statement
Any decision or opinion made by the CSRC and the exchange on this issuance does not indicate that they guarantee the authenticity, accuracy and integrity of the registration application documents and the information disclosed, nor do they indicate that they make substantive judgment or guarantee on the profitability, investment value of the issuer or the income of investors. Any statement to the contrary is a false statement.
According to the provisions of the securities law, the issuer shall be responsible for the changes in the operation and income of the issuer after the shares are issued according to law; Investors independently judge the investment value of the issuer, make investment decisions independently, and bear the investment risks caused by changes in the operation and income of the issuer or changes in the stock price after the shares are issued according to law. The issuer and all directors, supervisors and senior managers promise that the prospectus and other information disclosure materials are free from false records, misleading statements or major omissions, and bear corresponding legal liabilities.
The controlling shareholder and actual controller of the issuer promise that there are no false records, misleading statements or major omissions in this prospectus, and bear corresponding legal liabilities.
The person in charge of the company, the person in charge of accounting and the person in charge of accounting institutions shall ensure that the financial and accounting materials in the prospectus are true and complete.
The issuer and all directors, supervisors, senior managers, controlling shareholders, actual controllers, sponsors and underwriting securities companies promise to compensate investors for losses in securities issuance and trading due to false records, misleading statements or major omissions in the issuer’s prospectus and other information disclosure materials.
The sponsor and the securities service institution promise to compensate the investors for the losses caused to the investors due to the false records, misleading statements or major omissions in the documents prepared and issued for the issuer’s public offering.
Overview of this offering
Type of shares issued: RMB ordinary shares (A shares)
Number of shares issued: 58.4 million shares, accounting for 25% of the total share capital after issuance, and there is no transfer of old shares
Par value per share: RMB 1.00
Issue price per share: [] yuan
Expected issue date: January 12, 2022
Stock exchange to be listed: Shenzhen Stock Exchange gem
Total share capital after issuance: 233.6 million shares
Sponsor (lead underwriter): China Merchants Securities Co.Ltd(600999)
Signing date of prospectus: December 31, 2021
Tips on major events
The issuer reminds investors to pay special attention to the following key matters and be sure to carefully read the text of this prospectus before making investment decisions. 1、 Important commitments and instructions related to this offering
The company reminds investors to read the commitments related to this offering made by the company, the actual controller of the company, other shareholders, directors, supervisors, senior managers, other core personnel, as well as the sponsors and securities service institutions of this offering. The relevant commitments will be attached to this prospectus. 2、 Accumulated profit distribution and profit distribution policy
According to the proposal on the distribution plan of the company’s accumulated profits before the initial public offering of RMB common shares (A shares) deliberated and approved by the company’s second extraordinary general meeting in 2020, after the completion of the company’s initial public offering of shares, the accumulated undistributed profits before the company’s initial public offering of shares shall be enjoyed by the new and old shareholders after the issuance according to the shareholding ratio.
The company reminds investors to pay attention to the profit distribution policy after the issuance and listing of the company. For details, see “II. Dividend distribution policy and decision-making procedures after the issuance and listing, as well as the differences in dividend distribution policy before and after the issuance” in “section 10 investor protection” of this prospectus. 3、 Risk of market competition
In the field of consumer electronics, the global sales of smart phones and tablets have increased rapidly in recent years, providing a broad market space for FPC; In addition, the application of FPC products in new energy vehicles and industrial fields also shows a steady growth trend. However, due to the large number of production enterprises in FPC Industry, low market concentration and sufficient competition, the company is facing great competitive pressure.
In the field of connector components, downstream customers are also faced with complex and diverse choices when selecting upstream suppliers. The competition in the Chinese market is fierce and continues to intensify. In addition, with the progress of technology and the transfer of flat panel display industry to Chinese mainland, the demand for backlight modules of downstream customers is increasing and competition is becoming more and more intense.
