IPO Radar | Accounts receivable under pressure, Chengdu Ultra-Pure Hidden Multiple Concerns

Recently, Chengdu Super Purity Applied Materials Co., Ltd. (hereinafter “Chengdu Super Purity”) has updated its prospectus disclosure, officially signaling the start of a push to list on the ChiNext board.

The company plans to raise RMB 1.13B, focusing on core projects such as capacity expansion and the construction of a research and development center, thereby strengthening its layout in the semiconductor components sector.

As a company deeply focused on special coating components for semiconductor equipment, Chengdu Super Purity wears a “domestic substitution” halo. It has already achieved mass production of core components for etching equipment for processes at 5nm and below. In 2024, in the China Mainland market, it ranked first among domestic companies with a market share of 5.7%, and its prospects appear broad. However, as more details in the prospectus are gradually disclosed, multiple operational risks hidden behind the company’s impressive performance are coming to light one by one.

Concerns about extended payment terms come into focus

Chengdu Super Purity’s main products include special coating components for semiconductor equipment, precision optical components, and other products. As the “foundation” of semiconductor equipment manufacturing, the semiconductor components industry benefits from the wave of domestic substitution, but competition is intense and requirements for technology and supply-chain stability are extremely high.

Judging from performance data, during the reporting periods (from 2022 to the first half of 2025), Chengdu Super Purity’s revenue and net profit attributable to the parent company have both shown steady growth. In 2022, revenue was RMB 136 million and net profit attributable to the parent was RMB 57.55 million. In 2023, revenue increased to RMB 169 million and net profit attributable to the parent rose to RMB 64.81 million. In 2024, revenue climbed to RMB 257 million and net profit attributable to the parent reached RMB 82.26 million. In the first half of 2025, revenue was RMB 206 million and net profit attributable to the parent was RMB 60.82 million.

But behind the growth, Chengdu Super Purity’s accounts receivable turnover ratio has continued to decline. In 2022 it was 1.99 times/year; in 2023 it fell to 1.83 times/year; in 2024 it was 1.8 times/year; and in the first half of 2025 it dropped to 1.04 times/year—less than 60% of 2022. At the same time, the company’s accounts receivable turnover ratio has consistently been below the average level of comparable companies.

Source of data: Company announcements, Jiemian News research department

With the accounts receivable turnover ratio continuing to fall, the root cause lies in the rapid expansion of the scale of accounts receivable. The data show that from 2022 to 2024, Chengdu Super Purity’s accounts receivable carrying amount grew from RMB 77.43 million to RMB 156 million, with a compound annual growth rate of nearly 50%. This growth rate far exceeds the compound growth rate of revenue over the same period, meaning more and more of the company’s funds are being occupied by downstream customers, and the efficiency of capital turnover is steadily declining.

Accountant Wang Fangfang told a reporter from Jiemian News that the decline in accounts receivable turnover is usually related to factors such as relaxed sales policies, ineffective collections, and deteriorating customer credit conditions. Among these, extending payment terms is a common method companies use to stimulate sales and capture market share. For Chengdu Super Purity, which is in the final stage of its IPO push, to maintain cooperation relationships with core customers and further expand its revenue scale, it cannot be ruled out that it may attract customers by extending payment terms. However, this approach undoubtedly significantly increases the company’s risk of bad debts. Once downstream customers experience operating fluctuations and are unable to remit payments on time, bad debts may form and directly erode the company’s profits. Meanwhile, a large amount of funds being tied up will also intensify the company’s cash-flow pressure, affecting normal production and operations as well as R&D investment. Based on recent cases in which some companies in the semiconductor industry have high accounts receivable balances and difficult collections, this hidden risk for Chengdu Super Purity is worth heightened vigilance.

Increasing dependence on major customers continues

The weakness in accounts receivable turnover, to a certain extent, reflects Chengdu Super Purity’s relatively weak pricing power with downstream customers. Behind this disadvantage is a deeper issue: the company’s customer structure is single and its dependence on major customers continues to intensify—this is also one of the core challenges facing Chengdu Super Purity’s IPO.

In 2024 and the first half of 2025, Chengdu Super Purity’s two major core customers, Customer A and Customer B, together contributed nearly 70% of operating revenue. Compared with the proportions in 2022 and 2023, this share has further increased, and dependence on major customers continues to grow.

Source of data: Company announcements, Jiemian News research department

Public information shows that Chengdu Super Purity’s core customers are mainly semiconductor equipment companies. Companies including ASM China (688012.SH) and North Huachuang (002371.SZ) are important partners for it. In 2019, Chengdu Super Purity received ASM China’s “Supplier Award.” In 2022, it became a strategic partner of North Huachuang. In 2024, it was promoted to a “gold” supplier of North Huachuang. However, regardless of the specific identities of the company’s customers, a combined revenue share of nearly 70% means that if any one of them experiences operating fluctuations, sees a reduction in orders, or switches to other suppliers, it will deal a fatal blow to Chengdu Super Purity’s revenue.

