The industrial robot enterprise that sold over 10000 units last year has been delisted!

On March 27th, Bronte Robotics Co., Ltd. (hereinafter referred to as "Bronte") issued a notice on the receipt of the decision to terminate the listing and review of stocks.

It is shown that on March 24, 2023, Brandt received the "Decision on Maintaining the Termination of Listing of Brandt Robotics Co., Ltd. Shares" issued by National Equities Exchange Corporation, which reads "Decision on Maintaining the Termination of Listing of Brandt Robotics Co., Ltd. Shares [2022] No. 557".

The stock of Bronte Company will resume trading on March 30, 2023, and terminate its listing on April 14, 2023, indicating that Bronte will officially terminate its listing on the New Third Board.

According to data, Bronte is a technology enterprise dedicated to the independent research and development of domestic industrial robots. Its product types include general-purpose robots, stamping robots, palletizing robots, collaborative robots, parallel robots, etc. In November of last year, Bronte announced that a total of 10998 robots were shipped from January to October 2022, accounting for 171.79% of the total robot shipments in 2021. If this is the case, Bronte's robot shipment volume has already ranked among the top three in China, becoming the third local robot enterprise to achieve a shipment volume of over 10000 units in 2022.

Review of the Brandt delisting event

The date on which Bronte received the announcement of termination of stock listing was November 28, 2022, on the grounds that the financial reports of the past two fiscal years had been audited by certified public accountants without expressing an opinion. According to regulations, National Equities Exchange Corporation decided to terminate the company's stock listing.

Regarding this, on November 30, 2022, Bronte submitted a review application to the National Equities Exchange Corporation and was accepted on December 5, 2022. During the review application acceptance period, the company's stocks will not enter the delisting and consolidation period temporarily. However, in the end, it was not possible. Yesterday, Bronte received the "Announcement on the Decision to Terminate Listing Review of Stocks", confirming that it will terminate listing on the New Third Board.

The origin of all this was on April 7, 2021, when Tianjian Certified Public Accountants, which had been cooperating for ten years, issued an audit report on the 2020 financial statements of Bronte that was "unable to express an opinion". This move directly triggers a downgrade, and Bronte is expected to adjust from the innovation layer to the basic layer, with its securities abbreviation changed from "Bronte" to "ST Bronte".

Then on June 24, 2022, the newly hired Shenzhen Huangjia Certified Public Accountants by Brandt issued an audit report stating that they were unable to express an opinion.

According to the relevant provisions of the "Implementation Rules for the Termination of Listing of Stocks of Listed Companies in the National Small and Medium sized Enterprise Share Transfer System", if the financial reports of the listed companies in the past two fiscal years have been issued with negative opinions or audit reports that cannot express an opinion by a certified public accountant, the National Equities Exchange Company will terminate its stock listing, and as a result, the Bronte stock will be forcibly suspended on May 5, 2022.

It is worth noting that the reasons given by the two firms for "inability to express opinions" are the same, "In view of the authenticity of revenue under the sales model of Blunt's application companies, we cannot implement further audit procedure to obtain sufficient and appropriate audit evidence; at the same time, the expected credit loss rate of the aging portfolio of Blunt's accounts receivable from application companies has increased from 5% to 9.93% within one year, from 10% to 33.65% in 1-2 years, and from 50% to 100% in 2-3 years. We have not obtained sufficient information to judge the forward-looking impact of the expected loss rate of the company Whether it is accurate or not, it is impossible to determine whether the expected credit loss provision for accounts receivable is reasonable

Simply put, it means that the two firms are questioning the authenticity of Bronte's revenue under the application model, and therefore cannot express specific opinions in order to avoid joint and several liability.

Previously, industry insiders analyzed that Tianjian and Bronte were suddenly unbound, and the underlying reason may be that the new securities law implemented in March 2020 increased the punishment for illegal behavior by securities service agencies. Intermediaries must truly play the role of "gatekeepers", otherwise there will be a risk of bearing joint and several liability or supplementary liability for compensation.

Regarding the actions of Tianjian and Huangjia, Bronte filed a lawsuit and received the court's "Notice of Acceptance of Cases" on January 5, 2023 and February 3, 2023, respectively, officially entering the litigation stage. Bronte stated in the corresponding announcement that the two firms' audit of financial statements seriously violated the relevant regulations of the Ministry of Finance and the Institute of Certified Public Accountants, infringed on the legitimate rights and interests of the plaintiff, and had a significant impact on the company's production and operation.

Looking back at the entire process, it is not difficult to see that behind this series of disputes is the application model pioneered by Bronte.

