Start a business with 100,000 yuan! Another cross-border company is going for IPO

For companies that have grown to a certain scale, going public is often an important way to accelerate the capitalization process and enhance market competitiveness.

Rongpeng shares sprint IPO

Not long ago, the IPO review status of Rongpeng Co., Ltd. (Zhejiang Rongpeng Pneumatic Tools Co., Ltd.) was updated to "inquiry completed", which marks another step towards its goal of listing on the Beijing Stock Exchange.

In this IPO, Rongpeng plans to raise about 202 million yuan, which will be mainly used for three key projects: an annual production of 60,000 intelligent spraying machines, a pneumatic tool digital intelligent factory upgrade and transformation project, and a research and development center construction project. Through the implementation of these projects, Rongpeng hopes to significantly improve its intelligence level, production efficiency and technological innovation capabilities, thereby further consolidating its market position in the field of pneumatic tools and enhancing its market competitiveness.

Looking back on the listing process of Rongpeng Co., Ltd. , we have to start from 2023.

In fact, on September 7, 2023, Rongpeng Co., Ltd. was listed on the New Third Board with the stock code 874187, and the recommended listing broker was Guotai Junan . After listing, the company not only further improved its governance structure, but also effectively supplemented its working capital through equity financing.

On November 28, 2023, Rongpeng Co., Ltd. and Guotai Junan Securities signed a stock issuance and listing guidance agreement.

Just two days later, on November 30, the company submitted the Beijing Stock Exchange listing guidance registration materials to the Zhejiang Securities Regulatory Bureau.

On December 11, 2023, the Zhejiang Securities Regulatory Bureau officially accepted Rongpeng Co., Ltd.'s listing guidance filing materials and agreed to the filing. From then on, Rongpeng Co., Ltd. officially entered the guidance period.

On December 26, 2024, Rongpeng Co., Ltd. received the "Acceptance Notice" issued by the Beijing Stock Exchange, which formally accepted the company's application for public issuance of shares to unspecified qualified investors and listing.

Now, the IPO review status of Rongpeng Co., Ltd. has been updated to "inquiry completed", which brings it one step closer to officially listing on the Beijing Stock Exchange.

The predecessor of Rongpeng Co., Ltd. can be traced back to Rongpeng Pneumatic Tools Factory, which was established in June 1998. It was co-founded by brothers Li Xiaorong and Li Xiaopeng with an initial registered capital of only 100,000 yuan.

In August 2000, Rongpeng Pneumatic Tools Factory was renamed Rongpeng Co., Ltd., and the registered capital was increased to 580,000 yuan. After the capital increase, Rongpeng Co., Ltd. was still held by Li Xiaorong and Li Xiaopeng, each holding 50% of the shares, forming a stable equity structure.

Since its establishment, Rongpeng Co., Ltd. has always focused on the research and development, production and sales of pneumatic tools. The company's product line covers pneumatic nail guns, pneumatic spray guns, pneumatic air guns, sprayers and other fields, which are widely used in automobile manufacturing, electronic appliances, metal processing and other industries. With excellent product quality and technological innovation, Rongpeng Co., Ltd. has maintained a leading position in the market segment for many years, especially in the field of intelligent manufacturing of automotive parts, with a market share of more than 30%.

In the early days of its establishment, Rongpeng Co., Ltd. focused on the research and development and production of pneumatic tools, and gradually accumulated a good reputation in the domestic and foreign markets. With the continuous expansion of its business and in-depth exploration of the market, Rongpeng Co., Ltd. began to seek cooperation with internationally renowned tool brands. Through the ODM model, the company has provided customized products for internationally renowned brands such as Stanley Black & Decker, TTI, and Harbor Freight Tools.

This cooperation model helped Rongpeng Co., Ltd. to successfully join hands with internationally renowned tool brands. It not only quickly opened the door to the international market, but also gained a steady stream of stable orders, bringing a continuous flow of income to the company and gaining a firm foothold in the international market.

In addition to the ODM business, Rongpeng is also committed to building its own brand "Aeropro" and directly targeting global consumers through cross-border e-commerce platforms such as Amazon and Alibaba. This strategy enables the company to more accurately grasp market demand and enhance brand influence and product added value. With high-quality products and innovative marketing strategies, Rongpeng's own brand has achieved remarkable results in major markets such as Europe and the United States, further consolidating its competitive position in the international market.

