Produced by | Bullet Finance
Author | Left Xingyue
Edit | Hu Fangjie
American Editor | Qianqian
Audit | Ode
After nearly two years of waiting, Guangdong Outlet High-tech Materials Co., Ltd. (hereinafter referred to as "Ola New Materials") is finally going to be listed on the Science and Technology Innovation Board.
On April 23, Ole New Materials disclosed the issuance announcement that the number of shares issued by the company was about 40,011,200 shares, and the company's total share capital after the issuance was about 160 million shares, and the issue price was 9.6 yuan per share. The company launched an online subscription on April 25, and is expected to raise a total of about 384 million yuan.
On April 29, Ole New Materials released the announcement of the preliminary offline placement results and the online winning results, of which the initial strategic placement issued 8,002,240 shares, accounting for about 20% of the total number of shares issued. After the clawback mechanism was activated, the final winning rate of the online issuance was about 0.045%.
The main business of Ole New Materials is the research and development, production and sales of high-performance sputtering targets. It is worth noting that this is a typical "family-owned business", and the actual controller has a family of three who hold the "power" of the company, and many relatives hold important positions in the company.
Not only that, under the fierce market competition, the decline in gross profit margin and unstable performance are still challenges on the company's development road.
1. The actual controller's family of three is in power, and many relatives hold important positions
The main business of Ola New Materials is the R&D, production and sales of high-performance sputtering targets, the main products include copper targets, aluminum targets, molybdenum and molybdenum alloy targets and ITO targets of various sizes and types, which can be widely used in semiconductor displays, touch screens, architectural glass and other fields, and are the key materials for the industrial preparation of various thin films.
(Photo / Ole New Materials Prospectus)
Ole New Materials was founded by Wen Hongfu and Fang Hong. The predecessor of Ole New Materials, Ole Co., Ltd., was established in May 2010 with a registered capital of 10.01 million yuan. Among them, Wen Hongfu invested 6.006 million yuan, accounting for 60% of the registered capital, and Fang Hong invested 4.004 million yuan, accounting for 40% of the registered capital.
(Photo / Ole New Materials Prospectus)
In November 2020, Ole Limited was changed to a company limited by shares. As of February 29, 2024, Wen Hongfu and Fang Hong directly held 32.4 million shares and 18.5327 million shares of the company respectively, holding a total of 50.9327 million shares, accounting for 42.43% of the total shares of Ole New Materials.
At the same time, the husband and wife also indirectly control the voting rights corresponding to 24.99% of the shares of Ole New Materials through Hongwen Chuangxin, and indirectly control the voting rights corresponding to 4.67% and 3.11% of the company's shares held by Ouchuang Huicai and Ouchuang Dongsheng through Hongwen Chuangxin.
Therefore, Wen Hongfu and Fang Hong together control the voting rights corresponding to 75.20% of the company's shares and are the joint controlling shareholders of the company. In addition, Wen Hongfu and Fang Hong's daughter Wen Ya indirectly holds 0.56% of the company's shares through Ou Chuanghui.
(Photo / Ole New Materials Prospectus)
Wen Hongfu, Fang Hong, and Wen Ya are the actual controllers of Ole New Materials, and they hold important positions in Ole New Materials. Among them, Wen Hongfu serves as the chairman, general manager and chief technology officer of the company, Fang Hong serves as the company's director and director of personnel administration, and Wen Ya serves as the company's director, deputy general manager and secretary of the board of directors.
It can be seen that the three can jointly have a substantial impact on the resolution of the company's general meeting of shareholders and the election of directors, supervisors and senior management.
In fact, the Wen family's control over Ole New Materials is far more than that, in addition to the actual controller in charge, many relatives are in the company.
According to the prospectus, Wen Hongfu's sister Wen Hongyan served as the director and personnel administration manager of Ole New Materials, holding 0.19% of the shares, Fang Hong's younger brother Fang Chen served as the company's sales director, holding 0.28% of the shares, Fang Hong's cousin Fang Juan served as the financial manager, holding 0.02% of the shares, and Fang Hong's brother-in-law Liu Zhenqiang held 0.01% of the shares.
In addition, Fang Juan's husband Zhu Shuwen is the company's supervisor and production director, and Wen Hongfu's cousin Li Zhengchang is the deputy general manager of Ole New Materials.
