Another cross-border company's listing was suspended! It once sold 10 billion yuan worth of goods a year

In the capital market, a company’s road to listing is often accompanied by countless twists and turns and tests.

Recently, there was news from the cross-border e-commerce capital market that another cross-border company’s listing was suspended.

Tongli Technology's IPO suspended

Tongli Technology, which is striving for an IPO on the Shenzhen Stock Exchange's main board, is shown as "suspended" in the Shenzhen Stock Exchange's project status .

It is understood that the reason for the suspension of Tongli Technology's listing is that the financial information recorded in the application documents for issuance and listing has expired, and additional updated financial information needs to be submitted before the IPO review process can continue.

In August 2013, Tongli Technology was listed on the main board of the Hong Kong Stock Exchange with the stock code 01249.HK.

However, in 2021, Tongli Technology completed its privatization and delisted from the Hong Kong stock market.

In September 2022, Tongli Technology submitted an IPO application in the country.

On March 2, 2023, Tongli Technology's main board IPO application materials were accepted by the Shenzhen Stock Exchange.

The company expects to raise 1.015 billion yuan, which will be mainly used for upgrading the manufacturing technology of the plant, building a research and development center, expanding the production capacity of electroacoustic products and replenishing cash flow. The sponsor of this issuance is Huatai United Securities, and the auditing agency is Dahua Certified Public Accountants.

On March 30, 2023, the Shenzhen Stock Exchange issued an inquiry letter to Tongli Technology.

In May 2023, Tongli Technology responded to the relevant questions in the Shenzhen Stock Exchange's inquiry letter.

On June 30, 2023, the Shenzhen Stock Exchange issued another letter of implementation of opinions to Tongli Technology.

On July 28, 2023, Tongli Technology passed the listing committee meeting.

On November 6, 2023, Tongli Technology entered the stage of submitting registration application to the China Securities Regulatory Commission.

However, now, Tongli Technology's road to listing has temporarily come to a standstill.

According to public information, TCL Technology Co., Ltd. (hereinafter referred to as "TCL Technology") was formerly known as TCL TCL Electronics (Huizhou) Co., Ltd., which was established by TCL Holdings (BVI) Co., Ltd. with a capital of RMB 16 million in January 2000. The company is mainly engaged in the design, development, production and sales of acoustic products and smart products, and its main products include smart products such as DVDs, Bluetooth speakers and soundbars.

Tongli Technology started out as a DVD OEM. In the early stages of the company's development, Tongli Technology provided ODM services for DVD products to global brands such as Philips, Sony, Toshiba, Panasonic, and LG, and its shipments ranked first in the world at that time.

Later, with the rapid development of the electronics industry and the decline of the DVD industry, Tongli Technology began to transform into acoustic products.

After years of development, Tongli Technology has established solid cooperative relationships with many well-known international and domestic consumer electronics and Internet brand companies, and the group's various products are sold to the global market through customers.

At present, Tongli Technology has reached stable cooperative relationships with companies such as Amazon, Anker Innovations, Harman, Sony, Samsung, Jabra, OPPO, Alibaba, Google, ByteDance, and Lenovo.

In 2020, Anker Innovations ranked as Kone Technology's fifth largest customer, with its main purchased products being wearable devices, with an annual procurement amount of approximately RMB 400 million.

As a supplier to major well-known companies, Tongli Technology has great advantages in the supply chain.

KONE Technology has achieved lean and intelligent production on the supply chain side, and has established five manufacturing bases in Huizhou, Beihai and Vietnam. It has global production and manufacturing capabilities and can effectively reduce the risks of trade barriers.

According to the prospectus of Tongli Technology, the company's shipments of Bluetooth speakers, soundbars and other products currently rank first in the world.

In recent years, Tongli Technology has experienced rapid development and its performance has maintained steady growth.

In 2022, Tongli Technology's revenue exceeded 10 billion yuan, and its net profit reached 372 million yuan.

In the first three quarters of 2023, Tongli Technology achieved a revenue of approximately 6.7-7 billion yuan, and its net profit attributable to the parent reached 340-380 million yuan, almost catching up with the net profit for the whole year of 2022.

From the perspective of revenue structure, speakers are the product that contributes the most to KONE Technology's revenue, and have remained stable at more than 50% in the past three years. KONE Technology has become an important supplier to world-renowned consumer electronics brands.

Tongli Technology’s second largest product is wearable devices, and Tongli Technology’s third largest product is AIoT products.

Tongli Technology's success in product development is inseparable from its long-term investment in research and development. Tongli Technology has established research and development centers in Huizhou, Shenzhen, Xi'an, Wuhan and Malaysia, with a research and development team of more than 1,400 people, and has formed a series of core technologies in product simulation, algorithms, radio frequency, acoustics, etc.

Tongli Technology faces multiple risk factors

Although Tongli Technology's market performance is good, it still faces many risk factors in its development process.

First, Tongli Technology faces the same problem as many foundries, that is, raw materials, especially core raw materials such as chips, are too dependent on external procurement. Because the company's product patents are mainly concentrated in headphone noise reduction, processing technology, and the Internet of Things. It is understood that Tongli Technology's chips and other raw materials are mainly purchased from semiconductor companies such as MediaTek and Texas Instruments.

Secondly, the cost of raw materials accounts for more than 80% of the cost of the company's main business, which will have a significant impact on the company's operating performance. In the future, if the economic situation changes, upstream production capacity supply problems occur, or suppliers adjust their operating policies, the prices of the main raw materials purchased by the company may fluctuate significantly, which will directly affect the company's operations and profitability.

Third, Tongli Technology's debt-to-asset ratio is significantly higher than its peers. According to the prospectus information released by Tongli Technology, from 2020 to 2022, Tongli Technology's debt-to-asset ratio was 72.37%, 75.31% and 54.95% respectively. The average debt-to-asset ratio of companies in the same industry during the same period was 61.16%, 56.54% and 50.06%. Tongli Technology's debt-to-asset ratio is about 5%-15% higher than its peers on average.

Fourth, Tongli Technology's profitability is poor and its ability to resist risks is relatively weak.

The gross profit margins of Tongli Technology during the reporting period were 13.85%, 13.78% and 14.75%, which were relatively stable. However, the net profit margins during the reporting period were 4.18%, 2.92% and 3.71%, which showed a fluctuating downward trend.

The last risk factor that cannot be ignored is over-reliance on individual customers. In recent years, the top five customers of Tongli Technology include Samsung (including Harman), Sony, Flextronics, Customer A and Amazon. The sales revenue of these customers accounts for more than 70% of the company's main business revenue. Long-term over-reliance on individual customers is not conducive to the development of the company. The company's revenue is greatly affected by the operating conditions of these customers. If the payment cycle, order volume or payment ability of major customers changes, the company's cash flow will be directly affected.

For Tongli Technology, if it wants to achieve long-term development in overseas markets and successfully go public in the future, it must be vigilant about the above risk factors and at the same time pay attention to building its own competitiveness in the market.

Suspension of listing