Summary of Key Issues
Zhongshan Tape Factory, Crown New Materials (with annual revenue exceeding 3 billion yuan and serving as a supplier for Apple/Huawei), is pursuing an IPO but has exposed a series of problems: The actual controllers, a sister and brother (holding a combined 87% of the shares), only hastily signed an "agreement to act in concert" under regulatory scrutiny, raising doubts about the stability of their control. Prior to the listing, they cashed out more than 700 million yuan through dividends and asset sales, yet still need to raise another 100 million yuan to supplement their funds, creating a logical contradiction of "distributing money while also asking for more." The company's revenue has increased, but profits have barely grown. Their product prices are twice those of their competitors, without sufficient explanation. There are concerns regarding the authenticity of customers, inventory levels, and collection risks. Additionally, there are frequent related-party transactions with questionable fairness in pricing, as well as compliance issues such as overproduction beyond safety permits and operating without the necessary licenses.
I. Temporary Control Arrangements: Governance Risks Under Family Control
The actual controllers of Crown New Materials are Mai Huiquan (Australian citizenship with permanent residency in Hong Kong) and his sister Mai Huixia (Chinese citizenship with a Hong Kong ID). Together, they hold 87% of the shares but have not signed an "agreement to act in concert" for a long time, claiming to have "no controlling shareholders." Regulators question: What will happen to the interests of minority shareholders if the siblings disagree?
It was only one month before the IPO meeting (in July 2026) that they hastily signed the agreement. This is like not locking the door usually and then rushing to lock it when an inspection is coming; naturally, regulators are wondering if this was done just to pass the review and whether similar issues will arise in the future.
More critically, three out of the nine board seats are held by family members, and the assistant to the chairman is one of the controllers' daughters and niece, meaning key positions are almost entirely occupied by family members. Independent directors, who should supervise, may become mere formality under such familial control—a situation where too many people make the decisions, leaving outsiders with little say.
II. Early Cash Out by the Actual Controllers: Logical Contradictions in Fundraising Before Listing
During the reporting period (2023-2025), Crown New Materials distributed 158 million yuan in dividends, of which 87% went to the family members. In 2022, they also cashed out over 610 million yuan by acquiring the assets of the controllers' spouse and purchasing land and factories from the controllers' brother-in-law. In total, the controllers have already taken more than 700 million yuan before the listing.
Yet, the company still needs to raise 100 million yuan through an IPO to "supplement working capital." If the 158 million yuan in dividends was enough to cover their needs, why do they still need to ask investors for more money? It's like running a restaurant where you keep most of the profits for yourself and then tell customers, "I don't have money for ingredients; please contribute some." This raises suspicion that the IPO might be merely a tool for the controllers to cash out.
III. Increased Revenue Without Higher Profits: Doubts About High Product Prices and Inventory
While Crown New Materials' revenue increased from 2.895 billion yuan to 3.408 billion yuan, their non-recurring net profit growth rate plummeted from 11.7% to 0.15%, indicating that they are selling more but making less profit. Their core product, industrial tape, is sold for 3.49 yuan per square meter, twice the price of competitors Jinghua New Materials (1.85 yuan) and Yongguan New Materials (1.78 yuan). The company explains this with "more complex manufacturing processes (mainly double-sided tapes)," but whether this justification holds up is questionable. Strangely enough, industry prices are declining, and the company's capacity utilization rate is nearly 95%, indicating near-full capacity. Such high prices and high production levels are rare in a competitive manufacturing sector—either the products are truly exceptional, or there is something wrong with the pricing.
There are also other issues: The proportion of new customers has dropped from 10.82% to 5.12%, suggesting that business expansion is difficult. They even consider a retail company with only 200,000 yuan in paid-in capital as a "direct sales customer," raising doubts about the authenticity of these clients. Inventory levels have increased (from 28.7% to 35.2%), but the provision for inventory write-downs has decreased (from 9.37% to 4.99%). Moreover, 32.84% of accounts receivable are overdue, indicating potential cash flow problems.
IV. Related-Party Transactions and Compliance Issues: "Family Business" and Safety Hazards
Crown New Materials purchases over 30 million yuan in cotton paper annually from related-party company Taibei Te Xin Cai, accounting for 60% of its total procurement volume from this supplier. The actual controller of Taibei Te Xin Cai is the brother-in-law of the company's vice president. Since Taibei Te Xin Cai's main income comes from Crown New Materials' orders, such transactions can easily lead to inflated prices, as the supplier relies on the company for business.
More serious compliance issues include producing adhesives in excess of the safety permit limits (overproduction), selling materials containing toluene without the necessary hazardous chemicals license, and having expired qualifications. These are significant flaws that could result in fines and even production halts if discovered by regulators, adversely affecting the company's performance.
Conclusion
Although Crown New Materials is a supplier for Apple and Huawei with considerable revenue, the many issues exposed before the IPO suggest potential risks: unstable control, questionable practices of the actual controllers in cashing out, poor financial performance, and significant related-party transaction and compliance risks. If these problems are not resolved, investors' funds may not be safe even after the company goes public.