A-share subscription | Chengdian Optical and Communication (920008.BJ) opens subscription, mainly engaged in the research, production, and sales of network bus products and special display products.

On August 20th, Chengdu Guangxin (920008.BJ) began its application for purchase, with an issue price of 10 yuan/share and a maximum application limit of 437,000 shares. The price-to-earnings ratio is 14.82 times, and it is listed on the Beijing Exchange. GF SEC is the sponsor and lead underwriter. According to the prospectus, Chengdu Guangxin's main business is the research, development, production, and sales of network bus products and special display products, with its products mainly used in the national defense and military industry. The company is a research-driven manufacturing enterprise with several proprietary technologies and a strong focus on innovation and technological advantages. Since its establishment, Chengdu Guangxin has been dedicated to the research and development of network bus products, especially FC network bus products. FC network bus products have advantages such as high bandwidth, low latency, high reliability, and support for multiple upper-layer protocols. They were first used in fourth-generation aircraft such as F-22 and F-35 internationally and are currently considered an advanced type of network bus. Through the efforts of the company's technology research and development team, several research achievements of the FC network bus have been recognized to be at the domestic leading level by authoritative departments, filling the gap in related fields domestically. The high-speed network communication components and avionics network simulation, monitoring, testing equipment developed by the company have been successively used in the theory verification, research and development debugging, production equipment, and maintenance testing of major weapon systems in China. Since 2017, Chengdu Guangxin has been focusing on the special display field. With the iterative optimization of the company's products and the expansion of application scenarios, customer demand continues to increase. The proportion of revenue from special display products in the company has been steadily rising and is currently one of the main revenue streams. The company has innovatively applied LED display technology to the military analog simulation training field. After five iterations, the product has evolved from a 2m*2m hemisphere screen to a 1m*2m strip screen, and then to a 7m-diameter full sphere and a 5m-diameter full sphere, overcoming technical challenges in high-density LED complex curved surface display, spherical LED display driving and control, low-latency video transmission suitable for flight simulation, multi-channel video synchronization, high-density flexible LED light board, high-precision spherical stitching, and non-linear distortion geometry correction for LED spherical images. In 2021, the company successfully developed a LED spherical screen visual system that was approved through military assessment and mass-produced for use in military flight simulation training equipment, filling the gap in domestic flight simulation system technology. The company's LED spherical screen visual system reduces reliance on foreign projection equipment for China's flight analog simulation systems and has outstanding advantages in display effect, maintenance, independent control, compared to similar products based on projection display technology. It has been applied in the flight training of China's new main fighter aircraft. Financially, Chengdu Guangxin is estimated to achieve operating revenues of approximately 121 million yuan, 169 million yuan, and 216 million yuan in 2021, 2022, and 2023, respectively, with net profits of approximately 20.87 million yuan, 33.62 million yuan, and 45.04 million yuan during the period. It is important to note that Chengdu Guangxin mentioned in the prospectus the risks of fluctuations in demand in the military market and intensifying competition. During the reporting period, the company's main customers were subsidiaries of large state-owned enterprises in China, with the end-users being the military. Due to the special nature of military products related to national defense security, the state has strict control over the procurement of military products, and military procurement is highly planned. The demand for company products is largely influenced by China's military budget and equipment procurement plan, and these arrangements directly determine market demand. Therefore, fluctuations in military budget and equipment procurement plans have a significant impact on the company's performance. Furthermore, on one hand, the company's network bus and special display products incorporate advanced technologies in the industry, and the direction of market applications is still expanding, which leads to uncertainty in the growth rate of market space. On the other hand, the company's main products face relatively fewer industry competitors at present. If existing competitors surpass the company in terms of delivery timeliness, product quality, post-sales support, and market expansion capabilities, it could lead to a decline in the company's market share. With the growth of market space, more new entrants may be attracted, posing the risk of intensified market competition for the company.