Poly Cyron GEM IPO, focus on modified plastic, asset-liability ratio is higher than peers
On February 9th, Guangzhou Juxilong Engineering Plastics Co., LTD. (hereinafter referred to as “Juxilong”) was approved by China Securities Regulatory Commission for IPO registration on gem. Juxilong intends to issue no more than 11,952,200 ordinary shares to the public, accounting for no less than 25% of the total share capital after issuance.Sponsor agencies for the Great Wall securities.The company intends to raise 360 million yuan, of which 200 million yuan will be used to invest in the second phase construction project of the production base in East China, 80 million yuan will be used for the second phase construction project of the production base in South China, and the remaining 80 million yuan will be used to supplement the working capital of the company.As of the signing date of the prospectus, The controlling shareholder of Ju Xilong is Hao Yuanzeng, who directly holds 32.74% of the company’s equity. The actual controller is Hao Yuanzeng, Ren Ping, Hao Jianxin and Wu Ruosi, who together control 68.96% of the voting rights of the company.1 products, low rate of the acetate is approved by the ministry of China’s specialization, the new “little giant” enterprises, mainly engaged in modified plastics research and development, production and sales, its products include modified general plastic, modified engineering plastics, modified special engineering plastics and polymer materials, etc., mainly used in household appliances, automobile industry, medical supplies, electronic communications, and other fields.During the reporting period from January to June of 2018 to 2021, the operating revenue of Jucyron is 868 million yuan, 999 million yuan, 1.108 billion yuan and 596 million yuan respectively, and the net profit attributable to the owner of the parent company is 27.841,500 yuan, 47.5261 million yuan, 76.9758 million yuan and 35.3364 million yuan respectively.The company’s earnings are steadily increasing.The main business income of the company mainly comes from the production and sales of modified plastic products, and the sales income of modified plastic accounts for 92.11%, 90.88%, 93.21% and 95.88% of the main business income in each period respectively.Among them, modified PP is the company’s most important product series, sales revenue of each period accounted for 59.10%, 63.67%, 61.32% and 52.96%.The company focuses on the modification business of synthetic resin, which is in the middle of the modified plastic industry. The upstream is mainly the synthetic resin industry of various general plastics, engineering plastics and special engineering plastics, and the downstream is mainly the household appliances, automobile industry, medical supplies, electronic communication and other industries.According to statistics from the National Bureau of Statistics and The Qianzhan Industry Research Institute, the production of modified plastics by domestic enterprises increased from 7.05 million tons in 2010 to 19.55 million tons in 2019, with a compound annual growth rate of 12 percent.The compound annual growth rate of synthetic resin and copolymer was 9.13%, and the modification rate increased from 16.2% in 2010 to 20.4% in 2019.Modified plastics industry’s rapid development cannot leave the “plastic steel”, “with plastic and wood” industrial structure adjustment, with the enhancing engineering plastics modification technology, basic resin modified performance is superior to the steel, and household electrical appliances, auto parts, communications equipment, electric tools, new energy, high iron manufacturing and aerospace and other fields has realized the partial substitution.At present, the modification rate of domestic plastics is only about 20%, and the industry still has some room for growth in the future.However, there are more than 3,000 modified plastic enterprises in China, and the scale is generally small. There are only over 70 enterprises with annual production capacity of more than 3,000 tons. The industry concentration is low, and there are few enterprises with independent innovation ability that can provide customers with overall solutions of modified materials.In terms of market share, the market share of Jucylong is only about 0.61% based on the market output of modified plastics from 2017 to 2019, and there is a certain gap between Jucylong and its competitors such as Jinfa Technology and Preet.Among them, The market share of Jinfa technology is about 8%, preet, Dawn, And Guen is more than 1%, and the market share of Water and Nanjing Julong is about 0.5%.2 higher asset-liability ratio than peers during the reporting period from January to June 2018 to 2021, the asset-liability ratio of the company was 63.79%, 62.15%, 63.35% and 59.52% respectively. Due to limited financing channels, the company mainly raised funds through bank credit, resulting in high asset-liability ratio.Far higher than the average level of comparable listed companies in the industry.In addition, in each reporting period, the net cash flow generated by the company’s operating activities was -194 million yuan, -169 million yuan, -133 million yuan and -46 million yuan respectively, which continued to be negative.Since sales receipts and purchase payments have different credit periods, and the company’s customers mostly use bills for settlement, notes receivable and accounts receivable increase year by year with the growth of sales revenue.As a capital-intensive industry, the company has a large demand for working capital, so there is a certain liquidity risk.3 Conclusion From the track where the company is, there is a certain growth space in the future, but the current industry concentration is low, the company’s market share is still small, and there are certain operational risks.If the company can improve its cash flow and expand its scale through listing financing, it will play a positive role in seizing more market shares in the future.