Press maker Guangdong Yizumi Precision Machinery Co. Ltd. has at last received the green light from Chinese securities regulator for an IPO on the Shenzhen Stock Exchange.
The company plans to raise 360.6 million yuan ($57.9 million) by issuing 30 million shares, Yizumi said in a Dec. 20 statement. The funds will be injected into further capacity expansion as well as a technical center upgrade.
Yizumi's initial public offering journey started in 2012, when the 10-year-old company filed its first application with the China Securities Regulatory Commission. The company at the time said it planned to raise funds to enter new markets including India, Mexico, Russia and Turkey and build overseas production capacity.
Despite the company's highly publicized optimism, the project fell through, due to a variety of reasons including regulatory changes and a market slowdown.
In March 2014 Yizumi relaunched its IPO project and submitted filings in a second try.
In the filings, the company revealed its financials, reporting strong sales growth from 767.7 million yuan in 2011 to 861.8 million yuan in 2012, and to 1 billion yuan in 2013. Net profit also showed an upward trend, from 66 million yuan in 2011, to 76.2 million yuan in 2012, to 82.6 million yuan in 2013.
The company's net profit margin, however, trended down. In 2011 it was 8.6 percent, but it dropped to slightly less than 8 percent in 2013. Return on equity declined significantly from 45.7 percent in 2011, to 36.7 percent in 2012, and to 29.2 percent in 2013.
In response to a series of reports in the Chinese financial media that questioned Yizumi's financial vitality, particularly its high debt ratio, Yizumi CEO Richard Yan told HC360.com, a Chinese plastics website, that the numbers fail to tell the whole story. He said the company's debt situation is the result of aggressive asset acquisitions, including land in both South and East China that has since appreciated in value.
He also pointed out that Yizumi's debt-to-assets ratio has been trimmed from 74 percent in late 2011 to 67 percent in 2013, and to 64 percent by mid-2014.
In an oversaturated market that's plagued with low margins, Yizumi's aggressive global expansion, new product advances and sales growth have been noted by the biggest players in the industry. According to Yizumi, in September, Engel CEO Peter Neumann and Chief Technology Officer Stefan Engleder paid a visit to Yizumi's headquarters in Shunde and its factory in Wusha, exchanging ideas on a host of topics including production management, technological innovation, and talent management.
Neumann showed interest in Yizumi's corporate culture, Yizumi said, which is built around the concept of “Brother Yi” in a young and dynamic spirit. The company calls itself Family Yi and the employees are all “Brother Yi's.
Plastic injection molding machinery represents about 60 percent of Yizumi's business, while die casting machines accounts about 35 percent.
Yizumi acquired HPM's intellectual property in 2011 and has been expanding its North America presence.
