On December 16, Changzhou Wujin Zhongrui Electronic Technology Co., Ltd. (hereinafter referred to as “Zhongrui Electronics”) will welcome the inaugural meeting of the GEM.
After two or three years of ups and downs, can Zhongrui Electronics, which has been listed for the second time, pass smoothly?
However, from a business perspective, Zhongrui Electronics has also attracted high attention from the outside world due to its high-profile customer dependency and high accounts receivable issues, including its behavior of revising the number of social security contributions.
Zhongrui Electronics is mainly engaged in the research, development, manufacturing, and sales of precision safety structural components for cylindrical lithium batteries. Its main products include power type and capacity type lithium battery combination cap series products.
The company stated that it is positioned in the mid to high-end product market and continues to develop downstream customers in the power lithium battery industry such as new energy vehicles, electric tools, electric bicycles, and smart homes. The company has established long-term and stable cooperative relationships with leading lithium battery manufacturers at home and abroad, such as LG New Energy, Nengyuan Technology, Bike Battery, and Lishen Battery. The company’s products are mainly used in new energy vehicles such as Tesla Model3 and ModelY, electric bicycles such as Maverick, Harold, and Yadi, electric tools such as Dyson, TTI, and Bosch, as well as digital 3C products.
On July 2, 2020, Zhongrui Electronics launched a listing application to the Growth Enterprise Market, and subsequently announced its termination in January 2021.
From the perspective of operating data, from 2019 to 2021 and from January to June 2022, the operating revenue of Zhongrui Electronics was 279 million yuan, 460 million yuan, 648 million yuan, and 406 million yuan, respectively; The net profits attributable to the shareholders of the parent company were 320.10 million yuan, 65.6619 million yuan, 137 million yuan, and 92.9098 million yuan, respectively; The net profits attributable to the owners of the parent company after deducting non recurring profits and losses are 2.1307 million yuan, 56.4745 million yuan, 133 million yuan, and 90.4532 million yuan.
01
Significant dependence on key customers, and continuous increase in accounts receivable
The company’s main business income accounted for 92.46%, 83.71%, 92.67%, and 91.05%, respectively. Obviously, the revenue and net profit of Zhongrui Electronics have doubled in the third half of the year.
As the wind blew in, Zhongrui Electronics took off. The company stated that in 2020 and 2021, the prosperity of the domestic and foreign lithium battery new energy industry rebounded, and the demand for lithium batteries in the new energy vehicle and small power market increased. As a supplier of lithium battery safety structural components, the company’s product sales also increased accordingly. At the same time, the company has deepened cooperation with high-quality customers such as LG New Energy, and through supporting lithium batteries from LG New Energy, they are ultimately mainly used in Tesla New Energy vehicles. Therefore, the company’s operating revenue has achieved significant growth. In the first half of 2022, the company’s operating revenue increased compared to the same period last year, mainly due to the increase in demand from major customers such as LG New Energy.
However, the business structure of Zhongrui Electronics is relatively single risk or worthy of vigilance. During the reporting period, the sales revenue of the company’s power type lithium battery combination cap accounted for 88.77%, 93.00%, 96.32%, and 96.85% of the main business revenue of each period, respectively.
The company frankly states that its core technology is mainly reflected in the R&D, design, and manufacturing of safety structural components for cylindrical lithium batteries. The power type combined cap product is applied to cylindrical lithium batteries, with a relatively simple technical route and product structure. Currently, there is still a certain gap between the overall installed capacity of cylindrical lithium batteries and the square lithium batteries with the highest market share. If there are significant changes in the technical route of new energy vehicle power lithium batteries in the future, or the company fails to complete the research and development of new products and market layout in a timely manner, it will have a negative impact on the company’s business performance.
In addition, the sales amount of Zhongrui Electronics to the top five customers accounted for 54.23%, 75.62%, 78.97%, and 83.90% of the company’s current main business income, respectively, accounting for a relatively high proportion. Among the top five customers, the company’s sales revenue from LG new energy accounts for a relatively high proportion, accounting for 10.73%, 38.04%, 47.50%, and 58.63% of the company’s operating revenue during the reporting period.
In terms of accounts receivable and inventory, at the end of each reporting period, the book values of the company’s accounts receivable were 187 million yuan, 107 million yuan, 167 million yuan, and 150 million yuan, respectively, accounting for 52.10%, 32.95%, 36.93%, and 35.00% of the total current assets of the same period. The amount of accounts receivable is relatively large.
In other words, in the first half of this year alone, the amount of accounts receivable of Zhongrui Electronics was equivalent to that of last year. In addition, the book values of the company’s inventory during the period were 42.5871 million yuan, 45.445 million yuan, 75.8129 million yuan, and 78.7376 million yuan, respectively, accounting for 11.82%, 13.93%, 16.74%, and 18.35% of the year-end current assets.
02
The Mystery of the Ten fold Difference in the Number of Social Security Personnel
At the compliance level, it is reported that the National Enterprise Credit Information Publicity System showed that in the spot check conducted by Changzhou Wujin Ecological Environment Bureau in May 2022, the inspection items “administrative inspection for tracking and inspecting the environmental impact generated after the construction project is put into production or use” and “supervision on the preparation of the environmental impact report (form) of the construction project” were found to have problems by China Swiss Electronics and have been ordered to correct.https://store.stoneitech.com/
The market is also closely concerned that the prospectus shows that the number of employees during the reporting period was 794, 1132, 1295, and 1373, respectively, corresponding to 750, 1090, 1265, and 1335 social security contributors.
However, according to enterprise surveys, the number of insured persons of Zhongrui Electronics from 2019 to 2021 was 1041, 11645, and 13937, respectively. According to the national enterprise credit information publicity system, Zhongrui Electronics revised its annual report for the period 2019 to 2021 on November 24th this year, with the number of social security contributors in 2020 changing from 11645 to 1090.
Therefore, how many Chinese Swiss electronic social security payers are there? Why is there such a big gap? “Harbour Business Watch” attempted to verify the company’s board secretary office, but failed to receive a response.
