Sales of 80 billion in 3.5 years! Backed by Xiaomi, the company successfully IPOs

In recent years, while domestic brands have been actively developing their overseas businesses , leading ODM companies have also taken the initiative to develop overseas production capacity . The company's performance has also ushered in rapid development, and they have begun to actively rush to go public in order to gain more market opportunities.

"Longqi Technology" was listed on the Shanghai Stock Exchange

On March 1, 2024, the leading ODM company "Longqi Technology" was successfully listed on the main board of the Shanghai Stock Exchange, becoming the "first stock" of the Shanghai Stock Exchange in the Year of the Dragon .

The company issued 60 million shares this time , with an issue price of 26.00 yuan per share and an opening price of 59.99 yuan per share .

Longqi Technology originally planned to raise 1.8 billion yuan, of which 800 million yuan would be used for the Huizhou smart hardware manufacturing project, 400 million yuan would be used for the renovation and expansion project of the Nanchang smart hardware manufacturing center, 200 million yuan would be used for the upgrade and construction project of the Shanghai R&D center, and 400 million yuan would be used to supplement operating capital.

On the first day of listing, Longqi Technology's stock price once rose by more than 130%, and finally closed up by 99.69%, with a closing price of 51.92 yuan per share .

At present, the top three domestic ODMs have gathered in the A-share market. In addition to Longcheer Technology, the other two leading companies are Wingtech Technology , which went public through a backdoor listing in 2016, and Huaqin Technology , which landed on the main board of the Shanghai Stock Exchange in August last year .

The road for companies to go public through IPO is a daunting one, and the same is true for Longqi Technology.

In 2015 and 2017, Longqi Technology submitted prospectuses twice to the Shenzhen Stock Exchange and applied for an IPO on the Growth Enterprise Market , but both attempts ended in failure.

The reason for the two failed IPO attempts was that although the company's revenue continued to grow, its net profit had been declining, the company's business revenue showed seasonal fluctuations, and the company's customer concentration was very high. If there were changes in major customers, it might directly affect the company's performance.

The IPO encountered obstacles but Longqi Technology did not give up. Instead, it chose to change the application board to the Shanghai Stock Exchange Main Board and make a fresh start.

On June 12, 2023 , Longqi Technology's IPO was resumed.

On July 21, 2023 , Longqi Technology updated the review status of its listing application on the Shanghai Stock Exchange, and the company has responded to the review inquiry letter.

On August 11, 2023 , Longqi Technology updated the review status of its listing application on the Shanghai Stock Exchange, and the company has responded to the second round of review inquiry letters .

On August 23, 2023 , the Shanghai Stock Exchange Listing Committee announced that Longqi Technology’s initial public offering was approved.

On December 28, 2023 , the China Securities Regulatory Commission approved Longqi Technology’s IPO registration on the Shanghai Stock Exchange’s main board.

On January 31, 2024, Longqi Technology disclosed the initial public offering arrangements and preliminary inquiry announcement.

On February 21, 2024, Longqi Technology began online subscription.

On February 29, 2024, Longqi Technology disclosed the listing announcement for its initial public offering .

On March 1, 2024 , Longqi Technology was listed on the main board of the Shanghai Stock Exchange .

However, it should be noted that this is not the first time Longqi Technology has gone public.

In May 2005, Longcheer Technology was listed on the Main Board of the Singapore Stock Exchange, but eventually chose to delist in December 2020.

Longcheer Technology was founded in Shanghai in 2004. The company belongs to the smart product ODM industry and is mainly engaged in the research and development, design, production and manufacturing, and comprehensive services of smart products . After years of development, the company has formed a smart product layout covering smartphones, tablets and AIoT products.

Since 2015, Longcheer Technology has begun to develop AIoT fields such as smart watches and VR/AR devices .

In this year, Longqi Technology began to develop VR products .

In 2017, Longcheer Technology delivered its first VR product to iQiyi . In the same year, it also established cooperation with another company , providing it with VR product ODM services, successfully entering the world's leading brand of VR equipment, and its cumulative product shipments exceeded 1 million units .

