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After the sponsor was changed to CITIC Securities, Chengdu Jiachi Electronic Technology Co., Ltd. (hereinafter referred to as "Jiachi Technology") IPO "set off" again. On the evening of August 12, the official website of the Shanghai Stock Exchange showed that Jiachi Technology's IPO resumed the registration procedure. Three months ago, Jiachi Technology's IPO was "paused" because the sponsor Huaxi Securities was restricted from business activities. Jiachi Technology is also the first in the IPO market to resume the registration procedure after changing the sponsor during the registration stage.

Continue to attack the "registration barrier"

After a three-month suspension, Jiachi Technology's IPO was restarted. On the evening of August 12, the Shanghai Stock Exchange stated that according to the relevant provisions of Article 30 of the "Administrative Measures for the Registration of Initial Public Offerings", the issuance registration procedures of Jiachi Technology were resumed.

The prospectus shows that Jiachi Technology is a major domestic provider of electromagnetic functional materials and structures. From 2021 to 2023, Jiachi Technology's operating income will be approximately 530 million yuan, 769 million yuan, and 981 million yuan, respectively; the corresponding attributable net profits will be approximately 167 million yuan, 484 million yuan, and 564 million yuan, respectively.

According to the official website of the Shanghai Stock Exchange, Jiachi Technology's Science and Technology Innovation Board IPO was accepted on June 17, 2022, entered the inquiry stage on July 9 of the same year, was approved at the meeting on June 19, 2023, and submitted for registration on March 22, 2024.

However, due to the influence of the sponsor, Jiachi Technology's IPO was suspended in May this year. It is understood that because Huaxi Securities, the sponsor hired by Jiachi Technology, was subject to regulatory measures to restrict business activities by the China Securities Regulatory Commission, the Shanghai Stock Exchange suspended its issuance registration procedures on May 14 this year.

According to the Jiangsu Securities Regulatory Bureau, Hua Xi Securities failed to perform due diligence diligently in the underwriting process of Jintongling's 2019 private placement of stocks, there were false records in the underwriting letter for issuing stocks to specific objects, false records in the relevant reports issued during the continuous supervision stage, and the continuous supervision on-site inspection work was not carried out properly. Therefore, the Jiangsu Securities Regulatory Bureau decided to take regulatory measures to suspend Hua Xi Securities' underwriting business qualifications for 6 months. The suspension period will be from April 28 to October 27, 2024.

The official website of the Shanghai Stock Exchange shows that Jiachi Technology’s current IPO sponsor has been changed to CITIC Securities.

In response to relevant questions, a Beijing Business Daily reporter called the Securities Legal Department of Jiachi Technology for an interview. The other party said that the company has changed the sponsor in accordance with relevant laws and regulations and has completed the relevant review work. Regarding other questions, Jiachi Technology did not give a positive response.

Raising funds to replenish cash flow after continuous dividends

In this attempt to be listed on the Science and Technology Innovation Board, Jiachi Technology plans to raise approximately 1.245 billion yuan.

Specifically, after deducting the issuance expenses from the raised funds, Jiachi Technology will invest in the construction of an electromagnetic functional material and structure production and manufacturing base, an electromagnetic functional material and structure research and development center, and supplement operating capital according to the importance of the projects. Among them, the amount of raised funds to be used to supplement operating capital is 300 million yuan.

It is worth noting that in the year of IPO application, that is, 2022, Jiachi Technology paid cash dividends of 43.2 million yuan. In 2021, the company also paid cash dividends of 83 million yuan, accounting for approximately 49.7% of the net profit attributable to the company that year.

Financial commentator Zhang Xuefeng told the Beijing Business Daily that high dividends are often considered to be a manifestation of a company's confidence in its future development, but if a company pays dividends while raising funds to replenish its cash flow, it may cause the market to question its cash flow situation and future development prospects.

In addition, Beijing Business Daily reporters noted that from 2021 to 2023, Jiachi Technology's comprehensive gross profit margin was 82.58%, 82.15%, and 76.91% respectively, with a downward trend but overall at a high level. During the same period, the comprehensive gross profit margins of listed companies in the military materials industry were 46.15%, 46.4%, and 36.75% respectively.

By comparison, it can be seen that the comprehensive gross profit margin of Jiachi Technology is significantly higher than the average level of listed companies in the military materials industry. In this regard, Jiachi Technology stated that the main business of the company and listed companies in the same industry are in the field of military materials, but there are differences in product form and use, so there are large differences in the comprehensive gross profit margins of various companies.

Zhang Xuefeng pointed out that high gross profit margins usually indicate that a company has a strong competitive advantage in the industry, which may be reflected in unique products or services, strong bargaining power or low-cost operating models. However, high gross profit margins may also mean that the company is overly dependent on certain specific markets or products. If these markets experience intensified competition, declining demand or policy changes, gross profit margins may decline rapidly, affecting the company's profitability.

Beijing Business Daily reporter Ma Huanhuan and Ran Lili