Hubei Zhongyi Technology Co., Ltd
(No. 47, South Mengze Avenue, economic development zone, Yunmeng County)
Initial public offering and listing on GEM
Listing announcement
Sponsor (lead underwriter)
(27th and 28th floors, building 2, international trade building, No. 1 Jianguomenwai street, Chaoyang District, Beijing)
April, 2002
hot tip
The shares of Hubei Zhongyi Technology Co., Ltd. (hereinafter referred to as “Zhongyi technology”, “the company”, “the company” or “the issuer”) will be listed on the gem of Shenzhen Stock Exchange on April 21, 2022. The company reminds investors to fully understand the risks of the stock market and the risk factors disclosed by the company, avoid blindly following the trend of “speculation” in the initial stage of IPO, and make prudent decision and rational investment.
Unless otherwise specified, the abbreviations or terms in this listing announcement have the same meanings as those in the prospectus of the company’s initial public offering of shares.
Section I important statements and tips
1、 Important statements and tips
The company and all directors, supervisors and senior managers guarantee the authenticity, accuracy and completeness of the listing announcement, promise that there are no false records, misleading statements or major omissions in the listing announcement, and bear legal liabilities according to law.
The opinions of Shenzhen Stock Exchange and relevant government authorities on the listing of the company’s shares and related matters do not indicate any guarantee to the company.
The company reminds investors to carefully read the information published on cninfo.com.cn China Securities Network (www.cs. Com. CN.) China Securities Network (www.cn. Stock. Com.) Securities Times (www.stcn. Com.) Securities Daily (www.zqrb. CN.) The contents of the “risk factors” chapter of the company’s prospectus should pay attention to risks, make prudent decisions and make rational investment.
The company reminds the majority of investors that for any relevant content not involved in this listing announcement, please refer to the full text of the company’s prospectus. 2、 Special tips on investment risk at the initial stage of gem IPO
The issuing price of this offering is 163.56 yuan / share, which does not exceed the median and weighted average of offline investors’ quotation after excluding the highest quotation, as well as the securities investment fund, national social security fund, basic old-age insurance fund established through public offering after excluding the highest quotation The enterprise annuity fund established in accordance with the measures for the administration of enterprise annuity fund and the insurance fund quotation median and weighted average in accordance with the measures for the administration of the use of insurance funds, whichever is lower; According to the industry classification guidelines for listed companies (revised in 2012) issued by the CSRC, the industry of the issuer is “(C39) computer, communication and other electronic equipment manufacturing industry”. The issuance price of 163.56 yuan / share corresponds to the issuer’s audited diluted P / E ratio of parent net profit before and after deducting non recurring profits and losses in 2020, which is 91.57 times, which is higher than the industry’s average static P / E ratio of 39.70 times in the latest month released by China Securities Index Co., Ltd. on April 7 (T-3) 2022. There is a risk that the decline of the issuer’s share price will bring losses to investors in the future. There is a risk that the net asset scale will increase significantly due to the acquisition of raised funds, which will have an important impact on the issuer’s production and operation mode, operation management and risk control ability, financial status, profitability and long-term interests of shareholders. The issuer and the lead underwriter remind investors to pay attention to investment risks, carefully study and judge the rationality of issuance pricing, and make investment decisions rationally.
The company reminds investors to pay attention to the investment risks in the initial stage of IPO (hereinafter referred to as “new shares”), and investors should fully understand the risks and rationally participate in the trading of new shares.
Specifically, the risks at the initial stage of listing include but are not limited to the following:
(I) relaxation of price limit
The competitive trading of GEM stocks is subject to a wide range of rise and fall limits. For stocks that are IPO and listed on the gem, there is no rise and fall limit in the first five trading days after listing, and then the rise and fall limit is 20%. On the first day of listing, the main board of Shenzhen Stock Exchange was limited to 44%, 36% and 10% respectively. Gem further relaxed the restrictions on the rise and fall of stocks in the initial stage of listing, and increased the trading risk.
(II) a small number of tradable shares
At the initial stage of listing, because the lock up period of the original shareholders was 36 months or 12 months and the lock up period of the online lower limit was 6 months, the number of A-share tradable shares with unlimited sales conditions of the company after this issuance was 13629392, accounting for 20.24% of the total share capital after this issuance. At the initial stage of listing, the number of circulating shares is small, and there is a risk of insufficient liquidity.
