Longyang Electronics' downstream is weak, and the net profit of the two years of listing has dropped by 50%, and the three major IPO projects have been suspended, and the investment progress is less than 20%

Yangtze River Business Daily News ● Yangtze River Business Daily reporter Xu Jia

The business volume continued to decline, and Longyang Electronics (301389. SZ) IPO expansion project was suspended.

A few days ago, Longyang Electronics announced that the company intends to terminate the "Fuyang Electronic Electromagnetic Shielding and Other Related Materials Production Project" and "Electromagnetic Shielding and Related Materials Expansion Project" in the IPO fundraising project.

The Yangtze River Business Daily reporter noted that as of the end of May this year, the above two major projects have invested 43.4103 million yuan and 13.1963 million yuan respectively, and the investment progress is 18.86% and 16.33% respectively.

Two of the three major IPO fund-raising projects have terminated investment, and the current IPO fund-raising project of Longyang Electronics is only the "R&D center project", which has invested 17.4568 million yuan at the end of May this year, with an investment progress of 28.46%, and the overall investment progress of the three major projects is 19.89%.

According to Longyang Electronics, weak downstream demand and the company's adjustment of industrial layout planning are the main reasons for the company's termination of IPO fundraising projects. It is also reflected in the performance, in the first year of listing in 2022, the performance of Longyang Electronics began to decline, and the overall decline in the company's operating income and net profit in 2022 and 2023 will reach 48% and 51% respectively.

Two of the three major IPO projects were terminated

According to the data, in October 2022, Longyang Electronics issued 70.875 million new shares in its initial public offering, raising a total of about 1.595 billion yuan, and the net amount of funds raised after deducting related expenses was about 1.472 billion yuan, which were invested in the production projects of electromagnetic shielding and other related materials, the expansion project of electromagnetic shielding and related materials, and the R&D center project of Fuyang Electronics.

According to the plan, the total investment of the above three major projects of Longyang Electronics is 231 million yuan, 80.7894 million yuan and 61.3377 million yuan respectively, totaling 372 million yuan, which will be invested in all raised funds, so Longyang Electronics IPO raised 1.099 billion yuan.

However, more than a year after the completion of the IPO, with only three months left before the project reached its intended state of use, that is, October 2024, Longyang Electronics suddenly announced the termination of two major projects.

A few days ago, Longyang Electronics announced that the company intends to terminate the production project of Fuyang Electronics electromagnetic shielding and other related materials and the expansion project of electromagnetic shielding and related materials in the IPO fundraising project.

The Yangtze River Business Daily reporter noticed that the termination of the above two major projects means that only the R&D center project of Longyang Electronics' IPO fundraising project is still being promoted. As of the end of May 2024, the above two major projects have invested a total of 43.4103 million yuan and 13.1963 million yuan respectively, totaling 56.6066 million yuan, and the investment progress is 18.86% and 16.33% respectively, both of which are less than 20%. The R&D center project has invested a total of 17.4568 million yuan, with an investment progress of 28.46%, and the three major projects have invested a total of 74.0634 million yuan to raise funds, with an overall investment progress of 19.89%.

As for the reasons for the termination of the two major IPO fundraising projects, Longyang Electronics gave an explanation, mainly due to the weak downstream demand and the company's adjustment of industrial layout planning.

Longyang Electronics said that during the implementation of the project, affected by many uncertain factors such as international geopolitical changes, the terminal consumer demand was weak, the industry market competition became more and more fierce, the pressure of terminal consumption was transmitted to the upstream, and the overall pressure on the industrial chain was greater, resulting in the relatively weak performance of the 3C consumer electronics market to which the company's main business belongs since 2023. At present, the company's end customer structure is dominated by overseas customers, and the terminal demand is weak and transmitted to the upstream, and the company's overall business volume has declined. Therefore, the company's existing production capacity of electromagnetic shielding materials has been able to meet the needs of business development.

