Recently, Quanzhou Jiadeli Electronic Materials Co., Ltd. (hereinafter referred to as "Jiadeli") has filed for a mainboard IPO, with GF Securities acting as the sponsor.

Compared to its peers, Jiadeli's gross margin significantly exceeds the industry average, and its net profit margin is strikingly high. Behind this strong profitability lies a sharp increase in the company's construction-in-progress projects.

The prospectus shows that Jiadeli's capacity utilization rate exceeded 97% during the reporting period, appearing very high. However, the formula disclosed for capacity utilization is "standardized output/capacity." If calculated using "actual output/capacity," the rate drops to around 80%. This raises questions about whether the disclosed capacity utilization data is overstated. Investors must refer to footnotes to understand the calculation methodology. Interestingly, when disclosing the production-to-sales ratio, Jiadeli uses actual production data, raising concerns about the objectivity and fairness of this "double standard."

**Abnormally High Profit Margins Amid Surging Construction-in-Progress** Jiadeli, founded in 2002, initially operated as a foreign-invested enterprise but transitioned to a domestic company in September 2023. It specializes in the R&D, production, and sales of BOPP electrical films, including BOPP films and recycled pellets.

From 2022 to H1 2025, Jiadeli reported revenues of RMB 550 million, RMB 528 million, RMB 734 million, and RMB 367 million, with net profits of RMB 192 million, RMB 141 million, RMB 238 million, and RMB 125 million, respectively. While revenue and profits declined in 2023, they rebounded sharply in 2024, showing significant volatility.

Notably, Jiadeli's gross and net profit margins are the highest among peers, far exceeding industry averages. From 2022 to H1 2025, its gross margins were 49.29%, 41.91%, 46.29%, and 48.79%, compared to industry averages of 41.31%, 33.22%, 32.88%, and 36.85%. The company attributes this to factors such as supply shortages in the ultra-thin film market, superior product performance, and cost efficiency. However, the prospectus lacks detailed comparisons to substantiate these claims.

Jiadeli's net profit margins were even more remarkable, reaching 34.97%, 26.66%, 32.42%, and 33.99% during the same period, compared to peer averages of 16.26%, 10.54%, and 10.65%. The company did not explain why net margins exceeded gross margins, though lower operating expenses likely played a role.

While Jiadeli's sales and administrative expense ratios were below industry averages, its R&D spending ratio shifted from above to below peers, raising doubts about whether its high margins are innovation-driven.

**Construction-in-progress surged from RMB 78 million at the end of 2024 to RMB 339 million in H1 2025, driven by investments in new production lines.**

**Is Capacity Utilization Overstated?** The prospectus reports capacity utilization rates of 107.74%, 99.52%, 102.89%, and 105.81% from 2022 to H1 2025. However, these figures are based on "standardized output/capacity," not actual production. If recalculated using actual output, the rates drop to 86.42%, 79.64%, 79.95%, and 81.5%, about 20 percentage points lower.

Moreover, while capacity utilization uses standardized output, the production-to-sales ratio is calculated using actual sales, creating inconsistency. If standardized output were applied here, the ratio would fall below 80%, not the 99% disclosed.

**Low-Level Errors Raise Questions About GF Securities' Due Diligence** Jiadeli plans to issue at least 45.9075 million shares, representing 10% of post-IPO equity, and raise RMB 725 million for a new production base and working capital.

Before filing, Jiadeli raised capital from four investors in June 2025 at RMB 8.83 per share, valuing the company at RMB 3.65 billion. A buyback agreement was signed, requiring the controlling shareholder to repurchase shares if the IPO fails by December 2028.

**A glaring error appears on page 116 of the prospectus, where "H1 2025" is mistakenly listed as "2022" for a major client, casting doubt on GF Securities' diligence.**