Therefore, if the company cannot continuously improve product quality, technical level and management efficiency and maintain customer stickiness, it will be in a disadvantageous position in the future market competition, and the market share will gradually decline, resulting in the decline of the company’s operating performance. 4、 Risks caused by changes in downstream market demand
The main application fields of the company’s FPC products are consumer electronics products such as smart phones, wearable devices and smart homes, as well as power battery management systems such as automotive electronics, new energy batteries, UAVs and avionics. The market competition in the above application fields is relatively fierce and the product upgrading cycle is short, Manufacturers are faced with the risk of whether they can timely follow up the product upgrading of major customers and their own business fluctuations. At present, the overall development of the global economy is unstable, and the uncertain factors of the rotation and cyclical transformation of regional economic development increase. It can not be ruled out that the slowdown of global economic growth and the decrease of residents’ disposable income will lead to the shrinkage of FPC market demand in the future, which will affect the development of the company.
During the reporting period, the company’s connector components were mainly used in 5g communication base station, automobile, consumer electronics, communication, industry, medical and other fields, and the backlight module was mainly used in LCD and other fields. As the market demand in the fields of consumer electronics and automobiles will be affected by many factors such as macro-economy and policies, such as the decline of downstream market demand caused by adverse factors such as the decline of macro-economy and the decline of support policies in the future, the company’s customers may reduce the order volume accordingly, which will have an adverse impact on the sales of the company’s products. 5、 Risks to the sustainability and stability of cooperation with customer Weisheng Technology
Weisheng technology is one of the main customers of the company during the reporting period. Its sales amount in each period of the reporting period was 121.183 million yuan, 107.0185 million yuan, 62.2274 million yuan and 5.2672 million yuan respectively. It was the first, second and fourth largest customers of the company from 2018 to 2020. Weisheng technology has business overlap with the company, and its cooperation with the company is mainly due to insufficient production capacity. The company is selected as a partner to improve the production capacity of FPC business. The main downstream customers of FPC products sold by the company are Xiaomi mobile phones. In 2020, the company’s sales scale to Weisheng technology fell sharply year-on-year, and further fell sharply year-on-year from January to September 2021. In the future, if Xiaomi stops purchasing relevant FPC products from Weisheng technology or reduces its purchase share, or Weisheng technology reduces its purchase share to the company, there is a risk that the scale of cooperation between the company and Weisheng technology will be further reduced or even no longer continue to cooperate, resulting in a sharp decline in the company’s sales revenue of Weisheng technology.
6、 Risk of intensified market competition and decline in product revenue of power battery management system FPC business
The company is one of the first manufacturers to enter the field of power battery FPC in the industry. Through independent research and development, the company has realized the temperature and voltage signal acquisition of new energy power battery. The traditional harness has been upgraded to signal acquisition FPC. During the reporting period, due to the intensification of market competition and the dynamic adjustment of the company’s strategic direction, the company’s sales revenue of power battery management system FPC products decreased year by year, which were 110.7653 million yuan, 84.7852 million yuan, 77.7208 million yuan and 60.2192 million yuan respectively in each period. As of October 31, 2021, the amount of orders in hand for the company’s power battery management system FPC business was 26.731 million yuan.
In the future, if the company cannot continuously improve the competitiveness of this business by increasing technology R & D investment and reducing product production costs, it will be in a disadvantageous position in the market competition, resulting in a further decline in the revenue of this kind of products. 7、 Risks to the continuity and stability of cooperation with customers Byd Company Limited(002594)
Byd Company Limited(002594) is one of the main customers of the company during the reporting period. The sales amount from 2018 to 2020 was 86.2561 million yuan, 74.5851 million yuan and 48.0581 million yuan respectively, which are the third, fourth and seventh largest customers of the company respectively. The products sold by the company mainly include power battery management system FPC and a small number of consumer battery protection FPC products. In 2020, the company’s sales volume of Byd Company Limited(002594) fell sharply year-on-year. From January to September 2021, the company’s sales volume of Byd Company Limited(002594) was RMB 1488400, and there was no new order in 2021. The business cooperation between the company and Byd Company Limited(002594) is uncertain in the future. In the future, if the company stops cooperation with Byd Company Limited(002594) , or the scale of cooperation is greatly reduced, and the company fails to actively take measures to expand other customers or businesses of such products, it may have an adverse impact on the sales scale and profitability of the company. 8、 Risk of rising raw material prices
The company purchases many kinds of raw materials, among which the main raw materials are copper strip, base material, covering film, electronic material, gold salt, etc. in the future, if the price of such raw materials rises, and the company cannot take measures to transfer the rising pressure or offset the rising pressure of raw material prices through new products and new technological innovation, the company’s operating performance will be adversely affected.