In 2018, Longcheer Technology established the third business unit to carry out smart watch research and development and customer service , and then successively developed children's watches, Redmi Watch, Xiaomi Watch S1 and other products for Xiaomi and other companies.

In 2019, Longcheer Technology and Luxottica cooperated to develop electronic glasses and explored the product route of "smart glasses + fashion brand". The shipment volume of smart glasses products jointly produced by the two parties exceeded 700,000 units.

Longcheer Technology is a leader in the smartphone ODM/IDH field . According to Counterpoint data, in 2022 , Longcheer Technology's smartphone shipments reached 138 million units, accounting for 28% of global smartphone ODM/IDH shipments, ranking first in the world.

At present, the company's business has covered many countries and regions around the world, providing professional smart product comprehensive services to many of the world's leading consumer electronics brands and technology companies . Its main customers include Xiaomi, Samsung Electronics, Lenovo, Honor, OPPO, vivo, China Post Telecom, China Unicom, China Mobile , etc.

It is worth noting that Xiaomi and its affiliates are Longcheer Technology’s largest customers .

Since 2013, Longcheer Technology has reached a business cooperation with Xiaomi .

In 2015, Xiaomi held 9.13% and 8.18% of Longqi Technology shares respectively through capital increase through Tianjin Jinmi and Suzhou Shunwei , with a total shareholding of 17.31%, becoming the company 's second largest shareholder.

Therefore, the related transactions between Longqi Technology and Xiaomi have always been the focus of outside attention.

According to the information in the prospectus, since 2020, the cooperation model between Longqi Technology and Xiaomi has gradually shifted from IDH to ODM , which has also made Xiaomi and its affiliates the largest customers of Longqi Technology .

From 2020 to 2022 and the first half of 2023, Longqi Technology's sales to its top five customers, including Xiaomi, were RMB 15.379 billion, RMB 21.988 billion, RMB 25.697 billion, and RMB 7.907 billion, respectively, accounting for a considerable proportion of total revenue, at 93.65%, 89.40%, 87.57%, and 73.21%, respectively.

During this period, the amount of related sales with Xiaomi was 6.891 billion, 14.183 billion, 13.357 billion, and 4.086 billion, respectively, accounting for 41.96%, 57.66%, 45.52%, and 37.83% of revenue , respectively . The proportion in the first half of 2023 decreased slightly compared with other periods.

Although performance has grown steadily, Longqi Technology still faces challenges!

From 2020 to 2022 and the first half of 2023, Longcheer Technology 's revenue and net profit also maintained a steady growth trend. During this period, the company achieved revenue of 16.42 billion yuan, 24.595 billion yuan, 29.343 billion yuan and 10.800 billion yuan respectively , and the cumulative revenue in three and a half years exceeded 80 billion yuan.

During the same period, the company's net profit was RMB 299 million, RMB 548 million, RMB 561 million and RMB 334 million respectively .

Longcheer Technology expects to achieve a net profit of 602 million yuan to 627 million yuan for the full year of 2023, an increase of 7.40% - 11.86% compared to 2022 .

However, it should be noted that Longqi Technology 's profitability still has a certain gap compared with the other two leading companies , Wingtech Technology and Huaqin Technology .

In the first half of 2023, the revenues of Wingtech Technology and Huaqin Technology were 29.206 billion yuan and 39.698 billion yuan respectively , about 2.7 times and 3.6 times that of Longqi Technology; their net profits were 1.258 billion yuan and 1.282 billion yuan respectively, 3.7 times and 3.8 times that of Longqi Technology respectively .

On the other hand, it should be noted that Longqi Technology 's debt-to-asset ratio is also quite high.

From 2020 to 2022 and the first half of 2023, Longqi Technology's debt-to-asset ratio was 87.17%, 88.45%, 80.2% and 81.2% respectively.

In general, Longqi Technology faces many opportunities and challenges after its successful listing. To remain invincible in the overseas market, it needs to continuously innovate technology, adapt to the market, and resolve many risks in the future.

IPO

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