Preview of US Stocks: Profit Volatility and Cash Flow Tightness, Mingteng International Seeks to "Replenish Blood" in the US.

Since the implementation of the "filing new regulations" on March 31st, the enthusiasm of domestic companies for listing overseas has increased. According to incomplete statistics, as of September 28th, a total of 144 companies have submitted filing applications. Among them, 101 plan to list in Hong Kong, 42 plan to list in the US, and 1 plans to issue GDR (Global Depositary Receipt) in Switzerland. For example, on September 25th, approximately 4 companies received notices for overseas issuance and listing filing, including Jia Baoxian, Yanzhiwu, Xingtuguoji, and Mingtengguoji. Among them, Mingtengguoji, as it is in the automotive mold development industry, has gained many development opportunities in recent years with the rapid development of the automotive, motorcycle, aerospace, and other industries, gradually entering the public's view. The company previously submitted a confidential filing with the SEC on November 10, 2022, and publicly disclosed its prospectus for IPO on March 29, 2023, intending to list on Nasdaq with the stock code "MTEN." Based on this, let's further analyze Mingtengguoji's prospectus to see its true strength. Fluctuating net profits, tight cash flow Mingtengguoji is a holding company registered in the Cayman Islands, conducting business in China through its subsidiary, Wuxi Mingteng Mold Company. Its subsidiary has been providing comprehensive and personalized mold services for customers since December 2015, including mold design and development, production, assembly, testing, maintenance, and after-sales services. In terms of products, Mingtengguoji's main products are moldings for turbocharger systems, braking systems, steering and differential systems, and other automotive system components. In addition, the company also produces molds for new electric vehicle drive systems, battery pack systems, and engineering hydraulic components widely used in the automotive, construction machinery, and other manufacturing industries. Since its establishment, Mingtengguoji has become a supplier to major customers in the automotive parts manufacturing industry and has established long-term business relationships with them. Most of the company's customers have had business relationships with the company for over 5 years, including three Chinese listed companies: Kehua Holdings (603161.SH), Wuxi Best Precision Machinery (300580.SZ), and Wuxi Lihu Corporation (300694.SZ). With the stable relationships established with these customers, Mingtengguoji's business and revenue have continued to expand in recent years. According to the prospectus, the company's revenue increased from $4,442,600 in 2020 to $7,797,300 in 2021, a year-on-year growth of 75.51%. As of the first half of 2022, the company's revenue continued to grow to $3,940,800, an 8.19% increase compared to the same period in 2021. Although revenue has been expanding, Mingtengguoji seems to show signs of slowing growth. This can also be seen from its fluctuating net profits. According to the prospectus, the company recorded net profits of $1,965,000 in 2020 and $2,593,300 in 2021, increasing year by year. However, in the first six months of 2021 and 2022, the company recorded net profits of $1,531,700 and $987,800 respectively, showing a decline. Affected by the relatively weak revenue growth and fluctuating net profits, Mingtengguoji's cash and cash equivalents have also shown fluctuations. According to the prospectus, the company's cash and cash equivalents at the end of 2020 and 2021 were $440,800 and $307,000 respectively, a decrease of 30.35% year-on-year. As of the first half of 2022, the company's cash and cash equivalents increased to $927,900, compared to the same period in 2021. However, due to its relatively high level of liabilities, Mingtengguoji still faces some debt repayment pressures. As of the first half of 2022, the company's total liabilities increased significantly to $4,256,300 compared to the same period in 2021, while total assets were $9,606,300. Among them, the company's current liabilities amounted to $4,167,000, indicating short-term debt repayment pressures. Therefore, driven by factors such as weak revenue growth, fluctuating net profits, and tight cash flow, it is not difficult to understand Mingtengguoji's intention to seek listing in the US. Rapid industry development, still facing competition pressure Mold equipment casting is one of the most crucial processes in casting production and is crucial to the quality of castings. Currently, China has the most extensive mold production base in the world. According to forecast data as of June 30, 2022, China is expected to produce 39,100 sets of casting molds in 2022, and the number is estimated to reach 49,700 sets by 2028. North America is the most prominent mold market in the world, with 40,200 sets sold in 2022. In recent years, with the rapid development of industries such as automotive, motorcycles, and aerospace, China's mold industry has been growing rapidly. In 2021, the largest downstream demand for casting molds in the Chinese market was in the automotive sector, accounting for 56.9% of the market share, followed by engineering components and communication sectors, accounting for 12.99% and 18.22% of the market share, respectively. By 2025, Shanxi Guoxin Energy Corporation's annual car sales in China will reach 7 million units, with an optimistic forecast of 9 to 10 million units. This development speed sets a record for the global new energy vehicle industry. With the promotion of the "carbon peak and carbon neutrality" goals, renewable energy will become the standard energy for the green development of electric vehicles. Subsequently, technology and policies will further promote the gradual green transformation and achieve substantial synergy for the energy and automotive revolutions. Under the background of energy conservation and emission reduction, the growth rate of black gravity casting molds will slow down. In contrast, the scale of aluminum-magnesium alloy die-casting molds, low-pressure die-casting molds, and extrusion die-casting molds will continue to grow.Significant growth.Furthermore, due to the trend of aluminum replacing steel, the overall application area of the casting mold industry continues to grow. The development of the automotive industry has become the main driving force for the global casting mold industry. In 2021, the global casting mold industry held a market share of 67.44% in the application field. Therefore, the automotive manufacturing industry is constantly developing lightweight products that aim to be environmentally friendly and energy-efficient. The demand for turbochargers in the automotive industry has become the main driving force for the growth of the casting mold market. However, it is worth noting that the Chinese casting mold industry is also a highly diverse and competitive industry. The casting mold industry in China is highly diversified. In 2018, the top five companies in terms of global sales accounted for 21.85% of the Chinese market share. With the rapid development of China's new energy vehicles (NEVs) and the increasing demand for casting molds, as well as the entry of new small-scale enterprises, it is expected that the top five casting mold companies will account for 20.97% of the Chinese market share by 2022. Minten International's subsidiary operates in the middle of the casting industry. The proportion of global mold manufacturing industry is dispersed. According to the forecast data for 2022, the top five casting mold companies will account for 11.5% of the global sales. Among them, Gibbs Die Casting is the largest company in terms of global shipment, accounting for 3.33% of the overall global market; Tianjin Automotive Mould Co., Ltd. is China's largest casting mold manufacturer, ranking second in the global mold market and first in the Chinese market, accounting for 2.70% of the global market. From 2018 to 2022, the competition in the global casting mold industry has been extremely fierce, and the market share of the top five companies has been declining, leading to a more fragmented industry share. In this context, Minten International not only faces competition pressure from international mold manufacturing giants with technological advantages and financial strength, but also faces challenges from domestic competitors in terms of price and service, highlighting the significant competition pressure.