Wuhan Lide Electric Power Technology Co., Ltd.
Special Announcement on Investment Risks for Initial Public Offering of Stocks (First Time)
Sponsor Institution (Lead Underwriter): Zhongyuan Securities Co., Ltd.
Wuhan Lide Electric Power Technology Co., Ltd. (hereinafter referred to as "Lide Electric", "Issuer" or "Company") has received approval from the China Securities Regulatory Commission (hereinafter referred to as "CSRC") for its application to publicly issue no more than 21.21 million shares of RMB ordinary shares (A shares) (hereinafter referred to as "this issuance") under document No. [2022]737.
After negotiation between the Issuer and the sponsor institution (lead underwriter) Zhongyuan Securities Co., Ltd. (hereinafter referred to as "Zhongyuan Securities" or "Sponsor Institution (Lead Underwriter)"), the number of shares for this issuance has been determined to be 21.21 million shares, all of which are new shares for public issuance, with no transfer of existing shares by the Issuer's shareholders. The shares from this issuance are intended to be listed on the Main Board of the Shenzhen Stock Exchange (hereinafter referred to as "SZSE").
The preliminary inquiry for this issuance was completed on April 28, 2022, with the determined issuance price set at RMB 25.48 per share, corresponding to a diluted price-to-earnings ratio (P/E ratio) of 21.41 times for 2021 (calculated based on the lower of the net profit attributable to the owners of the parent company for 2021 audited by an accounting firm in accordance with Chinese accounting standards, excluding non-recurring gains and losses, divided by the total share capital after this issuance). This P/E ratio is lower than the average static P/E ratio of comparable listed companies in the same industry, which was 31.64 times in 2021. According to the "Guidelines for the Classification of Listed Companies" (2012 revision), Lide Electric belongs to the "C38 Electrical Machinery and Equipment Manufacturing" and "F51 Wholesale" industries. As of April 28, 2022, the average static P/E ratio for the "C38 Electrical Machinery and Equipment Manufacturing" industry published by China Securities Index Co., Ltd. for the last month was 37.17 times, and for the "F51 Wholesale" industry was 17.88 times. Since the P/E ratio corresponding to the issuance price is higher than the average static P/E ratio for the "F51 Wholesale" industry published by China Securities Index Co., Ltd., there is a risk that the Issuer's valuation level may revert to the industry average P/E ratio level, leading to a decline in stock price and potential losses for new stock investors.