"Electric Eel Finance" Electric Eel No. / text
On the stage of the capital market, every company seeking to go public is like a well-dressed dancer, looking forward to the favor of investors.
Recently, Honghai Technology replied to the second round of inquiries from the Beijing Stock Exchange. "Electric Eel Finance" learned that Honghai Technology's main business is the research and development, design, manufacturing and sales of household appliance accessories such as air conditioning structural parts, heat exchangers, and display structural parts.
Key financial data and financial indicators
According to the prospectus, from 2020 to 2022 and the first half of 2023, the company's operating income will be 138.7943 million yuan, 188.4033 million yuan, 252.9427 million yuan and 188.1514 million yuan respectively. As of the date of this prospectus, the company has a total of 69 patents, including 7 invention patents and 62 utility model patents.
"Electric Eel Finance" paid attention to the fact that the company's sales to Midea Group accounted for a relatively high proportion. During the reporting period, the company's largest customer was Midea Group, and the main products sold to it were air conditioning structural parts and heat exchangers. During the reporting period, the sales amount of Honghai Technology to Midea Group was 188.5582 million yuan, 305.9927 million yuan, 443.3615 million yuan and 357.3284 million yuan respectively, accounting for 62.40%, 65.37%, 70.92% and 72.84% of the sales amount under the total method in the current period. The company's operating income from Midea Group was 55.0644 million yuan, 78.7766 million yuan, 126.868 million yuan and 91.7014 million yuan respectively, accounting for 39.67%, 41.81%, 50.16% and 48.74% of the current operating income respectively.
Honghai Technology said in the prospectus that because the company's new products and new business expansion require a certain period of time and uncertainty, and Midea Group and other leading enterprises occupy a large market share in the mainland air conditioning industry, and the brand concentration of the downstream air conditioning industry is increasing, the company's dependence on the largest customer, Midea Group, will continue in the future.
Key Suppliers
On the other hand, "Electric Eel Finance" paid attention to the fact that from 2020 to 2022 and the first half of 2023, Honghai Technology's purchases from Midea Group amounted to 142.7347 million yuan, 263.4057 million yuan, 374.6264 million yuan, and 282.5678 million yuan respectively, accounting for 63.20%, 68.29%, 72.97%, and 73.54% of the total procurement, and Midea Group ranked first among the largest suppliers.
This time, Honghai Technology maintained close business contacts with Midea Group. This model of in-depth cooperation has brought stable orders and considerable income to Honghai, and provided a solid foundation for its technology research and development and market expansion.
However, when Honghai Technology embarked on the journey of IPO, this close relationship revealed a hint of concern. The dual dependence on procurement and sales makes Honghai appear too dependent on Midea Group in terms of operation. Once Midea Group's performance fluctuates or strategic adjustment, Honghai's operating income and profit may be affected. In the eyes of investors, this dependence is undoubtedly a time bomb that can detonate risks at any time.
Honghai Technology pointed out in its risk warning that in the future, if the company's largest customer, Midea Group, produces all the air-conditioning structural parts or heat exchanger products it needs due to its own reasons or major adverse changes in the macroeconomic environment, or requires the company to reduce product prices, or reduces the production plan due to market demand, market competition environment changes and other factors, Midea Group may reduce the company's business orders or even terminate the cooperative relationship with the company, which will have a significant adverse impact on the company's operation. This will affect the company's continued profitability in the future.
In this context, Honghai Technology, on the one hand, needs to continue to use the cooperative relationship with Midea to consolidate its market position, and on the other hand, it must prove to the market that it has sufficient independence and risk control capabilities. It's a battle of trust and transparency, and Honghai Technology has to find its rhythm in it.
In the coming chapter, we look forward to seeing how Honghai Technology shows a more mature and stable attitude in this complex and changeable business game, not only to win a bright future for itself, but also to bring trustworthy choices to investors.
"Electric Eel Finance" will keep an eye on the follow-up progress of Honghai Technology's IPO.