Core Viewpoint - Xiamen Hengkang New Materials Technology Co., Ltd. (referred to as "Hengkang New Materials") has had its IPO on the Sci-Tech Innovation Board postponed, marking the first such case in 2023 for the Shanghai and Shenzhen stock exchanges. The regulatory body raised significant concerns regarding the company's technology sources, revenue recognition methods, and the rationale behind high-interest deposits [1][3]. Group 1: IPO Review and Regulatory Concerns - The IPO review highlighted three main issues: doubts about the technology sources for photoresist materials and precursors, insufficient rationale for revenue recognition using the net method, and concerns over the high yield of long-term deposits [1][3]. - The company has been questioned about its revenue recognition practices, particularly regarding its role as an "agent" in introduced business transactions, which has led to scrutiny over its accounting policies [3][4]. - Financial data shows that as of the end of 2024, the company had cash and cash equivalents of 291 million yuan, with interest income of 21.29 million yuan and a deposit interest rate of 7.3%, significantly higher than the borrowing rate of 1.8% on its interest-bearing liabilities of 611 million yuan [1][8]. Group 2: Financial Performance and Revenue Structure - From 2022 to 2024, the company's main business gross profit figures were 231 million yuan, 226 million yuan, and 292 million yuan, with the gross profit contribution from self-produced products increasing from 17.95% to 34.14% [5]. - Despite the increase in the proportion of self-produced product revenue, the overall profitability still heavily relies on introduced products, which accounted for 65.86% of gross profit in 2024 [5][6]. - The company's financial expenses have been negative for three consecutive years, indicating that interest income from deposits has exceeded interest expenses from borrowings [6][8]. Group 3: Shareholder Issues and Legal Concerns - The company faces shareholder issues as a significant portion of shares (21.45 million shares) held by shareholder Lv Mouqin was frozen due to legal issues related to gambling activities [2][9]. - Following judicial proceedings, 16.65 million shares were transferred to a state-owned entity, leaving 4.8 million shares confirmed as held on behalf of another party [2][14]. - The historical legal issues surrounding the shareholder may lead to increased scrutiny from regulators regarding the clarity and stability of the company's ownership structure during the IPO process [15].

Core Viewpoint - Hebei Guoliang New Materials Co., Ltd. (Guoliang New Materials) is facing scrutiny regarding its performance and revenue recognition compliance as it seeks to go public on the Beijing Stock Exchange [2][3] Company Overview - Guoliang New Materials specializes in high-temperature industrial refractory materials and provides comprehensive contracting services and products [2] - The company generates nearly 80% of its main business revenue from Hebei Province, yet holds less than 5% market share in North China [4] Industry Competition - The refractory materials industry in China has over 2,000 companies, characterized by low concentration and intense competition [4] - Guoliang New Materials has plans to expand beyond Hebei to regions like East China, but faces challenges with low profit margins in these areas [5] Revenue Recognition Issues - The company's sales model includes overall contracting and direct sales, with revenue recognized based on specific contractual terms [7] - There are significant issues with missing key elements in settlement documents, such as prices and quantities, which have affected revenue recognition [8][9] - For the reporting period from 2021 to June 2024, amounts lacking signatures or seals were 48.06 million, 56.90 million, 47.19 million, and 6.66 million, representing 5.63%, 6.07%, 4.80%, and 1.52% of main business revenue respectively [8] Market Conditions - The refractory materials industry is currently experiencing an oversupply, with a need for balance that may take time to achieve [5][6] - Guoliang New Materials acknowledges the risks of market fluctuations and competition from industry leaders [5][6]

Group 1 - The company estimates expected credit losses based on historical credit loss experience, current conditions, and forward-looking information, particularly for unbilled engineering projects and warranty deposits [1][2] - The company's customer base primarily consists of government and state-owned enterprises, which generally have high credit ratings, leading to a lower estimated bad debt provision [2][3] - The actual bad debt losses for accounts receivable and contract assets from 2022 to 2024 were significantly lower than the provisions made, indicating a conservative approach to bad debt provisioning [3][21] Group 2 - The company has a cautious bad debt provisioning policy, which is influenced by industry characteristics and customer structure, resulting in a high level of provisions compared to actual losses [3][21] - Specific projects with aged receivables have been highlighted, including the Jiangxi Nanchang Tourism Group project, which has ongoing arbitration for unpaid amounts [6][7] - The company has engaged in legal actions to recover overdue payments, with some cases resulting in favorable arbitration outcomes [8][10] Group 3 - The company reported a significant increase in sales expenses, primarily due to the acquisition of subsidiaries and increased competition in the market [30][31] - Sales expenses rose by 31.18% in 2024, driven by higher costs associated with business entertainment and bidding services [31][32] - The complexity of projects, particularly in the cultural tourism sector, has led to increased professional input and higher bidding costs [32][33]