A-share subscription | Down product manufacturer Guqi Rongcai (001390.SZ) has opened subscriptions and established a partnership with Zhejiang Semir Garment (002563.SZ) and others.

On May 19th, Guqirongcai (001390.SZ) started its subscription with an issue price of 12.08 yuan per share and a subscription limit of 20,000 shares. The price-earnings ratio is 14.65 times. It is listed on the Shenzhen Stock Exchange, and Guosen is its sponsor. The prospectus disclosed that Guqirongcai's main business focuses on the research, production, and sales of high-spec down products, with its main products being goose down and duck down used in clothing, bedding, and other down product sectors. The company targets the mid-to-high-end market and has established cooperation with customers such as Hla Group Corp., Zhejiang Semir Garment, their children's clothing brand Balabala, Luolai Lifestyle Technology, and Jihua Group Corporation. During the reporting period, the company's capacity utilization rates were 87.39%, 87.09%, 76.70%, and 66.18% respectively. In 2020, the company had a large number of orders on hand, leading to an increase in production capacity in early 2021 with the addition of a production line. The capacity utilization rate decreased in the first half of 2022 due to reduced deliveries caused by the pandemic. In terms of finances, the company achieved operating revenues of approximately 459 million yuan, 444 million yuan, and 596 million yuan in 2019, 2020, and 2021 respectively. The net profits were approximately 35.81 million yuan, 53.99 million yuan, and 76.81 million yuan. In the prospectus, Guqirongcai highlighted the risks of insufficient operating funds. The net cash flows from operating activities were -25.86 million yuan, -47.75 million yuan, 29.91 million yuan, and -47.73 million yuan for the reporting periods, with negative net cash flows from operating activities in the previous two years and the most recent period. This is primarily due to the long receivables collection cycle from downstream customers of down products, while the payment cycle from upstream suppliers is relatively short, tying up a significant amount of operating funds. The company is in a rapid development stage with growing funding needs. Failure to widen financing channels as expected and improve operating cash flows effectively may result in insufficient operating funds and impact business development.