Securities code: Jiangsu Lixing General Steel Ball Co.Ltd(300421) securities abbreviation: Jiangsu Lixing General Steel Ball Co.Ltd(300421) Jiangsu Lixing General Steel Ball Co.Ltd(300421)
Jiangsu Lixing General Steel Ball Co., Ltd.
(No. 68, Xingyuan Avenue, Rucheng street, Rugao City, Jiangsu Province)
Gem issues A-Shares to specific objects
Prospectus
(Registration draft)
Sponsor (lead underwriter)
(No. 1508, Xinzha Road, Jing’an District, Shanghai)
January, 2002
Company statement
The company and all directors, supervisors and senior managers promise that there are no false records, misleading statements or major omissions in the prospectus and other information disclosure materials, and bear corresponding legal liabilities for their authenticity, accuracy and completeness.
The person in charge of the company, the person in charge of accounting and the person in charge of the accounting organization shall ensure that the financial and accounting materials in the prospectus are true and complete.
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 application documents and the information disclosed, nor do they make substantive judgment or guarantee on the profitability, investment value of the company or the income of investors. Any statement to the contrary is a false statement.
According to the provisions of the securities law, the company shall be responsible for the changes of the company’s operation and income after the securities are issued according to law. Investors independently judge the investment value of the company, make investment decisions independently, and bear the investment risk caused by the change of the company’s operation and income or the change of securities price after the issuance of securities according to law.
Tips on major issues
The company urges investors to carefully read the full text of “section VI risk factors related to this offering” in this prospectus, and pay special attention to the following risks. 1、 Implementation risk of raised investment projects
The investment projects raised by the company this time are “precision rolling element project with an annual output of 6000 tons”, “expansion project with an annual output of 8 million high-end large rolling elements” and “supplementary working capital”. The company’s investment project with raised funds is based on the current industrial policy, market environment, technology development trend and other factors. Although the company has fully analyzed and demonstrated the relevant policies, technical feasibility and market prospect of the project invested by the raised funds, in the process of project implementation, the company may be affected by some unforeseen factors such as macroeconomic environment, industrial policy and market environment, thus affecting the realization of the expected benefits of the project.
The G3 grade high-precision micro ball produced by the raised capital investment project “precision rolling element project with an annual output of 6000 tons” is an upgraded iterative product produced in large quantities for the first time in China. The production equipment of this product depends on foreign imports. Although the company’s imported equipment for producing G3 grade micro ball, the micro steel ball production line, has been installed and put into use in the factory in early 2021, However, there is uncertainty whether the future equipment upgrading will be limited by trade policies, technology blockade and other factors. In addition, although the company has the technical strength to mass produce G3 level high-precision micro balls after years of technical accumulation, if the technical standards of G3 level micro ball products can not meet or exceed the main foreign competitors, or can not meet the needs of downstream customers, it may lead to uncertainty in the implementation of the company’s raised investment project. 2、 Capacity digestion risk of raised investment projects
The company’s production capacity will be increased accordingly after the completion of this raised investment project. The raised investment project is determined according to the industrial policy, market environment, industry development trend and other factors in recent years, combined with the company’s analysis and judgment on the future development of the industry. The scale of capacity increase is reasonable. However, it will take some time for this raised investment project to be completed and put into operation. If there are major adverse changes in subsequent industrial policies, market demand and competition pattern, or the company’s market development ability is insufficient and the growth rate of market space is lower than expected, the company may face the risk that the new production capacity cannot be eliminated and the implementation effect of raised investment project does not meet the expectations. 3、 Risk that the benefits of raised investment projects fail to meet the expectations
The investment projects of the raised funds are “precision rolling element project with an annual output of 6000 tons”, “expansion project with an annual output of 8 million high-end large rolling elements” and “supplementary working capital”. The implementation of the project will further expand production capacity, optimize product structure and expand the company’s market share in the global bearing steel ball field. Although the company has fully investigated and demonstrated the project invested by the raised funds, it will take some time for the project to reach full production. In the process of project implementation, if there are major changes in market environment, technology and management, the implementation of the project will be affected. Therefore, the economic benefits and market acceptance of the products after the actual completion of the project may be different from the calculation of the issuer, which will affect the expected investment effect and the realization of income objectives. 4、 Product certification risk of raised investment projects
