On the eve of the listing of Shenzhen Venture Capital, "surprise shareholding"? Decoli sprinted to the IPO of the Science and Technology Innovation Board

On October 13, Capital State learned that the IPO of the Science and Technology Innovation Board of Wuxi Dekeli Optoelectronic Technology Co., Ltd. (hereinafter referred to as "Dekeli") was accepted by the Shanghai Stock Exchange, and the proposed fundraising was 1.030 billion yuan.

Image source: The official website of the Shanghai Stock Exchange

The company's main business covers the research and development, production and sales of optical transceiver modules, optical amplifiers, optical transmission subsystems, and the products are mainly used in communication trunk transmission, 5G fronthaul, 5G in-process backhaul, data link acquisition, data center interconnection, UHV communication protection and other national key support development areas.

Image source: Company prospectus

According to financial data, the company's revenue in 2018, 2019, 2020 and the first half of 2021 was 265 million yuan, 387 million yuan, 665 million yuan and 383 million yuan, respectively; The corresponding net profit for the same period was 14.1571 million yuan, 46.6549 million yuan, 142 million yuan and 67.3040 million yuan, respectively.

The specific listing criterion selected by the issuer is the criterion (1) set out in Rule 2.1.2 of the Listing Rules, namely "the expected market value is not less than RMB1 billion, the net profit in the last two years is positive and the cumulative net profit is not less than RMB50 million, or the expected market value is not less than RMB1 billion, and the net profit in the most recent year is positive and the operating income is not less than RMB100 million".

The proposed fundraising will be used for the expansion and upgrading of high-speed optical transceiver product lines, the platform research and development projects of optical transmission subsystems, and the supplementary working capital.

Capital State noted that Decoli is backed by Shenzhen Venture Capital, which "suddenly invested in shares" on the eve of the company's listing.

On November 25, 2020, Dekeli and Shenzhen Venture Capital and Laterite Zhanlu signed the "Shenzhen Innovation Investment Group Co., Ltd. and Zhuhai Laterite Zhanlu Equity Investment Partnership (Limited Partnership) and Wuxi Dekeli Optoelectronic Technology Co., Ltd. investment agreement on Wuxi Dekeli Optoelectronic Technology Co., Ltd.", stipulating that Shenzhen Venture Capital would subscribe for 422,670 shares with a subscription amount of 8,499,893.70 yuan, corresponding to the new registered capital of 422,670.00 yuan; Laterite Cham Lu subscribed for 3,107,910 shares in the amount of RMB62,500,070.10, corresponding to the new registered capital of DECOLI of RMB3,107,910.00.

On December 11, 2020, Decoli held the first Extraordinary General Meeting of Shareholders in 2020 and made a resolution, and the registered capital increased from 68.6086 million yuan to 72.96 million yuan; Shenzhen Venture Capital subscribed for 422,700 new shares of Dekeli at a price of RMB84,998,930, of which RMB422,700 was included in the registered capital and the remaining RMB8,077,223.70 was included in the capital reserve; Laterite Cham Lu subscribed for 3,107,900 new shares of Decoli at a price of RMB62,500,070.10, of which RMB3,107,900 was included in the registered capital and the remaining RMB59,392,160.10 was included in the capital reserve; Unicom CICC subscribed for 820,900 new shares of Decoli for RMB16,507,615.26, of which RMB820,900 was included in the registered capital and the remaining RMB15,686,749.26 was included in the capital reserve.

As of the date of signing of this Prospectus, Taike Link holds 24,741,405 shares in the Company, representing a shareholding ratio of 33.91%, which is the controlling shareholder of the Company.

Decoli admits that the company has the following risks:

(1) Iterative risks of technological upgrading

Optoelectronic device industry development is changing with each passing day, in recent years, new market needs and new industry standards continue to emerge, continuous R & D investment, technical route upgrade iteration and new product development is the key to maintaining a competitive advantage of enterprises.

After years of continuous R&D investment, the company has formed a series of technology accumulation in the field of high-speed and long-distance optical communication transmission, but if the design and manufacturing process level and technical parameter indicators of the company's products in the future do not meet the industry standards or customer requirements, or the company cannot respond to the new market demand and technology trends in a timely manner, it may face the risk of losing competitive advantage due to product technology upgrading and iteration.

