Beijing Stock Exchange Weekly Review News: Juxing Technology and Development Technology Disclosure Second Round of Inquiry Responses

From June 21st to June 27th, the two Beijing Stock Exchange enterprises under review of Juxing Technology and Development Technology updated their progress.

Specifically, Juxing Technology disclosed the response to the second round of inquiries on June 27; Development Technology disclosed its response to the second round of inquiries on June 21.

In addition, the application materials of 21 companies, including Hongyuan Co., Ltd., Ed Technology, Jiachuang Biotechnology, Kema Materials, and Meiya Technology, were accepted by the Beijing Stock Exchange.

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2. Analysis of IPO inquiries for development of science and technology: no sharp inquiries More than 8% of the income comes from overseas and has not been inquired about

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1. Juxing Technology replied to the second round of inquiries of the Beijing Stock Exchange: under full competition, the revenue is lower than that of comparable companies, but the gross profit margin is higher with five capabilities

Juxing Technology (874021), a queuing enterprise on the Beijing Stock Exchange, recently replied to the second round of inquiries, explaining the reasonableness of the company's revenue scale being smaller than that of comparable companies but with higher gross profit margin and net profit under the condition of full market competition.

The difference between the gross profit margin of Juxing Technology and comparable companies, taking the comparison with Fuda Alloy as an example, from 2021 to 2023, the gross profit margin of Fuda Alloy's multilayer contact products is 17.24%, 17.51% and 17.33% respectively, while the gross profit margin of Juxing Technology's electric contacts in the same period is 21.84%, 21.42% and 24.63% respectively, which is 4 to 7 percentage points higher. In terms of volume, the annual revenue of Fuda Alloy's multilayer contact products is 600 million to 900 million yuan, and the annual revenue of Juxing Technology's electric contact products is about 300 million to 400 million yuan.

The first question of the second round of inquiries of the Beijing Stock Exchange paid attention to this problem, and the inquiry letter mentioned that in each period of the reporting period, the operating income of Juxing Technology was lower than that of Fuda Alloy and Wenzhou Hongfeng, and the net profit and gross profit margin were higher than the latter.

In the second round of replies, Juxing Technology replied to the question in detail with about 3 pages, and summarized that the company has achieved a higher gross profit margin than comparable companies with small revenue by virtue of its five capabilities.

First, the product type is well chosen. In the reply letter, Juxing Technology said that Fuda alloy products are mainly contact materials, which are silver alloy products with high unit value, but the gross profit margin is low, while the unit value of the company's electrical contacts is relatively low, but the gross profit margin is higher.

Second, the product specifications are well selected. Juxing Technology replied that according to the inference, the single weight and single size of Fuda alloy rivet electrical contacts are larger, so it is inferred that Fuda alloy's rivet electrical contacts are more used in high-current environments, while the company's rivet-type electrical contacts are more used in low-current environments, and the size of electrical contacts is smaller, and the gross profit margin of large-size products is generally lower than that of small-size products.

Third, the application field is well chosen. Juxing Technology replied that compared with Wenzhou Hongfeng, the main application field of Wenzhou Hongfeng's electrical contact products is circuit breakers, while the main application fields of the company's products are relays, switches, etc., and the two companies have formed differences in specific product types, and can negotiate pricing with customers according to the market competition of their respective products, resulting in differences in gross profit margins.

Fourth, the business structure is well arranged. Juxing Technology replied that compared with Fuda Alloy, the company's three-composite rivets with higher gross profit margin accounted for a relatively high proportion, and the higher proportion of high-gross margin products made the gross profit margin of the company's rivet-type electric contacts generally higher than that of Fuda Alloy laminated contact products.

Fifth, the technology is abundant, and the production cost is reduced well. Juxing Technology replied that it has accumulated rich technical experience and innovative achievements in the field of rivet electric contact manufacturing, which can reduce production costs and improve product market competitiveness and gross profit margin while providing customers with customized services for high-performance electrical contact products.

According to the data of the Dubei Research Institute, the main business of Juxing Technology is the research and development, production and sales of electrical contact products, the main products are electrical contacts and electrical contact components, which are the core components for controlling the on-off of low-voltage electrical appliances. In 2022, the net profit will be 36.72 million yuan, a decrease of 37%, and the net profit will be 76.76 million yuan in 2023.

The company asked 8 questions in the first round of inquiries and 6 questions in the second round of inquiries. In the second round of inquiry letters, the Beijing Stock Exchange further inquired about the company's key performance-related issues such as the accuracy of disclosure of the company's innovation characteristics and core competitiveness, the reasonableness of performance fluctuations, the authenticity of overseas sales, and the reasonableness of gross profit margin fluctuations higher than those of comparable companies.

2. Analysis of IPO inquiries for development of science and technology: no sharp inquiries More than 8% of the income comes from overseas and has not been inquired about

Development Technology (873879), a company to be listed on the Beijing Stock Exchange, was formerly known as the Measurement System Division of Deep Technology, and its controlling shareholder is Deep Technology (000021), a company listed on the Shenzhen Stock Exchange. The main business is the R&D, production and sales of smart metering terminals such as smart electricity, water and gas meters, as well as AMI system software.

