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In the process of electronic products production, electronic yarn, electronic cloth are the basic materials for the production of copper clad plates and printed circuit boards. Currently, electronic yarn (cloth) manufacturer Henan Guangyuan New Materials Co., Ltd. (hereinafter referred to as Guangyuan New Materials) is applying for listing on the GEM. " Daily Economic News " noticed that Guangyuan New Materials conducted tutoring registration with the Henan Securities Regulatory Bureau in December 2020 and officially entered the IPO counseling period.
Before entering the counseling period, in August 2020, the four institutional shareholders of Guangyuan New Materials transferred all the shares they held, of which three were 7.3 yuan per share, and this price was the price of the three institutions when they increased their capital in Guangyuan New Materials in January 2019. In other words, after more than a year of holding shares, Guangyuan New Materials is about to enter the IPO guidance period and withdrew from the shareholders at the original price. The prospectus (draft for filing) did not explain in detail the reasons for the shareholder's withdrawal from the original price.
Picture source: Reporter Wenduo of Meike
Ultrafine Electronic Yarn Project is half of the actual production capacity of roving
Guangyuan New Materials mainly produces electronic glass fiber products, specifically electronic yarn and electronic cloth series products. The downstream is copper clad board, printed circuit board and other manufacturers, and ultimately used in consumer electronics, automotive electronics and other electronic products.
According to the IPO plan, Guangyuan New Materials plans to raise 2.6 billion yuan, of which 1.2 billion yuan will be used for the "construction project of high-performance ultra-fine electronic yarn production line for an annual output of 70,000 tons" (hereinafter referred to as the ultra-fine electronic yarn project), 600 million yuan will be used for the "intelligent production line project of high-performance electronic cloth per year 100 million meters", 500 million yuan will be used for the "construction project of high-performance ultra-thin electronic cloth per year" and 300 million yuan will be used for the supplementary working capital.
According to the diameter of the single filament, electronic yarns are divided into rovings, fine yarns, ultrafine yarns, extremely fine yarns and other types. The electronic cloths woven with electronic yarns of different thicknesses are thick cloth, thin cloth, ultrathin cloth and extremely thin cloth.
Prospectus (Draft for filing) disclosed that due to technical limitations, most domestic electronic yarn companies are concentrated in the mid- and low-end fields. "Most domestic electronic yarn companies mainly produce rovings and fine yarns, and the market competition is fierce; and in the field of high-end electronic yarns, there are currently few domestic manufacturers that can mass-produce high-end electronic yarns, among which extreme fine yarns are dominated by a few companies such as Japan's Nitofang and the United States AGY."
It can be seen that rovings and fine yarns are mid- and low-end products of electronic yarns, and ultra fine yarns and extremely fine yarns are high-end products. During the reporting period (2019-2021 and January-March 2022), Guangyuan New Materials' largest electronic yarn product was roving, with the main business revenue accounting for 19.49%, 15.40%, 21.47%, and 27.91% respectively; the revenue amount and revenue share of ultra-fine yarn continued to decline, with the main business revenue accounting for 13.54%, 12.37%, 4.35% and 3.23% respectively.
For the ultra-fine electronic yarn project with an annual output of 70,000 tons, Guangyuan New Materials stated that the implementation of this project will help the company accelerate the layout of the ultra-fine electronic yarn field and gain first-mover advantage in the market.
However, the reporter saw in the environmental impact assessment document of the ultra-fine electronic yarn project that the project was carried out in two phases, with a total production capacity of 35,000 tons of G75 yarn, 19,000 tons of E225 yarn, 8,000 tons of D450 yarn, 4,000 tons of D900 yarn, as well as C1200, BC1500, BC2250 and BC3000 yarn respectively. According to the classification of electronic yarns, G75 is roving, E225 is yarn, D450 yarn and D900 yarn are ultra-fine yarn, and C1200, BC1500, BC2250 and BC3000 are extremely fine yarn.
In other words, the ultrafine electronic yarn project with an annual output of 70,000 tons is actually roving, 19,000 tons is fine yarn, and only 16,000 tons is ultrafine yarn and extremely fine yarn. The project name clearly indicates that "ultrafine electronic yarn" seems to be "not worthy of its name". However, the prospectus (draft for filing) does not explain the specific production capacity, but only lists the production capacity of some extremely fine yarns. "Build to form the capacity of C1200, BC1500, BC2250, BC3000 and other extremely fine yarns with annual output of 1,500 tons, 900 tons, 800 tons and 800 tons, respectively."