(III) the shares can be used as the subject matter of margin trading on the first day of listing
GEM stocks can be used as the subject of margin trading on the first day of listing, which may produce certain price fluctuation risk, market risk, margin call risk and liquidity risk. Price fluctuation risk refers to that margin trading will aggravate the price fluctuation of the underlying stock; Market risk refers to that when investors use stocks as collateral for financing, they need to bear not only the risks caused by the change of the original stock price, but also the risks caused by the change of the stock price of new investment, and pay the corresponding interest; Margin call risk means that investors need to monitor the level of guarantee ratio in the whole process of trading to ensure that it is not lower than the maintenance margin ratio required by margin trading; Liquidity risk refers to that when the price of the underlying stock fluctuates violently, the financed purchase of securities or the repayment of securities, the sale of securities or the repayment of securities may be blocked, resulting in greater liquidity risk. 3、 Special risk tips
The company specially reminds investors to carefully read all the contents of “section IV Risk Factors” in the prospectus. Investors are reminded to pay special attention to the following risk factors:
(I) business risks caused by share inheritance and change of actual controller
Mr. Wang Hanping, the former controlling shareholder and actual controller of the company, died on April 6, 2021. Mr. Wang Li inherited 56.38% of the shares of the company originally held by Mr. Wang Hanping according to a valid will and became the new controlling shareholder and actual controller of the company. As the founder of the company, Mr. Wang Hanping has played an important role in introducing management and technical talents for the company, formulating the company’s business policy and development strategy, and improving the company’s governance system and governance structure. Mr. Wang Li previously lacked enterprise operation and management experience, such as the new controlling shareholder and actual controller will adopt different business policies, development strategies and management ideas in the future If the development strategy and management ideas do not meet the market demand and the actual situation of the company, it may have an adverse impact on the future operation of the company.
As of the signing date of this listing announcement, there is no dispute or potential dispute over 56.38% of the shares of the company held by Mr. Wang Li. The concerted action agreement signed by Mr. Wang Li and Ms. Wang Xiaoxia is legal and effective, and the actual control of the company is clear and stable. Mr. Wang Li has issued a letter of commitment to maintain the stability of the actual control of the company, Wang Xiaoxia, a shareholder holding more than 5% of the company’s shares, and Zhongyi investment have issued a letter of commitment to maintain the stability of the company’s actual control, but they still do not rule out that uncontrollable factors may affect the stability of the company’s control in the future, which may have an adverse impact on the company’s future operation.
(II) as for the high concentration of customers, there is a certain risk of dependence on the main customers Contemporary Amperex Technology Co.Limited(300750) with regard to customers
From 2019 to 2020 and from January to June 2021, the proportion of products sold to Contemporary Amperex Technology Co.Limited(300750) accounted for 7.10%, 35.46% and 46.93% of the company’s operating revenue respectively, and the proportion of products sold to Contemporary Amperex Technology Co.Limited(300750) accounted for 14.77%, 50.31% and 47.80% of the company’s total gross profit respectively. The company’s sales revenue to Contemporary Amperex Technology Co.Limited(300750) increased significantly in 2020, and the proportion of sales revenue to Contemporary Amperex Technology Co.Limited(300750) also increased significantly, The company has a high concentration of customers.
If the operation of Contemporary Amperex Technology Co.Limited(300750) or the cooperation between the company and Contemporary Amperex Technology Co.Limited(300750) changes in the future, which has a significant adverse impact on the company’s business, and the company fails to resolve the relevant risks in time, the company’s operating performance and the sustainability of performance growth will be affected to a certain extent.
(III) risks of energy consumption dual control policy on the issuer’s production and operation and raised investment projects
In September 2021, the company received the implementation plan for double control target responsibility assessment of energy consumption of provincial key energy users in the 14th five year plan issued by Hubei Provincial Development and Reform Commission forwarded by Yunmeng County Development and Reform Bureau. According to the implementation plan, the company and Zhongke copper foil meet the standards of key energy users included in the dual control assessment and management scope of energy consumption in Hubei Province.
If the company and Zhongke copper foil fail to complete the total energy consumption and intensity targets in the follow-up assessment, or the total energy consumption target is completed but the intensity target is not completed, and the assessment result is evaluated as “incomplete”, it may face the risk of compulsory implementation of energy audit, ordering rectification within a time limit, and delaying the approval of energy-saving review of new high energy consumption projects.
(IV) production 4.5 μ M risk of large obstacles encountered by lithium battery copper foil
Following the requirements of battery manufacturers to improve energy density and reduce cost μ M after lithium copper foil, 4.5 μ M lithium battery copper foil is expected to become one of the mainstream products in the future, and there is a certain substitution risk for the company’s existing main product specification lithium battery copper foil. Achieve 4.5 μ M copper foil batch production needs to meet the technical requirements of additives, core equipment, process technology and so on. At present, the downstream leading enterprise Contemporary Amperex Technology Co.Limited(300750) has started to apply 4.5 μ M lithium copper foil. If production 4.5 μ M copper foil encounters great obstacles, so it can not timely respond to the needs of the market and customers for advanced processes and products, and the company fails to overcome relevant obstacles and resolve risks in time, which will have a certain impact on the company’s market competitiveness and production and operation performance.
