According to Gelonghui, Xi'an Taijin New Energy Science and Technology Co., Ltd. (hereinafter referred to as "Taijin New Energy") recently released its prospectus for initial public offering of shares and listing on the Science and Technology Innovation Board (draft), with CITIC Securities Co., Ltd. as the sponsor.

Taijin New Energy is a company specializing in the research and development, design, production and sales of high-end green electrolysis equipment, titanium electrodes and metal glass sealing products.

In terms of shareholding structure, Taijin New Energy's controlling shareholder is Northwest Institute for Non-ferrous Metal Research, which directly holds 22.83% of the company's shares; in addition, it controls 20.00% of the company's shares through Western Metal Materials, which means that it actually controls 42.83% of the company's shares. Shaanxi Provincial Department of Finance holds 100.00% equity of Northwest Institute for Non-ferrous Metal Research and is the actual controller of the company.

According to the prospectus, the company plans to raise 1.5 billion yuan in funds for the industrialization project of high-end intelligent complete electrolysis equipment for green electrolysis; industrialization project of high-performance composite coating titanium electrode materials; enterprise R&D center construction project; and supplementary working capital.

The research and development expense ratio is lower than the industry average.

Taijin New Energy's main products include electrolytic complete sets of equipment, titanium electrode products and metal glass sealing products. The company's products are used in large-scale computers, 5G high-frequency communication, consumer electronics, new energy vehicles, green environmental protection, wet metallurgy, hydrogen energy, aerospace and defense and other fields.

From the revenue structure, from 2021 to 2023, the proportion of revenue from complete electrolytic equipment products in the company's main business income is on the rise, while the proportion of titanium electrodes is on the decline.

The structure of the company's main business comes from the prospectus.

In terms of performance, in 2021, 2022 and 2023, Taijin New Energy's operating income was about 519 million yuan, 1.005 billion yuan and 1.669 billion yuan respectively; during the same period, the company's net income attributable to the parent was approximately 54.9828 million yuan, 98.2936 million yuan and 155 million yuan. It is noteworthy that Taijin New Energy's 2022 cash dividend amount reached 60 million yuan.

Taijin New Energy's inventory book balance was approximately 517 million yuan, 1.712 billion yuan and 2.706 billion yuan in 2021, 2022 and 2023, respectively. The company's inventory balance is relatively high, of which the amount of goods issued by the company is 203 million yuan, 969 million yuan and 2.017 billion yuan, accounting for 39.21%, 56.61% and 74.54% of the end-of-period inventory book balance, respectively. The proportion of goods issued to inventory balances is relatively high.

The main financial indicators of the company come from the prospectus.

From 2021 to 2023, Taijin New Energy's main business gross profit margin was 25.95%, 24.44% and 25.14%, respectively. The company's main business gross profit margin in 2021 was higher than the average of comparable companies, 23.69%, while in 2022 and 2023, it was lower than the average of comparable companies.

The comparison of the company's main gross profit margin data to comparable companies comes from the prospectus.

Taijin New Energy stated in the prospectus that the gross profit margin of the company's main business showed fluctuations from 2021 to 2023, mainly affected by fluctuations in raw material prices and adjustments in product sales structures. The main reason for the difference with some comparable companies is that the types and structures of the company's products are different from those of comparable companies in the same industry.

Regarding research and development expenses, Taijin New Energy's research and development expenses from 2021 to 2023 were 21.1734 million yuan, 37.5539 million yuan and 48.543 million yuan, and the research and development expense ratios were 4.08%, 3.74% and 2.91%, respectively. It is noteworthy that although the company's research and development expenses are on the rise, the company's research and development expense ratio is still lower than the average of comparable companies.

The comparison of research and development expense ratios with comparable companies comes from the prospectus.

Taijin New Energy stated in the prospectus that if the company's judgment on industry technology and product development trends is erroneous, the continuous improvement of the company's product technology and process level cannot be sustained through technology research and development, research and development investment cannot continue or research and development progress is not as expected, and newly developed products, processes, etc. cannot be industrially applied, the company will face the situation where the research and development innovation costs already invested cannot bring the expected benefits to the company as scheduled, which may affect the company's development.

The asset-liability ratio is about 90%.

Taijin New Energy stated that the company mainly determines its procurement and production plans based on customer orders and demand, and delivers to project sites according to contract agreements. After the acceptance is qualified, the cost is allocated. Because there is generally a long interval between delivery and acceptance, the book value of goods issued by the company is large.

If there are significant unfavorable changes in the customer's production and operation, slowing down and delaying the supply project construction, or if the company fails to handle the acceptance and settlement procedures in a timely manner, it will lead to a large inventory balance and may result in impairment risks.

In 2021, 2022, and 2023, the asset-liability ratio (parent company) of Taijin New Energy Co., Ltd. were 89.57%, 91.96%, and 92.63%, respectively. The asset-liability ratio is relatively high. During the same period, the company's asset-liability ratio (consolidated) was about 90%, significantly higher than the average of comparable companies in the same industry.

Debt repayment ability-related indicators relative to comparable companies in the same industry, sourced from the prospectus.

Taijin New Energy Co., Ltd. stated in the prospectus that as of December 31, 2023, the company's asset-liability ratio (parent company) was 92.63%, current ratio was 1.04 times, and quick ratio was 0.37 times, of which the current ratio and quick ratio were both lower than the average level of comparable companies in the same industry, and the asset-liability ratio was higher than the average level of comparable companies in the same industry. If the company's operations fluctuate, especially if there is a short-term difficulty in recovering accounts receivable, and the company cannot expand its financing channels, the company will face certain short-term debt repayment risks.

The market space for the company's titanium electrodes and glass sealing products is large. As downstream market demand grows, if more domestic manufacturers enter the market or existing competitors increase their market share, the company will face more intense market competition, which may affect the company's profitability and operational performance.

Epilogue

From the prospectus, Taijin New Energy Co., Ltd. has accumulated certain capabilities and performance foundations in the fields of electrolysis equipment and titanium electrodes, but looking deeper into the company's financial data, there are also some hidden worries. For example, the company's asset-liability ratio (consolidated) is higher than the industry average, and the current ratio and quick ratio are also lower than the industry average; in addition, the company's inventory book balance continues to increase, and there is impairment risk. The company may need to further optimize its financial structure, continue to innovate, and ensure to maintain a leading position in the market competition.