China Eco-Materials Files for U.S. IPO of Up to $21.3 Million

China Eco-Materials has applied to list its ordinary shares on the Nasdaq Global Select Market under the symbol "ZGHB."
Yaning YingOct 09,2019,06:55

China Eco-Materials Group Co. Ltd., an eco-friendly construction materials vendor and distributor, files for the initial public offering of a minimum of 1.2 million and a maximum of 2.5 million ordinary shares of the company. According to its prospectus filed with the U.S Security and Exchange Commission.

The Jiangsu-based company is mainly engaged in the production and sale of the following two eco-friendly construction materials: autoclaved aerated concrete blocks and ready-mixed mortar. The primary business operations are conducted through its variable interest entity (or "VIE"), Nanjing Fuya, which began operations in 2004. China Eco-Materials said in its filing.

All the company's sales were made to customers in Jiangsu province, especially in the Nanjing City surrounding area. For the years ended February 28, the company's revenue increased by 11.1% from $6.3 million in 2018 to $7.0 million in 2019.  Net income increased by 16.7% from $1.2 million in 2018 to $1.4 million in 2019 according to the data in the prospectus.

General and administrative expenses as a percentage of the revenue in 2018 and 2019 are 4.0% and 6.1%, respectively. Net cash used in investing activities is $2.7 million in 2019, which is a lot more than that in 2018. These data shown in the company's file reflected the company's strategy of "seek to expand our sales force," "investing in personnel training and equipment and production upgrades necessary to maintain the quality of our products," China Eco stated.

One thing that needs to be pointed out is that base on the prospectus, China Eco-Materials entered in two industries: autoclaved aerated block and ready-mixed mortar industry. However, the growth rate of the autoclaved aerated block industry, which is the company's most important market slowed down from 2014 to 2018. From a year-on-year increase of 23.61% in 2015 to 3.24% in 2018.

China Eco-Materials plans to list its ordinary shares on the Nasdaq Global Select Market under the symbol "ZGHB."

China Eco-Materials has not disclosed its underwriters on the proposed offering.