Core Viewpoint - Guangzhou Ruili Kemi's IPO faces scrutiny due to performance volatility, reliance on related transactions, and internal control risks, despite its leading position in the commercial vehicle active safety system market [1][5]. Group 1: Financial Performance - The company's financial performance is closely tied to the commercial vehicle industry cycle, with a significant profit drop in 2022 due to a 31% decline in commercial vehicle sales, resulting in a net profit decrease from 197 million to 96.96 million [2]. - In 2023, the net profit rebounded to 269 million, but the first half of 2024 saw a 4.52% decline in non-recurring net profit [2]. - Accounts receivable consistently exceed 70% of revenue, with a year-end balance of 566 million in 2023, and a customer concentration of nearly 30% among the top five clients, raising concerns about cash flow pressure [2]. Group 2: Related Transactions - The complex network of related transactions raises concerns, as the controlling shareholder, Ruili Group, is both the largest customer (27.8% of sales in 2021) and a key supplier (12.75% of purchases) [3]. - The company acquired four subsidiaries from Ruili Group for 938 million, with one subsidiary showing a 152% appraisal increase despite reporting a net loss of 2.13 million in 2023 [3]. - A subsidiary was involved in a fraudulent loan scheme, highlighting potential risks of related party fund occupation [3]. Group 3: Internal Control Issues - Systemic internal control vulnerabilities are evident, with a subsidiary using personal accounts for public fund transactions, involving 1.9 million in 2020 [4]. - The company faced fines totaling nearly 300,000 for environmental and safety issues, with a subsidiary penalized for not having waste gas treatment facilities, risking its high-tech enterprise qualification [4]. - Employee rights issues were raised, with 709 employees lacking social insurance and 1,122 without housing fund contributions until just before the IPO application [4]. Group 4: Market and Regulatory Environment - The company plans to raise 1.522 billion for R&D and working capital, but the necessity of expansion is questioned given a 72.77% capacity utilization rate in 2023 and a projected 5.1% decline in commercial vehicle sales in 2024 [4]. - The Shenzhen Stock Exchange has raised concerns about the fairness of related transactions and the adequacy of disclosures regarding the controlling shareholder's historical issues [4]. - The IPO case reflects the regulatory challenges during the deepening of the registration system, balancing technical strength and market share against historical flaws and internal control issues [5].