risks as of the date of signing the prospectus, the company involved two major outstanding arbitration issues, which may have a certain impact on the company's financial position, operating results and cash flow status. The arbitration matters were: (1) Regionalrubbertradingco.pteltd. (Yuan Gum Co., Ltd., hereinafter referred to as "Yuan gum") to apply for recognition and enforcement of Foreign Arbitral Awards (162th number of smokers);(2) Regionalrubbertradingco.pteltd. (Yuan gum) application for recognition and Enforcement of Foreign Arbitral Awards (17th number of smokers). For details, refer to the "four other important matters" of this prospectus, "IV, litigation or arbitration matters which may have a greater impact on the issuer". As a result of the company in the two pending arbitration cases, the possibility of loss, if the company loses and the decision is actually implemented, there will be a negative impact on the operation of the company risk. Four, the main raw material price fluctuation risk natural rubber as an important strategic resource, is a typical resource-constrained product; As a commodity, its price is closely related to trade policy, exchange rate and capital market situation. In recent years, influenced by the overseas commodity market, the natural rubber price showed a big fluctuation trend. During the reporting period, the 1 quarter of 2011 Natural rubber in the historical high, the company brought a greater cost pressure, and then, natural rubber prices gradually fall; since 2012, natural rubber prices have been on the overall downward trend of volatility. Natural rubber, synthetic rubber is the main raw material for the production of tires, accounting for a larger proportion of the total production costs. Because the price of natural rubber and synthetic rubber has a certain linkage, the price of natural rubber has a great effect on the cost of tyre. 2011, 2012 and 2013, natural rubber and synthetic rubber in the company's production costs accounted for the total proportion of 59.08%, 50.64% and 48.59% respectively. Therefore, the company will face the risk of substantial fluctuations in the price of natural rubber.