With a debt ratio of over 60%, Juneng shares enters the Beijing Stock Exchange-EEWORLD

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Written by | Duoyu

On September 29, 2022, the shares of Ningxia Juneng Robot Co., Ltd. (hereinafter referred to as "Juneng Shares") were suspended from trading on the National Equities Exchange and Quotations; on September 30, Juneng Shares received the "Acceptance Notice" issued by the Beijing Stock Exchange, formally accepting its application for public issuance of shares to unspecified qualified investors and listing.

Juneng shares plans to raise 211 million yuan this time, mainly for the construction of industrial robot and intelligent equipment R&D and production base projects and to supplement working capital.

Served over 300 customers and successfully delivered 1,500 automated production lines

According to the prospectus, Juneng Co., Ltd. was established in 2008 and is a supplier of intelligent manufacturing overall solutions with robots and related intelligent technologies as its core, focusing on CNC machine tool manipulators, truss manipulators and digital factory solutions. Its main products include robot automated production lines, automated auxiliary units, etc.

Among them, the robot automated production line is the core part of the overall intelligent manufacturing solution. Juneng Co., Ltd. has achieved the goal of replacing manual work to complete the position transfer, visual inspection, machine tool service, depalletizing, grinding, deburring and other tasks of various parts and components through the comprehensive use of functional equipment such as the design of various truss robots, secondary development of articulated robots, gripper units, 2D or 3D vision equipment, thereby improving the efficiency and quality of parts processing.

Today, Juneng’s products have been widely used in the manufacturing of automotive parts, construction machinery, aerospace, military industry, rail transit, elevators and other general machinery. Its customers include Shaanxi Hande Axle, Shaanxi Fast Group, BYD, Dongfeng Honda, GAC, FAW, Guangdong Hongtu, Wencan Holdings, Longi Machinery, Precision Forging Technology, Kehua Holdings, Tianrun Industrial, WeiFu Hi-Tech, Hunan Electric Power Co., Ltd. and many other industry benchmark companies and listed companies.

As of the end of June 2022, Juneng Co., Ltd. has served more than 300 customers and successfully delivered more than 1,500 automated production lines.

Small revenue scale, huge difference from comparable companies

Gaogong Robotics found that Juneng Co., Ltd. successfully landed on the NEEQ market as early as May 2017. In mid-April this year, it was successfully selected into the list of companies listed on the NEEQ Innovation Layer in 2022. Subsequently, Juneng Co., Ltd. began to file for listing guidance on the Beijing Stock Exchange, and submitted guidance filing application materials to the Ningxia Regulatory Bureau of the China Securities Regulatory Commission on April 21. The guidance agency was Kaiyuan Securities.

According to the prospectus, during the reporting period, Juneng’s operating income was 138 million yuan, 152 million yuan, 209 million yuan and 141 million yuan, respectively. In 2020-2021, its operating income increased by 10.50% and 37.42% year-on-year, respectively, showing a steady growth trend.

However, in terms of revenue scale, there is a huge gap between the total operating revenue of Juneng Co., Ltd. and the scale of domestic comparable companies disclosed in the prospectus, such as Xianhui Technology, Ruisong Technology, Xinbang Intelligent, Jiangsu Beiren, Kelai Mechanical and Electrical, and Keda Intelligent. Both the total revenue and comparable product revenue are below the average of comparable companies.

Taking the 2021 revenue as an example, the average total revenue and comparable product revenue of comparable companies were 1.1 billion yuan and 610 million yuan respectively, while that of Juneng Power Co., Ltd. were 205 million yuan and 188 million yuan respectively, with a huge difference in revenue scale.

Note : Screenshot Source: Ju Neng Shares Prospectus ( Draft )

Not only the performance, but also in terms of the proportion of R&D investment to operating income, Juneng shares are slightly lower than the average level of comparable companies. Taking 2022H1, 2021, 2020 and 2019 as examples, the average figures of comparable companies in each stage were 9.04%, 6.43%, 5.79% and 6.68% respectively; while the R&D expenses of Juneng shares in each stage were RMB 7.9628 million, RMB 7.3865 million, RMB 10.1762 million and RMB 4.6256 million respectively, accounting for 5.78%, 4.85%, 4.86% and 3.27% of operating income respectively.

