Futu News on December 11, this Friday.$Wenling cutting tool (01379.HK) $According to the announcement, the company plans to issue 20 million shares from December 11 to 16, including 2 million shares for public offering and 18 million shares for international offering at a price of HK $6.25 to HK $6.75 per share, which is expected to be listed on December 30.

It is reported that Wenling cutting tools, founded in 2003, is a well-known trading center operator of cutting tools in China. It operates and manages the trading center in Qianyangxia Village, Wenling Town, Wenling City, Zhejiang Province, China. The main business activities and income sources mainly come from the property leasing business of the trading center of the cutting tools industry.

In terms of financial data, the company's total revenue from fiscal year 2017 to fiscal year 2019 was 43.487 million yuan, 46.994 million yuan and 50.15 million yuan respectively, with a compound annual growth rate of 7.39%. In the same period, net profit was 44.892 million yuan, 36.961 million yuan and 32.447 million yuan, with a compound annual growth rate of-14.98%. In the first half of 2020, the company recorded a total revenue of 20.011 million yuan and a net profit of 10.791 million yuan.

In terms of the industry, the upper reaches of the work tools industry refer to the manufacturers who provide work tools for dealers in the trading center, while the middle reaches include work tools dealers and trading centers. The services of the work tool Trading Center mainly include shop leasing, property management and other assistance services; downstream, including the textile industry, paper industry, pharmaceutical industry, automobile industry and other manufacturing industries.

Driven by the increasing demand of the machine tool industry and the increase in export demand, the total output of cutting tools increased from 161.5 million in 2014 to 259.5 million in 2019, with a compound annual growth rate of 10.0%. Due to the problem of economic cycle, the growth rate of production of cutting tools slowed down in 2019. Despite the impact of COVID-19, production of cutting tools will not suffer negative growth, and the growth rate is expected to decline to 0.6 per cent in 2020. In the long run, taking into account the increased investment in fixed assets and the additional demand brought about by the implementation of machine tool upgrading, the total production of cutting tools is expected to further expand to 378.5 million pieces in 2024, with a compound annual growth rate of 9.7% from 2020 to 2024.

In terms of fund-raising purposes, the company intends to use the net proceeds from the share sale for the following purposes: about 70% will be used to partially fund the costs and expenses of establishing and building the industrial park, so as to expand the company's coverage in the cutting tools industry; about 20% will be used to finance further development on the third floor, and about 10% will be used for general working capital and other general corporate purposes.