Fine Yuan Technology (嘉元科技), a copper foil manufacturer headquartered in Meizhou, Guangdong, is to be listed on China’s STAR board. The company set its IPO price at CNY 28.26 per share, planning to issue 57.8 million shares in total.
Given last year’s earnings of the company, the P/E ratio is 37.41, a quite modest number compared to its peers to be listed on STAR, but it is still impressive if taking the average ratio of Shanghai Stock Exchange into account.
The Meizhou-based Fine Yuan Technology provides high-quality copper foils to notable down-stream buyers like BYD (比亚迪) and Contemporary Amperex Technology (宁德时代).
The company’s core product, copper foils, is fundamental to Lithium-ion batteries, which are utilized in electric vehicles and other electric products. The rapid development of the electric vehicle industry in China secures a stable amount of orders for copper foil producers. Nevertheless, policy changes affecting the downstream buyers would menace material producers as well.
Fourteen years after its foundation, Fine Yuan Technology was eventually listed on the New OTC Market in China in 2015. In Q4 2018, the company’s net profit was more than CNY 70 million, growing by around 25% quarter-on-quarter.
As a company to be listed on STAR, which was designed for innovative startups, Fine Yuan Technology seems to lack innovation capability. In 2018, it spent only 3.32% of its operating revenue on R&D; among 776 employees, only 66 were reportedly involved in R&D activities.