A-share subscription | Kelon New Materials (920098.BJ) opens subscription and has established cooperative relationships with top companies in the coal or coal machinery industry such as China Shenhua Energy.

On November 26th, Kelon New Materials (920098.BJ) started its IPO, with an issue price of 14 yuan per share and a maximum subscription of 712,500 shares. The P/E ratio is 14.45 times and it belongs to the Beijiao Stock Exchange, with Guoxin Securities as its exclusive sponsor. The prospectus disclosed that Kelon New Materials' main business is the research, production, and sales of hydraulic composite seals and hydraulic hoses, as well as the design, production, sales, and maintenance of coal mine auxiliary transport equipment. The company's main products, rubber and plastic new materials, are core components of the fully mechanized coal mining machine's hydraulic support, and the main products of coal mine auxiliary transport equipment are the main transportation tools for underground hydraulic supports and materials. Kelon New Materials provides comprehensive services to coal machine production and coal mine customers from various aspects such as support, maintenance, and transport around the fully mechanized coal mining machine hydraulic support. Kelon New Materials' main customers are large coal mines and coal machine enterprises. It has established long-term and stable cooperative relationships with top companies in the coal or coal machine industry such as Shanxi Coal Group, Zhengzhou Coal Mining Machinery Group, Beimaiji, Pingmei Ji, China Shenhua Energy, and Shandong Energy. The coal industry business is stable. During the reporting period, the company's R&D investment amounts were 14.4751 million yuan, 18.3733 million yuan, 21.8012 million yuan, and 14.1999 million yuan respectively. The three-year compound annual growth rate of R&D investment is 22.72%, and the number of R&D projects and investment has been increasing year by year, covering main business sectors such as hydraulic composite seals, hydraulic hoses, special vehicles, military industry, and high-speed rail. It is understood that Kelon New Materials plans to use the raised funds, after deducting issuance expenses, for the following projects: Financially, in the fiscal year 2021, 2022, and 2023, the company is expected to achieve operating income of approximately 313 million yuan, 329 million yuan, and 442 million yuan respectively. The net profit is expected to be approximately 66.1216 million yuan, 51.9705 million yuan, and 83.3681 million yuan respectively. It is important to note that the prospectus specifically reminds investors to pay attention to the fluctuation of operating performance of rubber and plastic new materials. The company's rubber and plastic new materials products are mainly used in the coal machine field, and the demand is mainly affected by multiple factors such as coal production, coal machine equipment renewal, coal mine intelligent transformation, new customer and new business field expansion. Specific demands can be divided into new machine equipment and old machine maintenance. In 2023, China's coal production is expected to maintain stable growth, and the operating performance of coal machine manufacturers such as Zhengzhou Coal Mining Machinery Group, Tiandi Science & Technology, China Coal Energy, Linzhou Heavy Machinery Group, Shandong Mining Machinery Group, as well as maintenance companies like Zhengzhou Suda Industry Machinery Service, are generally growing. There is a strong demand for new machine equipment and old machine maintenance. In 2023, the proportion of new machine equipment in Kelon New Materials' income from coal machine rubber and plastic materials is expected to be 66.41%, with revenue growth mainly driven by new machine equipment demand. The future performance of this business will depend on various factors at the macro level such as coal production, coal machine equipment renewal, and coal mine intelligent transformation. At the micro level, it will depend on whether downstream customers' demand for new machine equipment can continue and whether the company can obtain corresponding orders, as well as whether the company can get more old machine maintenance business orders in the case of a relative decrease in demand for new machine equipment to achieve the expansion of new and old machine business. If in the future, the dominant position of coal as the main energy source is rapidly replaced, downstream major customers reduce their demand for new machine equipment for reasons related to operating performance, investment plans, product technology, etc., and if the company fails to expand its old machine maintenance business or adapt to market changes successfully to expand new customers and new businesses, or if new products and technologies fail to follow market development trends, or if raw material prices rise sharply squeezing the company's gross profit margin, or if the company experiences a major incident leading to a significant decrease in market share, or if the results of the funded projects do not meet expectations, the company faces the risk of a decline in operating performance of rubber and plastic new materials products.