A-share subscription | Tongyu New Material (301630.SZ) opens for subscription, its wholly-owned subsidiary faces the risk of loss

On July 1st, Tongyu Xincai (301630.SZ) started its subscription with an issue price of 84 yuan per share and a subscription limit of 10,000 shares. The price-earnings ratio is 23.94 times, and it is listed on the Shenzhen Stock Exchange with Industrial as its sponsor. The prospectus disclosed that Tongyu Xincai's main business is the research, development, production, and sales of electronic resins, mainly used in the production of copper clad laminates. The company's products mainly include MDI modified epoxy resin, DOPO modified epoxy resin, high-bromine epoxy resin, BPA phenol-formaldehyde epoxy resin, and phosphorus-containing phenol-formaldehyde resin curing agents. Tongyu Xincai currently has efficient production capacity for 5 segmented product categories and produces multiple segmented specification products simultaneously, providing a systematic resin solution for the mid-to-high end copper clad laminate industry. The company has established long-term stable partnerships with global well-known manufacturers in the copper clad laminate industry such as KINGBOARD HLDG, Shengyi Technology, Nanya New Material Technology, Zhejiang Wazam New Materials, Kinwong Electronic, and Guangdong Goworld, and has quickly grown into a leading domestic supplier of electronic resins in the copper clad laminate field. Financially, in the fiscal years 2022, 2023, and 2024, the company's operating income is expected to be approximately 1.193 billion yuan, 886 million yuan, and 952 million yuan, respectively. During the same period, net profits are expected to be approximately 188 million yuan, 164 million yuan, and 143 million yuan. In its prospectus, Tongyu Xincai highlighted the risk of losses at its wholly-owned subsidiary Jiangxi Tongyu. During the reporting period, the subsidiary was in the construction, equipment commissioning, and trial production stages, incurring losses of 3.4915 million yuan, 7.055 million yuan, and 14.4414 million yuan, respectively, which had a certain adverse impact on the company's operating performance. If the operating conditions of Jiangxi Tongyu cannot be improved in the future, and the business development falls short of expectations, there may be a risk of a decrease in the company's net profit.