From this, it is not difficult to find that the proportion of R&D investment in each stage of Juneng Co., Ltd. is lower than the average of comparable companies.

Gross profit margin decreased and debt ratio reached 63.17%

According to the prospectus, during the reporting period, the asset-liability ratio of Juneng Co., Ltd. was 79.58%, 76.71%, 73.03% and 63.17% respectively. Although there is a trend of narrowing year by year, overall, the debt ratio is still at a relatively high level, and compared with comparable companies, Juneng Co., Ltd.'s debt-paying ability indicators are weaker than the average of comparable companies.

If Juneng’s operating performance fails to meet expectations or even declines in the future, resulting in a decrease in operating cash inflows, or it becomes difficult to raise debt repayment funds through external financing, it will put certain pressure on its capital chain.

Note : Screenshot Source: Ju Neng Shares Prospectus ( Draft )

In this regard, Juneng Shares explained that the main reasons are: ① Compared with comparable listed companies, the company has fewer financing channels. Since its establishment, the company has had relatively little external equity financing and mainly financed through bank loans; ② The company is in a rapid development stage. During the reporting period, the company's business scale has expanded year by year, and accounts payable, advances received (including contractual liabilities) and other current liabilities have grown rapidly, resulting in the company's relatively high liabilities.

Note : Screenshot Source: Ju Neng Shares Prospectus ( Draft )

In terms of profits, although Juneng shares achieved different degrees of increase, the amount of government subsidies accounted for a high proportion of its total profits. If it cannot continue to obtain government subsidies in the future, or if there are adverse changes in government subsidy policies, it will have a certain adverse impact on its operating performance.

In terms of gross profit margin, during the reporting period, the gross profit of Juneng's main business was RMB 52.5441 million, RMB 55.2358 million, RMB 81.5434 million and RMB 39.5458 million, respectively, while the gross profit margin of the main business was 38.26%, 36.69%, 39.86% and 28.37%, respectively. Among all types of products, the revenue from robot automation production line products accounted for more than 90%, which had a significant impact on the changes in its main business gross profit margin.

Among them, in the first half of 2022, the gross profit margin of Juneng's robot automation production line was 27.59%, a decrease of 13.12% compared with 2021. In this regard, Juneng said that it was mainly because the revenue from Dayang Materials accounted for a high proportion among the top five customers, but the gross profit margin was lower than the company's average level.

The robot itself relies on foreign brands

In addition, Juneng Co., Ltd. has a tendency to rely too much on foreign-funded robot bodies in terms of production line delivery, which can be seen from the purchasing situation of its top five suppliers.

Taking 2022H1 and 2021 as examples, the annual procurement amount of the top five suppliers in 2022H1 accounted for 37.09%, of which FANUC accounted for a total of 15.19%; in 2021, the annual procurement amount of the top five suppliers accounted for 33.95%, of which FANUC + KUKA accounted for a total of 20.01%.

The fact that Juneng's production line delivery is extremely limited by foreign-funded robot bodies has also planted a time bomb for its development. If international trade frictions intensify or the COVID-19 pandemic recurs, Juneng's purchase of foreign-funded robot bodies will be restricted, and may even directly lead to problems such as shortages of related parts, price fluctuations, and reduced product performance.

Note: The screenshot is from Juneng Shares' prospectus (submission draft)

From the table, Gaogong Robot found that in the first half of this year, Kuka had withdrawn from the list of top five suppliers of Juneng Co., Ltd.; at the same time, the purchase volume of Fanuc Robotics has also decreased significantly compared with 2021.

An industry insider speculated: "The reason why Juneng didn't buy the Kuka robot this year is probably because it was out of stock. Another possibility is that Kuka had major internal changes and it was directly abandoned."

But no matter what, on the whole, there are still many uncertainties in the listing of Juneng Shares on the Beijing Stock Exchange.