(Photo / Ole New Materials Prospectus)
It can be seen that many relatives of Wen Hongfu, Fang Hong, and Wen Ya are all working in Ole New Materials and holding shares, and their positions are not low.
In fact, there are pros and cons to being a "family business". The advantage is that the human and financial rights of the enterprise are generally firmly in the hands of one or a few people in the company, which is convenient for managers to control the enterprise and adjust strategies.
The disadvantage is that the property rights structure of family enterprises is too concentrated, and in addition to the actual controller leading the operation and giving orders, family members often link the property rights relationship with the blood relationship, and there is a risk of interfering in the operation of the enterprise.
It is worth mentioning that under the leadership of the Wen family, Ole New Materials has some financial irregularities.
According to the prospectus, there has been a third-party payment collection of Ole New Materials. During the reporting period, the company's third-party collection amounts were 4.1343 million yuan, 14.6221 million yuan and 80,500 yuan respectively, accounting for 1.08%, 3.73% and 0.02% of operating income respectively.
(Photo / Ole New Materials Prospectus)
Although the amount and proportion of third-party payments are relatively small, it still reflects that there are certain loopholes in the company's financial internal control management. Therefore, it will take time for the Wen family to maintain effective management and avoid risks in daily production and operation after listing.
2. The performance is on a "roller coaster", and the gross profit margin continues to decline
"Bullet Finance" noticed that the performance of Ole New Materials was not stable.
According to public information, during the reporting period, the operating income of Ole New Materials was 382 million yuan, 392 million yuan and 476 million yuan respectively, a year-on-year increase of 55.44%, 2.50% and 21.5%, and the net profit attributable to the parent company in the same period was 50.4817 million yuan, 35.3231 million yuan and 49.3433 million yuan respectively, a year-on-year increase of 129.07%, -30.03% and 39.69%.
(Photo / Wind (unit: 10,000 yuan))
In 2022, affected by factors such as the turbulent international situation, the global macroeconomic downturn, and the decline in the prosperity of the consumer electronics industry, the display panel industry will fluctuate cyclically, and the price pressure of downstream display panel manufacturers will be transmitted to upstream sputtering target manufacturers.
In 2022, Ole New Materials' revenue will increase by 2.50% year-on-year, but the net profit attributable to the parent company will drop by three percent, showing a situation of "increasing revenue but not increasing profits". In 2023, although the company's net profit attributable to the parent company has increased, it still has not recovered to the profit level of 2021.
It is worth mentioning that the competition in the sputtering target market is fierce, and foreign sputtering target companies were established earlier, mature and diversified in business, occupying a high market share in the global sputtering target market, such as JX Metal, Mitsui Metal, Sumitomo Chemical, etc.
However, the development of domestic sputtering target enterprises started late, and there is still a certain gap between the product types and downstream application fields of sputtering targets and foreign sputtering target enterprises.
However, compared with domestic and foreign competitors, the revenue scale of Ole New Materials is not dominant. According to the reply document to the inquiry letter, in 2022, the operating income of Jiangfeng Electronics, the peer company of Ole New Materials, will be 2.324 billion yuan, 695 million yuan will be Ashtron, and 2.301 billion yuan will be Longhua Technology. The operating income of Ole New Materials is significantly lower than that of peer companies that have disclosed data.
In terms of net profit, in addition to Ashtron, the net profit of Ole New Materials in 2022 is also lower than that of peer companies.
(Photo / Ola New Materials inquiry letter reply)
Not only is the scale of revenue and net profit inferior to peers, but the reduction of profitability is also a major "problem" of the company. According to the prospectus, during the reporting period, the gross profit margin of the company's main business was 30.32%, 23.10% and 22.46% respectively, showing a continuous downward trend.
(Photo / Ole New Materials Prospectus)
Among them, the copper target, the main product of Ole New Materials, accounts for more than 40% of the company's operating income, and its gross profit margin will decline from 22.51% in 2021 to 17.95% in 2023.
During the reporting period, the average sales unit price of copper targets was 77.16 yuan/kg, 75.88 yuan/kg and 72.22 yuan/kg respectively, which was also in a downward trend.
(Photo / Ole New Materials Prospectus)
It is worth noting that during the reporting period, the average sales unit price of the company's other main product, aluminum target, was 500.29 yuan/kg, 418.13 yuan/kg and 356.13 yuan/kg, respectively, and the unit price in 2022 and 2023 decreased by 16.42% and 14.83% respectively.
