CITIC Construction Investment And CITIC Securities "Compete For Food" Xi'An Kaili IPO Customer Concentration And Raw Material Scarcity Become Hidden Dangers

On July 17, Xi'an Kaili Securities Co., Ltd. (hereinafter referred to as CITIC Capital Securities Co., Ltd.) has entered the IPO inquiry stage.

Founded in 2002, Xi'an Kaili is one of the early pioneers in the domestic precious metal catalyst industry. Relying on technological innovation, it has developed from a small company with seven people to a science and technology innovation enterprise with a registered capital of 80 million yuan and a staff of 170 people. The company is mainly engaged in the R & D and production of precious metal catalysts, the research and development of catalytic application technology, the recovery and reprocessing of waste precious metal catalysts. As a leading supplier of precious metal catalysts in the field of fine chemical industry in China, the company has developed a variety of precious metal catalyst products to achieve import substitution.

In December 2015, Xi'an Kaili was listed and publicly transferred in the national stock transfer system. On June 19, this year, its application for listing on the science and technology innovation board was accepted by the Shanghai Stock Exchange.

CITIC Kaili lost its IPO in Xi'an

In the past year, under the promotion of policy reform, the IPO market is booming again, followed by more intense project competition among major investment bank sponsors.

As a new "king of investment banking" rising in the past two years, the share of the IPO market between CSCI and the old "king of securities dealers" CITIC Securities has become an open secret.

This time, in Xi'an Kaili IPO, which is not a large project, some details also positively reflect the fierce competitive relationship between CITIC Securities and CITIC construction investment, a pair of new and old investment bank kings.

In fact, at the beginning of Xi'an Kaili's IPO preparation in November 2018, the proposed intermediary broker was not CSCI, but CITIC Securities.

On February 26, 2020, Xi'an Kaili suddenly announced that the company and CITIC Securities signed the "guidance agreement on IPO and A-share listing between Xi'an Kaili New Material Co., Ltd. and CITIC Securities Co., Ltd. on November 27, 2018, and submitted the initial public offering to Shaanxi regulatory bureau of China Securities Regulatory Commission (hereinafter referred to as" Shaanxi securities regulatory bureau ") The development bank's stock listing guidance and registration materials were accepted.

Xi'an Kaili said that in view of the company's strategic development needs, after friendly consultation with CITIC Securities, they agreed to terminate the guidance on IPO and listing of the company. Both sides signed the termination agreement on February 24, 2020 and filed it with Shaanxi securities regulatory bureau. CITIC Securities will no longer serve as the company's listing guidance agency.

Then on March 31, Xi'an Kaili announced that the company intends to issue shares to the public for the first time and go public. On March 30, 2020, the company submitted the registration materials for guidance to Shaanxi securities regulatory bureau and was accepted. The tutoring agency was CSCI.

Xi'an Kaili held the fourth extraordinary general meeting of shareholders in 2020 on June 10, 2020, which deliberated and passed the proposal of listing on the science and technology innovation board.

Precious metal resources are scarce

In this IPO, Xi'an Kaili plans to issue no more than 23.36 million shares and raise 650 million yuan for advanced catalytic materials and technology innovation center and industrialization construction project, and rare and precious metal catalytic material production and reuse industrialization project, and supplement working capital.

It is understood that precious metals are scarce resources in the world, and most of China's major precious metals rely on imports. In 2018, the total supply of PGMS in China was 215.8 tons. Among them, the net import volume reached 175 tons, an increase of 18.3% compared with the same period in 2017.

The recent spread of global epidemic, the rise of anti globalization and the rise of trade protectionism have had a great impact on the global catalyst industry.

Xi'an Kaili said that the main raw materials of precious metal catalysts are platinum, palladium and other precious metal raw materials. China is an extremely scarce country in terms of platinum group metal resources. Its price is affected by the global and downstream industry business cycle, and its price changes rapidly and fluctuates greatly. Moreover, the price of platinum group metals is expensive, which usually accounts for more than 90% of the production cost of products. Therefore, the fluctuation of precious metal prices has an impact on enterprise costs Loud.

"China is a big country in manufacturing, automobile and chemical industry. We need a large amount of precious metals. We can support daily production by relying on imports and our own production. However, with the epidemic situation and the increasing use of precious metal products, from the perspective of long-term development and increasing demand, the rising trend of precious metal prices is expected to continue. In recent years, the prices of palladium and rhodium are expected to continue The increase is larger, which brings greater cost pressure to downstream application enterprises. In the future, due to the influence of international politics and other factors, the shortage of domestic precious metal supply will have a greater impact on the production and operation of the company. " Xi'an Kaili said in reply to the 21st century report.

The company's downstream customers are more concentrated in the pharmaceutical field. According to the prospectus, the company's existing products are mainly applied in the field of fine chemicals, among which the pharmaceutical raw materials and intermediates are important markets, and the main downstream customers are mostly in the pharmaceutical industry. In 2017, 2018 and 2019, the revenue from pharmaceutical customers accounted for 72.24%, 63.52% and 70.82% of the main business income of each period, respectively. The top five customers of the company also concentrated in this field.

Xi'an Kaili said that with the implementation of domestic "4 + 7" bulk purchase, drug related review and consistency evaluation policies, the concentration degree of pharmaceutical enterprises is expected to be further improved. If the company loses major customers due to product quality, industry competition and other factors, or the replacement of new catalysts in the pharmaceutical industry, it will have adverse effects on the company's business development.