Guangzhou KDT Machinery Co Ltd

Guangdong Haode CNC Equipment Co., Ltd. has received a second round of inquiry letters during its IPO review on the Beijing Stock Exchange, raising questions over the rationale of its plan to raise funds for capacity expansion despite declining sales of core products and insufficient capacity utilization. From 2023 to 2025, sales of its edge banding series fell from 2,347 units to 1,926 units. In 2024, capacity utilization rates for the three major series—edge banding, panel cutting, and drilling—stood at 81.68%, 74.85%, and 78.44% respectively. Yet the company intends to raise 250 million yuan for a smart manufacturing project, aiming for an annual output of 4,000 edge banding machines upon reaching full production. Meanwhile, its gross margin has lagged the industry average by about 3 to 4 percentage points for three consecutive years, coming in at 23.03%, 25.84%, and 25.50% from 2022 to 2024, compared to the average of comparable companies at 28.95%, 28.69%, and 28.90% over the same period. Additionally, as of the end of 2025, its cash and cash equivalents reached as high as 202.77 million yuan, accounting for 36.12% of total assets and far exceeding peers, highlighting the contradiction of holding idle cash while seeking substantial fundraising. The controlling shareholders, Liu Jingsheng and his wife Wan Yan, together hold 77.26% of the shares, and related-party transactions as well as reinstatement clauses in VAM agreements have also raised governance concerns.