Overview - Drying equipment is essential in various industries such as lithium batteries, textiles, food, chemicals, agriculture, ceramics, and environmental protection [1][14] - The demand for drying equipment has been continuously growing, particularly in the lithium battery sector, with a projected demand of 5.421 million units and a market size of 34.3 billion yuan in 2024 [1][14] Market Policies - The Chinese government has issued several policies to support the development of the general equipment manufacturing industry, including drying equipment, creating a favorable policy environment [8] Industry Chain - The upstream of the drying equipment industry includes suppliers of raw materials and components such as steel, motors, and sensors, while the midstream involves research and production, and the downstream encompasses various application markets [10] Demand Structure - Lithium batteries represent the largest demand market for drying equipment, accounting for 23.54%, followed by textiles and food at 17.32% and 12.70% respectively [12] Competitive Landscape - The drying equipment industry in China is characterized by a high degree of market fragmentation, with over 40% of related companies having registered capital under 2 million yuan [14] - As demand for high-end products increases, companies with advanced technology and R&D capabilities are expected to gain competitive advantages [14] Company Analysis - Shenzhen Xinyuren Technology Co., Ltd. focuses on high-end equipment for lithium-ion batteries, with 53.67% of its revenue from drying equipment in the first half of 2025 [15] - Qingdao Degute Energy-saving Equipment Co., Ltd. specializes in energy-saving drying machines, achieving a revenue of 250 million yuan in the first half of 2025, with a gross profit margin of 39.14% [16] Development Trends - The drying equipment industry is expected to emphasize green energy and energy-saving technologies, with a focus on renewable energy sources and smart upgrades through IoT and AI [16]

Group 1 - Longxin Intelligent Equipment Co., Ltd. has received the first round of inquiry letters from the Beijing Stock Exchange, focusing on eight aspects including the accuracy of innovation characteristics and market space disclosure, risks of declining operating performance, the reasonableness of gross profit margins compared to comparable companies, and the necessity and rationality of fundraising projects [2] - The company plans to raise 458 million yuan through its IPO, primarily for the expansion of intelligent micro-nano material production equipment and supporting automation production lines, large-scale automation equipment construction projects, and research center construction projects [5] - From 2022 to 2024, Longxin Intelligent achieved revenues of 336 million yuan, 582 million yuan, and 604 million yuan, with net profits of 87 million yuan, 143 million yuan, and 120 million yuan, indicating a clear trend of "increasing revenue without increasing profit" [5] Group 2 - Longxin Intelligent acquired 65% of Longxin Drying through a share swap in July 2022, resulting in goodwill of 17.7061 million yuan, with Longxin Drying contributing net profits of 35 million yuan, 86 million yuan, and 51 million yuan during the reporting period, accounting for 40.35%, 60.15%, and 42.64% of Longxin Intelligent's net profits respectively [5] - Longxin Drying has eight patents that may have potential dispute risks, as one invention patent and seven utility model patents were applied for within one year after the inventors left their previous employment, which meets the time requirements for recognition of work-related inventions under Chinese patent law [6] - Longxin Intelligent stated that these patents were primarily formed during the early stages of Longxin Drying's establishment and are still in the research phase, not applied to core business products, but still carry potential dispute risks [6]

Core Viewpoint - Longxin Intelligent Equipment Co., Ltd. has submitted its listing application to the Beijing Stock Exchange, with concerns raised about the legitimacy of its financial performance following a significant acquisition of Longxin Drying, which has contributed approximately 50% of its profits in a short period [1][4]. Financial Performance - Longxin Intelligent's revenue for 2022-2024 is projected to be CNY 336 million, CNY 582 million, and CNY 604 million, with net profits of CNY 87 million, CNY 143 million, and CNY 120 million respectively [2]. - The acquisition of a 65% stake in Longxin Drying in July 2022 has been a major factor in the company's profit surge, with Longxin Drying contributing CNY 138.48 million and CNY 283.91 million in revenue for 2022 and 2023, accounting for 41.20% and 48.76% of Longxin Intelligent's total revenue [2][3]. Acquisition Concerns - Investors have questioned the rapid profit contribution from Longxin Drying, suggesting potential "patchwork listing" practices [4]. - Longxin Intelligent claims the acquisition was aimed at achieving business synergy and enhancing independence [4]. Supplier and Labor Issues - There are significant doubts regarding the legitimacy of Longxin Drying's top five installation service providers, with some showing zero insured employees despite substantial transaction volumes [5][6]. - Similar concerns exist for labor outsourcing suppliers, with several newly established companies quickly becoming major suppliers while showing no insured employees [9]. Accounts Receivable Analysis - Longxin Intelligent's accounts receivable have shown a concerning trend, with over 1-year aged receivables increasing from 22.82% in 2022 to 75.24% in 2024, indicating potential cash flow issues [10][11]. - Despite the high proportion of aged receivables, the company's bad debt provision rates are lower than industry averages, raising questions about the adequacy of its financial practices [14][17]. Revenue Recognition Patterns - The company has experienced significant fluctuations in quarterly revenue, with over 50% of its revenue typically recognized in the fourth quarter, suggesting a reliance on year-end performance [18].