IPO Observation: Wife-Controlled Company Faces Questions on "Low Prices, Weak Negotiation Power," Research and Development Expenses Low Compared to Peers

After submitting its listing application to the Northbound Market in November last year, Shenzhen-based Controlou Corporation (hereinafter referred to as Controlou) recently received a second-round inquiry letter from the Northbound Market, focusing on eight major issues including related-party sales, inadequate innovation disclosure, and declining gross profit margin. Notably, as a company controlled by a couple with an ownership stake of over 80%, Controlou's gross profit margin has shown a significant decline overall and is far below the average of its peers.

Nearly 90% of Revenue Comes from Single Product

Gross Profit Margin Declines Overall, Far Below Peers' Average

According to the prospectus, Controlou is a high-tech company specializing in industrial automation control product research and development, production, and sales. Its main products include intelligent industrial control machines, control boards, and related accessories.

In 2020, 2021, 2022, and the first half of 2023 (hereinafter referred to as the reporting period), Controlou's revenue came mainly from a single product, which accounted for nearly 90% of its total revenue.

Controlou's revenue has been steadily increasing over the years, but there are concerns about its stability and sustainability. The company relies heavily on a few major customers, which poses risks to its business.

Main Products Experience Large Decrease in Backlog Orders

According to the prospectus, at the end of each year, Controlou's accounts receivable balance has been steadily increasing, with a write-off amount that has increased by over 1.4 times in just two years.