An analyst, Tu Zhenbin, who has followed the semiconductor industry for a long time, believes that the revenue share of Chengdu Super Purity’s top five customers has already exceeded 85%, far above the industry’s average customer concentration level. In the context of pronounced cyclical fluctuations in the semiconductor equipment industry, the stability of customer orders directly determines a company’s operating performance. Chengdu Super Purity has failed to effectively expand its customer base and diversify its revenue sources; instead, its dependence on core customers continues to intensify. The sustainability of its continuously profitable ability, without question, has become the focus of regulatory inquiries and market attention.

Doubts about the impartiality of Customer B’s certification

Major customers not only provide orders to Chengdu Super Purity; their related-party relationship also cannot be ignored. To prove the technical advancement of its products, in its prospectus, Chengdu Super Purity disclosed that Customer B issued technical and application proof to the company, certifying that the company’s products’ overall performance reaches an internationally leading level.

However, the proportion of shares directly and indirectly held in the company by Customer B and its related parties had previously exceeded 5%, meaning Customer B had been a related party of the company. This has raised questions in the market.

According to the Regulations of the People’s Republic of China on Certification and Accreditation (revised in 2020), certification activities shall follow the principles of objectivity and independence, openness and fairness, and honesty and trustworthiness; certification bodies may not have any interest relationship in terms of assets or management with the certification applicant.

Attorney Zhang Shuo told a reporter from Jiemian News that as a shareholder of Chengdu Super Purity, Customer B has a direct interest relationship with the company. Its certification of “internationally leading level” is clearly in violation of the impartiality principles of certification activities, making it difficult to rule out the possibility of interest transfer or subjective favoritism. Zhang Shuo also further pointed out that technical certification for semiconductor components needs to be carried out by an independent third-party institution to ensure objectivity and authority.

Weak R&D investment

In fact, doubts about the impartiality of Customer B’s certification are only the surface. What it reflects behind the scenes is the core issue of Chengdu Super Purity’s insufficient R&D investment.

The semiconductor components industry is a typical technology-intensive sector, and R&D investment is the core support for companies to maintain technological barriers and enhance product competitiveness. Chengdu Super Purity’s R&D investment performance has remained weak, far below the average level of peer companies.

Financial data show that in 2023, Chengdu Super Purity’s R&D expense ratio was 5.66%. In 2024, it declined to 5.37%. In the first half of 2025, the company’s R&D expense ratio further fell to 3.67%. In the same period, the average R&D expense ratio of comparable companies in the industry was above 7%.

Source of data: Company announcements, Jiemian News research department

From the absolute value of R&D investment, during 2022 to the first half of 2025, Chengdu Super Purity’s cumulative R&D investment was only RMB 36.7311 million. This is seriously inconsistent with the semiconductor components industry’s characteristics of “high R&D and high investment.”

Hidden risks in supply-chain security

On the supply-chain side, Chengdu Super Purity also faces serious dependency issues. The procurement share from its first-largest supplier, Kema Technology, has risen year by year and has already exceeded 50%.

During the reporting period, Chengdu Super Purity’s procurement share from Kema Technology continued to climb. In 2022, it was 29.88%; in 2023, it increased to 33.75%; in 2024, it jumped to 48.47%; and in the first half of 2025, it further exceeded 52.03%. At the same time, the procurement shares of the company’s top five suppliers also rose from 63.88% in 2022 to 74.60% in the first half of 2025. Supplier concentration continues to increase, and supply-chain diversity is severely insufficient.

Source of data: Company announcements, Jiemian News research department

The semiconductor components industry has extremely high requirements for the quality of raw materials and the stability of supply. The quality of raw materials directly determines the performance of the final products. An excessively high procurement share from a single supplier means Chengdu Super Purity’s production and operations are highly dependent on Kema Technology’s supply capability, product quality, and the stability of pricing.

Analyst Li Jun told a reporter from Jiemian News that, from the perspective of industry structure, although the upstream raw material market for semiconductor components is generally fragmented, monopoly characteristics are significant in sub-segments. Usually, a single product category is provided by only a handful of suppliers, giving those suppliers strong bargaining power. Chengdu Super Purity’s procurement share from Kema Technology exceeds 50%, which suggests it may lack bargaining power in procurement negotiations. If it then faces issues such as raw material price increases and stricter payment terms, it will further squeeze the company’s profit margins.