Today, Rongpeng's products have been exported to more than 100 countries and regions around the world, covering major markets such as Europe, America, and Asia. Especially on e-commerce platforms such as Amazon, the "Aeropro" brand has become an important growth pole for Rongpeng in the overseas market with its outstanding market performance.

Rongpeng shares can achieve rapid development in overseas markets thanks to the company's consistent priority of technological innovation and continued increase in R&D investment. In order to better absorb international advanced technology and talents, Rongpeng shares set up a R&D center in Germany. As an industrial power, Germany has abundant high-end talent resources and advanced technical concepts. Rongpeng shares' German R&D center has attracted many outstanding local talents to join, continuously improving the technical level of products and helping the company launch more competitive innovative products.

In terms of market expansion, Rongpeng Co., Ltd. abandoned the traditional single market strategy and adopted a flexible and diverse differentiated market expansion strategy. In view of the high requirements of the European market for product precision and technical content, the company focused on promoting high-precision industrial robots to meet the needs of the European manufacturing industry for high-end equipment; in the North American market, Rongpeng Co., Ltd. mainly promotes flexible manufacturing systems based on the development trend of the local manufacturing industry and market demand to help companies achieve more efficient and flexible production; in the Southeast Asian market, considering the local market's sensitivity to product prices, Rongpeng Co., Ltd. focuses on launching cost-effective standardized products and quickly opens the door to the Southeast Asian market. This market strategy that adapts to local conditions enables Rongpeng Co., Ltd.'s products to quickly adapt to the needs of different markets, effectively improves market penetration, and allows Rongpeng Co., Ltd. to stand out in the international market.

Rongpeng shares still faces multiple risk factors in its IPO

However, Rongpeng Co., Ltd. still faces multiple risk factors.

The first is the company's declining performance and financial pressure.

From 2021 to 2023 and the first half of 2024, Rongpeng's operating income was 553 million yuan, 487 million yuan, 428 million yuan and 221 million yuan, respectively, showing a downward trend year by year. At the same time, the company made three high dividends in the three and a half years from 2021 to the signing date of the prospectus, with a cumulative dividend amount of up to 60 million yuan. As of the end of June 2024, the company's cash and cash equivalents on its account were only 7.0373 million yuan, while short-term loans reached 11.1067 million yuan. There was an obvious funding gap, and the cash on hand could not cover short-term debts.

Secondly, Rongpeng Co., Ltd. also faces risks and challenges brought about by fluctuations in gross profit margin.

During the reporting period, although the gross profit margin of Rongpeng's main business showed a fluctuating upward trend, an in-depth analysis of the driving factors behind it shows that this upward trend is not due to the substantial enhancement of the company's core competitiveness, but more due to external factors such as the optimization and adjustment of product structure, the phased changes in the US dollar exchange rate and the decline in raw material costs. Since these factors supporting the increase in gross profit margin are not fully controlled by the company itself, once the market environment changes, the company's gross profit margin will inevitably face the risk of decline. As a key indicator to measure the company's profitability, the fluctuation of gross profit margin will directly affect the company's profitability, thereby weakening the company's competitiveness in the market.

In addition, talent shortage is also a major challenge facing Rongpeng Co., Ltd.

According to the prospectus, as of June 30, 2024, Rongpeng has 910 employees, of which only 4.29% have a bachelor's degree or above, and 83.74% have a technical secondary school degree or below. Such a talent structure may limit the company's ability in technological innovation, product upgrades, and intelligent transformation.

Moreover, with the increasingly fierce competition in the pneumatic tool market, Rongpeng shares are facing huge competitive pressure from domestic and foreign peers. If the company fails to continuously improve the competitiveness of its products, it is likely to further lead to a decline in market share.

In general, Rongpeng 's journey to IPO on the Beijing Stock Exchange is full of challenges and uncertainties. The above multiple risk factors have added many obstacles to the company's IPO journey.

In the face of these challenges and risks, Rongpeng needs to actively respond to market challenges, strengthen internal management, and improve compliance. At the same time, the company should also increase investment in research and development and talent introduction to enhance the company's core competitiveness and innovation capabilities. By continuously optimizing product structure, improving production efficiency, strengthening brand building and other measures, the company can achieve the goal of successful listing and sustainable and healthy development in the capital market.

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