According to public information, the Beijing Stock Exchange Listing Committee held the 55th review meeting in 2022 at 9:00 a.m. on October 21, 2022 to review Zhejiang Fengan Gear Co., Ltd. (hereinafter referred to as “Fengan Co., Ltd.”). The results showed that the meeting was successful. The sponsor was Zheshang Securities.
Fengan Co., Ltd. is a high-tech enterprise specializing in R&D, production and sales of various agricultural machinery gears. Its main products include harvester gears, tractor gears, rotary cultivator gears, etc.
As of the date the prospectus was signed, Huang Jianmin, the largest shareholder of the company, directly held 29.59% of the issuer's shares. Through sound investment, Huang Jianmin directly and indirectly controlled 37.91% of the issuer's shares and was the controlling shareholder of the company. Huang Jianmin has control over the company's operating decisions and is the actual controller of the company.
The IPO plans to raise 153 million yuan, mainly for additional gear renovation and expansion projects with an annual output of 2 million pieces to supplement working capital.
Fundraising usage, image source: prospectus
During the reporting period, Fengan Co., Ltd. achieved revenue of 82,83228 million yuan, 131 million yuan, 167 million yuan, and 89.1409 million yuan respectively, and net profit attributable to owners of the parent company after deducting non-recurring profit and loss was 127.719 million yuan, 285.966 million yuan, 307.279 million yuan, and 155.652 million yuan respectively.
Fundamental situation, image source: prospectus
Judging from the product classification, harvester gears and tractor gears are the company's main products. During the reporting period, the combined revenue of the two types of products accounted for 86.86%, 91.32%, 90.46%, and 94.40% of the company's main business revenue, respectively.
Main business revenue is classified by product or service. Image source: Prospectus
During the reporting period, the gross margins of Fengan Co., Ltd.'s main business were 28.81%, 36.06%, 34.01%, and 35.31% respectively. If the growth rate of the downstream market size slows down in the future due to factors such as industry policies and weakening of subsidies, the company's product prices will face downward pressure, leading to a risk that the company's gross margin will decline.
It is worth noting that the high market concentration of the downstream agricultural machinery industry has led to the company's high concentration of customers. During the reporting period, sales of the top five major customers of Fengan Co., Ltd. accounted for 72.33%, 82.72%, 82.96%, and 86% of its main business revenue, respectively. Among them, sales of Ward agricultural machinery, the largest customer, accounted for 46.92%, 61.81%, 59.24%, and 55.02% respectively. The overall trend was upward and accounted for more than 50%. The company depended to a certain extent on its largest customer, Wade Agricultural Machinery.
In addition, there is a situation where Ward Agricultural Machinery produces its own tractor gears. If Ward Agricultural Machinery increases its self-supporting ratio in the future, or if major changes in Ward Agricultural Machinery's business strategy, operating conditions, or other factors cause a decline in its demand for the company's products, or because it cannot meet customer needs due to reasons such as the quality and speed of delivery of the company's products, there may be major changes in the company's cooperative relationship with it, which may adversely affect its business performance.
At the end of each reporting period, the book values of accounts receivable of Fengan Co., Ltd. were 496.098 million yuan, 494.64 million yuan, 58,0012 million yuan, and 87.536 million yuan respectively; during the reporting period,The turnover ratio of the company's accounts receivable was 1.47, 2.47, 2.88, and 1.14, respectively, which is lower than the average of comparable companies. As the scale of the company's operations continues to expand, the amount of the company's accounts receivable is on the rise. In the future, if the company's accounts receivable collection measures are not effective, the customer's business situation changes adversely, or the credit status of the customer in arrears changes, causing their payment to be delayed or unable to pay, it may have a negative impact on the recovery of the company's accounts receivable.