Gardelli IPO: Performance declined year-over-year in the second half of 2025, with the exchange questioning the untimely transfer of fixed assets.

Quanzhou Jiade Li Electronic Materials Co., Ltd. (hereinafter referred to as Jiade Li) is about to be reviewed for its IPO on the main board of the Shanghai Stock Exchange. The prospectus (review draft) shows that Jiade Li’s performance during the reporting period (2022, 2023, 2024, and the first half of 2025) has been unstable. Its operating revenue and net profit attributable to the parent declined year-over-year in the second half of 2025.

Meanwhile, in previous exchange review inquiries, Jiade Li was questioned about whether there was a delay in capitalizing fixed assets (“transfer to fixed assets”). The Daily Economic News reporter noted that despite a significant increase in construction-in-progress in the first half of 2025, the construction of the company’s headquarters building, which is closest to completion, appears to have slowed down. Even though over 90% of the investment has been completed by the end of the first half of 2025, the project has not yet been transferred to fixed assets.

Additionally, during the reporting period, Jiade Li’s gross profit margin has consistently been higher than the average of comparable companies in the industry.

2025 Second Half Operating Revenue and Net Profit Attributable to Parent Decline Year-over-Year

Jiade Li mainly engages in the research, production, and sales of BOPP electrical membranes, with downstream applications including polypropylene films for film capacitors (capacitor films) and composite copper foil substrates.

From the performance data, in 2022, 2023, 2024, and the first half of 2025, Jiade Li’s operating revenue was 550 million yuan, 528 million yuan, 734 million yuan, and 367 million yuan, respectively. Its net profit attributable to the parent was 192 million yuan, 141 million yuan, 238 million yuan, and 125 million yuan, showing some volatility.

In the second half of 2025, Jiade Li’s operating revenue and net profit attributable to the parent decreased by 1.84% and 9.36% year-over-year. Despite this, the company’s total operating revenue and net profit for 2025 increased by 3.18% and 2.35% year-over-year, respectively, but the growth rate slowed significantly compared to 2024.

It is worth noting that Jiade Li relied heavily on its largest supplier, Borealis Private Limited (hereinafter referred to as Borealis), during the reporting period. In the first half of 2022, 2023, 2024, and 2025, the proportion of procurement from Borealis accounted for 87.53%, 84.95%, 80.59%, and 78.43% of total procurement, respectively. The amount spent on polypropylene resin from Borealis made up 96.62%, 95.54%, 90.74%, and 92.08% of the company’s raw material procurement.

Jiade Li explained in the prospectus that during the reporting period, to ensure raw material quality, the company mainly purchased polypropylene resin produced by Borealis AG, which is the sole distributor of Borealis resin materials in China.

Questions Over Delayed Capitalization of Fixed Assets

The reporter observed that as of the end of the first half of 2025, Jiade Li’s fixed assets and construction-in-progress totaled 367 million yuan and 339 million yuan, respectively, nearly half of the company’s total assets of 1.491 billion yuan.

The exchange previously requested Jiade Li to clarify the details of newly purchased machinery and equipment during each period, installation processes and progress, current usage status, and whether there was a delay in capitalizing fixed assets. Jiade Li responded that during the reporting period, the company judged whether construction-in-progress had reached the predetermined usable state according to relevant standards, and promptly transferred fixed assets that had reached the usable state and recorded depreciation. There was no delay in capitalizing fixed assets.

Notably, Jiade Li’s construction-in-progress surged from 78 million yuan at the end of 2024 to 339 million yuan at the end of the first half of 2025, including 224 million yuan in ongoing projects and 115 million yuan in project materials.

Regarding specific projects, as of the end of the first half of 2025, the seventh and eighth production line projects had invested approximately 60% of their total budgets, and Jiade Li had begun to transfer these to fixed assets. The headquarters building project had invested 92.81% of its budget, yet Jiade Li had not started to transfer it to fixed assets.

Furthermore, in the first half of 2025, compared to the 112 million yuan invested in the seventh and eighth production lines and 29.18 million yuan in the Xiamen new materials production base (Phase I), Jiade Li only invested 4.78 million yuan in the headquarters building project.

Does Jiade Li have a slowdown in the construction of the headquarters building project in the first half of 2025, and is this delaying the transfer to fixed assets? Has the headquarters building already been put into use? Given that the cumulative investment reached 92.81% of the budget, should the project have been transferred to fixed assets? The Daily Economic News reporter sent an interview letter to Jiade Li on March 12, but as of press time, no reply has been received.

Gross Profit Margin Significantly Higher Than Industry Peers

In the first half of 2022, 2023, 2024, and 2025, Jiade Li’s gross profit margins were 49.29%, 41.91%, 46.29%, and 48.79%, respectively, far exceeding the industry average of 41.31%, 33.22%, 32.88%, and 36.85%.

Jiade Li explained that the high gross profit margin is mainly due to: insufficient supply in the domestic ultra-thin film market; the significant performance advantages of ultra-thin films; the company’s product structure mainly consisting of ultra-thin films; and leading production efficiency and cost control.

The reporter noted that compared to industry peers, even Jiade Li’s lowest-margin medium-thick films had gross profit margins of 41.48%, 33.89%, 39.62%, and 43.54% in the first half of 2022, 2023, 2024, and 2025, respectively. In contrast, Dazhongnan’s margins were 38.40%, 35.84%, 35.03%, and 37.26% in the same periods, generally lower than Jiade Li’s medium-thick film margins, except in 2023.

Compared with Haiwei Co., Ltd., in the first half of 2022, 2023, 2024, and 2025, Jiade Li’s ultra-thin film gross margins were 63.51%, 58.43%, 57.71%, and 59.06%, respectively, significantly higher than Haiwei’s 52.8%, 37.1%, 38.0%, and 43.2% (first five months of 2025). Although Jiade Li’s thin and medium-thick films had lower margins than Haiwei in 2022 and 2023, their margins increased substantially in 2024 and further improved in the first half of 2025, surpassing Haiwei in 2024 and 2025.

Additionally, Jiade Li stated in the prospectus that during the reporting period, the average purchase price of polypropylene resin raw materials decreased from 16,800 yuan/ton, 14,000 yuan/ton, 12,700 yuan/ton, to 12,800 yuan/ton, mainly due to declines in international oil prices and shipping costs. However, recent sharp increases in international oil and shipping prices may raise the procurement cost of polypropylene resin, potentially impacting gross profit margins.