Hong Kong IPO disclosure precedents · 188 companies, 188 items
Disclosures that raw materials constitute the largest component of cost of sales and that commodity price fluctuations drive results, including quantified cost-share analyses and cases arguing limited exposure due to low purchase share.
During the Track Record Period, prices of our raw materials experienced fluctuations.
Business · p. 225
For example, prices of lithium-ion batteries increased significantly in recent years primarily due to the shortage of lithium supply and booming demand of lithium from both NEV and power storage sectors.
Business · p. 225
We do not engage in hedging using derivative instruments relating to the risk exposures in connection with our raw materials.
We had raw materials costs of RMB1,590.1 million, RMB2,453.0 million, RMB2,973.1 million and RMB712.5 million in 2020, 2021, 2022 and the three months ended March 31, 2023, respectively, accounting for 82.7%, 80.1%, 79.2% and 78.7% of our total cost of sales.
Financial Information · p. 280
We do not engage in hedging activities related to the risk exposures in connection with the price of our raw materials, and we may face price fluctuations.
Business · p. 196
We have not received any official notification from suppliers that they had encountered difficulties in fulfilling their obligation to provide raw materials to us under existing contracts; however, we expect that some of our upstream suppliers in or around Wuchang City may be impacted, which could result in potential decrease in paddy supply and relatedly increase in paddy price in the harvest season in 2023 and thereby lead to negative impact on our cost of raw materials and financial performance.
For the years ended 31 December 2020, 2021 and 2022 and the four months ended 30 April 2022 and 2023, our procurement cost for the relevant hardware and software accounted for 84.0%, 73.9%, 89.5%, 86.4% and 94.5% of our cost of sales respectively.
Financial Information · p. 297
For prudence sake and taking into account the historical fluctuation on the same during the Track Record Period for our Group, we adopted a hypothetical fluctuations 5% and 10% for procurement cost of the relevant hardware and software in performing the below sensitivity analysis.
Financial Information · p. 298
Any unexpected increases in market prices of the hardware and software may have a material and adverse effect on our business, results of operations and financial condition if we are unable to transfer the increased procurement cost to our customers.
Since we commenced self-operated cross-border seaborne transportation in 2021, we incurred bunker costs of RMB162.4 million and RMB392.8 million for the years ended December 31, 2021 and 2022, respectively, representing approximately 4.3% and 9.7% of our cost of sales for the corresponding periods, respectively.
Financial Information · p. 345
The increase in our bunker costs from 2021 to 2022 was attributable to an increase in global fuel prices in 2022, which contributed to the decrease in the gross profit margin of our self-operated cross-border seaborne transportation from 19.1% in 2021 to 14.1% in 2022.
Financial Information · p. 345
We compare prices of fuel among available options and select a suitable port for vessel bunkering.
Our cost of raw materials and components are subject to industrywide commodity pricing. In particular we have experienced increased cost of chips historically in line with industry price fluctuations.
Business · p. 188
We aim to maintain a steady supply of necessary components or raw materials at reasonable prices by expanding our supply channels, developing longterm relationship with major suppliers, and increasing our inventory to meet the needs of our production.
In relation to any risks of increasing prices in raw materials, in particular, steel products, we believe that the following will help us mitigate such risks or navigate through the changes in the market due to such risks:
Business · p. 264
Our equipment assets were not greatly affected by the rise in the price of raw materials.
Business · p. 265
We have a predominant position in the negotiation process of equipment asset procurement, and the actual procurement cost has been declining year by year.
In FY2019, FY2020, FY2021, 9M2021 and 9M2022, the cost of raw materials accounted for approximately 78.4%, 85.6%, 87.2%, 88.5% and 86.4%, respectively, of our total cost of sales.
Business · p. 270
The prices and availability of these major raw materials are sensitive to transport disruptions, government policies, general economic conditions, and many other factors that are beyond our control.
Business · p. 277
Moreover, for the raw materials to be purchased from new supplier for the first time, or the raw materials that are expected to have material price fluctuation from time to time, our procurement team would request price quotations from alternative suppliers from our list of qualified suppliers to obtain the best price for such raw materials.
For each of FY2019, FY2020, FY2021 and 3Q2022, our cost of raw materials amounted to approximately RMB796.4 million, RMB687.7 million, RMB642.7 million and RMB531.6 million, respectively, representing 48.6%, 43.5%, 39.5% and 43.7% of our total cost of sales, respectively.
Business · p. 273
In order to control our price risk, fixed-unit-price contracts, where the total price is adjustable, are preferred.