A | High-performance engineering plastic products and assembly component manufacturer Kent Corporation (301591.SZ) opens subscription. Pay attention to the risk of a decrease in net asset yield.

On February 8th, Kent Corporation (301591.SZ) started its subscription with an issue price of 19.43 yuan per share, a subscription limit of 55,000 shares, a price-to-earnings ratio of 22.81 times, and is listed on the ChiNext Board of the Shenzhen Stock Exchange. Guotai Junan Securities is its exclusive sponsor. According to the prospectus, Kent Corporation focuses on the research and development, production, and sales of high-performance engineering plastic products and components. The main business has not undergone significant changes. The company's main products include seals and components, insulation parts and components, functional structural parts, corrosion-resistant pipe fittings, granular materials, and PTFE films. The company's products have excellent performance such as high pressure resistance, temperature resistance, corrosion resistance, wear resistance, creep resistance, low dielectric loss, and high impedance. The end products are widely used in general machinery manufacturing such as valves and compressors, communication equipment manufacturing, high-speed rail and rail transportation equipment manufacturing, automobile manufacturing, instrument and meter manufacturing, medical equipment, semiconductor equipment, environmental protection equipment, wind power equipment, and other fields. Currently, Kent Corporation's sales market covers mainland China, Taiwan, Japan, South Korea, Southeast Asia, the United States, the European Union, and other countries and regions. The company has established direct and stable cooperative relationships with clients in various industrial sectors, including global and domestic leading high-end equipment manufacturing enterprises such as CommScope, Bray, Emerson, Rego, Schlumberger, Iron and Steel Research Institute, CRRC Corporation, Neway Valve, Aerosun Corporation, BYD Company Limited, among others. According to the report, the company's main business revenue composition for the reporting period divided by product category is as follows: It is understood that the funds raised by Kent Corporation, after deducting the issuance expenses, are planned to be used for the following projects: In terms of finance, the company is projected to achieve operating revenue of approximately 245 million yuan, 317 million yuan, 372 million yuan, and 199 million yuan in 2020, 2021, 2022, and the first half of 2023, respectively. The net profits are estimated to be approximately 42.6297 million yuan, 53.3258 million yuan, 73.3071 million yuan, and 42.1078 million yuan, respectively. It should be noted that the prospectus specifically warns investors to pay attention to the risk of a decline in return on equity. The weighted average return on equity for the reporting period was 14.07%, 16.30%, 20.49%, and 10.13%, respectively. After the funds raised from the public stock offering, the company's net assets are expected to increase significantly. Due to the implementation cycle of the fundraising projects, it may be difficult to achieve high returns during the construction period. The release of benefits will have a certain progressive nature, leading to a difficulty in maintaining synchronous growth between net profit and net assets in the short term. Therefore, the company faces the risk of diluted return on equity due to the increase in net asset size after the issuance.