Hailiwei withdraws its main board IPO and originally planned to raise 500 million yuan

Hailiwei, which plans to raise 500 million yuan in IPO, has stopped trading on the Shanghai main board.

On November 16, the IPO review status of Qingdao Hailiwei New Material Technology Co., Ltd. (hereinafter referred to as “Hailiwei”) on the main board of the Shanghai Stock Exchange was changed to “terminated”. Because Hailiwei and its sponsors withdrew their issuance and listing application, the Shanghai Stock Exchange terminated its issuance and listing review in accordance with regulations.

With this impact on the main board listing, Hailiwei originally planned to raise 508 million yuan, which will be invested in the technical transformation and expansion project of the automotive rubber seal production line, the polyurethane component production project, the R&D center construction project, and to supplement working capital.

Hailiwei’s main business focuses on the research and development, production and sales of rubber, polyurethane, composite materials and other polymer material products. The products mainly cover the two major application fields of automobiles and rail transit, and achieve sealing, waterproofing, vibration reduction and other functions.

In the automotive field, Hailiwei’s products are mainly automotive powertrain system seals, which are mainly used in automotive powertrain systems such as automotive engines, gearboxes and axles, including dynamic seals and static seals. The company has now become a supporting supplier to well-known engine manufacturers and commercial vehicle manufacturers such as Weichai Group, Cummins, Yunnei Group, and China FAW. The company is one of the major suppliers of commercial vehicle power system assembly seals. During the reporting period, Hailiwei’s market share was approximately 10%.

In the field of rail transit, the main raw materials of Hailiwei products are polyurethane materials, including polyether polyols, polyether polyol combinations and isocyanate prepolymers. The main suppliers include BASF Polyurethane Specialty Products (China) Co., Ltd., Wanhua Chemical (Yantai) Sales Co., Ltd. and other well-known leading polyurethane companies.

Hailiwei’s products in the rail transit field are mainly waterproof and vibration-absorbing products for high-speed railway engineering works, including elastomer beam end waterproofing devices, fastener pads, composite sleepers, waterstops, etc. Major customers include various domestic railway construction units and railway construction units. During the reporting period, Hailiwei’s rail transit products have been successfully used in many key national railway lines such as the Lunan High-speed Railway, the Gansu-Shenzhen High-speed Railway, the Weilai-Lai High-speed Railway, and the Sichuan-Tibet Railway. Hailiwei is one of the original research units of domestic elastomer beam end waterproofing device products. According to statistics, during the reporting period, the market share of Hailiwei elastomer beam end waterproofing device products was 26.88%, ranking first in market share.

In terms of performance, from 2020 to 2022, Hailiwei achieved operating income of 400 million yuan, 366 million yuan, and 406 million yuan respectively, and net profits of 77.3605 million yuan, 60.924 million yuan, and 77.248 million yuan respectively.

It is worth noting that Hailiwei is at risk of performance decline. In the prospectus, Hailiwei stated that the company’s operating performance has been affected by factors such as national macroeconomic regulation, downstream industry policies, and the new crown epidemic, and has shown certain fluctuations. If factors such as a downturn in the downstream industry and a rapid rise in the price of rubber and other major raw materials occur in the future, the company’s financial indicators such as revenue, gross profit margin, and net profit may decline sharply, resulting in a 50% decline in operating profit in the year of listing and future fiscal years. % or even risk of loss.

In addition, Hailiwei’s main rail transit and automobile markets are also experiencing declining demand. As of the end of 2022, my country’s high-speed rail operating mileage will reach 42,000 kilometers. According to the “Outline of the Advance Plan for Railways in a New Era of Transportation Power”, the scale of my country’s high-speed railways will reach 70,000 kilometers by 2035. Based on this calculation, the domestic demand for new high-speed railways in the future is 28,000, and the demand for new high-speed railways will gradually decrease.

In the automotive field, according to the “China Commercial Vehicle Industry Development Report (2022)” of the China Association of Automobile Manufacturers, it is expected that by the end of the “14th Five-Year Plan”, the domestic commercial vehicle market sales will return to pre-epidemic levels, with the total volume gradually stabilizing at 4.5 million About vehicles/year. Hailiwei said that the downstream customers of the company’s automotive seal products are mainly concentrated in the commercial vehicle power system industry. If the country’s investment in infrastructure slows down or the elimination and restriction policies of backward models are delayed in the future, it may lead to growth in the new commercial vehicle market. This will in turn affect the demand for power system seals from engine OEMs, which will have a negative impact on the company’s production and operations.