According to Gelonghui, Omesen Intelligent Equipment Co., Ltd. (hereinafter referred to as 'Omesen') recently submitted a prospectus (declaration draft) to BSE, and the feedback status has been accepted. The sponsor agency is Xinda Securities Co., Ltd.

Omesen is a professional manufacturer of intelligent equipment, established in 2003, mainly engaged in the research and development, design, production, and sales of intelligent production equipment and production lines. The company's products can be widely used in industries such as electrical appliances, environmental protection, wind power and lithium new energy, and other fields. They are key equipment to achieve production automation, intelligence, and efficiency.

Regarding the equity structure, before this issue, Long Xiaobin, Long Xiaoming, Guan Yinqiu, and Lei Lin held a total of 81.49% of the company's equity directly and indirectly. Among them, Long Xiaobin and Long Xiaoming are siblings, Long Xiaobin and Guan Yinqiu are husband and wife, and Long Xiaoming and Lei Lin are husband and wife.

According to the prospectus, the funds raised by Omesen this time will be used in projects including the construction of a digital metal pipe forming equipment and customized intelligent equipment production base; research and development center construction project; and supplementary working capital project.

The performance is volatile.

Omesen's main products include intelligent equipment for heat exchanger production, pipeline processing, and other customized intelligent equipment (such as environmental protection equipment, lithium battery hot pressing and shaping equipment, and wind power blade root numerically controlled milling machines). The company has established cooperative relationships with Gree Electric Appliances, Midea Group, Aux, Hisense Electric, TCL Electric, Sichuan Changhong, and Daikin Air Conditioning.

From the perspective of the composition of the main business income, in 2021, 2022, and 2023, the revenue of intelligent equipment for heat exchanger production accounted for more than 43% of the company's main business income.

Composition of main business income, source of prospectus.

In terms of financial data, in 2021, 2022, and 2023, Omesen's operating income was approximately RMB 308 million yuan, RMB 279 million yuan, and RMB 325 million yuan; during the same period, the company's net income attributable to the parent was RMB 44.8329 million yuan, RMB 19.3893 million yuan, and RMB 48.1647 million yuan respectively.

It can be seen that Omesen's performance has fluctuated greatly in the past three years. Among them, the net profit attributable to the parent company in 2022 has plummeted.

The company's main financial indicators come from the prospectus.

Regarding the reason for the decline in the company's performance in 2022, Omesen stated in the prospectus that the non-standard automation equipment and non-standard automated production lines sold by the company require installation, commissioning, and acceptance work. In 2022, the company and downstream customer employees were restricted from traveling, which had a certain adverse impact on the delivery and acceptance of the company's products.

In addition, there are certain differences in the gross profit margin of different products of the company, and there have been changes in the product sales structure in 2022 compared to the same period last year. The company's overall expenses increased in 2022, mainly due to the increase in employee salaries, advertising and promotion expenses, increased listing intermediary service fees, increased research and development investment in order to maintain technological advantages.

Omesen stated that although the operating performance of the company will recover and grow in 2023 as the travel restrictions are lifted, the company still faces the risk of declining business performance if it cannot maintain its industry-leading advantage or downstream customer demand decreases in the future.

From January to March 2024, Omesen's operating income was RMB 64.9955 million yuan; during the same period, the company's net income attributable to the parent was RMB 11.9515 million yuan.

In 2021, 2022, and 2023, Omesen's gross profit margin for its main business was 41.94%, 37.65%, and 43.35% respectively. The company's main business gross profit margin in 2022 was lower than the average of comparable companies in the industry.

Comparable companies' gross profit margin comparison analysis situation, source of prospectus.

The company has a relatively high inventory scale, and there is a risk of inventory impairment.

In 2021, 2022, and 2023, Omesen's inventory book value accounted for 38.18%, 46.17%, and 39.54% of the company's current assets, mainly including products and goods issued. With the gradual expansion of the company's business scale, the occupation of inventory by the company's operating funds may further increase. If the company cannot strengthen production plan management and inventory management, it may lead to a decrease in inventory turnover and difficulties in capital turnover.

Regarding the reason for the large balance of the company's inventory, Omesen stated in the prospectus that the company's products are mainly customized products, adopting a production mode of 'production based on sales' and 'pre-production investment'. After signing a sales contract with the customer, the company will customize design and development according to the delivery time, and deliver the product to the customer after production is completed. The company's products have a long production cycle and need to go through pre-delivery testing, installation and commissioning after delivery, and customer acceptance and other links, which has resulted in a large balance of inventory for the company.

In 2021, 2022, and 2023, the proportion of Orimson's accounts receivable and contract assets' ending balance to current operating income was 40.39%, 43.60%, and 37.33%, respectively, which accounted for a large proportion. If the company's accounts receivable management is improper or the market environment changes, there may be a risk of bad debt losses due to customer payment delays.

In 2021, 2022, and 2023, Orimson's asset-liability ratio was 59.35%, 58.82%, and 51.48%, respectively, which, although decreased, still higher than the average of comparable companies in the same industry. The company's current ratio for the same period was 1.43, 1.32, and 1.51, and the quick ratio was 0.88, 0.71, and 0.91, respectively, which were lower than the average of comparable companies in the same industry. The short-term solvency needs to be improved.

Debt serviceability indicators of the company and comparable companies in the same industry, sourced from the prospectus.

It is worth noting that in 2022, the proportion of the government subsidy amount of Orimson to the total profit of the year exceeded 40%. According to the prospectus, in 2021, 2022, and 2023, the government subsidy amounts included in the current profit and loss of Orimson were 4.18 million yuan, 7.67 million yuan, and 6.55 million yuan, respectively, which accounted for 8.52%, 41.28%, and 12.08% of the total profit for the period.

Orimson stated that if the government's support for the industry in which the company operates weakens in the future, the government subsidy amount obtained by the company will be reduced, which will have a certain impact on the company's future operating performance.

Epilogue

Orimson, focusing on the field of intelligent equipment manufacturing, has established cooperation relationships with many domestic and foreign leading companies in the home appliance industry. However, in recent years, the company's performance has fluctuated significantly, and the inventory scale is relatively high, which has also aroused market attention. How to reduce the company's performance fluctuations and optimize inventory management are issues that Orimson needs to consider and solve.