A-share subscription | Jiachi Technology (688708.SH) opens subscription as a provider of electromagnetic functional materials and structures.

On November 25, Jiachi Technology (688708.SH) opened for subscription, with an issue price of 27.08 yuan per share and a subscription limit of 0.75 million shares, with a P/E ratio of 20.72 times. It is listed on the Shanghai Stock Exchange, and Huaxi is its exclusive sponsor. According to the prospectus, Jiachi Technology is a leading provider of electromagnetic functional materials and structures (EMMS) in China, focusing on leading and promoting the development of EMMS technology in China and contributing to the national defense security and electronic information industry. The company's EMMS products are mainly military products, accounting for over 97% of the revenue in 2023, mainly used in the stealth field; with civilian products as a supplement, mainly used in the electromagnetic compatibility field. It is understood that Jiachi Technology plans to use the funds raised for the following projects after deducting the issuance expenses: Financially, the company is expected to achieve operating revenue of approximately 530 million yuan, 769 million yuan, and 981 million yuan in 2021, 2022, and 2023 respectively. The net profits are expected to be approximately 167 million yuan, 484 million yuan, and 564 million yuan respectively. It is important to note that the prospectus specifically reminds investors to pay attention to the turnover and impairment risks brought about by the large balances of accounts receivable and bills receivable. In the defense industry where the company operates, there are common characteristics such as long project research and development cycles, complex payment settlement procedures, and concentrated settlement quarters. As of each period end, the total balance of accounts receivable and bills receivable was approximately 355 million yuan, 678 million yuan, and 984 million yuan, accounting for 66.91%, 88.16%, and 100.34% of the operating revenue in each period. Since 2021, the proportion of accounts receivable to operating income has been increasing, while the turnover speed has been decreasing. If downstream customers delay payment schedules or their payment capabilities change, the company will face risks of turnover and impairment of accounts receivable.