Rigol Technologies Co., Ltd. (hereinafter referred to as “Rigol”, 688337.SH) has recently been active in several respects. On one hand, six shareholders of the company are set to see their locked-up shares released, while on the other hand, Rigol has announced that it has submitted an application for H-share listing on the Hong Kong Stock Exchange.
As a global electronic measurement instrument company, Rigol faced performance losses in the first half of this year. There is limited growth in revenues, coupled with high expenses that continuously erode profits. Given Rigol's substantial cash reserves, the necessity of their fundraising through a Hong Kong listing is now under scrutiny.
**Release of Locked-up Shares**
Recently, Rigol published an announcement regarding the public listing and circulation of its initially locked-up shares, stating that approximately 118 million shares would be released starting October 9, accounting for 61.01% of the company's total equity. These shares belong to six shareholders: Suzhou Rigol Technology Investment Co., Ltd. (holding 32.94%), Li Weisen (8.02%), Wang Tiejun (8.02%), Wang Yue (5.93%), Suzhou Ruige Hezhong Management Consulting Partnership (Limited Partnership) (3.05%), and Suzhou Ruijin Hezhong Management Consulting Partnership (Limited Partnership) (3.05%).
Rigol was listed on the Shanghai Stock Exchange's Science and Technology Innovation Board in 2022, with a total post-IPO equity of around 121 million shares. Among these, approximately 96 million shares are subject to trading restrictions, making up 79.09% of the total equity, while around 25 million shares are freely tradable, amounting to 20.91%.
On September 30, the company announced that it had submitted its application and related documents for H-share issuance and listing to the Hong Kong Stock Exchange.
Since its IPO in 2022, Rigol has conducted three rounds of private placements. The IPO price was RMB 60.88, with the three subsequent placements at RMB 54.71, RMB 35.50, and RMB 23.08, raising approximately RMB 1.666 billion, RMB 287 million, RMB 252 million, and RMB 44 million respectively, totaling RMB 2.249 billion.
Established in 2000, Rigol is known for its design, development, manufacture, and delivery of comprehensive electronic measurement instruments and solutions. According to Frost & Sullivan, Rigol is the largest supplier of electronic measurement instruments in China, and it is also the first and only company in China to successfully commercialize digital oscilloscopes using self-developed ASICs.
**Hong Kong Listing Plans**
However, the plan to list in Hong Kong has also triggered doubts regarding the reasonableness and growth potential of further fundraising.
For this H-share listing, Rigol intends to allocate the raised funds towards several key areas over the next five years: enhancing its R&D capabilities and promoting technological innovation and iteration; expanding overall production capacity and improving product line automation; making strategic investments and acquisitions to achieve long-term growth goals; strengthening global sales, marketing, and service networks; and supplementing working capital for general corporate purposes.
Data reveals that in the first half of this year, Rigol’s total operating revenue reached approximately RMB 355 million, reflecting a year-on-year increase of 15.57%. Total costs were RMB 375 million, up approximately 12%. The net profit attributable to the parent company, excluding non-recurring items, was -RMB 11 million, a year-on-year increase of 42.32%.
It is noteworthy that the substantial erosion of profits does not stem from operating costs but from expenses. In the first half of this year, Rigol's operating costs were RMB 158 million, a year-on-year increase of approximately 18.97%. Sales expenses were RMB 58 million, up 6.46%; administrative expenses totaled RMB 50 million, up 5.32%; R&D expenses were RMB 108 million, with a year-on-year increase of 23.22%; while financial expenses were -RMB 5.83 million, down 167.63%. This indicates that the total of the four key expense items in the first half of this year reached RMB 211 million, increasing by approximately 6.05%, outpacing operating costs. The company’s gross profit margin was 55.39%, whereas the net profit margin was only 4.57%, with the net profit margin (after excluding non-recurring items) at -2.97%.
Reviewing the company's financial data over the past three years, Rigol’s total revenue has ranged between RMB 600 million and RMB 700 million. Although total costs for 2023-2024 are slightly lower than total revenues, the trend of high expenses has not changed.
As of the first half of this year, Rigol's total assets amounted to RMB 3.794 billion, with current assets at RMB 2.592 billion and non-current assets at RMB 1.201 billion. Among current assets, cash holdings were RMB 329 million, while trading financial assets reached RMB 1.788 billion (all in transferable large-value certificates of deposit), with accounts receivable at RMB 150 million and inventories at RMB 293 million. Additionally, the total liabilities were RMB 680 million, and total equity reached RMB 3.113 billion, resulting in a debt-to-asset ratio of only 17.93%.
In terms of cash flow, Rigol reported a total cash inflow from investment activities of RMB 393 million in the first half, mainly from recovering investments amounting to RMB 384 million, while cash outflows totaled RMB 463 million, primarily directed towards investment payments of RMB 431 million. The net cash flow from investment activities was -RMB 70 million.
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