IPO | Jinli Permanent Magnet is now offering shares, receiving investment from China Resources and other cornerstones

News from Futu News on December 31, this Friday$JLMAG (06680.HK)$An announcement was announced that it will issue approximately 0.125 billion shares from December 31, 2021 to January 7, 2022. The company plans to issue approximately 0.125 billion shares, including a public sale of 12.5468 million shares and an international sale of approximately 0.113 billion shares, with an issue price of HK$33.8-40.3 and 200 shares per lot. It is expected to be listed on January 14, 2022.

The company is a leading manufacturer of high-performance rare earth permanent magnet materials. According to Frost & Sullivan, the company's market share in production of high-performance rare earth permanent magnet materials in 2020 was about 14.5%, ranking first in the world. According to Frost & Sullivan, in 2020, the company used grain boundary penetration (“grain boundary penetration”) technology to produce 4,111 tons of high-performance rare earth permanent magnet materials, ranking first in the world in the crystal boundary penetrating rare earth permanent magnet material market, accounting for about 21.3% of the market share.

The company was listed on the New Third Board from December 2015 to January 2018, and its A shares$Jl Mag Rare-Earth (300748.SZ)$Listed on the Shenzhen Stock Exchange GEM since September 2018.

Since its establishment, the company has been focusing on R&D, production and sales of high-performance NdFeB rare earth permanent magnetic materials (“NdFeB permanent magnetic materials”) for global new energy, energy saving and environmental protection. The company's products are widely used in new energy vehicles (“new energy vehicles”) and automotive parts, permanent magnet wind turbines (“permanent magnet wind turbines”), energy-saving inverter air conditioners (“energy-saving inverter air conditioners”) and other industries.

In terms of financial conditions, the company's revenue from 2018 to 2020 was 1.28 billion yuan, 1.63 billion yuan, and 2.29 billion yuan respectively. Revenue for the first half of 2021 was 1.77 billion yuan, an increase of 93% over the previous year. Net profit for 2018 to 2020 was 150 million yuan, 160 million yuan and 240 million yuan respectively. Net profit for the first half of 2021 was 220 million yuan, an increase of 141% over the previous year.

On the industry side, China's production of high-performance NdFeB rare earth permanent magnet materials reached 46,200 tons in 2020 and is expected to reach 105,900 tons in 2025, with a compound growth rate of 17.9% from 2020 to 2025. As carbon neutrality targets increase market demand for rare earth permanent magnet materials, the NEV industry and the green and low-carbon industry, and favorable policies, the market is expected to grow rapidly in the future.

In terms of Cornerstone Investors, the company has entered into a Cornerstone Investment Agreement. Assuming an offering price of HK$37.05 (that is, the median offer price), the total number of shares on sale that Cornerstone investors will subscribe for is 58.4308 million shares, which is equivalent to approximately 46.57% of the H shares issued after the completion of the global offering. Cornerstone investors include the China State-owned Enterprise Mixed Ownership Reform Fund, CR Alpha Investment II Limited (an investment company indirectly owned and controlled by China Resources Group), HHLR Fund, L.P., and YHG Investment, L.P. (a subsidiary of Gao Lin), CITIC Prudential Life Insurance Co., Ltd., and the Sino-Belarusian Industrial Investment Fund (initiated by China Merchants Capital).

In terms of financing, the company plans to use the net proceeds from the global sale for the following purposes: about 35% is expected to be used for the construction of the Ningbo production base; about 25% is expected to be used for potential acquisitions before the end of 2023 to expand the company's global industrial chain layout; about 20% is expected to be used for the company's R&D; about 10% will be allocated to repay the company's Baotou production base project construction loans; and about 10% is expected to be used as the company's working capital and general corporate purposes.

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