Unique application sales model

The application business model is a unique sales model implemented by Bronte in December 2016. Under the application business model, Bronte is responsible for the research and development, production, and sales of robots and robotic arms. The application business is responsible for providing terminal application design, integration, and after-sales service for the Bronte products it sells.

In July 2019, Bronte graded the application system, with the company developing a first tier application provider, a second tier application provider, and a third tier application provider. For first tier application providers, Bronte also provides a credit line. Based on the property certificate and integrity provided by the guarantor of the first tier application provider, without the need for collateral or pledge, first tier application providers can apply to Bronte for product credit lines ranging from 200000 yuan to 28.5 million yuan before 2020 to purchase products.

This application model essentially attracts more users through network effects to ensure the growth of product sales and profits for all participants. It is thanks to this model that Bronte has achieved significant development over the past few years, with robot sales exceeding 10000 units last year.

However, the sales model of the application provider is undoubtedly a double-edged sword. Once the application provider fails to make payments on time, the risk of bad debts in Brent's accounts receivable will greatly increase, and at the same time, it will threaten the company's cash flow. In the 2021 annual report, Bronte mentioned in the description of significant risk matters, "The company's sales model is application sales, and theoretically, it is necessary to continuously expand new application providers to sell products. If the number of primary application providers continues to decrease in the future or the sales amount of individual primary application providers does not significantly increase, the company's performance will be greatly affected

In addition, for audit firms, under the application model, it is difficult to confirm the authenticity of Bronte's income. In 2020, Bronte's revenue was 592 million yuan, of which app revenue was 439 million yuan, accounting for 74% of the revenue. The firm was unable to confirm the authenticity of the financial data of hundreds of app providers, which is why it is "unable to express an opinion".

Crazy Goals and Cheap Products

Bronte is actually quite well-known in the robotics industry. As early as 2015, Bronte proposed the goal of a trillion yuan revenue and announced at the end of that year that it would issue 350 million shares at a price of 30 yuan per share to Guangdong Rongzao Investment Management Co., Ltd. controlled by Yin Rongzao and its private investment funds, totaling 10.5 billion yuan. It should be noted that Bronte's revenue was only 131 million yuan, with a total market value of only 724 million yuan that year.

For trillion yuan revenue, Bronte solves this problem by developing 108 first tier applications, developing 108 second tier applications per first tier application, and developing 108 third tier applications per second tier application. These applications each sell 40 robots worth 28500 yuan, so 108 × one hundred and eight × 108 households × 40 units/unit × 28500 yuan/unit=1.43607168 trillion yuan

This idea is totally a joke. By 2022, Bronte will propose the goal of 3008 for common prosperity, which will also take three steps: the first step is to achieve an annual revenue of more than 10 billion yuan and more than 1000 invention patents; The second step is to achieve an annual revenue of over 100 billion yuan and over 10000 invention patent authorizations; The third step is to achieve an annual revenue of over 100 billion yuan and grant over 100000 invention patents. At this point, I couldn't help but come up with the steps to put an elephant in the refrigerator - open the refrigerator door, put the elephant in, and then close the refrigerator door.

Compared to its arrogant goal, the low price of Bronte's robot products is the reason. Last year, due to rising raw material prices and logistics pressure, major robot companies were raising prices for their products to stabilize their performance. However, Bronte did not increase but instead decreased. Since April 2022, it has launched a series of activities, and even six axis robot products have dropped to 18500 RMB per unit. Perhaps we believe this is a godsend opportunity, Perhaps also because of this, Bronte's robot shipments exceeded 10000 units last year.

However, this approach is clearly not beneficial to performance. According to the 2022 third quarter report of Brandt, the operating revenue achieved during the reporting period was 356 million yuan, a year-on-year decrease of 25.91%, and the net profit attributable to shareholders was 0.18 billion yuan, an increase or decrease ratio of -152.34% compared to the same period last year; The basic earnings per share is -0.08 yuan, with a year-on-year increase or decrease ratio of -153.33%; The gross profit margin was 12.40%, compared to 35.42% in the same period last year.

Open the official website of Blount, there are many philosophical chicken soup such as "wealth myth" and "common prosperity". Last November, an inexplicable philosophical formula was released on the official account: Practical Philosophy=100% self-discipline+unity of knowledge and practice+Avenue to Jane=Blount's goal+common prosperity methodology+practitioners of common prosperity.

Bronte's series of behaviors are inexplicable, and in the robotics industry, he is actually an alternative. If he is not a genius, he is a delusion, and in his current situation, he seems to prefer the latter.