(2) The risk of leaking secrets of core technologies

Optoelectronic devices industry is a technology-intensive industry, optical transceiver module, optical amplifier, optical transmission subsystem field has a high technical barriers, the company's core technology is the company's core competitiveness, is the driving force for the development of enterprises. The core technology of the company's products depends on continuous R & D investment and R & D innovation, if there is an unfavorable protection of core technology or the outflow of core technical personnel leads to the leakage, theft or imitation of key technologies, it may adversely affect the company's technological innovation, business development and even business performance.

(3) The risk of performance fluctuations caused by changes in downstream industry demand

The optoelectronic device industry in which the company is located will be affected by the downstream 5G market and the changes in the demand of the terminal consumer market and show a certain degree of cyclical fluctuations. In recent years, the demand for the global 5G market has continued to grow, especially China's 5G industry has shown a rapid growth trend driven by the government and capital. According to ICC forecasts, China's 4G network construction cycle is about 6-7 years, and it takes about 8 to 10 years to complete the total investment process of 5G networks under the condition that the annual investment intensity remains unchanged. If the terminal demand of the downstream 5G market weakens significantly in the future, and the application of technology is less than expected, the industry prosperity will decline, which may adversely affect the company's production and operation and profitability.

(4) High risk of customer concentration

At present, the company's core products are mainly used in the field of optical communication, and the downstream application industry is relatively concentrated. According to the caliber of the consolidated calculation of customers controlled by the same actual controller, during the reporting period, the company's sales to the top five customers were 184.9233 million yuan, 271.8609 million yuan, 474.1824 million yuan and 243.8025 million yuan, accounting for 69.77%, 70.17%, 71.34% and 63.65% of the company's operating income in the same period, respectively, and the customer concentration was relatively high. If there are adverse changes in the Company's future cooperation with such customers and the Company is unable to effectively develop other customers or the needs of existing customers are significantly reduced by changes in relevant national industry policies, the higher customer concentration will adversely affect the Company's operations.

(5) Risks of international trade frictions

In recent years, the global industrial structure has been deeply adjusted, and the tendency of international trade protectionism and technological protection has risen, which has had a certain negative impact on The overseas investment and export of Chinese enterprises. Since June 2018, Sino-US trade frictions have gradually increased, and the United States has repeatedly announced import tariffs on Chinese goods and restricted the export of high-end chips and other raw materials to China. Although the company's operating income during the reporting period still maintained steady growth, if international trade frictions intensified, the company's operating performance may be directly or indirectly adversely affected.

(6) The risk of fluctuations in the gross profit margin of the main business

During the reporting period, the gross profit margin of the company's main business was 24.23%, 31.00%, 34.35% and 34.59% respectively, and the higher gross profit margin level helped the company maintain excellent service level and R & D capabilities. With the continued advancement of 5G construction in the future and the intensification of industry competition, it may lead to fluctuations in the company's downstream market demand. Therefore, the company's core technical advantages, continuous innovation ability, cost control level and other factors may affect the company's gross profit margin level, which in turn affects the company's profitability.

(7) The risk that accounts receivable and notes receivable cannot be recovered

The company gives customers a certain payment settlement cycle according to the customer's historical transaction records and sales scale. At the end of each reporting period, the carrying amount of the Company's accounts receivable was RMB82.7724 million, RMB74.4652 million, RMB134.0128 million and RMB225.145 million, respectively, and the carrying amount of the Company's notes receivable was RMB64.4713 million, RMB140.3519 million, RMB188.8568 million and RMB144.0287 million, respectively, and the combined proportion of accounts receivable and notes receivable in the current assets of each period was 50.30%, 54.41%, respectively. 46.21% and 51.87%.

The company's accounts receivable and bills receivable account for a large proportion of the company's current assets. In the future, as the company's operating scale expands, the balance of accounts receivable and notes receivable will increase accordingly. If the financial situation of major customers suddenly deteriorates, it will bring the risk that the company's accounts receivable and notes receivable will not be recovered in a timely manner.

This article originated from Capital State