(Photo / Ole New Materials Prospectus)
It can be seen that in the case of the downturn in the downstream industry, the life of Ole New Materials is not easy.
In this regard, Ole New Materials also admitted in the prospectus that in the future, if there are major adverse changes in the macro economy, industry development, downstream market demand, etc., the prosperity of the flat display industry will decline again or the demand growth will not be as expected, the market demand for the company's main products will weaken, and its average unit price, gross profit margin and operating performance will face the risk of decline.
3. Sixty percent of R&D personnel have a college degree or below
In the face of the risk of fluctuations in the downstream industry, as a company that is sprinting to be listed on the Science and Technology Innovation Board, strengthening R&D and innovation may be the only way to resist risks.
During the reporting period, the R&D expenses of Ole New Materials were 21.6491 million yuan, 27.7999 million yuan and 27.1066 million yuan respectively, and the proportion of R&D investment in operating income was 5.66%, 7.09% and 5.69% respectively. In 2023, the company's R&D expenses and R&D rates will be decreasing.
(Photo / Ole New Materials Prospectus)
In addition, from the perspective of the composition of the company's R&D personnel, the company's R&D personnel are not highly educated.
During the reporting period, the number of R&D personnel in the company was 54, 59 and 63, accounting for 12.39%, 13.05% and 13.88% of the total.
Among them, the number of R&D personnel with college degree or below is 38, 39 and 38 respectively, accounting for 70.37%, 66.10% and 60.32% of the number of R&D personnel. It can be seen that more than 60% of the R&D personnel of Iole New Materials have college degree and below.
(Photo / Ole New Materials Prospectus)
Ole said that the company's R&D personnel with college degree and below are mainly engineers, technicians and experimenters. Although the academic qualifications of R&D personnel are not the only criterion for enterprises to judge the ability of relevant personnel, attracting more high-level R&D talents is also one of the ways for enterprises to further improve their R&D and innovation capabilities.
It is worth mentioning that many R&D personnel of Ole New Materials are not "full-time", but "part-time".
According to the prospectus, there are some R&D personnel part-time participation in production activities, as well as non-R&D personnel assisting in R&D activities, and the company will be full-time engaged in R&D work and personnel who spend more than 50% of their working hours in R&D work in the current year are identified as R&D personnel.
Therefore, whether the company's R&D personnel are suspected of "water injection" still needs to be continuously observed in the future.
What are the R&D results of Ole New Materials?
According to the prospectus, as of February 29, 2024, Outlet New Materials and its branches and subsidiaries have a total of 134 patents, including 31 invention patents and 103 utility model patents.
Generally speaking, invention patents can better reflect a company's R&D and innovation capabilities, and the number of invention patents of Ole New Materials is only one-third of that of utility model patents.
Most of the 31 invention patents of Ole New Materials were obtained from 2017 to 2019, and only 7 invention patents were obtained after 2020.
In this regard, the regulator also inquired about whether the company applied for a centralized patent application, and Ole New Materials said that the company's application for invention patents since 2017 is in line with the company's own characteristics and development stage, and is reasonable.
It is worth mentioning that the high-performance sputtering targets of Ole New Materials are mainly used in the field of flat display, and the related application fields have the characteristics of high technical requirements, difficult entry, diversified product demand, and fast iteration speed.
With the continuous development and upgrading of the downstream industry, customers' requirements for sputtering target technology and performance continue to improve, and if the company's product technology innovation cannot match the upgrading and iteration speed of downstream customers' products and technologies in the future, Ole New Materials may miss new market opportunities.
It is worth mentioning that the company's latest prospectus shows that in this IPO, Ole Xincai plans to invest 577 million yuan in raising funds. According to the listing announcement disclosed by the company on April 23, according to the issue price of 9.6 yuan per share, the company is expected to raise a total of 384 million yuan, which is about 193 million yuan less than the 577 million yuan in the prospectus.
(Photo / Ole New Materials Prospectus (disclosed in April 2024))
(Photo / Ole New Materials Listing and Issuance Announcement)
In the case of shrinking raised funds, it remains to be seen how Ole New Materials will supplement the investment funds for related projects and whether the funds for innovative research and development will be tight.
*The title picture in the article is from: Ole New Materials official website.