In addition, Longyang Electronics also said that in order to better respond to the changes in the industrial chain and serve customers in the industrial chain of the 3C consumer electronics industry, the company will adjust the relevant production capacity layout plan in a timely manner, invest in Vietnam in 2023, and expand the production capacity of electromagnetic shielding materials and other related products in Southeast Asia.

The performance fell by 560 million yuan, and the investment of the raised funds is undecided

Behind the termination of the initial fundraising project is the decrease in terminal consumer demand, and the impact on Longyang Electronics is also reflected in the performance.

According to the data, Longyang Electronics is mainly engaged in the research and development, production and sales of various electromagnetic shielding materials and some insulating materials, and its products are mainly used in the field of 3C consumer electronics and new energy vehicles.

The Yangtze River Business Daily reporter noticed that Longyang Electronics is a listed company in the "fruit chain". Before the IPO, from 2018 to 2021, Longyang Electronics' operating income and net profit increased from 214 million yuan and 83.3457 million yuan to 428 million yuan and 198 million yuan respectively.

In 2022, the first year of the company's listing, Longyang Electronics' performance began to decline. In 2022 and 2023, Longyang Electronics will achieve operating income of 376 million yuan and 265 million yuan respectively, a year-on-year decrease of 12.11% and 29.51%; The net profit was 169 million yuan and 96.7627 million yuan, a year-on-year decrease of 14.58% and 42.7%. In the past two years, the company's operating income and net profit have decreased by 48% and 51% respectively.

Longyang Electronics previously said that the performance of the 3C consumer electronics market, to which the company's main business belongs, will be relatively weak in 2023, among which overseas terminal brands will destock, and there will be a slow pace of recovery. At present, the company's customer structure is mainly overseas customers, and the terminal demand is weakly transmitted to the upstream, which makes the company's overall performance decline significantly. In addition, there are many manufacturers in the 3C consumer electronics industry, the overall industry concentration is not high, and the overall demand of the overall industry is weak, resulting in more fierce overall competition.

It is worth noting that Longyang Electronics disclosed that in 2023, among the company's main products, the output of copper plating machine, laminating machine, forming machine and film cutting machine will be 454,600 meters, 1,176,400 meters, 6,002,900 meters and 409 million pieces, respectively, and the capacity utilization rate will be 50.11%, 101.04%, 71.27% and 54.06% respectively. Among them, the capacity utilization rate of copper plating machine and film cutting machine is at a low level.

In the first quarter of this year, Longyang Electronics achieved operating income of 59.0883 million yuan, a year-on-year increase of 24%; The net profit was 17.808 million yuan, a year-on-year decrease of 7.49%.

With the termination of the two major fundraising projects, the scale of idle raised funds in Longyang Electronics has increased. According to the announcement, after the termination of the two major projects, it is expected that the remaining funds will be raised by 260 million yuan. Longyang Electronics said that the follow-up company will continue to actively explore projects with strong profitability, good future development prospects, complementary resources with the company's resources and can enhance the company's core competitiveness, and the company will timely perform the corresponding decision-making and approval procedures and timely disclosure according to the substantive progress of the new raised funds investment project.

Among the funds over-raised in the IPO, Longyang Electronics has planned to use 800 million yuan to invest in the construction project of the composite copper foil production base, and the over-raised funds for undetermined purposes are about 300 million yuan. As of the end of 2023, a total of 33.1564 million yuan has been invested in the construction project of the composite copper foil production base, and the investment progress is 4.14%. Including the remaining funds from the termination of the project, the scale of raised funds for the undetermined purpose of Longyang Electronics will reach 560 million yuan.

It is worth mentioning that in May 2023, Longyang Electronics also threw out a convertible bond issuance plan of 1.107 billion yuan, and the raised funds were planned to be invested in the construction project of composite copper foil production base and the project of thin film metallization R&D test center. However, in May this year, Longyang Electronics voluntarily terminated the issuance of the above-mentioned convertible bonds.