State-level "little giant" Tiangong shares (920068) opens for subscription, combining low valuation and high growth to build a "double insurance" for new stocks.

Subsidiary of TIANGONG INT'L (00826), Tiangong Co., Ltd. (920068), initiated the new stock subscription for listing on the Beijing Stock Exchange today. According to the official website of the Beijing Stock Exchange, Tiangong Co., Ltd., which began new stock subscription on April 28, will publicly issue 60 million shares in this IPO, accounting for 9.28% of the total post-issuance share capital (before the exercise of the over-allotment option), with a price per share of 3.94 RMB, corresponding to a post-listing market value of 2.548 billion RMB. If the over-allotment option is exercised, the number of issued shares will increase to 69 million shares, accounting for 10.52% of the total post-issuance share capital, with a corresponding market value of 2.583 billion RMB. Of the 60 million shares publicly issued, 42 million shares will be sold online, accounting for 70%, with a corresponding strategic placement ratio of 30%. As the first company to go public after the new listing rules on April 3 on the Beijing Stock Exchange, Tiangong Co., Ltd. retains the strategic placement ratio of 30%, which benefits from improving the chances for small investors in the secondary market. This fully reflects the Beijing Stock Exchange and the issuer Tiangong Co., Ltd.'s favor towards small and medium investors. It is worth noting that the strategic placement agency in this offering is led by three top brokerage firms, CITIC, Guotai, and CICC, along with other well-known private equity firms. The longest lock-up period is 18 months, indicating institutional optimism about the future development of Tiangong Co., Ltd. As a leader in the consumer electronics field of titanium and titanium alloy materials, Tiangong Co., Ltd. continues to lead the trend of titanium alloy penetration in the consumer electronics market. In recent years, globally renowned 3C manufacturers have accelerated the adoption of titanium alloy materials in their products. Apple was the first to use titanium alloy in the Apple Watch Series 6 Edition in 2020, followed by Samsung, Huawei, and others who quickly introduced smartwatches with titanium metal cases. Huawei's WATCH 4 Pro released in 2024 also features a titanium alloy case. Apple has also been using titanium alloy frames in its iPhone 15 Pro series since 2023, and last year's iPhone 16 Pro and iPhone 16 Pro Max also feature titanium alloy frames. This has led to competitors following suit, with Huawei, Honor, Xiaomi, Samsung, and other 3C manufacturers starting to incorporate titanium alloy materials in their phones. With the accelerated penetration of titanium alloy materials in products from major 3C manufacturers, Tiangong Co., Ltd. has seen explosive growth. From 2021 to 2023, Tiangong Co., Ltd. had operating revenues of 283 million RMB, 383 million RMB, and 1.035 billion RMB respectively, with year-on-year growth rates of 55.23%, 35.65%, and 170.05%. During this period, the company's net profit attributable to shareholders was 20.34 million RMB, 69.98 million RMB, and 170 million RMB respectively, with year-on-year growth rates of 67.87%, 244%, and 142.57%. In 2024, Tiangong Co., Ltd.'s revenue was 801 million RMB, the gross profit margin of main business increased by 4.64 percentage points to 31.87%, and the net profit attributable to shareholders increased slightly by 1.57%. Currently, the titanium and titanium alloy materials industry in China faces the problem of structural overcapacity, fierce competition in low- and mid-range products, clear homogeneity issues, but a significant shortage of high-end product capacity, with demand exceeding supply. Based on the current situation in the industry, while continuing to deepen its presence in the consumer electronics field, Tiangong Co., Ltd. is actively expanding into high value-added areas such as 3D-printed titanium materials, aerospace fastener titanium materials, and medical titanium materials, leveraging its leading advantages in technology, experience, funding, and talent accumulation. In the field of additive manufacturing, Tiangong Co., Ltd. has expanded its client base to include several international renowned clients. In 2024, Tiangong Co., Ltd. achieved significant growth in both the number of clients and sales in additive manufacturing compared to the previous year. With the expansion of new clients and increased delivery speeds in the future, the business of titanium materials for additive manufacturing is expected to continuously drive the company's performance. In the aerospace field, Tiangong Co., Ltd. has obtained EN9100 certification for the production of titanium and titanium alloy materials used in the aviation industry and completed the delivery of the first aerospace-grade fastener titanium alloy wire order in March 2025, laying a solid foundation for Tiangong Co., Ltd. to accelerate its entry into the aerospace field. In the medical titanium materials sector, Tiangong Co., Ltd.'s titanium alloy products have obtained ISO 13485 certification for medical device quality management systems, indicating authoritative recognition of the safety and reliability of its materials in the medical field. Tiangong Co., Ltd. stated in its prospectus that all the funds raised from this IPO will be used for the construction of a project to produce 3,000 tons of high-end titanium and titanium alloy rods and wire materials annually, increasing the company's capacity from 7,000 tons to 10,000 tons. It is worth noting that the new project under construction will be used to manufacture high-end products, which will not only effectively support Tiangong Co., Ltd.'s product strategy towards high-end development but also establish the company's leading position in the high-end titanium and titanium alloy market, contributing to the continuous growth of Tiangong Co., Ltd.'s future performance. From a valuation perspective, Tiangong Co., Ltd. has a significant valuation advantage. Compared with the static price-to-earnings ratios of its industry peers such as Western Metal Materials (002149.SZ), Western Superconducting Technologies (688122.SH), Baoji Titanium Industry (600456.SH), and Hunan Xiangtou Goldsky Titanium Industry Technology (688750.SH), which are 62.25 times, 42.89 times, 30.28 times, and 67.15 times respectively, with an average static price-to-earnings ratio of 50.64 times. Tiangong Co., Ltd.'s market value at the time of listing is 2.548 billion RMB (before the exercise of the over-allotment option), and its estimated valuation based on the 2024 net profit attributable to shareholders of 170 million RMB is only.14.98 times, significantly lower than the average valuation level of comparable companies. Given the significant deviation between Tian Gong's excellent fundamentals and valuation, the listing of Tian Gong shares may bring excess returns to new investors.Je suis dsol, je ne parle pas franais.