Recently, Shenzhen Peicheng Electronic Technology Co., Ltd. (hereinafter referred to as "Peicheng Technology") submitted its prospectus, seeking to list on the Beijing Stock Exchange through an IPO with a public offering of no more than 16.6667 million shares.

During the reporting period, Peicheng Technology's performance showed significant volatility, particularly pronounced in 2024, with both revenue and net profit declining by 4.02% and 20.8% year-over-year respectively. This "double decline" situation has directly triggered market concerns about the weakening growth momentum.

More notably, while facing performance pressure, the company also encountered order reductions from core customer BYD Company Limited. During the reporting period, transaction amounts between the two parties continued to decline, and BYD Company Limited's ranking in Peicheng Technology's customer list dropped from the largest customer in 2022 to the third largest customer in 2024. Behind this series of cooling cooperation, the core cause points to product quality issues.

Regarding the rationality of fundraising projects, Peicheng Technology's plan to raise 60 million yuan for supplementing working capital is also questionable. From a financial fundamentals perspective, the company's short-term debt repayment ability performs strongly, with relevant indicators consistently far above industry averages during the reporting period. Since 2023, cash on hand has completely covered short-term borrowings, and in 2024, short-term borrowings were completely cleared, indicating abundant cash reserves.

Meanwhile, its "self-generating" capability is outstanding, with net cash flows from operating activities exceeding 130 million yuan for two consecutive years in 2023 and 2024, demonstrating stable cash generation ability.

More noteworthy is that the company paid substantial dividends despite abundant funds: cash dividends totaled 77.5 million yuan from 2022 to 2023, an amount that already exceeds the planned 60 million yuan fundraising for working capital supplementation. This contradiction of "sufficient cash on hand, strong self-generating ability, and dividends exceeding fundraising amounts" while still relying on external financing to supplement working capital makes the rationality of this fundraising project urgently requiring further explanation from the company.

**Performance Decline and BYD Company Limited "Order Cuts"**

Peicheng Technology is positioned as a local circuit value-added service provider in the lithium battery new energy industry, professionally engaged in independent R&D, production and sales of third-party battery power control systems (BMS, PCS, etc.), and providing component application solutions centered on integrated circuits and discrete devices.

From 2022-2024 (hereinafter referred to as "reporting period"), Peicheng Technology achieved operating revenues of 850 million yuan, 764 million yuan, and 733 million yuan respectively, with net profits of 92.434 million yuan, 113.3785 million yuan, and 93.4449 million yuan respectively. Revenue continued to decline, particularly in 2024, when both revenue and net profit declined by 4.02% and 20.8% year-over-year respectively.

The continuous shrinkage of revenue and significant decline in net profit, especially the "double decline" situation in 2024, inevitably raises market concerns about weakening growth momentum.

Notably, Peicheng Technology's performance decline appears to be accompanied by order reductions from important customer BYD Company Limited. During the reporting period, the company's sales revenue to BYD Company Limited continued to decline, at 90.2989 million yuan, 42.9504 million yuan, and 38.0691 million yuan respectively, showing a year-over-year decreasing trend. Meanwhile, BYD Company Limited's ranking in Peicheng Technology's customer list dropped from the largest customer in 2022 to the third largest customer in 2024.

It should be noted that Peicheng Technology's continuous decline in sales revenue to BYD Company Limited is directly related to product quality issues. In Peicheng Technology's inquiry letter, the Beijing Stock Exchange clearly pointed out that in 2023, mainly due to quality problems with related IGBT products at factory delivery, Peicheng Technology signed a "Return Agreement" with CR Micro and returned related materials, while related compensation responsibilities were negotiated between BYD Company Limited and CR Micro, with Peicheng Technology not bearing compensation losses to BYD Company Limited.

However, the impact of quality issues has been directly reflected in cooperation data. In 2023, Peicheng Technology's IGBT device procurement declined by approximately 55 million yuan, leading to decreased sales revenue to BYD Company Limited, and in 2024, BYD Company Limited's procurement from Peicheng Technology further declined.

Thus, product quality issues became the key trigger for BYD Company Limited's reduced procurement, with lasting impact. The Beijing Stock Exchange also required Peicheng Technology to explain, based on orders in hand with BYD Company Limited and subsequent sales situations, whether product quality issues during the reporting period would cause significant adverse effects on the sustainability of cooperation between the issuer and BYD Company Limited and the issuer's operational stability.

**Ample Funds, Strong Short-term Debt Repayment Ability, Large Dividend Payments, Yet Still Planning Fundraising for Working Capital**

Peicheng Technology's Beijing Stock Exchange IPO aims to raise 500 million yuan, allocated to battery and power control system capacity enhancement projects, R&D center construction projects, and working capital supplementation projects.

The rationality of using 62 million yuan for working capital supplementation projects is questionable. During the reporting period, Peicheng Technology's current ratios were 1.55, 2.85, and 2.69 respectively, with quick ratios of 1.08, 1.9, and 2.23 respectively. Both current and quick ratios are well above 1, reflecting strong short-term debt repayment ability.

From asset details, as of the end of 2022, 2023, and 2024, Peicheng Technology's monetary funds were 60.2723 million yuan, 131.9198 million yuan, and 230.0445 million yuan respectively, with short-term borrowings of 70.6587 million yuan, 30.0244 million yuan, and 0 yuan respectively. This means that since 2023, the company's monetary fund scale has completely covered short-term borrowings, and by 2024, short-term borrowings were completely cleared, fully reflecting good cash reserve conditions and stable liquidity and short-term debt repayment ability.

Regarding cash flow, during the reporting period, Peicheng Technology's net cash flows from operating activities showed significant volatile improvement, from -39.0404 million yuan in 2022 (net outflow) to significant improvement in 2023 and 2024 at 143.6054 million yuan and 137.5192 million yuan respectively, achieving net inflows exceeding 130 million yuan for two consecutive years. Despite short-term operating cash flow pressure in 2022, the strong performance in subsequent years fully demonstrates enhanced "self-generating" ability, with cash creation from operating activities becoming stable and relatively strong.

More notably, from 2022 to 2023, the company's cash dividends totaled 77.5 million yuan, an amount that completely covers the 60 million yuan it plans to raise through Beijing Stock Exchange IPO for working capital supplementation. In other words, with appropriate adjustment of dividend rhythm, the company could completely meet working capital needs through internal funds. However, the reality is that while having continuously abundant cash on hand, cleared short-term borrowings, and strong "self-generating" ability, the company still plans to supplement working capital through external financing after substantial dividend payments to shareholders. The rationality of this approach may require further explanation from the company.