A-share subscription | “Ningwang” and “Diwang” equipment supplier Honggong Technology (301662.SZ) opens subscription accounts receivable turnover rate continues to decline

The Zhitong Finance App learned that on April 8, Honggong Technology (301662.SZ) began the subscription. The issuance price was 26.6 yuan/share, and the subscription limit was 0.45 million shares, with a price-earnings ratio of 7.05 times. It belongs to the Shenzhen Stock Exchange, and GF Securities is its sponsor.

According to the prospectus, Honggong Technology focuses on R&D, production and sales of automated processing production lines and equipment for bulk materials such as powder, granules, liquid, slurry, etc., and is an automated material processing solution provider with independent core equipment, accessories and software. The company mainly provides customers in lithium batteries, positive and negative electrode materials, fine chemicals and other industries with automated material processing production lines and equipment to meet the stable and efficient manufacturing needs of customers.

In the field of lithium battery homogenization, the company has become an equipment supplier for well-known customers such as Ningde Era, BYD, China Airlines, Honeycomb Energy, Everweft Lithium Energy, Sunwoda, and Ganfeng Lithium.

During the reporting period, the production and sales rates of Honggong Technology's automated material processing production lines were 89.80%, 69.78%, 76.47%, and 110.47%, respectively, while the production and sales rates of stand-alone equipment were 77.32%, 77.47%, 131.03%, and 89.69%, respectively.

Regarding stand-alone equipment, Honggong Technology said that the company's stand-alone equipment output was higher than sales in 2021 and 2022, mainly because Ningde Times and its subsidiaries completed production of several stand-alone equipment such as mixers and transfer tanks during the current period and completed inspection after the deadline.

On the financial side, in 2021, 2022 and 2023, the company achieved operating revenue of approximately RMB579 million, RMB2,178 billion and RMB3.198 billion respectively. The company's net profit was approximately RMB 50.79 million, RMB 298 million, and RMB 315 million respectively.

Honggong Technology stated in its prospectus that the sharp increase in the company's revenue from 2021 to 2023 is mainly due to the continuous increase in cooperation projects between the company and leading customers. Since 2024, the pace of expansion of the company's downstream production has slowed down, and the company's revenue has declined. Operating revenue and net profit from January to September 2024 were approximately $1,459 million and $111 million respectively, down 26.44% and 37.42% year-on-year.

Since 2023, due to the slowdown in downstream customers and the pace of production expansion, the repayment rate has slowed down. The share of accounts receivable that are at least one year old has continued to increase. It was 18.35%, 34.22%, and 50.15% at the end of the last two years and the end of the first period, respectively. The receivables turnover ratio continued to decline. The last two years and the first instalment were 3.17, 2.09, and 1.00, respectively.