After the listing of Changlian Technology on September 30, another new stock is listed on the Shenzhen Stock Exchange today.

According to the report, on October 11, Anhui Qiangbang New Materials Co., Ltd. (hereinafter referred to as 'Qiangbang New Materials') was listed on the Shenzhen main board, with Haitong Securities as the sponsor.

Qiangbang New Materials (001279) issued a price of 9.68 yuan per share, with a P/E ratio of 17.54 times, lower than the industry P/E ratio of 31.55 times. As of the time of reporting, its stock price has surged over 1345%, with a latest market cap exceeding 22.3 billion yuan.

Recently, the new A-share IPO market has been hot, with Changlian Technology soaring more than 17 times on the first day of listing on the GEM, and other recent IPOs like Wireless Media and Hehe Information also performing actively. In addition, due to the relatively low number of outstanding shares of new stocks in the early listing period, they are more susceptible to speculative capital. Against this backdrop, it is reasonable for Qiangbang New Materials to have a first-day closing increase on its listing.

As one of the largest domestic manufacturers of printing plate materials, Qiangbang New Materials has a certain scale advantage, but in recent years, the company's performance has been volatile, with a relatively high proportion of overseas sales, facing exchange rate fluctuation risks.

Based on the offering price and the issuance quantity of 40 million shares, the total amount raised by Qiangbang New Materials in this public offering is expected to be 0.387 billion yuan, significantly lower than the planned 0.668 billion yuan. The funds raised in this IPO will be used for eco-friendly printing plate capacity expansion projects, R&D center construction projects, smart technology upgrading projects, repayment of bank loans, and supplementing working capital.

Use of raised funds, image source: Prospectus

01

Anhui Xuancheng launched an IPO for a printing plate material company.

Qiangbang New Materials is from Xuancheng City, Anhui Province. It was established in 2010 and transformed into a joint-stock company in 2021.

The company mainly engages in the research and development, production, and sales of printing plate materials. According to the explanation provided by the Printing Equipment Branch of the China Printing and Equipment Industry Association, Qiangbang New Materials' sales scale has consistently ranked second in China and top five globally during the reporting period.

Regarding the equity structure, before this issuance, the actual controller of Qiangbang New Materials, Guo Liangchun's family members (Guo Liangchun, Wang Yulan, and their sons Guo Juncheng and Guo Junyi) collectively held 89.40% of the company's shares. After listing, the Guo Liangchun family's total shareholding in the company is 67.05%.

Guo Liangchun, born in the 1960s, with a high school education, currently pursuing an Executive Master of Business Administration (EMBA) degree at Cheung Kong Graduate School of Business. He previously held positions such as Vice General Manager of Wenzhou Libang Leather Co., Ltd., and Executive Director and General Manager of Shanghai Qiangbang. He is now the Chairman of Qiangbang New Materials.

Guo Juncheng, born in the 1980s, holds a master's degree and previously served as Vice General Manager of Shanghai Qiangbang. He currently holds positions as Supervisor of Yizhao Industrial, Executive Director of Zhuojue Trading, Supervisor of Shanghai Shenlong, and concurrently serves as Director and General Manager of Qiangbang New Materials.

Since its establishment, Qiangbang New Materials has always focused on the research and development of photosensitive materials and their applications in printing plates, establishing a comprehensive printing plate product system. The company's main products include lithographic plate materials and flexible plate materials. The lithographic plate materials mainly include thermal CTP plate materials, UV-CTP plate materials, while the flexible plate materials mainly include traditional flexible photosensitive resin plates, digital flexible photosensitive resin plates, etc.

By business category, from 2021 to 2023, the revenue share of offset plate products accounted for over 95%, which is an important source of income for the company, while the revenue share of flexible plate materials is relatively lower.

The company's main business income is categorized by business type, source: prospectus

Offset printing is a type of lithographic printing method, where the ink on the printing plate is transferred to the substrate through a rubber blanket, classified as indirect printing. On the other hand, relief printing, intaglio printing, screen printing, and other printing methods belong to direct printing. Qiangbang New Materials' offset plate materials typically have a thickness of 0.10mm to 0.40mm, completing the photosensitive material coating on thin aluminum substrates, ensuring stable material quality, high fidelity, and clarity.

