Core Viewpoint - Zhejiang Kema Material Co., Ltd. has successfully passed the listing review on the Beijing Stock Exchange, with a focus on the development, production, and sales of dry and wet friction materials, while facing scrutiny over internal control issues and reliance on a single product line [1][9]. Company Overview - Kema Material specializes in the research, production, and sales of dry friction plates and wet paper-based friction plates, primarily used in clutches and automatic transmission systems [1]. - The actual controllers of the company are a family of four, holding a combined stake of 84.4%, which raises concerns about internal control and governance [3][6]. Financial Performance - The company reported significant revenue fluctuations, with revenues of CNY 202 million, CNY 199 million, and CNY 249 million from 2022 to 2024, showing a 25.16% increase in 2024 [19]. - In the first half of 2024, Kema Material achieved revenues and net profits of CNY 139 million and CNY 45 million, respectively, marking year-on-year increases of 11.37% and 30.79% [19]. Product Dependency - The company's revenue is heavily reliant on the T2 dry friction plate, which accounted for over 96% of total revenue in recent years, while the T1 product has seen a drastic decline [19][20]. - The T1 product was officially discontinued in July 2023, leading to a surge in T2 product sales due to its environmentally friendly production process [20]. Internal Control Issues - Kema Material has faced multiple internal control deficiencies, including issues in R&D management, inventory and sales management, and financial controls, which have been highlighted by the Beijing Stock Exchange [6][8]. - The company has committed to rectifying these internal control issues, which have been acknowledged in their responses to regulatory inquiries [8]. R&D Investment - The company's R&D expenses have decreased over the past three years, with rates of 6.77%, 6.56%, and 5.51%, which are below industry averages [15][17]. - Kema Material plans to invest CNY 55 million in upgrading its R&D center, although this amount is lower than previously proposed during its aborted IPO on the ChiNext [14][15]. Supply Chain Concentration - The concentration of suppliers is higher than industry averages, with the top five suppliers accounting for over 58% of total purchases, raising concerns about supply chain stability [21][22]. - Some of the major suppliers have very few insured employees, which has prompted inquiries from the Beijing Stock Exchange regarding their operational viability [23][24].