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According to the arrangement, the GEM IPO of Shanghai Yutian Guanjia Technology Co., Ltd. (hereinafter referred to as "Yutian Guanjia") will be listed on August 23. Behind the first listing, Yutian Guanjia still has three major questions to be answered. Beijing Business Daily reporters noticed that before applying for IPO, Yutian Guanjia distributed cash dividends, of which the dividend amount in 2021 exceeded the net profit attributable to the year; at the same time, in each period of the reporting period, the company's main business gross profit margin was lower than the average level of comparable companies in the same industry; in addition, the proportion of the company's R&D investment in revenue has also been declining year by year. On August 22, Yutian Guanjia was interviewed by Beijing Business Daily reporters on related issues.

The dividend amount in 2021 exceeds the net profit of the year

The official website of the Shenzhen Stock Exchange shows that the Shenzhen Stock Exchange Listing Review Committee is scheduled to hold the 15th Listing Review Committee review meeting of 2024 on August 23, 2024 to review Yutian Guanjia's initial public offering.

It is understood that Yutian Guanjia's GEM IPO was accepted in June 2023 and entered the inquiry stage in July of the same year.

According to information, Yutian Guanjia is an automotive sports parts manufacturer with car sunroofs as its main products. It has the integrated capabilities of car sunroof design, R&D and production, and mainly serves well-known domestic and foreign automobile manufacturers established in China and some overseas vehicle manufacturers.

The financial report shows that from 2021 to 2023, Yutian Guanjia achieved operating income of approximately 1.694 billion yuan, 2.021 billion yuan and 2.491 billion yuan, respectively, and the corresponding attributable net profits were approximately 42.833 million yuan, 71.3726 million yuan and 160 million yuan, respectively.

For this listing on the GEM, Yutian Guanjia plans to raise 575 million yuan. After deducting the issuance expenses, the funds will be invested in Yutian Guanjia's new factory, new technology research and development projects for automobile roof systems and moving parts, automotive electronics research and development and construction projects, and supplementary working capital projects according to the importance of the projects. The investment amounts of the raised funds are 325 million yuan, 87 million yuan, 88 million yuan, and 75 million yuan, respectively.

A reporter from Beijing Business Daily noticed that before applying for IPO, Yutian Guanjia distributed cash dividends, with dividends of 10 million yuan and 50 million yuan in 2020 and 2021 respectively. Among them, the dividend amount in 2021 exceeded the attributable net profit of that year.

In this regard, Yutian Guanjia said in an interview with Beijing Business Daily that from 2020 to 2022, the company's cash flow remained in good condition and the company had sufficient monetary funds, which provided a solid financial guarantee for the company's stable dividends. At the same time, the company's operating performance continued to grow rapidly and its profitability was strong. From 2020 to 2022, the company's cumulative total dividends accounted for only 31.98% of the total cumulative attributable net profit.

Yutian Guanjia said that the company has formulated various post-listing systems in accordance with the law, and has made provisions for the company's profit distribution policy and shareholder dividend return plan after issuance and listing. After listing, the company will implement a sustained and stable profit distribution policy, continue to attach importance to reasonable investment returns to investors, and effectively protect the interests of all shareholders.

Gross profit margin is lower than the industry average

The gross profit margin level is related to a company's profitability. Beijing Business Daily reporters noticed that Yutian Guanjia's main business gross profit margin has been lower than the average level of comparable companies in the same industry for many years.

The prospectus shows that from 2021 to 2023, the gross profit margin of Yutian Guanjia's main business will be 14.49%, 14.94% and 16.84% respectively. Although the gross profit margin has gradually increased, it is significantly lower than that of its peers. During the same period, the average gross profit margin of the main business of comparable companies in the same industry was 20.08%, 17.57% and 20.25% respectively.

Yu Fenghui, a new finance expert and economist, told the Beijing Business Daily that there may be many reasons why the company's main business gross profit margin is lower than that of its peers. Intensified market competition and problems with the quality of the company's products or services may lead to the company's lower gross profit margin. Overall, the continued difference in gross profit margin may reflect the company's insufficient profitability and poor cost control, which may affect the company's market position and future development potential.

In response to related questions, Yutian Guanjia told the Beijing Business Daily reporter that there are currently no comparable listed companies in the same industry as automobile sunroof manufacturers. From the perspective of product areas, there are differences in the company's specific products, application areas, component structures, and market supply and demand conditions between the company and comparable companies in the same industry.

According to Yutian Guanjia, in the automotive parts industry, product differences have a more significant impact on gross profit margin, but the company's sunroof products are difficult to find similar products among domestic listed companies. The main products of Yachiyo Industry Co., Ltd., a Japanese automotive parts listed company, include fuel tanks and roof sunroofs. According to the 2022 annual report, its comprehensive gross profit margin is 14.97%. Excluding the impact of the fuel tank business, Yachiyo Industry Co., Ltd.'s automotive sunroof gross profit margin is close to the company's automotive sunroof gross profit margin and is comparable.

Yutian Guanjia told the Beijing Business Daily that from the perspective of the company's strategic planning, the company is currently in a stage of rapid growth and achieving domestic substitution of automotive sunroof products. The company has established good cooperative relations with major well-known vehicle manufacturers with stable product quality and efficient response capabilities.

R&D expense rate decreases year by year

In addition to the gross profit margin of the main business, Beijing Business Daily reporters noticed that Yutian Guanjia's overall R&D expense ratio is slightly lower than the average level of listed companies in the same industry, and is showing a downward trend year by year.

The prospectus shows that from 2021 to 2023, Yutian Guanjia's R&D expenses were RMB 66.9256 million, RMB 62.2507 million and RMB 68.4558 million, respectively. The proportion of R&D expenses to operating income was approximately 3.95%, 3.08% and 2.75%, respectively. The company's R&D expense rate has been declining year by year.

In addition, compared with comparable companies in the same industry, Yutian Guanjia's overall R&D expense rate is slightly lower than the average of listed companies in the same industry. The prospectus shows that from 2021 to 2023, the average R&D expense rates of listed companies in the same industry were 3.9%, 4.97% and 4.69% respectively.

From a vertical perspective, Yutian Guanjia told the Beijing Business Daily reporter that the proportion of the company's R&D investment in operating income has declined mainly because the company's revenue scale has expanded rapidly, resulting in a decline in the relative proportion.

From a horizontal perspective, Yutian Guanjia said that the company's overall R&D expense rate is slightly lower than the average of listed companies in the same industry, mainly because the company's main R&D platform is relatively mature, the demand for test molds, materials, and equipment is gradually decreasing, and the R&D input-output is relatively high. The company actively cooperates with the supporting development of vehicle manufacturers and also attaches importance to the research and development of new products and new technologies. The changes in the R&D expense rate during the reporting period are mainly due to the different stages of the R&D projects.

Yu Fenghui believes that the trend of IPO companies' R&D investment ratio declining year by year should be a cause for concern, as it may indicate that the company does not attach enough importance to R&D. For an IPO company, continuous R&D investment is the key to maintaining its competitive advantage and core competitiveness.

Financial commentator Zhang Xuefeng also told the Beijing Business Daily reporter that in an era of rapid technological development, continuous R&D investment is the key to maintaining market competitiveness. Companies should appropriately increase R&D investment to enhance technological innovation and product development capabilities, thereby improving market competitiveness and sustainable development capabilities. They can also establish an effective R&D incentive mechanism to attract and retain high-level R&D talents and improve the company's R&D efficiency and innovation capabilities.

Beijing Business Daily reporter Ma Huanhuan and Ran Lili