The main products of this raised investment project “precision rolling element project with an annual output of 6000 tons” are high-precision micro balls and small balls. Among them, G3 high-precision micro balls are upgraded iterative products produced in large quantities for the first time, and the products can be sold in batches only after passing the customer certification. Although the G3 high-precision microsphere produced in small quantities by the company has passed the certification of some potential customers, due to the uncertainty of mass production, if the company’s products fail to pass the certification of customers on schedule, it will have an adverse impact on the benefits of this raised investment project. 5、 Investment and raised depreciation risk
After the completion of the raised investment project, the company will add fixed assets and intangible assets, and the depreciation and amortization expenses will increase accordingly. After the raised investment project is put into operation, the annual average depreciation of fixed assets and amortization of intangible assets will have a certain impact on the company’s future annual profits. Although the expected benefits of this raised investment project are good, and the expected benefits will be able to absorb the impact of the depreciation of new fixed assets after the smooth implementation of the project, since the construction of the raised investment project requires a certain period, if there are significant adverse changes in the market environment after the implementation of the raised investment project, the depreciation and amortization of assets in the new growth period will have an adverse impact on the company’s future profitability. 6、 Risk that the growth of operating performance does not meet the expectation
The operating performance of the company is affected by various internal and external factors such as industrial policy, market environment, downstream industry demand and internal management level. If the growth rate of downstream industry slows down in the future or the final actual demand of main customers drops significantly compared with the expected demand, it may have an adverse impact on the operating performance of the company, The company will face the risk of performance growth falling short of expectations or growth decline. 7、 Risk of intensified market competition
The issuer is currently the main bearing and rolling element manufacturing enterprise in China, with leading technical R & D strength in the industry. It has global well-known mechanical parts manufacturers such as GKN group, SKF group, jetteggert Co., Ltd. and enten Co., Ltd. as long-term and stable high-quality customers, it has a great competitive advantage in the bearing and rolling element industry.
However, as major international bearing and rolling element manufacturers such as Japan chunnakajima company continue to expand their business worldwide and the development of local bearing and rolling element manufacturers in China, if the issuer fails to improve and consolidate its existing competitive advantage in time, it may face the impact of the deterioration of the market competitive environment on its sustainable profitability, Thus, the issuer has a decline in income growth or even a decline in income. Therefore, the issuer has the risk of intensified market competition. 8、 Risk of trade policy changes
During the reporting period, the company’s overseas sales revenue accounted for 30.18%, 30.34%, 24.97% and 31.93% of its main business revenue respectively. Since 2018, in trade disputes with China, the United States has imposed punitive tariffs on products made in China in accordance with act 301. As of the signing date of this prospectus, relevant policies have led to the company’s steel ball products to continue to impose a punitive tariff of 25% since July 2018. In addition, other major exporting countries and regions did not adopt trade protection procedures for the issuer’s main products, and there were no trade frictions, which had no significant impact on the issuer’s performance. Under the background of escalating trade frictions and uncertain prospects, if the United States and other countries further expand and implement the expanded tax list in the future, it may affect the company’s export business and adversely affect the company’s production and operation to a certain extent. 9、 Risk of asset impairment of Lexus
Due to the dual impact of Sino US trade friction and covid-19 epidemic, powerstar America cannot make a profit in the short term. Therefore, the company terminated the recognition of book deferred income tax assets for prudence. As of September 30, 2021, the net book value of long-term assets of Lexus totaled 428569 million yuan, including fixed assets, construction in progress and intangible assets. From the objective situation analysis, powerstar United States is not unable to make profits due to its own reasons, but due to the extensive systemic risks caused by international events. The company is still confident that Lexus will resume production and make profits. In addition, the relevant equipment used by Lexus can be fully used for the production of similar products of domestic parent companies and other subsidiaries, and there is no major renovation expenditure. In the current domestic market where the supply of rolling elements is in short supply, the recoverable amount of equipment is greater than the book value, and the risk of material impairment is low. Nevertheless, considering the unpredictability of the international situation and the additional costs in the process of equipment transportation, there is still the possibility of impairment of the long-term assets of Lexus.
