According to the Futu Securities app, Guoxin Guokong (08629), a state-owned testing and inspection service provider from Xinyi City, Maoming, Guangdong, began its IPO on August 26th, with a deadline of September 3rd. The total number of shares offered is 10.179 million, with 90% for placement and 10% for public offering, as well as an additional 15% provision for adjustment. The offer price per share is HK$8.6 to HK$10.4, with a board lot of 500 shares, and the expected H-share trading on the Hong Kong Stock Exchange will commence on September 6th, 2024.

Looking at the shareholder structure of Guoxin Guokong, Xinyi City Housing and Urban-Rural Development Bureau's affiliated institution, Xinyi City Construction Engineering Quality and Safety Affairs Center, holds a 56% stake, while Xinyi City Finance Bureau holds a 14% stake through Xinyi Xinhui, and the remaining 30% is held by public shareholders. The government-backed shareholder composition provides the company with relatively stable capital support and effectively safeguards the company's stability.

Since its establishment in 2000, Guoxin Guokong has been focusing on construction engineering testing and inspection services, with a wide service scope covering various areas such as foundation and infrastructure, public roads, building materials, building structures, and slope monitoring, and as of May 2024, it has started providing food testing services. As of August 2024, the company has obtained approval from the Guangdong Market Supervision Administration for 39 testing service categories, covering five major areas: construction engineering, product and material testing, environmental testing, food testing, and agriculture-related testing, with testing capabilities exceeding 2700 items and diversified testing qualifications and business content.

Driven by the strong promotion of the national 'rural revitalization' and Guangdong Province's 'hundred, thousand, and ten-thousand' engineering policies, the economic development of third-tier and below cities is showing vigorous vitality, leading to a continuous increase in the demand for independent testing and inspection services. In the Pearl River West region where Guoxin Guokong is located, the independent testing and inspection services market is mainly composed of localized small and micro-enterprises, showing a clear trend of decentralization. The state-owned background of Guoxin Guokong may provide it with certain development advantages in the existing market environment. With the support of government policies, the company has the opportunity to enhance its business layout through strategic planning and market expansion, including possible mergers and acquisitions.

During the previous performance periods, Guoxin Guokong achieved continuous growth. In 2022, 2023, and the six months ended June 30, 2024, the company's revenues were RMB 199.66 million, RMB 415 billion, RMB 16.329 million, and RMB 22.83 million, respectively. As for profits, the company's net income in 2023 was RMB 13.254 million, with a gross profit margin of 71.8% and a net profit margin of 31.9%, a year-on-year increase of 107.9%; for the first half of 2024, the company's net income was RMB 7.343 million, with a gross profit margin of 70.8% and a net profit margin of 32.2%, with a year-on-year revenue growth of 39.8%. The company's plan to be listed on the GEM and its dividend policy are also worth noting. According to the prospectus, the overall principle is to distribute profits to shareholders every year, with a proposed distribution rate of no less than 20% of the after-tax profits available for distribution, which is an unusually high fixed dividend rate in the GEM.

Assuming an offer price of HK$9.5 per share (i.e. the middle of the offer price range), the company expects to receive a net amount of approximately HK$54.4 million from the share offering. Of this amount, approximately 37.4% will be used to expand testing services, approximately 27.7% will be used to consolidate and expand the existing market, approximately 27.5% will be used to expand construction engineering testing services, approximately 5.5% will be used to upgrade the ERP system, and the remaining 1.9% will be used for general operating expenses. Overall, Guoxin Guokong's listing is also an important capital injection into the testing service market in western Guangdong. For investors seeking stable returns and long-term growth, Guoxin Guokong is worth close attention.