Core Viewpoint - The Shenzhen Stock Exchange requires Shangshui Intelligent to explain the technical iteration risks of its existing products and the sustainability of its performance growth, considering market demand, competition, market share trends, R&D results, and comparisons with peers [1]. Group 1: Company Overview - Shangshui Intelligent has over ten years of experience in the intelligent equipment industry, focusing on a comprehensive technical capability system that includes "core single machines + intelligent control systems + process packages" [3]. - The company's main business revolves around core processes such as micro-nano powder treatment, precise measurement of powder-liquid mixtures, powder-liquid mixing and dispersion, and functional film preparation, applicable in sectors like new energy batteries, new materials, chemicals, food, pharmaceuticals, and semiconductors [3]. Group 2: Financial Performance - For the years 2022 to 2024 and the first half of 2025, Shangshui Intelligent's operating revenues were reported as 397.7 million, 601 million, 637 million, and 398 million yuan respectively, while net profits attributable to the parent company were 97.72 million, 234 million, 153 million, and 93.71 million yuan respectively [3]. - The company is projected to see revenue growth in 2024 without a corresponding increase in profit [3]. - As of June 30, 2025, the total assets amounted to 2.049 billion yuan, with equity attributable to shareholders of the parent company at 665.63 million yuan, and a debt-to-asset ratio of 65.35% [4].

Core Viewpoint - Shenzhen Shangshui Intelligent Co., Ltd. is preparing for an IPO on the ChiNext board, focusing on the manufacturing of new energy battery electrode sheets and intelligent equipment in the new materials field. The company has a significant market share in its sector but faces challenges due to reliance on a limited product structure and major customer dependency, particularly on BYD [1][8]. Financial Performance - In 2024, the company reported a net profit exceeding 150 million yuan, with revenues of 396.54 million yuan, 600.60 million yuan, 636.59 million yuan, and 397.71 million yuan across different periods. The gross profit margins for its main business were 48.10%, 57.08%, 48.72%, and 53.65% respectively [2]. - The total assets as of June 30, 2025, were 2.05 billion yuan, with a debt-to-asset ratio of 65.35%. The company's net profit for the first half of 2025 was 93.71 million yuan, with a projected total for the year of 161.12 million yuan, reflecting a 5.64% increase from the previous year [3][5]. Product Structure and Market Position - The company's main product, the cyclic efficient pulping system, accounted for 89.89%, 90.21%, 93.48%, and 93.96% of its revenue in the respective years, indicating a heavy reliance on a single product line. The market share for this product has decreased from 89% in 2022 to 60% in 2024 due to increased competition [6]. - The company has invested 182.04 million yuan in R&D, representing 8.96% of total revenue, with 116 R&D personnel making up 19.33% of the workforce [6]. Customer Dependency - The company has a significant dependency on BYD, with sales to the top five customers accounting for 91.48%, 91.76%, 89.86%, and 93.65% of total revenue in the respective years. Sales to BYD alone represented 49.04%, 48.39%, 65.78%, and 36.29% of total sales, indicating a critical reliance on this customer [8][11]. Accounts Receivable and Credit Risk - The accounts receivable balance has increased over the years, with a notable rise in overdue accounts, which accounted for 55.57%, 52.93%, and 81.20% of total receivables in the respective years. The increase in overdue accounts is attributed to extended payment cycles from customers in the lithium battery manufacturing sector [13][14]. - The company has not recognized any impairment for its "Dichain" receivables, which are used for sales to BYD, indicating low credit risk associated with these transactions [17][18]. Inventory Management - The company's inventory value exceeded 1 billion yuan, with a significant increase in the proportion of inventory to current assets, reaching 63.42% by the end of 2024. The inventory write-down provisions have also increased, reflecting a growing concern over inventory management [27][31]. Project Acceptance Cycle - The average project acceptance cycle has been increasing, reaching 26.75 months in the first half of 2025. This trend is attributed to the complex internal approval processes of major clients, particularly in the lithium battery sector, which has slowed down project completions [33][38].

Core Viewpoint - Shenzhen Shangshui Intelligent Co., Ltd. (Shangshui Intelligent) is heavily reliant on BYD, which is both a major shareholder and the largest customer, contributing 65.78% of its revenue in 2024, indicating a significant business risk due to this dependency [2][4][8]. Group 1: Company Overview - Shangshui Intelligent was founded in 2012, focusing on micro-nano powder processing, precision measurement, mixing and dispersion, and functional film preparation, with applications in the new energy battery sector [4]. - The company has established partnerships with major players in the new energy battery industry, including BYD, Yiwei Lithium Energy, and CATL, as well as international manufacturers like Samsung SDI and LGES [4]. Group 2: Financial Performance - Shangshui Intelligent's revenue has shown strong growth over the past three years, with annual revenue of 397 million, 601 million, 637 million, and 398 million yuan, and a compound annual growth rate of 26.70% from 2022 to 2024 [4][5]. - Despite revenue growth, net profit has shown signs of decline, with a significant drop of 34.90% in 2024 compared to 2023, attributed to factors such as changes in VAT policies and fluctuations in gross profit [5][6]. Group 3: Dependency on BYD - The company has a significant dependency on BYD, with sales to the top five customers accounting for over 89% of total revenue, and sales to BYD alone representing 36.29% in the first half of 2025 [8][9]. - A strategic cooperation agreement was signed with BYD, extending the lock-up period for BYD's shares in Shangshui Intelligent to 36 months, indicating a long-term commitment [8]. Group 4: Risks and Challenges - Shangshui Intelligent faces risks related to its heavy reliance on BYD, as any changes in BYD's procurement strategy or market conditions could adversely affect its business [9]. - The company has reported a significant increase in inventory levels, which poses a risk of capital inefficiency and potential financial strain if not managed effectively [9]. - The gross profit margin has fluctuated, with rates of 48.10%, 57.08%, 48.72%, and 53.65% over the reporting periods, indicating potential pressure from cost control demands from clients and market competition [10][11].