Nylon cable tie maker Imperius plans to IPO on the North Exchange, Russia-Ukraine conflict intensifies cost pressure

On April 7, Impair announced that it has completed the listing guidance and acceptance of the Beijing Stock Exchange, the application materials have been accepted, and the prospectus has been disclosed
.
This time, Impera plans to raise 140 million yuan, of which 100 million yuan is planned to be used for the automation upgrade of the main product - nylon cable tie series production line
.

It is understood that the nylon cable tie business accounts for more than 70% of Impair's operating income in 2021.
Affected by the price fluctuation of the raw material PA66, the company's gross profit margin in 2021 will drop by nearly 10 percentage points compared with the same period of the previous year, of which the raw material expenditure of PA66 accounts for the operating cost.
The ratio is about 80%
.
As a downstream industry of petrochemicals, Impair said bluntly that the recent outbreak of the Russian-Ukrainian war has put pressure on its costs
.

The outbreak of the Russian-Ukrainian war aggravates the risk of rising raw material prices

Impair is controlled by Changhong Plastics Group Co.
, Ltd.
(hereinafter referred to as "Changhong Plastics"), a well-known enterprise in Wenzhou
.
In the list of well-known companies disclosed in Wenzhou local chronicles in 2010, more than ten companies including Changhong Plastics were listed alongside Tsingshan Holdings, which was widely known for its "nickel war" not long ago
.

Founded in 2010, Impair has been listed on the national stock exchange system since 2014.
The company mainly cultivates the field of modified plastic products, and sells nylon cable ties, steel nail wire clips, terminal blocks, polymer alloy cable trays and other plastic accessories.
Kingfisher plc, a well-known building materials and home furnishing retail group, is one of its important customers
.
Among them, nylon cable ties are the main products of Impair
.
In the past three years, although the proportion of the revenue of nylon cable ties products has declined, they are all above 70%
.

Judging from the financial data of Impera in the past three years, its operating income fluctuated and rose, but its net profit declined for two consecutive years
.
In 2021, the operating income of Impair will be 612 million yuan, a year-on-year increase of 29.
84%; the net profit will be 34.
371 million yuan, a year-on-year decrease of 31.
44%; the comprehensive gross profit margin will be 17.
24%, a year-on-year decrease of 9.
84 percentage points
.

As for the increase in revenue but not profit in 2021, Impair explained that the main reason is that the market price of raw material PA66 has increased significantly
.
PA66 is the raw material of nylon cable ties and is a downstream product of the petrochemical industry
.
In 2021, the gross profit margin of Imperium nylon cable ties will be 13.
41%, a year-on-year decrease of 13.
01 percentage points
.

"Starting from the fourth quarter of 2021, the price of PA66 will gradually fall, but the recent outbreak of the Russian-Ukrainian war has caused drastic fluctuations in the prices of some commodities, which is expected to have a certain impact on the prices of various raw materials of the company
.
" Impair said in the prospectus , PA66 is a bulk transaction commodity, and the market quotation difference is small.
Affected by the characteristics of the upstream chemical industry, the company has less choice for suppliers.
It mainly considers the price advantage of the other party and the ability of timely delivery to adjust the supplier and purchase volume
.

In addition, the export revenue of Imperium accounts for more than half of the total revenue, and the transportation of products is mainly by sea.
If the shipping capacity is tight and the cost of shipping increases, the relevant impact will be transmitted to the company's export revenue
.
As of March 11 this year, the China Export Containerized Freight Index (CCFI) was 3366.
01 points, still at a high level
.

Impera also warned the risk that if the pressure of cost increases cannot be effectively alleviated through measures such as cost control and price transmission in the future, the company may face the risk of a sharp drop in operating profit or even a loss
.

From the GEM to the North Exchange, 100 million funds were raised to double the production capacity

The listing criteria chosen by Impair is "an estimated market value of not less than 200 million yuan, a net profit of not less than 15 million yuan in the last two years, and an average weighted average net asset ratio of not less than 8%
.
" Wind data shows that at present, the total market value of Impair is nearly 700 million yuan
.

In 2020, Impair had planned an IPO on the Growth Enterprise Market, and then changed to listing on the selection layer of the then national stock exchange system
.
On March 14 this year, the Board of Directors of Imperium passed a resolution to change from listing on the National Equities Exchange and Quotations to applying for a public offering of shares and listing on the Beijing Stock Exchange
.

According to the prospectus, Impair plans to raise 140 million yuan this time, of which 100 million yuan will be used for the automation upgrading and transformation project of nylon cable tie series production line (hereinafter referred to as the "nylon cable tie upgrade project"), and 40 million yuan will be used to supplement Liquidity and repayment of bank loans
.

Image source: Screenshot of prospectus

The prospectus shows that the total investment of the nylon cable tie upgrade project is about 194 million yuan, and the project is expected to have a construction period of 3 years
.
"The existing production capacity can no longer meet the needs of subsequent business development, and the production capacity bottleneck has become a key factor restricting the company's further development
.
" Impair's move is mainly to expand the production capacity of nylon cable ties, improve product quality, and further strengthen the company's core Competitiveness to meet the growing market demand
.

Specifically, Impair said, "using intelligent manufacturing technology, a new plant of 11,594 square meters has been added, and various advanced equipment such as injection molding machines, robots and automatic cable tie packaging machines have been added.
After completion, an additional annual output of 11,000 tons of nylon will be formed.
The production capacity of cable ties series products”
.

By the end of 2021, Impair has more than 180 injection molding machines, with an annual output of more than 10,000 tons of nylon cable ties
.
This means that if the fundraising is successful and the project construction goes smoothly, Impair's nylon cable ties production capacity will be doubled
.