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

Daily Economic News Reporter: Wang Lin    Editor: Dong Xing Sheng

Quanzhou Jiade Li Electronic Materials Co., Ltd. (hereinafter referred to as Jiade Li) is about to be reviewed for IPO listing 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-on-year in the second half of 2025.

Meanwhile, in a previous inquiry letter from the stock exchange, 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 pace of the company’s headquarters building project, which is closest to completion, seemed to slow down. Even though over 90% of the investment had been completed by mid-2025, the project had not yet been transferred to fixed assets.

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

Decline in Operating Revenue and Net Profit Attributable to Parent in the Second Half of 2025

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

Looking at performance, in 2022, 2023, 2024, and the first half of 2025, Jiade Li’s operating revenues were 550 million yuan, 528 million yuan, 734 million yuan, and 367 million yuan, respectively, with net profits attributable to the parent of 192 million yuan, 141 million yuan, 238 million yuan, and 125 million yuan. The operating performance showed some volatility.

In the second half of 2025, operating revenue and net profit attributable to the parent decreased by 1.84% and 9.36% year-on-year. Despite this, Jiade Li’s total operating revenue and net profit for the full year of 2025 increased by 3.18% and 2.35% year-on-year, 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). In 2022, 2023, 2024, and the first half of 2025, procurement from Borealis accounted for 87.53%, 84.95%, 80.59%, and 78.43% of total procurement, respectively. The procurement of polypropylene resin from Borealis made up 96.62%, 95.54%, 90.74%, and 92.08% of the company’s raw material purchases.

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 from the stock exchange about delayed capitalization

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

The exchange previously requested Jiade Li to clarify the specific situation of newly purchased machinery and equipment during each period, installation process 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 increased sharply 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 construction-in-progress and 115 million yuan in engineering materials.

Looking at individual projects, by the end of the first half of 2025, the cumulative investment in production lines No. 7 and No. 8 accounted for about 60% of the project budget, and Jiade Li had begun to transfer these projects 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, Jiade Li invested 112 million yuan in the No. 7 and No. 8 production lines, 29.1823 million yuan in the Xiamen new materials production base (Phase I), but only 4.779 million yuan was invested in the headquarters building project.

Does Jiade Li appear to have slowed construction of the headquarters building project in the first half of 2025 and delayed its transfer to fixed assets? Has the headquarters building already been put into use as of mid-2025? Given that the cumulative investment has reached 92.81% of the budget, should the project have been transferred to fixed assets? The Daily Economic News reporter sent an interview request 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 above the industry average of 41.31%, 33.22%, 32.88%, and 36.85%.

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

The reporter observed 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 2022, 2023, 2024, and the first half of 2025, respectively. In contrast, Daxin South’s margins were 38.40%, 35.84%, 35.03%, and 37.26% in the same periods, generally lower than Jiade Li’s medium-thick films, except in 2023.

Compared with Haiwei Co., Ltd., Jiade Li’s ultra-thin film gross margins were 63.51%, 58.43%, 57.71%, and 59.06% in 2022, 2023, 2024, and the first half of 2025, respectively, consistently 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 significantly 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 was 16,800 yuan/ton, 14,000 yuan/ton, 12,700 yuan/ton, and 12,800 yuan/ton, showing a downward trend 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, further impacting gross profit margins.