10、 Raw material price fluctuation risk
The main raw materials of the issuer’s products are bearing steel, which fluctuates greatly and has a certain impact on the production cost of the products. During the reporting period, the average cost of the company’s raw material bearing steel was 984199 yuan / ton, 1034894 yuan / ton, 1097814 yuan / ton and 1139812 yuan / ton, with growth rates of 5.15%, 6.08% and 3.83% respectively. The average cost of steel showed an upward trend year by year. The breakeven analysis on the rise of raw material price shows that taking 2021 as an example, assuming that other factors other than the change of raw material price do not change, when the purchase unit price of bearing steel increases by 28.81%, the profit before tax will be zero, and if it further increases by 54.96%, the gross profit margin will be zero. The issuer has established a long-term and stable procurement relationship with major special steel production enterprises such as Baosteel trading and CITIC Pacific. At the same time, it can also appropriately adjust the product price in case of major adverse changes in the price of raw materials, so as to transfer the impact of cost fluctuations on the company’s profits and realize effective price transmission.
During the reporting period, the average cost of the company’s raw material bearing steel increased by 15.81%. Meanwhile, after deducting the impact of transportation expenses during the reporting period, the gross profit margin of the company’s main business was 25.34%, 21.37%, 23.47% and 25.42% respectively. Except for 2019, the gross profit margin of the company’s main business did not fluctuate significantly, indicating that the company has good price transmission ability. Nevertheless, as it is difficult to keep the price adjustment of the issuer’s products fully synchronized with the fluctuation of the purchase price of raw materials, if the price of relevant raw materials fluctuates sharply in the short term, the gross profit margin of the issuer will be affected to a certain extent, thus affecting the profitability of the company. 11、 Risk of high customer concentration
The downstream customers of the issuer are mainly world-famous bearing manufacturers, including GKN group, SKF group, jetteggert Co., Ltd., enten Co., Ltd., Korea Rijin group, people’s group, etc. At present, the world’s eight major bearing manufacturers account for more than 70% of the global bearing market share, and the industry concentration of downstream customers is high. During the reporting period, the proportion of the issuer’s sales to the top five customers (according to the consolidated caliber) in the operating revenue was 50.90%, 51.12%, 44.08% and 47.51% respectively, of which the proportion of sales from the top two customers GKN group and SKF group in the operating revenue was 38.96%, 37.11%, 27.49% and 30.01% respectively. The company has the risk of high customer concentration.
If the company can’t maintain its R & D capability and improve its technical level in the future, can’t maintain its advantages in technology and product quality compared with other companies in the same industry, or the response speed to customers can’t meet its requirements, there may be a risk of increased competition leading to the loss of customers, which will have an adverse impact on the operation of the company.
12、 Risk of high concentration of suppliers
The company’s main raw materials are steel. During the reporting period, the proportion of raw materials purchased by the company’s top five suppliers was 58.46%, 55.97%, 57.78% and 58.49% respectively, accounting for a relatively high proportion, and the suppliers were relatively concentrated. Selecting major suppliers for centralized procurement can ensure stable product quality, effectively reduce procurement costs and improve procurement efficiency. However, if such raw material suppliers cannot continuously supply qualified products to the company due to their own operation, product quality and cooperative relationship with the company, resulting in the need for the company to adjust suppliers, It will have an adverse impact on the company’s operation in the short term. 13、 Credit impairment risk of accounts receivable
At the end of each reporting period, the net book value of the company’s accounts receivable was 22790400 yuan, 248585200 yuan, 266511200 yuan and 325269400 yuan respectively, accounting for 32.27%, 34.08%, 33.85% and 43.27% of the operating revenue respectively.
The growth of the issuer’s accounts receivable balance is basically consistent with the growth of the company’s sales revenue. The high balance of accounts receivable at the end of the period is related to the industry characteristics of the issuer. The long-term payment period of bearing manufacturers and downstream customers is generally the payment period agreed by large-scale manufacturers or downstream customers. Therefore, after receiving the bill of lading, the main payment period of bearing manufacturers and downstream companies is a certain period of time, and the payment period of bearing manufacturers and downstream companies is a certain period of time, The credit period varies from 30 days to 90 days according to the customer’s credit rating. Since it often takes some time from the time of delivery to the time when the customer receives the payment voucher and the time when the customer pays to the account, the collection cycle generally ranges from 2 to 4 months. Although the credit rating of downstream customers of the issuer is high and the aging of accounts receivable is short, there is still a risk of bad debt due to the large amount of accounts receivable of the issuer.
catalogue
The company declares that 1. Tips on major issues 2 catalog 7 interpretation 10 I. General terms 10 2. Professional terms Section 1 basic information of the company 13 I. Company Profile 13 II. Equity structure