Copper strip is one of the main raw materials for the production of connector parts and components of the company. The amount of copper strip consumed by the production of connector parts and components of the company in each period of the reporting period accounted for more than 40% of the direct material cost of connector parts and components. Since 2021, affected by multiple factors such as the spread of overseas epidemic and loose global liquidity, the prices of bulk commodities such as copper have reached new highs. Although the company can reduce the adverse impact of copper price rise on the company’s performance by increasing the product sales price, the increase of product sales price generally lags behind the increase of raw material price in time. In addition, the rising copper price will lead to the company’s raw material procurement occupying more working capital, thus increasing the pressure on the company’s working capital. 9、 Risk of product price decline
Product price is one of the key factors affecting the profitability of the company. With the intensification of market competition, the company’s product prices are facing downward pressure, which does not rule out the possibility of the company adopting price reduction strategy to deal with the competition. If the company cannot continuously reduce the production cost of existing products, optimize the product structure and develop new products with high added value and in line with market demand, the decline of product price will lead to the decline of the company’s gross profit margin, which will have an adverse impact on the company’s profitability. 10、 Risks caused by the decline of downstream smartphone shipments
The company’s main business products are divided into three categories: FPC, connector components and LED backlight modules. Among them, the products related to terminal applications for mobile phones are mainly consumer electronic FPC (including consumer battery protection FPC and mobile phone peripheral FPC). In addition, there are a small number of precision structural parts in connector components. In 2020 and January September 2021, the proportion of consumer electronics FPC revenue in main business revenue was 27.12% and 28.73% respectively.
According to the quarterly tracking report of mobile phones released by Market Research Institute IDC, in the second quarter of 2021, the shipment volume of China’s smart phone market was about 78.1 million units, a year-on-year decrease of 11.0%; In the third quarter of 2021, China’s smartphone market shipped about 80.8 million units, down 4.7% year-on-year; The global smartphone market shipped about 330 million units, down 6.7% year-on-year; The performance of some mobile phone industry chain enterprises declined in the first half of 2021. As an upstream parts supplier of mobile phones, if the shipment of smart phones continues to decline in the future, the business related to mobile phones as the company’s terminal products may be negatively affected, which will have a negative impact on the company’s performance.
11、 Environmental risk
The production process of the company’s main products involves metal surface treatment and electroplating processing, and the pollutant emission control is relatively strict. With the increasing national requirements for environmental protection, the company continues to increase investment in environmental protection, but there is still a risk of punishment due to staff negligence and other reasons.
In addition, with the enhancement of the public’s awareness of environmental protection, the government’s attention to environmental protection is increasing. It does not rule out that the environmental protection department further improves the environmental protection requirements for relevant enterprises, so that the company increases the investment in environmental protection facilities and operation, and increases the cost of environmental protection, which may have an adverse impact on the company’s business performance. 12、 Risk that the project invested with raised funds fails to achieve the expected income
The raised funds are planned to invest in the construction of printed circuit board production line, advanced manufacturing base, R & D center and supplementary working capital projects. The calculation of the expected income of the raised investment project is based on the current economic situation, market environment and the company’s existing operating conditions. If the raised funds are not available in time, or the macroeconomic situation and market environment change significantly, it will have an adverse impact on the construction progress, investment return and expected income of the raised investment project. 13、 Main financial information and operating conditions after the audit deadline of the financial report
(i) Main financial information and operating conditions after the audit deadline of the financial report
From the audit deadline of the financial report to the signing date of this offering intention, the internal and external environment of the company’s production and operation has not undergone or will undergo significant adverse changes, and the company has no other major events that may affect the judgment of investors.
（2） Forecast for 2021
According to the preliminary calculation, the expected performance of the company in 2021 is as follows:
Unit: 10000 yuan
Year on year change ratio of the project from 2021 to 2020
Operating income 145000.00 ~ 150000.00117534.2923.37% ~ 27.62%
Net attributable to owners of the parent company: 20000.00 ~ 22500.0018421.448