The same situation also occurs in the fundraising project "high-performance ultra-thin electronic cloth production line project" with the project name clearly marked "ultra-thin electronic cloth", but the environmental impact assessment document shows that the designed production capacity is 44 million meters of thick cloth, 25 million meters of thin cloth, and the ultra-thin cloth and extremely thin cloth production capacity is 11 million meters.Regarding this project, Guangyuan New Materials stated that the implementation of the project can promote the development of my country's high-end electronic cloth industry and will help expand the company's supply of high-performance ultra-thin electronic cloth products.
is composed of revenue. Guangyuan New Materials' electronic cloth product revenue mainly comes from thick cloth and thin cloth, and the revenue accounts for a high proportion. The income amount and proportion of ultra-thin cloth and extremely thin cloth are relatively small.
During the reporting period, Guangyuan New Materials electronic yarn products had a total production capacity of 90,400 tons, 90,400 tons, 95,300 tons and 30,500 tons, respectively, and the electronic cloth had a total production capacity of 196 million meters, 220 million meters, 282 million meters, and 85.7076 million meters. In this IPO, Guangyuan New Materials fundraising and investment project plans to add 70,000 tons of electronic yarn production capacity and 180 million meters of electronic fabric production capacity. It is relatively large compared to the existing production capacity. It is still unknown whether it can be successfully digested in the future. How to deal with the industry expansion trend?
In fact, just like the above two major fundraising projects, most of the production capacity is roving, fine yarn, thick cloth and thin cloth, Guangyuan New Materials' main source of income is roving, fine yarn, thick cloth and thin cloth. The market competition in the roving and fine yarn fields is fierce. "The price of electronic-grade products in this category is greatly affected by factors such as the sharp expansion of domestic market production capacity, supply and demand relationship and changes in product structure."
Guangyuan New Materials also experienced performance fluctuations due to the above factors. During the reporting period, the company achieved operating income of RMB 828 million, RMB 866 million, RMB 1.699 billion and RMB 384 million, respectively, and achieved net profit of RMB -41.614 million, RMB -7.422 million, RMB 529 million and RMB 61.291 million, respectively.
's sharp expansion of production capacity and intensified market competition have affected the prices of related products. The price of product prices fell significantly in 2019 and 2020, resulting in a loss of net profit of the company; in 2021, affected by the supply of new downstream production capacity and strong demand in the terminal market, product prices generally rose sharply, and the company's net profit increased significantly to 529 million yuan.
However, the growth trend of product selling price has not continued. From January to March 2022, with the changes in demand in downstream industries, the average sales price of the company's products has declined to a certain extent. Therefore, Guangyuan New Materials has the risk of operating performance declining or even losing money. "In extreme cases, it even faces the risk of operating profits falling by more than 50% in the year of listing compared with the previous year or losing money in the year of listing."
In terms of gross profit margin, the gross profit margins of the company's main business during the reporting period were 15.07%, 14.36%, 47.54% and 29.38%, respectively. After a sudden increase in 2021, it showed a significant decline. The average gross profit margins of the main business of comparable companies in the same industry are 33.45%, 31.93%, 39.26% and 36.67% respectively. Except in 2021, the rest of the years are far higher than Guangyuan New Materials. The company said that there are differences in product categories and proportions mainly.
It is worth noting that in 2019 and 2020, Guangyuan New Materials suffered losses due to factors such as the sharp expansion of domestic market production capacity. So is the industry's capacity expansion still continuing?
China Jushi (SH600176, stock price 14.54 yuan, market value of 58.21 billion yuan) ranked first in the world in terms of glass fiber yarn production capacity, with an annual production capacity of 2 million tons. It is currently implementing the strategic goal of "rebuilding one Jushi " and continuously expanding production capacity. In March 2022, China Jushi disclosed that it plans to invest in a glass fiber production line construction project through its subsidiary Jiujiang , with an investment amount of 5.076 billion yuan. roving, electronic glass fiber cloth, etc. produced by Zhongcai Technology (SZ002080, stock price 23.62 yuan, market value 39.64 billion yuan), has an annual production capacity of more than 1 million tons. In June 2022, China Materials Technology announced that it plans to invest 3.684 billion yuan in Taiyuan, Shanxi to build a high-performance glass fiber intelligent manufacturing production line project with an annual output of 300,000 tons.
