Core Viewpoint - Xiamen Hengkang New Materials Technology Co., Ltd. (referred to as "Hengkang New Materials") is facing scrutiny regarding its high customer concentration, declining gross margins, and the necessity of its fundraising projects as it prepares for its IPO on the Sci-Tech Innovation Board [1][6][8] Group 1: IPO and Fundraising - Hengkang New Materials disclosed its second round of inquiry responses for its IPO, which was accepted on December 26, 2024, and entered the inquiry phase on January 18, 2025 [1] - The company plans to raise approximately 1.007 billion yuan, down from the initial 1.2 billion yuan, with the revised fundraising focusing on the second phase of the integrated circuit precursor project and advanced materials project [3][4] - The company has removed the "SiARC development and industrialization project" from its fundraising plan, indicating a strategic shift possibly aimed at expediting the IPO process [4][6] Group 2: Customer Concentration - Hengkang New Materials has a high customer concentration, with the top five customers accounting for 99.22%, 97.92%, and 97.20% of revenue from 2022 to 2024, significantly higher than the industry average of around 35% [6][7] - The company relies heavily on its largest customer, with sales percentages of 72.35%, 66.47%, and 64.07% over the same period, raising concerns about potential risks if relationships with key clients deteriorate [6][7] Group 3: Gross Margin and Profitability - The gross margin for Hengkang New Materials' self-produced products has been declining, particularly for precursor materials, which reported negative margins of -329.59%, -19.91%, and -1.56% from 2022 to 2024 [8][9] - The gross margin for self-produced photolithography materials also decreased from 39.17% in 2022 to 33.47% in 2024, attributed to product structure changes and price negotiations with customers [8][10] - The company faces challenges in achieving sustainable profitability for its self-produced precursor materials, which may lead to further financial strain if large-scale orders are not secured [9][10]