Huawei\Xiaomi supplier Zijian Electronics IPO accepted, plans to raise 488 million yuan

The Shenzhen Stock Exchange has officially accepted the GEM IPO application of Chongqing Zijian Electronics Co., Ltd. (referred to as "Zijian Electronics").

It is understood that Zijian Electronics is a national high-tech enterprise engaged in the research and development, design, production and sales of consumer rechargeable lithium-ion battery products. Its product capacity is mainly below 1,000mAh, and its main application areas are various small consumer electronic products, including Bluetooth headsets, smart wearable devices (smart watches, bracelets, VR/AR glasses, etc.), smart speakers, portable medical devices, vehicle recorders, etc.

The main business is growing year by year, with high customer concentration

In terms of profitability, during the reporting period, Zijian Electronics' operating income continued to grow. In 2017, 2018 and 2019, Zijian Electronics' operating income was RMB 142.9896 million, RMB 235.8723 million and RMB 421.4259 million respectively, and its net profit was RMB 13.8001 million, RMB 40.3207 million and RMB 63.7654 million respectively. Zijian Electronics' current profitability is good.

In terms of products, according to the product appearance, Zijian Electronics' lithium-ion batteries can be divided into square batteries, button batteries, cylindrical batteries, pin-type batteries and other product series. Among them, square batteries, cylindrical batteries, and pin-type batteries use the winding process, and button batteries are divided into hard shell button batteries and soft package button batteries. Hard shell button batteries use the lamination process, and soft package button batteries use the winding process.

In terms of customer development, Zijian Electronics products are widely used in terminal products of well-known brands in the fields of communications, audio, Internet, smart wearables, etc., including Huawei, Xiaomi, OPPO, vivo, FITBIT, Harman (JBL, AKG, etc.), B&O, Sennheiser, Jabra, Plantronics, Sony, LG, Panasonic, Pioneer, Audio-Technica, Marshall, 3M, Anker, Google, Amazon, NetEase and other world-class and well-known brands, establishing a good brand image of "VDL (Zijian Electronics)".

According to the prospectus, in 2017, 2018, 2019 and January-March 2020, the company's revenue from its top five customers accounted for 36.97%, 41.18%, 57.66% and 45.48% of its current operating income, respectively, and its customer concentration is relatively high.

During the reporting period, Zijian Electronics was mainly engaged in the research and development, production and sales of consumer rechargeable lithium battery products. Zijian Electronics' main business revenue was RMB 142.4857 million, RMB 231.4523 million, RMB 417.7356 million and RMB 70.8793 million, respectively, which came from the sales revenue of various types of lithium batteries. The scale of its main business continued to expand.

Bluetooth headsets are currently the largest downstream application area for Zijian Electronics products. In recent years, emerging consumer electronic products have gradually emerged, providing new growth momentum for the consumer lithium battery industry. At present, the mainstream emerging consumer electronic products include Bluetooth headsets, wearable devices, smart speakers, etc. Zijian Electronics' lithium batteries are widely used in many consumer electronic product fields such as Bluetooth headsets, smart bracelets, sports bracelets, Bluetooth speakers, etc. The downstream industry has a large market capacity and a fast development speed. Benefiting from the continuous development of the downstream market, Zijian Electronics' lithium battery product sales revenue continues to grow.

Raised 488 million yuan to expand production of consumer batteries

Zijian Electronics plans to issue no more than 17,700,800 ordinary shares in RMB to the public, raising RMB 488 million, all of which will be used for projects related to Zijian Electronics' main business and to supplement working capital.

The "Consumer Lithium-ion Battery Expansion Project" invested with the funds raised this time is to expand the production of Zijian Electronics' hard-shell button batteries, soft-pack button batteries, square batteries and other products. It is planned to invest 317.8598 million yuan in the construction of the "Consumer Lithium-ion Battery Expansion Project".

After the completion of this project, the product capacity will be greatly increased, the product process will be further optimized, and the process capacity and automation level of consumer lithium-ion battery products will be improved to meet the rapidly growing market demand and business expansion needs. At the same time, the project will help Zijian Electronics to expand its main business horizontally by significantly increasing the production capacity of button batteries, further enriching the product structure, and expanding the product application field.

In the "Zijian R&D Center Construction Project" invested by the raised funds, Zijian Electronics will conduct research and development on topics such as "4.4V high energy density silicon-based system development", "high rate electrolyte development", and "solid-state battery development". After successful research and development, the new technology will be applied to products to ensure that Zijian Electronics maintains technological leadership and technological innovation. The construction of the project will help Zijian Electronics further increase its reserves of new technologies and lay a solid foundation for the long-term and sustainable development of Zijian Electronics' business.

Regarding future plans, Zijian Electronics stated that it will continue to use "truth-seeking and pragmatic, producing high-quality products; honoring promises, satisfying customers; continuous innovation, setting an industry example" as its action guide, continue to deepen its existing main business, keep pace with the development of global advanced lithium-ion battery technology, continuously improve the level of automation and intelligent manufacturing, build a world-class consumer lithium-ion battery industry innovation center and production base, continuously provide the market with globally competitive lithium-ion battery products, and strive to become an internationally leading green new energy supplier.