After a three-month hiatus, BSE has accepted a new IPO application.

Gelonghui learned that Shanghai Baran Automotive Testing Equipment Co., Ltd. (hereinafter referred to as "Baran") submitted a prospectus declaration draft and intends to sprint for listing on BSE, with Sinolink Securities Co., Ltd. as the sponsor.

Established in 2005, Baran was listed on the National Equities Exchange and Quotations in March 2023 and moved to the Innovation Level in May 2024. The company focuses on the research, development, production, and sales of automotive repair, testing, and maintenance equipment, with its registered office in Jiading District, Shanghai.

In terms of equity structure, as of the date of the prospectus signing, the couple Cai Xilin and Sun Lina collectively control 46.66% of the company's shares, making them the joint actual controllers of the company.

Cai Xilin, born in 1959 with a college degree, has successively held positions such as workshop director of Hukou Tools Factory in Jiangxi Province, business manager at Zhuhai Volkswagen Electric Co., Ltd., and branch manager of Zhuhai Haida Trade and Industry Co. From 2005 to 2009, he served as the general manager of Shanghai Baran Automotive Testing Equipment Co., Ltd., and is now the chairman and general manager of Baran.

Sun Lina, born in 1982 with a master's degree, served as overseas sales manager at Guangzhou Huifeng Machinery Co., Ltd. for several years, and also held the position of general manager at Guangzhou Puli Machinery Co., Ltd. Since February 2015, she has been serving as an executive director and general manager of Guangzhou Jingjia Automotive Equipment Co., Ltd., and has been the deputy general manager of the company since August 2022.

Equity structure diagram before company's issuance, image source: prospectus

In this listing application, BarraNshee plans to raise approximately 0.3 billion yuan to be used for the intelligent transformation and expansion projects of car maintenance equipment, the intelligent factory project of lifting equipment, and the construction project of the R&D center.

Use of raised funds, image source: Prospectus

01

There are fluctuations in performance.

Balanshie is a large-scale manufacturer in the domestic automotive maintenance equipment industry, with its main products including tire changers, balancers, lifting equipment, refrigerant recovery and charging machines, pneumatic oil suction machines, and other automotive maintenance equipment and devices.

Specifically, from 2021 to the first half of 2024, the lifting equipment business contributed over 40% of Balanshi's revenue, a significant proportion; the revenue proportion of tire changers has declined slightly but still remains above 25%; the revenue proportion of balancers, maintenance equipment, and other businesses is relatively low.

The main components of the company's main business revenue, image source: prospectus.

Among them, the lifting equipment is one of the basic equipment for automobile maintenance and inspection, mainly used to lift the car to a certain height from the ground for repair personnel to enter the bottom of the car. The products mainly include column lifts, scissors lifts, motorcycle lifts, lifts suitable for new energy vehicles, and other different series.

Balan Shi's developed and manufactured tire changer is a car maintenance equipment used to disassemble and install car tires during automobile repairs. There are many types of tire changers, and the typical models of the main series include fully automatic leverless tire changers, tilt-back leverless tire changers, multifunctional auxiliary arm tire changers, etc.

Image source: Prospectus

In terms of performance, in the year 2021, 2022, 2023, and the first half of 2024 (referred to as the 'reporting period'), Balan Shi's revenue was approximately 0.744 billion yuan, 0.643 billion yuan, 0.794 billion yuan, and 0.511 billion yuan respectively, with corresponding net income of approximately 0.061 billion yuan, 0.03 billion yuan, 0.081 billion yuan, and 0.069 billion yuan. The company's performance has fluctuated.

Main financial data and financial indicators, image source: prospectus

During the reporting period, Baranshi's comprehensive gross margin rates were 22.33%, 23.62%, 27.04%, and 28.50%, showing an increasing trend, consistent with the changing trends of comparable companies in the same industry. The company's gross margin is closer to Gaochang Mechanical and Electrical, higher than Changrun Stock, mainly due to the product differences between the company and Changrun Stock.

Comparative analysis of gross margin rates of comparable companies, image source: prospectus

Baranshi is facing the risk of fluctuating raw material prices. During the reporting period, the total amount of raw material purchases accounted for over 70% of the total raw material purchases. The main raw materials purchased by the company are steel, finished products, and components. If steel prices rise in the future, it may increase the company's production costs, thereby affecting the company's gross margin and profitability.

02

The OEM sales model carries risks.

With the rapid development of the automotive aftermarket, the market space of the automotive maintenance industry continues to expand, attracting more companies to enter and intensifying competition among them. Homogeneous competition in the mid-to-low-end market can affect the accumulation of profits for companies. Despite Banlashi having certain technological and scale advantages, it still faces fierce industry competition.

The China Automobile Industry Association divides the automotive aftermarket into 9 categories, including automotive parts supply, automotive repair services, automotive aftermarket accessories, automotive finance, used cars and leasing, automotive culture, scrap recycling and remanufacturing, automotive professional markets, and others. Banlashi operates in the automotive repair services sector, an important subdivision of the aftermarket.

Image source: Prospectus

The automotive maintenance and repair industry includes automotive 4S stores, authorized repair service stations, comprehensive repair shops, quick repair chain stores, specialized repair shops, beauty and decoration shops, and Banlashi operates in the automotive warranty equipment sector, providing equipment and technical support for vehicle inspection, repair, and maintenance in the automotive maintenance and repair industry.

Banlashi's products are ultimately sold to various automotive 4S stores, automotive repair and maintenance shops, automobile manufacturers, including well-known manufacturers such as BYD Auto, Li Auto Inc, Great Wall Motor, as well as large chain automotive repair and maintenance shops like Tuhu Car, JD Car, Tmall Car Maintenance, and well-known oil companies such as PetroChina, Mobil, and Shell. At the same time, the company's products are also exported to hundreds of countries and regions in Europe, South America, North America, Africa, Asia, and other regions.

During the reporting period, Banlashi's export revenue accounted for about 75% of the current main business revenue, a relatively large proportion. The majority of exports are settled in US dollars. If the RMB appreciates significantly against the US dollar in the future, Banlashi's competitiveness in export products may decrease, leading to exchange losses that could impact the company's operational performance. Additionally, sales revenue to customers in Russia and Belarus accounts for about 10% of the main business revenue, posing certain risks to the company's overseas market sales.

The main business revenue is classified by sales region. Image Source: Prospectus

It is worth noting that Baran's overseas sales are mainly through OEM mode, where the company cannot use its own brand, and end users cannot directly access the company's product information. Its overseas customers are mainly local automotive maintenance equipment brand merchants. If in the future, the revenue from major OEM customers decreases, or the company fails to meet the product development or quality requirements of major customers, it may lead to a reduction in cooperation with major OEM customers, thereby affecting the company's overseas sales revenue.

At the end of each reporting period, the company's accounts receivable book values were 46.6779 million yuan, 46.4032 million yuan, 54.5417 million yuan, 0.1 billion yuan, showing an overall increasing trend. The proportions of accounts receivable to total current assets at the end of each reporting period were 18.99%, 15.80%, 14.35%, and 22.73% respectively. If the financial status of customers changes in the future, it may result in a slowdown in accounts receivable collection or even unrecoverable debts for the company.

03

Epilogue

As a manufacturer of automotive maintenance, inspection, and maintenance equipment, in recent years, Baran has experienced some fluctuation in performance. At the same time, the company is relatively dependent on overseas sales revenue, which primarily operates on an OEM mode, posing certain risks. In an environment of intensified market competition, the company needs to increase research and development investment, continuously upgrade products to enhance competitiveness.