A-share subscription | Automotive fuel system "Little Giant" Shi Chang Group (920022.BJ) starts subscription. Its main customers are domestic mainstream vehicle manufacturing enterprises.

On September 9th, Shichang Group (920022.BJ) started its IPO with an issuing price of 10.9 yuan per share and a subscription limit of 745,700 shares. The price-to-earnings ratio is 10.32 times. It belongs to the North Stock Exchange, with Northeast as its sponsoring institution. According to the prospectus, Shichang Group's main business is the research, development, production, and sales of automotive fuel systems, with the main product being automotive plastic fuel tank assemblies. In 2021, it was recognized by the Ministry of Industry and Information Technology as one of the third batch of specialized, specialized, and new "small giant" enterprises. The company mainly sells to complete vehicle manufacturing enterprises, and its main products are characterized by lightweight, low emissions, antistatic, low noise, and high safety features. Its main customers include GEELY AUTO, Chery Automobile, China FAW, Chongqing Changan Automobile, and other mainstream domestic complete vehicle manufacturing enterprises. The automotive plastic fuel tank assemblies produced by Shichang Group can be divided into two categories: atmospheric pressure and high pressure. The former is used in traditional fuel vehicles, while the latter is used in plug-in hybrid electric vehicles (including extended-range) in the new energy vehicle field. In the traditional fuel vehicle field, traditional fuel vehicles account for about 60% of China's total vehicle sales, making them the main source of demand for fuel tanks. From 2022 to 2024, China's sales of traditional fuel vehicles are expected to reach 199.774 million, 205.988 million, and 185.71 million vehicles respectively, indicating a sufficient market size. By 2024, with the increase in sales and market share of new energy vehicles, the sales of traditional fuel vehicles may decrease, but the absolute scale will still remain high. Financially, in 2022, 2023, and 2024, the company's operating income is expected to be approximately 282 million, 406 million, and 515 million yuan respectively. During the same period, the net profit is expected to be approximately 17.7779 million, 51.9843 million, and 69.493 million yuan respectively. Shichang Group warned in the prospectus about the risks associated with low net cash flow from operating activities. During the reporting period, the net cash flow from operating activities was -32.5273 million, -37.2454 million, and 48.7481 million respectively. In 2022 and 2023, they were negative. After excluding the impact of discounted bills, the net cash flow from operating activities was 19.759 million, 17.6966 million, and 84.2992 million respectively. During the reporting period, the company's operating income significantly increased, mainly through debt financing and using its own funds to meet development needs. If in the future, the net cash flow from operating activities remains low after excluding the impact of discounted bills, and the company is unable to raise and use funds in a reasonable manner through equity financing, debt financing, etc., the company may face the risk of insufficient working capital or even a cash flow crisis, which could have an adverse impact on the company's production and operation. Additionally, at the end of each reporting period, the company's asset-liability ratio was 69.71%, 62.87%, and 50.31% respectively, indicating a relatively high level. The main reason is that the company's accumulation is limited, and in recent years, the funding needs for business development have been mainly met through debt financing, leading to a high level of debt. If the company is unable to effectively manage funds or expand financing channels in the future, it may face certain risks related to debt repayment and liquidity, even leading to the risk of forced execution of assets and a cash flow crisis.