Honghe Technology (SH603256, stock price 6.92 yuan, market value of 6.12 billion yuan) was listed in 2019, and the electronic grade fiberglass ultrafine yarn project in Huangshi, Hubei was put into production in 2021. In 2022, Honghe Technology has not yet announced its expansion plan. It is currently promoting the "development and production project of high-end electronic grade glass fiber cloth for 5G for an annual output of 50.4 million meters", and is expected to be completed in 2022.
Chongqing International Composite Materials Co., Ltd., like Guangyuan New Materials, is sprinting to GEM IPO, intending to raise 2.481 billion yuan to be used for the construction of ECT glass fiber intelligent manufacturing production line, electronic yarn production line and other projects. It is expected that the production capacity will increase significantly.
It can be seen that after entering 2022, the expansion plan of comparable companies in the same industry is still continuing. How can Guangyuan New Materials respond to this trend? According to the prospectus (draft), if electronic-grade glass fiber manufacturers cannot complete product upgrades and continue to reduce costs and increase efficiency, and continue to carry out low-level repeated investment and capacity expansion, they may face losses or even be eliminated. Therefore, the measures taken by Guangyuan New Materials include continuously strengthening R&D investment and enhancing the company's competitiveness; predicting market demand and increasing business revenue.
Five institutional shareholders withdraw shares before and after IPO guidance
Prospectus (draft for declaration) discloses the changes in shareholders and shareholders during the reporting period.
In January 2019, Guangyuan New Materials launched capital increase and shares expansion, and four institutions including Huai'an Huida Equity Investment Center (Limited Partnership) (hereinafter referred to as Huai'an Huida), Ningbo Meishan Bonded Port Zhongke Huican Venture Investment Management Center (Limited Partnership) (hereinafter referred to as Ningbo Zhongke) became the company's new shareholders. Calculated based on the subscription price and the number of new shares, the investment prices of the four institutions are all 7.3 yuan per share.
Then in April 2019, Guangyuan New Materials conducted two capital increase, with the capital increase price of both 7.3 yuan per share, while the number of shares held by the above four institutions has not changed.
More than a year later, in August 2020, Guangyuan New Materials transferred its shares. Among the above four institutions, except Huai'an Huida, all of the shares of Guangyuan New Materials held were transferred, with the transfer price of the share price of 7.3 yuan per share. At the same time, the institutional shareholder Ningbo Meishan Bonded Port District Jinge Investment Partnership (Limited Partnership) (hereinafter referred to as Ningbo Jinge), with a transfer price of 7.15 yuan per share. The reporter noticed that Ningbo Jingge was established in July 2018, and the investment time should be not far from that of Ningbo Zhongke and other institutions.
Guangyuan New Materials disclosed that "the above-mentioned share transfer is priced at the transferor's investment cost price." Regarding why Ningbo Zhongke and other shareholders withdrew at the original price after holding shares for more than a year, the prospectus (draft for declaration) did not explain in detail, but only stated that the pricing basis is "combined with the investment price of Guangyuan New Materials' previous financing round as a reference."
In July 2021, Huai'an Huida also transferred all its shares in Guangyuan New Materials, but the transfer price was not disclosed. In fact, in January and June 2021, Guangyuan New Materials introduced two institutional shareholders, and the capital increase price was still 7.3 yuan per share.
It is worth noting that the reporter found out on the official website of the Henan Securities Regulatory Bureau that Guangyuan New Materials began to enter the IPO counseling period in December 2020. In other words, five institutional shareholders left the ranks of shareholders before and after IPO guidance.
Among the five institutional shareholders, except for Huai'an Huida that did not clarify the nature of the shareholders, Ningbo Zhongke and four other institutions are private equity funds. The reporter found out on the official website of China Securities Investment Fund Association that the four private equity funds have all registered and obtained the fund number. Among them, Ningbo Jingge has been liquidated in advance, while Ningbo Zhongke and three other institutions are "in operation".
Regarding the reasons why many shareholders exited at the share price, the production capacity of fundraising projects, etc., on August 31, Guangyuan New Materials Securities Department replied to the reporter of "Daily Economic News" via email that, given that our company is currently in the IPO silent period , the relevant information is subject to the information publicly disclosed by our company on the Shenzhen Stock Exchange.
Daily Economic News
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