The company has also independently developed flexible plate materials, effectively mastering all independent intellectual property rights from material to formulation to production process, becoming one of the few domestic companies with the production capacity for flexible plate materials, breaking the foreign monopoly in this area.

Qiangbang New Material's products are widely used in printing books, newspapers, brochures, corrugated boxes, food packaging boxes (bags), pharmaceutical packaging, adhesive labels, and various printing materials.

In terms of performance, in 2021, 2022, and 2023 (referred to as the 'reporting period'), Qiangbang New Materials achieved revenues of approximately 1.503 billion yuan, 1.588 billion yuan, and 1.425 billion yuan respectively, with net profits of approximately 70.467 million yuan, 98.8916 million yuan, and 93.5138 million yuan respectively. The company's performance fluctuates, with a decrease in revenue in 2023 due to the lower unit price of offset plate products and lower-than-expected overseas market demand.

Preliminary calculations show that the company's revenue from January to September 2024 is approximately 1.069 billion yuan to 1.208 billion yuan, with a year-on-year change of 1.69% to 14.92%, and the net income attributable to the parent company's shareholders is 68.5 million yuan to 76.9 million yuan, with a year-on-year change of -2.92% to 8.98%.

During the reporting period, Qiangbang New Materials' comprehensive business gross margin rates were 11.48%, 12.72%, and 13.17%, with 2021 being lower than Xintu New Materials.

The company stated in the prospectus that Xintu New Materials, a peer company, has a much higher comprehensive business gross margin rate than the industry average due to its heavy reliance on long-term cooperative relationships with existing customer groups. Domestic sales are mainly through direct sales. The direct sales model incurs higher sales expenses but maintains a higher gross margin.

Comparison of the company's comprehensive business gross margin rate with comparable companies in the industry, Image source: prospectus

Qiangbang New Materials' product sales are mainly through a distribution model, with sales revenue from the distribution model accounting for over 98% of the main business revenue, making up a significant proportion. In the future, if the company cannot effectively manage distributors continuously or if the cooperative relationship with distributors deteriorates, it may impact the company's operational performance and brand image.

02

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

After many years of development, Qiangbang's new materials industry has formed a competitive landscape dominated by leading companies. Currently, the global printing plate market is mainly occupied by three major international manufacturers: Fujifilm in Japan, Eastman Kodak in the USA, Agfa in Belgium, as well as Qiangbang New Materials and Lekai Huaguang as the two leading domestic enterprises.

With the continuous changes in the industry's competitive landscape, the competition for technical talent will become increasingly intense. Due to the increased environmental protection requirements in various industries, green and environmentally friendly printing materials will become the main direction for the future development of the printing industry. This also places higher demands on Qiangbang New Materials' technology research and development and resource allocation capabilities.

During the reporting period, Qiangbang New Materials' research and development expenses accounted for 3.23%, 3.45%, and 3.41% of its revenue respectively, which is lower than the average of comparable companies in the same industry. The company stated that due to its higher income scale compared to similar industry companies, this has resulted in a relatively lower proportion of research and development expenses to revenue.

Comparison of the proportion of research and development expenses to revenue between the company and comparable companies in the same industry, image source: prospectus.

After years of development, Qiangbang New Materials has established a sales network in various provinces and cities across the country, gradually expanding from domestic to global markets. It has established sales service systems in Europe, East Asia, Southeast Asia, and other regions. Its products are not only sold domestically but also exported to more than 60 countries and regions overseas.

During the reporting period, the proportion of overseas sales revenue to main business income for the company was 40.85%, 46.26%, and 42.28%, with a relatively high proportion of overseas sales. In recent years, with the increasing complexity, instability, and uncertainty of the global economy and international environment, if there are changes in the trade policies or forex exchange rates in the export destinations in the future, it may affect the company's export income.