On June 14th, the second sci-tech innovation board company passed the review after the release of the new "National Nine Articles".

Shanghai Stock Exchange announced that today (June 14th), the 16th listing audit committee meeting was held. The review result showed that Beijing Capri Lighting Technology Co., Ltd. (hereinafter referred to as "Caplin")'s IPO meets the issuance conditions, listing conditions and information disclosure requirements. After on-site inquiry, there is no need for further action.

After launching the new "National Nine Articles" in April this year, regulatory authorities emphasized supervision throughout the IPO process to delisting, strictly controlling the access to the public offering and listing, continuing to strengthen the regulatory oversight of listed companies, and increasing the supervision of delisting. The new "National Nine Articles" pointed out that efforts should be made from the aspects of systems and supervision to improve the issuance and listing system, raise the listing standards for the main board and the GEM, and improve the evaluation standards for the scientific and technological attributes of the STAR market.

Therefore, for enterprises planning to IPO on the sci-tech innovation board, the level of scientific and technological innovation is undoubtedly a focus of consideration for whether they are qualified or not. At the same time, against the background of the tightening of the IPO rhythm in recent days, two sci-tech innovation board companies that plan to be listed have consecutively passed the review. The focus of the exchange and the enterprise's on-site inquiry has also become the core issue of current market and other queued enterprises' concerns.

The two core points of regulatory attention during the review stage

By comparing the main problems raised by the committee on-site inquiry, according to the daily report of the sci-tech innovation board, it can be seen that during the middle and later stages of the company’s IPO review, the exchange's concerns or requirements for the enterprise have the following two particularly significant features:

Firstly, the enterprise's performance needs to be sustainable over a certain period of time in the future, which means that if it is successfully listed in the future, it is necessary to avoid large fluctuations or declines in performance as much as possible, and there must be feasible response measures.

In the inquiry into Caplin, the exchange requested that the company further explain the reasons for and the feasibility and sustainability of the large growth in market share, sales revenue, and gross profit margin of fiber laser products during the reporting period, as well as the risk of significant fluctuations in future performance.

In the inquiry into Lingyun Technology, the company was asked to explain whether there is a risk of significant fluctuations or declines in performance after listing based on the company's market space for main products, industry technological iteration, the layout of major customer products, research and development investment and industrialization progress, market share of main products, and expansion of downstream customers, and the measures taken to cope with such risks and whether it will affect the company's continuing operating capacity.

Secondly, the enterprise's products and technologies need to be advanced and maintain sufficient competitiveness in the industry.

At today's (June 14th) on-site inquiry, Caplin was asked to explain the technological advancement of its main products, based on the main product characteristics, technical difficulties, market share, technical barriers, competitive advantages and disadvantages compared with peer enterprises, and research and development investment. At the same time, it needs to explain whether the fiber laser products applied to portable welding have technical uniqueness and advancement in lightweight and low cost, as well as the specific measures taken by the company to maintain the related competitive advantages of the product.

Lingyun Technology also requested a special explanation for its AI0T signal processing and transmission chip products, showing its sustainable viability based on performance, downstream market demand, sales revenue, and the proportion of product and technical service sales to major customers.

In addition, financial risks and operational independence of the enterprise were also mentioned in the on-site inquiry. Caplin was requested to explain whether provisions for bad debts of accounts receivable are sufficient based on its customer concentration, accounts receivable scale, and turnover ratio. Lingyun Technology was required to explain whether there is significant dependence on affiliates and whether this affects the company's independent operation capability.

It is worth noting that while Lingyun Technology and Caplin consecutively passed the review, six planned IPO companies have announced the termination of the IPO process in the past week.

"Termination is termination, approval is approval, these are two different things." Senior investment banker Wang Jiyue told the daily report of the sci-tech innovation board that supporting enterprise development is of course not a problem in the capital market, but it should not be unconditional support. From the perspective of regulation, it is necessary to balance investment and financing, balance the interests of investors and listed companies, and cannot only consider the requirements of one party. For enterprises, successful IPO should not be the goal of survival.

Fiber lasers lead the lightweight trend, with great market growth potential

Caplin was established in 2003, and its main business is research and development, production and sales of semiconductor lasers, fiber lasers and ultrafast lasers.

According to the prospectus, Caplin products have formed sales in more than 60 countries around the world and have established cooperative relations with well-known domestic and foreign manufacturers, scientific research institutions, and universities such as China Electronics Technology, Han's Laser Technology Industry Group, Chinese Academy of Sciences and China Academy of Engineering Physics.

The laser market has numerous domestic and foreign vendors, leading to intense competition. Taking semiconductor lasers as an example, the market includes foreign leading manufacturers such as Lumentum and related companies in the United States, as well as domestic relatively leading enterprises such as Xinghan Laser, Huaguang Optoelectronics, Juguang Technology, CGH and Kapelan. Due to Kapelan's own insufficient production capacity, the company's market share in this market has gradually declined from 16.9% over the past two years to 13.3%.

However, Kapelan stated that as the company's second production base in Tianjin is completed and is expected to be put into trial production in June this year, the subsequent production capacity of semiconductor lasers is expected to be eased, and the company's semiconductor laser sales revenue is expected to resume growth in 2025.

In the field of fiber laser, the market share of foreign manufacturers is generally higher than that of domestic manufacturers, and Kapelan's market share rate in 2023 is 5.2%. The company stated that in the future, its market share in this field will continue to rise significantly with the continuous sales of the "Lightning" series in the welding field, the "Thunder" series in the cutting field and the continuous introduction of new products.

In terms of performance, Kapelan has only recently managed to turn losses into profits, but its revenue and net income growth rate are significant. For each year from 2021 to 2023, Kapelan's operating income was RMB 496 million, RMB 722 million, and RMB 1.104 billion, and the corresponding non-recurring net profit was minus RMB 74.01 million, RMB 12.36 million and RMB 105 million, respectively. Among them, the net profit attributable to the mother in 2023, excluding non-recurring gains and losses, increased by 751.28% year-on-year.

Kapelan stated that the main reason for the company's return to profit in 2022 is not only due to its continued contribution of high gross margin in the field of semiconductor lasers, but also due to the good return on investment in the early research and development and market development in the fiber laser business. "From the operating situation in 2023, the company's profit level is still in a stage of continuous improvement."

Regarding the sustainability of future performance, Kapelan stated in a previous reply to inquiries that the domestic semiconductor laser market started relatively late but has developed rapidly in recent years. The company has accumulated nearly 20 years of technology and customer resource accumulation in the semiconductor laser industry, forming a high barrier to entry, and will continue to focus on high-threshold application areas, with good development prospects in the semiconductor laser business. In addition, the capacity of the fiber laser market is large, and the company is leading the industry's trend towards lightweighting, expanding from welding to multiple fields, and is expected to have significant room for future product growth.

The road to Kapelan's listing has been quite tortuous. The company had previously planned to list on the ChiNext board of the Shenzhen Stock Exchange. In July 2021, Kapelan and Ping An Securities signed a termination agreement. After replacing the sponsoring institutions with Guotai Junan, Kapelan's IPO application on the STAR board was accepted in May 2023. On August 22, 2023, Kapelan completed the first round of inquiries.

The prospectus shows that Kapelan plans to raise RMB 859 million for the construction of the high-power laser intelligent manufacturing base project, semiconductor laser R&D project, fiber laser R&D project and other projects, as well as supplementing working capital.