Kunlun Unicom's IPO "terminated" due to concentrated supplier risk.

On March 1, Beijing Kunlun Unicom Technology Development Co., Ltd. (referred to as "Kunlun Unicom") changed its status from "under review" to "terminated" for its application for an IPO on the Shanghai Stock Exchange, due to the company's request to withdraw the application documents. According to the prospectus, Kunlun Unicom is a professional IT infrastructure solutions provider, offering IT infrastructure solutions, IT operation services, and IT value-added supply services to meet the IT infrastructure needs of enterprises at different stages of development. Its IT infrastructure solutions include digital office solutions, cloud computing solutions, and information security solutions. Kunlun Unicom is one of the first batch of enterprise service partners of Microsoft in mainland China, serving as a service provider for renowned manufacturers such as Microsoft, Veritas, VMware, BMC, DELL, New H3C, and Inspur. Due to the complexity of customer IT needs, products and services from a single manufacturer are unable to address various issues comprehensively, making it difficult to meet the personalized demands of different industries. Based on its long-term practice, industry experience, and precise understanding of customer needs, the company can provide solution consultation and design for customers in the areas of digital office, cloud computing, and information security, offering original hardware and software product selection, integration, delivery, and operation maintenance based on its business scale, pain points, and IT development stage, ultimately ensuring better integration of original hardware and software products into the IT environment and guaranteeing the security, stability, and efficiency of customer IT infrastructure. The company has established partnerships with numerous renowned domestic and international manufacturers, receiving awards from Microsoft, Alibaba, VMware, and many other renowned manufacturers, and offering comprehensive one-stop services across multiple vendors and platforms, as well as the ability to respond quickly and deliver promptly. Kunlun Unicom can provide frontline consultation, migration, deployment, and 24/7 MSP hosting services for customers, possessing certain experience in assisting customers with digital and cloud transformation. In the reporting period, it has served over 4,500 customers, maintaining stable cooperation with leading customers in vertical segments such as BMW, ByteDance, Alibaba, and Lixingxing, covering industries like manufacturing, internet, and finance, accumulating a certain customer base while gaining widespread recognition from numerous leading customers in the industry and establishing a certain level of reputation in China. In terms of financials, the company's main business revenue breakdown in 2020, 2021, and 2022 is as follows: In 2020, 2021, and 2022, the company's operating revenues were approximately RMB 1.325 billion, RMB 1.651 billion, and RMB 2.067 billion respectively; during the same period, the company's net profits were approximately RMB 74.7309 million, RMB 78.2583 million, and RMB 89.8694 million respectively. Overall, the company's operating performance has shown a growing trend during the reporting period. It is worth noting that Kunlun Unicom highlighted the risk of supplier concentration in the prospectus. Specifically, in the reporting period, the top five suppliers' purchase amounts were RMB 598.9753 million, RMB 713.136 million, and RMB 850.0309 million, accounting for 52.98%, 51.32%, and 48.60% of the total purchases respectively, with direct purchases from the largest supplier Microsoft accounting for 15.60%, 12.66%, and 14.57% of the total purchases, indicating a relatively high level of procurement concentration. The company's main upstream original manufacturers are well-known domestic and international software and hardware manufacturers, maintaining long-term stable cooperation with them. However, if there are unfavorable changes in the business operations of major suppliers in the future, or if there are tensions in the cooperation relationship with the company, leading to failure to supply goods on time, in good quality, and in sufficient quantity, it may result in a shortage of procurement resources and have adverse effects on the company's operations.