(V) risk of industrial policy change
Lithium copper foil, one of the company’s main products, is mainly used in the downstream new energy vehicle industry. With the gradual maturity of the industrial chain of China Shanxi Guoxin Energy Corporation Limited(600617) automobile industry and the adjustment of the national subsidy policy, the industry is changing from the vigorous development stage brought by policy subsidies to the sustainable growth stage based on market demand and driven by technological innovation. If the current decline of state subsidies exceeds expectations or other major adverse changes occur in relevant industrial policies, the development of new energy vehicle industry will be affected to a certain extent, which will have an adverse impact on the sales of lithium battery copper foil products of the company.
(VI) risk of intensified market competition
Since 2014, China Shanxi Guoxin Energy Corporation Limited(600617) automobile industry has entered a period of rapid development, driving the demand for power batteries, and power battery enterprises have expanded their production, thus driving the expansion of cathode material collector and its upstream enterprises. Affected by the increasingly fierce market competition, the change of subsidy policies for new energy vehicles, the adjustment of product structure and other reasons, enterprises in the industry have accelerated technology R & D, optimized processes and increased production capacity to obtain technical and price advantages. Subsequently, the scale of lithium-ion copper foil industry has developed rapidly: with the rapid development of lithium-ion batteries, especially power batteries in China, according to GGII, the shipment volume of China’s lithium-ion copper foil industry continued to develop rapidly at a growth rate of 20% from 2015 to 2020. From 2018 to 2020, the output of lithium battery copper foil in China increased from 119000 tons to 145000 tons. The capacity in the industry continued to expand, and the capacity utilization rate decreased from 73.4% to 67.3%. In terms of market competition, downstream customers continue to focus on power battery enterprises, and ultra-thin lithium batteries have become the focus of the competitive layout of leading enterprises. According to GGII, by 2020, the market share of the top five suppliers in the lithium copper foil industry has reached 67.4%, and the market competition is fierce.
The gross profit margin of lithium copper foil of the company is greatly affected by the market competition of the industry, customer and product structure, technical development difficulty and other factors. If the industry competition intensifies in the future, the company’s business scale, customer resources, product price and other aspects change greatly, or the company cannot continue to maintain its competitive advantage in innovation and technology, the company will face the risk of decline in gross profit margin due to adverse factors such as the decline in the sales price of main products, the rise in the price of raw materials and the rise in labor cost.
(VII) risk of fluctuation of processing fee and decline of operating performance
There are many enterprises producing electrolytic copper foil in the industry, with large market demand and full competition. At present, companies in the same industry are expanding their production to seek scale expansion and technological iteration and upgrading. At the same time, relevant policies in the downstream new energy vehicle industry may also fluctuate. The intensification of industry competition, the overtaking of industry status by competitors, the decline of new energy subsidy policy again, resulting in the decline of prosperity of copper foil industry and other related factors may have an adverse impact on the company’s product processing fees. The company’s overall operating performance is sensitive to the fluctuation of processing fees. According to the calculation, if the processing fees drop by 10%, the company’s net profit will drop by 29.35% in 2020. Therefore, the decline of processing fees will have an adverse impact on the company’s business growth and product sales, resulting in the risk of decline in the company’s operating performance. (VIII) price fluctuation risk of raw materials
The company uses copper as the main raw material for the production of electrolytic copper foil, and the product pricing adopts the mode of “copper price + processing fee”. As the proportion of raw materials in the unit cost of standard copper foil and lithium battery copper foil products is basically in the range of 70% – 85% (the proportion of raw material costs is different due to different specific products), according to the sensitivity analysis and calculation, the rise or fall of copper price is less than 30%, and the corresponding decline or rise of the company’s gross profit margin is less than 5%. Therefore, the fluctuation of copper price will affect the company’s operating revenue, cost and gross profit margin, thus affecting the company’s performance. If the copper price in the market fluctuates sharply in the short term, the sales price of the company’s products fails to reflect the change of the copper price in time, which will have an adverse impact on the company’s performance. In the first half of 2021, the market copper price continued to rise, and the fluctuation range of the average price increased compared with that in 2020. If the company fails to timely transmit the impact of copper price fluctuation on the purchase unit price to the sales side and reflect it in the sales unit price, it will have an adverse impact on the company’s performance.
(IX) safety production risk
There is a certain risk of accidents due to improper operation in the company’s production activities. Safety accidents may cause personal casualties, property damage, etc., and may cause the company to be punished, affecting the company’s financial status and operating results.
(x) technological innovation risk
With more and more enterprises entering the copper foil industry, the industry competition is intensifying. At the same time, the rapid development of downstream industries also makes customers put forward higher requirements for the quality and process of electrolytic copper foil. In the future, if the company cannot
