Core Viewpoint - Xiamen Hengkang New Materials Technology Co., Ltd. (referred to as "Hengkang New Materials") is progressing with its IPO on the Sci-Tech Innovation Board, having recently disclosed responses to the first round of inquiry letters from the Shanghai Stock Exchange regarding various aspects of its business and financials [1][4]. Financial Performance - Hengkang New Materials reported revenues of approximately 322 million yuan, 368 million yuan, and 548 million yuan for the years 2022, 2023, and 2024, respectively, with corresponding net profits of approximately 101 million yuan, 89.84 million yuan, and 96.92 million yuan [4]. - The company's bank deposits were approximately 603 million yuan, 619 million yuan, and 654 million yuan, while bank borrowings were approximately 101 million yuan, 346 million yuan, and 633 million yuan during the same period [4][5]. Inventory Management - The company's inventory balance increased significantly, with figures of approximately 51.49 million yuan, 125 million yuan, and 165 million yuan for 2022, 2023, and 2024, respectively. The inventory turnover rates were 2.03 times/year, 1.57 times/year, and 1.74 times/year, all below the industry average [6][7]. - The increase in inventory is attributed to rising production volumes and the need to maintain safety stock due to long supplier delivery times and the development of new products [7]. Supplier Dependency - Hengkang New Materials relies heavily on a few suppliers, with the top five suppliers accounting for approximately 74.98%, 75%, and 75.44% of total purchases during the reporting period. The largest supplier accounted for 52.04%, 40.02%, and 51.53% of purchases [8]. - The company is addressing its dependency on foreign suppliers by focusing on domestic production of key raw materials and increasing the proportion of self-produced products [8].

Core Viewpoint - Intellectual property (IP) has become a core focus in the IPO review process for companies aiming to list on the Sci-Tech Innovation Board, especially with the recent regulatory clarifications and requirements for "hard technology" and innovation capabilities [1] Group 1: Regulations on IP for Sci-Tech Innovation Board IPO - The key regulatory concerns regarding IP during the IPO process include the completeness and independence of the issuer's IP, clarity of IP ownership, potential disputes, and the issuer's ability to protect its core technologies [2][3] - Companies must demonstrate their continuous innovation capabilities and the stability of their IP rights to meet the compliance requirements set by the securities regulatory authorities [2][3] Group 2: Key Review Focus on IP - The review process emphasizes the progress of any ongoing patent infringement lawsuits, the importance of the involved patents to the company's revenue, and the potential impact of a loss in such cases on the company's operations [7][8] - Companies facing patent invalidation requests must provide updates on the status of these requests and their potential implications for business operations and IPO eligibility [9] Group 3: Practical Suggestions for Addressing IP Risks - Companies should enhance their independent R&D capabilities and establish a robust IP management system to avoid issues such as insufficient patent numbers or concentrated patent applications [29][30] - It is crucial for companies to maintain clear documentation of R&D activities and ensure compliance with IP ownership agreements, especially when involving former employees from competing firms [31][32] - Companies are advised to assess the significance of shared patents and consider acquiring full rights to critical shared IP to ensure ownership stability [32] Group 4: Specific IP Issues - The concentration of patent applications prior to an IPO can raise regulatory scrutiny if not adequately justified, as it may suggest attempts to artificially inflate asset valuations [25][26] - The expiration of IP rights can significantly impact a company's competitive position, necessitating a thorough analysis of the importance of such rights to ongoing operations [28]