A new energy vehicle parts company in Suzhou failed to go public with an annual revenue of over 4 billion yuan | Specialized and Sophisticated Express

Author | Zhou Qinbing

Editor | Peng Xiaoqiu

Recently, the Shenzhen Stock Exchange has terminated the IPO application of Suzhou Lilai Industrial Intelligent Manufacturing Co., Ltd. (referred to as "Lilai Zhizao"), which means that Lilai Zhizao's listing attempt has failed.

Lilai Zhizao was established on May 24, 2004. From 2021 to 2023, the company's revenue was 3.07 billion yuan, 3.781 billion yuan, and 4.486 billion yuan respectively, with an average annual compound growth rate of 20.88%; the net profit after deduction of non-recurring gains and losses was 71 million yuan, 112 million yuan, and 146 million yuan respectively, with an average annual compound growth rate of 39.88%. The output of the company's main products exceeds 300,000 tons, it has more than 30 shearing production lines and more than 40 stamping production lines, and has more than 1,500 employees.

It is mainly engaged in the research and development, production and sales of automotive and home appliance parts. The main products include aluminum and steel sheared parts for automobiles and home appliances, as well as stamping parts such as body parts, chassis parts, seat frames and TV back panels. It is one of the enterprises in the industry that simultaneously possesses integrated processes such as material shearing, mold manufacturing, stamping, welding, assembly, and surface treatment.

In recent years, the proportion of automotive parts product sales revenue in the main business income has been increasing year by year, from 51% in 2021 to 77% in 2023; while the sales revenue of home appliance products has decreased from 40% to 20%.

Specifically, the aluminum sheared parts for automotive body is the company's key product, accounting for 60% of the company's total revenue; the body panel sheared parts can be used to form the external body panels of the vehicle, such as the outer panels of doors, engine covers, trunk lids, etc.; the roof sheared parts can provide structural support and coverage for the vehicle roof; the frame component sheared parts, as a part of the vehicle frame, are used to connect and support various parts of the vehicle body; the anti-collision beam sheared parts play a role in absorbing and dispersing the impact force when the vehicle collides, enhancing the safety performance of the vehicle. In the production of luxury vehicle models, a large number of aluminum alloy body panel sheared parts are used in Audi A8, which can make the vehicle body lighter, improve fuel economy and handling performance. In the field of new energy vehicles, Tesla Model S uses aluminum alloy frame component sheared parts, which helps to reduce the vehicle weight and increase the cruising range. In the aspect of automotive passive safety design, the anti-collision beams of vehicles use aluminum alloy sheared parts, such as some models of Volvo, which can effectively absorb energy during a collision to protect the safety of the occupants in the vehicle.

Image source: Prospectus

In 2023, the company's sales of aluminum sheared parts for automotive body were approximately 63,100 tons, with a domestic market share of 15.05%, and the market ranking is unknown. But overall, the company has obtained a certain market share in the field of sheared parts and stamping parts, especially in the aspect of aluminum sheared parts.

In recent years, in order to meet the lightweight needs of downstream main engine manufacturers, the company has vigorously developed the automotive aluminum parts business. During the reporting period, the relevant aluminum parts business income was 1.115 billion yuan, 1.754 billion yuan and 2.072 billion yuan respectively, and thereby it has developed new energy vehicle customers such as T Company and NIO.

In 2023, the company's sales of sheared parts accounted for 20%-40% of NIO's procurement share of similar sheared parts, and the number of similar sheared part suppliers was 3. In the first half of 2024, NIO was the company's second largest customer, with a sales amount of approximately 115 million yuan, accounting for 5.71%. At present, the company has become a first-tier supplier for domestic and foreign first-tier automotive and home appliance brands such as T Company, NIO, Jaguar Land Rover, Samsung Electronics, BSH, BOE, and Xiaomi, as well as a direct supplier for the world's top 50 well-known parts manufacturers such as Magna, Gestamp, Adient, and Faurecia, and has established a stable cooperative relationship with customers.

The failure of Lilai Zhizao's IPO listing mainly has three reasons:

Doubt about the sustainability of performance growth

Although the company's performance grew significantly from 2021 to 2023, the net profit in the first half of 2024 was only 48 million yuan, accounting for 30% of the full-year net profit of 151 million yuan in 2023, showing a significant downward trend. It is difficult to meet the requirement of "the net profit in the recent year is not less than 100 million yuan" in the main board listing standards. During the review period of the Shenzhen Stock Exchange, the company's full-year performance in 2024 has been released. Perhaps the performance did not meet expectations, causing the company and the sponsor to choose to withdraw the application.

Insufficient R & D investment

Although Lilai Zhizao claims to be an industrial intelligent manufacturing enterprise, the total R & D expenses in three and a half years are only 125 million yuan, accounting for 0.94% of the cumulative operating income of 13.358 billion yuan. Such a low proportion of R & D investment does not match the technical innovation requirements required by "industrial intelligent manufacturing". In addition, in the reporting period, the proportion of direct materials in the company's main costs is stable at about 90%, and the proportion of direct labor and manufacturing expenses is 10%, indicating that the company's products are mainly the primary processing of direct materials. The gross profit margin of the company's main business in the reporting period is only about 10%. Overall, the company still lacks R & D and innovation.

Industry risk hazards

This year, the competition in the new energy vehicle market has intensified. Factors such as the withdrawal of new energy vehicle subsidies and fluctuations in raw material prices may affect the company's profitability and market share in the automotive parts business. In 2024, the price reduction of new energy vehicles is particularly significant, with an average price reduction of 18,000 yuan and a reduction rate of up to 9.2%. In order to reduce costs, vehicle manufacturers will continue to put pressure on parts suppliers to reduce the price of parts, and the profit space of parts enterprises will be compressed. Although the company has high-quality customer resources, the risk of a single business structure still exists.