On January 8, Yirui Technology (688301) updated the reply to the inquiry letter for the private placement review and the draft application of the prospectus, adding a new risk description.

"Caizhong Society" found that Yirui Technology's fixed increase has lasted 8 months. As early as April 30, 2024, Yirui Technology announced a fixed increase plan, with a total planned fundraising of no more than 1.45 billion yuan, and all the funds will be used for the construction of X-ray vacuum devices and comprehensive solutions.

The construction period of the project is 36 months, with a total investment of 1.56 billion yuan.

After the completion of the project, it is expected to increase the production capacity of 77,000 tubes and 19,300 sets of X-ray integrated solution products. From the perspective of industry development trends, the global X-ray imaging equipment market is in the growth channel, and new needs are emerging in the medical and industrial fields.

However, there are many challenges and risks that companies need to face head-on.

In terms of market competition, the core components of X-ray industry concentration is high, foreign giants such as Vanruishi, Trixell, Hamamatsu Photonics occupy an advantage in technology and market share, although Yirui Technology has made certain achievements in China, but it is still facing great pressure in the global market competition.

Internally, there is a risk of insufficient technical development of new products and personnel reserves in fundraising projects.

Although a number of products have been developed in this fundraising project, some key products such as C-Arm/DR tubes and medical CT tubes are still in the process of research and development. In the context of rapid development of industry technology and fierce competition for talents, the company is very prone to fall into the dilemma of new product development, and the shortage of personnel may hinder the advancement of fundraising and investment projects, which poses a major challenge to its technological innovation and market expansion.

At the same time, there are potential risks associated with construction in progress. As of June 30, 2024, the balance of the company's construction projects reached 3.15 billion yuan, accounting for 38.89% of the total assets of 8.1 billion yuan, and it is expected to be transferred to fixed assets from the end of 2024 to 2025, when depreciation and amortization will rise significantly. Once the operating income of the project does not meet expectations, or the industrial policy and market environment change, the new depreciation expense is very likely to drag down the company's operating performance.

"Caizhong Society" found that there was a new situation in the previous fund-raising investment project of Yirui Technology, and the regulator also inquired about it.

Yirui Technology said that in September 2024, the company's board of directors and board of supervisors decided to extend the scheduled availability date of the "new detector and scintillator material industrialization project" raised by convertible bonds in 2022 from September 2024 to December 2025. At present, the company is promoting the production of the first test product and related testing and trial production, indicating that it will be able to reach the predetermined usable state and carry out the overall conversion by December 2025. However, if the project encounters unfavorable factors or force majeure that affect the progress in the future, there is a risk of further delay or even impairment of the project. Moreover, as of the announcement date, the cumulative investment progress of the project has exceeded 100% to 101.22%, and there is still nearly a year to reach the intended usable state, and the final amount of investment is still unknown. In response to inquiries, the company stated that "there is no postponement of the conversion".

The issue of accounts receivable is another focus of regulatory attention in the audit inquiry letter.

The book value of accounts receivable has increased significantly, from 280 million yuan in 2021 to 860 million yuan as of June 30, 2024, and the proportion of accounts for total assets has also increased from 7.96% to 10.66%.

In the first half of 2024, the company's accounts receivable turnover ratio of 2.75 is significantly lower than the average of 4.04 for comparable companies in its peers, while Varex and Vieworks were higher at 5.03 and 5.27, respectively, in the same period. Although the company said that the overall situation of receivables was good and that it had made provision for bad debts, such a rapid growth in accounts receivable was still worrying.

The latest financial report shows that Yirui Technology's revenue and net profit both declined.

In the first three quarters of 2024, the company achieved revenue of 1.356 billion yuan, a year-on-year decrease of 2.91%; net profit was 390 million yuan, down nearly 10% year-on-year. The company's asset-liability ratio continued to rise, with 9.03%, 13.02%, 32.91% and 42.05% at the end of 2020-2023, respectively, and increased by 1.89 percentage points to 43.94% at the end of the third quarter.

Looking back on the development history of Yirui Technology, it was established in 2011 and successfully listed on the Science and Technology Innovation Board in 2020. In the early days of listing, the company emerged in the market with its technological breakthroughs in the field of digital X-ray detectors; The company is mainly engaged in the research and development, production, sales and service of new core components such as digital X-ray detectors, high-voltage generators, combined ray sources, and ball tubes.

The company's founder, Tieer Gu, has a certain technical background, but with the company's business expansion, the company's shareholding structure has gradually dispersed. As of June 30, 2024, the actual controller of the company is Gu Tie, who personally directly holds and controls 25.26% of the voting rights of Yirui Technology through Yiyuan Herui, Shanghai Changze and Shanghai Changrui. After the completion of this issuance, the proportion of voting rights of the shares controlled by Gu Tie will be further diluted, and the company will face the risk of further dilution of control.

According to the data, Gu Tie was born in June 1968, American nationality, and has a doctorate. He has successively served as R&D engineer and engineering manager of Optical Imaging Systems Company, project manager, operations manager and product engineering director of General Motors Medical Systems and PerkinElmer, general manager of GM Global R&D Center (Shanghai), and director and general manager of Shanghai Tianma Microelectronics. From 2014 to 2019, he successively served as director and general manager of the company; Since July 2019, he has served as the chairman and general manager of the company.