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On September 19, Jiangsu Hengtai Lighting Co., Ltd. (hereinafter referred to as "Hengtai Lighting") is about to usher in the review of the Beijing Stock Exchange Review Committee.
This IPO, without considering the over-allotment option for , Hengtai Lighting plans to issue no more than 22.2 million shares to unspecified qualified investors, raising 199.198 million yuan to be used for annual production of 5 million sets of LED lighting fixtures, R&D center upgrade projects, and technical transformation projects for intelligent production equipment.
IPO Daily noted that Hengtai Lighting mainly sells overseas, with more than 95% of its revenue coming from overseas; but this also led to the continued decline in the cash flow of the company's operating activities and the increase in accounts receivable.
Source: Tuchuang Creative
Revenue fluctuates significantly
Founded in 2013, Hengtai Lighting is a high-tech enterprise focusing on green and environmental protection and intelligent lighting fixtures. It is mainly engaged in the research and development, manufacturing, sales and services of industrial lighting and commercial lighting products.
China Lighting Electrical Appliances Association information shows that among the export companies of industrial and mining lights products in the first three quarters of 2021, Hengtai Lighting ranked first. In the single market in the United States, Hengtai Lighting occupies 1/4 of the market share.
In fact, Hengtai Lighting is a company that mainly focuses on overseas sales.
Hengtai Lighting's operating income increased from 511 million in 2019 to 767 million yuan in 2021, with a compound growth rate of 22.36% in three years; net profit increased from 72.1066 million yuan in 2019 to 79.851 million yuan in 2021, which is an overall increase.
However, Hengtai Lighting's performance had a sharp decline in 2019 and 2020, with operating income growth rates of -29.74%, -2.9% and 54.52% from 2019 to 2021 (hereinafter referred to as the "reporting period"), respectively; and net profit attributable to shareholders with non-recurring items were -37.87%, -32.72% and 107.05%.
Regarding such a large fluctuation in performance, Hengtai Lighting stated that due to the Sino-US trade friction, the company's products were subject to a 10% tariff since September 2018. The company's major U.S. customers have expected the occurrence of Sino-US trade frictions and further increase in subsequent tariffs. Therefore, in the second half of 2018, the stocking was increased, and the order amount placed to the company increased. In 2018, the company's operating income and net profit grew faster than in 2017. By 2020, the company will suffer a significant increase in exchange losses due to the impact of the "new crown epidemic" and the increase in exchange losses.
During the reporting period, the company mainly focused on overseas sales, and the proportion of overseas sales revenue of the company's main business revenue was 95.66%, 95.54% and 96.11%, respectively, all exceeding 95%.
Since the Sino-US trade friction in 2018, due to changes in the US 301 tariff policy, the company's LED lighting fixtures exported to the US market has been subject to high tariffs, and the current main applicable tax rate is 25%.
Statistics of the China Lighting and Electrical Appliances Association show that in 2021, the total export volume of the entire industry reached US$65.47 billion, and the year-on-year growth of reached 24.50%, an increase of 44.09% over 2019, and the average growth rate in the two-year period reached 12.95%. Among them, the export volume of LED lighting products was US$47.445 billion, a year-on-year increase of 33.33%, an increase of 57.33% over 2019, and the average growth rate in the two-year period reached 16.31%.
From this point of view, Hengtai Lighting's performance growth rate is slightly higher than the domestic industry's export growth rate.
China's LED companies mainly undertake key links in the development and manufacturing of the global LED lighting industry chain. Domestic representative companies include Sunlight Lighting, Lidarson, Guangpu Co., Ltd., Debang Lighting, Minbao Optoelectronics and Hengtai Lighting, which are mainly exported to North America and Europe.
Among them, Debang Lighting (603303.SH), Foshan Lighting (000541.SZ), Lidaxin (605365.SH), Sanxiong Aurora (300625.SZ), and Sunlight Lighting (600261.SH) are listed as comparable listed companies. Compared with competitors in the same industry, Hengtai Lighting has a smaller revenue and profit scale, and its business is in the sub-sector of LED lamps and .
"Trouble" caused by overseas customers
In addition to the severe fluctuations in performance, the company's gross profit margin and cash flow in operating activities have continued to decline in the past two years.
During the reporting period, the company's main business gross profit margin was 26.46%, 25.83% and 24.07%, respectively, showing a downward trend.
In this regard, Hengtai Lighting stated that the company mainly provides customers with differentiated and personalized LED lighting fixtures. The influence of factors such as changes in raw material prices, fluctuations in exchange rate, industry competition, technological progress, and changes in customer consumption demand has put the product's gross profit margin facing the pressure of a gradual decline. The company's product gross profit margin mainly depends on the product's sales price and unit cost . Sales prices are mainly affected by product costs, fluctuations in the US dollar exchange rate, and market competition; unit cost of products is affected by rising manufacturing costs caused by fluctuations in material prices, rising labor costs and increased investment in fixed assets.
In addition, Hengtai Lighting's net cash flows in operating activities during the reporting period were RMB 86.6835 million, RMB 17.5337 million and -22.0306 million, respectively, and the cash flows in operating activities continued to decline and were negative.
In fact, Hengtai Lighting has declined due to the time difference in settlement cycle receivable and payable and the epidemic.
During the reporting period, the company's monetary funds balance at the end of each period was RMB 94.3621 million, RMB 49.8424 million, and RMB 67.8684 million, and the monetary funds were still sufficient.
From 2019 to 2020, the company distributed RMB 52 million and RMB 78 million, with a total dividend of RMB 130 million. In 2020, 58.513 shares were transferred to all shareholders for every 10 shares based on the company's total share capital at that time.
However, it is important to note that the company's operating income in 2021 increased by 54.52% year-on-year, but the balance of accounts receivable at the end of the period was 221.208 million yuan, an increase of 113.35% year-on-year, which is much faster than the revenue growth rate.
In response to this, the company stated that the issuer's cash income ratio continued to decline during the reporting period, mainly because international shipping was affected by the epidemic after 2020, and there was a congestion and queue for shipments. The company confirmed revenue based on the bill of lading date. The delay in issuing the delivery time after the goods are loaded, resulting in a longer customer payment cycle.
As of the date of signing the prospectus, the company's controlling shareholder was Li Pengqing, who directly held 40.38% of the company's shares, indirectly held 0.94% of the company's shares, and totally held 41.32% of the company's shares, and was the actual controller of the company.
END
Reporter Wang Ying
layout Chu Nianying
edited by Wu Mingzhou
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