Development Technology said in the prospectus that the company has participated in a number of large-scale smart meter deployment projects in Europe, such as Italy, the United Kingdom, the Netherlands, Norway, Sweden, Austria and Portugal, and has exported more than 50 million sets of smart metering terminals to Europe. At present, it is the only domestic enterprise that has entered the UK market with its own brand of smart meters.

According to the prospectus, from 2020 to the first half of 2023, the main business income contributed by the development of overseas markets for science and technology will be 2.1 billion yuan, 1.423 billion yuan, 1.57 billion yuan and 1.11 billion yuan respectively, accounting for 98.95%, 96.90%, 87.70% and 85.45% of the company's main business income respectively.

According to past practice, with such a high proportion of overseas income, the Beijing Stock Exchange will definitely inquire about the authenticity of overseas income and whether it is fully verified. However, for the overseas income from the development of science and technology, the Beijing Stock Exchange was not questioned this time.

Based on the first and second rounds of inquiries of the Beijing Stock Exchange on the development of science and technology, the inquiries mainly focused on two aspects: first, around the relationship with deep technology, whether the inquiry is independent of the controlling shareholder and actual controller; The second is to inquire about the reasons and reasonableness of the large fluctuations in business performance, as well as the sustainability and adequacy of the substantial increase in performance.

Aiming at the relationship with deep technology. The Beijing Stock Exchange requires clarification on whether there is overlap between suppliers or customers, and whether senior managers and financial personnel have cross-positions with Deep Technology; the issuer's internal control system for fund management, institutional arrangements to prevent capital occupation and its implementation; the reasonableness of DeepTech and its affiliates being the top five customers of the issuer, the specific role of DeepTech in the consortium's bidding, whether the order acquisition mainly depends on DeepTech, and whether the cooperation with the corresponding end customers is stable and sustainable; Whether the relevant procedures have been fulfilled for the use of trademarks and logos by the authorized development technology of deep technology; Combined with the reasons for not identifying core technical personnel, it fully explains whether the issuer has independent R&D and production capacity.

In the above inquiries, the first few questions, as a company to be listed, there must be basic specifications, and the reply only needs to list detailed materials. Slightly more acute is the last question, why the core technical personnel have not been identified, and the issue is mentioned in both places.

The response of the development technology is that the company has established a sound R&D mechanism, and the company's R&D mainly stems from the continuation of the existing technology and R&D system and the collaboration between multiple departments, and there is no dependence on the R&D capabilities of individual technical personnel.

Sustainability around large fluctuations in performance and substantial growth in performance. The Beijing Stock Exchange asks questions about the development of technology from multiple dimensions, for example, the stability and sustainability of cooperation with major customers, and whether there is a dependence on major customers? EXPLAIN THE REASONS FOR THE SIGNIFICANT DECREASE IN SALES TO ALFANAR DURING THE REPORTING PERIOD, AND EXPLAIN THE STATUS OF COOPERATION WITH THE CUSTOMER AND WHETHER THERE ARE ANY ADVERSE CHANGES IN THE CURRENT ORDER SITUATION AND COOPERATION INTENTIONS; SUPPLEMENTARY EXPLANATION OF THE BACKGROUND OF THE COOPERATION BETWEEN THE ISSUER AND CUSTOMERS WHOSE SALES REVENUE HAS INCREASED SIGNIFICANTLY, SUCH AS PROSPECT WORRY-FREE AND ISRAEL ELECTRICCORPORATION LTD., AND THE CONTINUITY OF COOPERATION, THE SPECIFIC PRODUCT SITUATION AND AMOUNT, UNIT PRICE, GROSS PROFIT MARGIN LEVEL OF THE PURCHASE AND SALE FROM OVERLAPPING CUSTOMERS AND SUPPLIERS SUCH AS PROSPECT WORRY-FREE, AND WHETHER THERE IS A LARGE DIFFERENCE BETWEEN THE PRICE OF THE PRODUCT TERMINAL SALES AND THE PRICE OF NON-OVERLAPPING CUSTOMERS OF SIMILAR PRODUCTS, AND EXPLAIN THE REASONS AND REASONABLENESS FOR THE RAPID GROWTH OF SALES REVENUE AND HIGH GROSS PROFIT OF PROSPECT WORRY-FREE.

Since the company's customers are relatively well-known companies, the development technology listed the company's order amount in hand, domestic and foreign income changes, product price changes and other data in detail to reply.

For example, the reasons and reasonableness of the rapid growth of sales revenue and high gross profit with worry-free prospects.

The rapid growth of the company's sales revenue to Prospect Worry-free is mainly due to the fact that end customers began to place orders with Prospect Worry-free in large quantities in 2022.

In its reply letter, Kaifa Technology said that the company's higher gross profit margin for sales with worry-free prospects was mainly due to the higher pricing of end customers' products. Through early R&D and technology accumulation, the company has developed prototypes that meet the requirements of end customers faster than competitors in the process of cooperation and contact, reducing the competition against end customers, so the gross profit margin of products is higher.