New Henghui's IPO for the Second Board of Stock Exchange Filed for Registration Smart Card Business as the Core Revenue Source

On March 11, New Henghui Electronic Co., Ltd. (hereinafter referred to as "New Henghui") applied for IPO review status change to "submitted for registration" on the Shenzhen Stock Exchange's GEM. Its sponsor is Founder Securities and it plans to raise RMB518.63 million. The prospectus shows that New Henghui is an integrated circuit enterprise integrating the research, production, sales and encapsulation testing of chip packaging materials. Its main businesses include smart card business, etched leadframe business and IoT eSIM chip encapsulation and testing business. Among them, smart card business is the company's traditional core business and the main source of its revenue and profit. During the reporting period, the Company's smart card business achieved sales revenue of RMB411 million, RMB562 million, RMB583 million and RMB283 million, accounting for 77.44%, 84.45%, 78.35% and 70.72% of its main business revenue respectively, which is the main source of its revenue. According to statistics or forecast data from Eurosmart (European Smart Card Association) and others, the global shipment of smart cards has been relatively stable at about 9.5 billion pieces in recent years, of which the shipment of telecom SIM cards is about 4.5 billion pieces, the shipment of bank chip cards is about 3.3 billion pieces, and the shipment of ID and industry application cards is about 1.5 billion pieces. According to this calculation, as of June 2024, the market share of the Company's core encapsulation materials, flexible leadframe, in the smart card business reached 36%, and the market share of its smart card module products was about 12%. In addition, the prospectus warns of the risk of high concentration of customers and suppliers. The Company's top few customers accounted for 45.07%, 55.54%, 46.88% and 42.79% of its revenue respectively, with a high concentration. If its major customers terminate or reduce their purchases from the Company due to major unfavorable changes in their production and operation or credit status, the Company's operating performance will face a downward risk. Financially, New Henghui achieved revenue of about RMB548 million, RMB684 million, RMB767 million and RMB414 million in 2021, 2022, 2023 and 2024H1 respectively. Its net profit was RMB100 million, RMB111 million, RMB153 million and RMB101 million respectively during the same period. #End of Polished Translation