Black technology: a super empire spanning two worlds

Chapter 290 [A Good First Impression]

in the office.

Xiao Yu stared at the office computer on the table, browsing the information about Likang Technology provided by Xiao Lan.

The company's full name is "Liren Health Technology Co., Ltd.", and its main business includes the research, development, production and sales of multilayer co-extruded polyolefin heat shrink film products; and the research, development, production and sales of thermoplastic elastomers.

They also offer a wide range of consumer-grade sex toys, including realistic hair strands, doll skins, silicone lifelike dolls, molded cups, and vibrating toys, making for a very diverse product portfolio.

"Not bad, it's a legitimate manufacturing company, quite capable." Xiao Yu nodded as he browsed through some information about Likang Technology.

Xiao Lan also found some videos of the company's production workshop. Some were posted by the company itself, and some were posted by some of the company's employees on social media. Xiao Lan found and compiled them all.

One of the major technological highlights of Likang Technology is its independently developed "flexible memory material," which achieves environmental stability from -45 degrees Celsius to 135 degrees Celsius.

This company not only produces thermoplastic elastomer materials, but also manufactures and researches high-end silicone. Zhou Chengyang, the founder of Likang Technology, believes that the upgrade of AI doll skin materials will lead to a surge in demand.

According to this year's annual report, Likang Technology's total operating revenue in 2023 was 7.53 million yuan, a year-on-year increase of 63.35%, with a net profit of -3380.73 million yuan, a year-on-year decrease of 267.28%, and a non-GAAP net profit of -5887.21 million yuan, a year-on-year decrease of 461.58%.

"Xiao Lan, the company's revenue increased by about 3 million last year, but its profits plummeted. What's the reason for this? Where did the money go?" Xiao Yu asked. There was a lot of information, and he was too lazy to look at it. Asking Xiao Lan directly would be more efficient.

If Zhou Chengyang tries to pull some kind of "restructuring" scheme to get company money out of the company, he will reject it without hesitation, and even if Yun Shu comes to plead for him, it will be useless.

A moment later, Xiao Lan replied: "According to a series of information disclosed by the company, and the annual report and financial statement conference call chaired by its chairman Zhou Chengyang, the reason for the sharp decline in the company's profits is that the company has significantly increased its investment in research and development expenses."

"Data shows that in 2023, Likang Technology's R&D expenditure accounted for 27.56% of its operating revenue. Zhou Chengyang told shareholders in the earnings call that the company will continue to increase its R&D investment in the future to ensure the market competitiveness of its products."

"Oh? A company that makes fun products has such a high R&D investment ratio?" Xiao Yu couldn't help but ask, then nodded and said, "Yes, that's pretty good. Being able to use most of the revenue for corporate R&D shows that Yun Shu's cousin-in-law is ambitious. That's good."

With its R&D investment ratio, Likang Technology is a high-investment enterprise, both within and across industries.

The ratio of R&D investment to revenue for sex toy companies varies depending on factors such as company size, development stage, and market positioning.

According to data compiled by Xiaolan, the R&D investment ratio in the sex toy industry ranges from approximately 0.23% to 30%.
The company's R&D expenditure accounts for 27.56% of its revenue, and according to Zhou Chengyang in the earnings call, he plans to increase the R&D investment to around 30% this year.

Compared with several peer companies in the industry, Zuiqingfeng's R&D investment accounts for only 0.23% of its operating revenue. Zuiqingfeng adopts a light-asset business model of internet sales + OEM production. It mainly purchases through the "sales-driven procurement" model and licenses its own trademarks to suppliers for OEM production. Therefore, it has a low dependence on R&D investment.

Jussex's R&D investment accounts for only 0.88% of its total revenue. The company believes that sex toys should focus more on market promotion and sales channel expansion, rather than product R&D and innovation.

As an enterprise integrating independent research and development, production and sales of silicone humanoid robots and silicone dolls, Likang Technology does not follow a light-asset business model, but rather focuses on assets and invests heavily.

The investment in scientific and technological research and development accounts for nearly one-third of the product sales volume, which also shows that Zhou Chengyang is willing to invest more in research and development in order to pursue technological innovation and product differentiation.

Moreover, he intends to focus on high technology as the main selling point for future products, such as using advanced technologies like artificial intelligence and biomaterials, and the proportion of R&D investment will be even higher. Xiao Yu couldn't help but smile and said to himself, "Judging from this information, Yun Shu's recommendation is quite reliable. I don't think this company needs to rely on Lingjing Technology's coattails; given time, it will rise in the industry."

Of course, if you manage to latch onto Lingjing Technology, you're guaranteed to soar to new heights and achieve meteoric success.

However, whether or not to cooperate will definitely require the company to send someone to conduct an on-site investigation at Likang Technology Company. After all, the information that Xiaolan found is public information. If we want to cooperate, we need to understand the non-public information.

Xiao Yu didn't need to worry about these things personally; Xu Changming and the others would arrange for someone to take care of them.

Xiao Yu learned about Likang Technology in its initial stages, and his first impression of the company was quite good; at least, he was quite impressed with it.

The annual report looked rather bad, but that was because Zhou Chengyang had bigger ambitions and invested the money he earned back into research and development on a large scale. Otherwise, he could have easily turned a profit. He could have simply reduced the R&D ratio and saved the money as profit.

The company listed on the Beijing Stock Exchange (BSE) last year. The BSE, which had only recently opened, allowed companies with losses to list. The BSE also had relatively high entry requirements, and most retail investors in the A-share market could not speculate on BSE stocks.

Moreover, the Beijing Stock Exchange is more volatile, with daily price limits of ±30%, while the main board's daily price limits are ±10%, and the ChiNext and STAR Market's are ±20%.

However, the capital market did not buy into Zhou Chengyang's promises, with investors believing that Zhou Chengyang was too aggressive.

Likang Technology also peaked on its first day of listing, with its highest market value reaching 28 billion yuan. However, almost a year after its listing, its market value has been halved and then halved again, with the lowest share price falling to 1.07 yuan per share and its market value falling to 5 million yuan.

The stock price has rebounded somewhat, but it's still only around 1.5 yuan, with a total market capitalization of just over 7 million yuan, which is lower than the company's annual revenue.

The company's daily trading volume in the secondary market is only one or two million, and sometimes it is even less than one million, so there is basically no liquidity.

This amount of power is nothing compared to Lingjing Technology.

Even with its trading volume shrinking to extremely low levels, Lingjing Technology still easily achieves a daily turnover of 40 to 50 billion yuan. A single positive candlestick can easily push its turnover to the hundreds of billions. For the past two years, it has consistently and steadily dominated the top spot in the daily turnover rankings of the A-share market, with no other stock able to challenge it.

The liquidity of Likang Technology is limited because it is a stock listed on the Beijing Stock Exchange, a market with virtually no retail investors. Moreover, the overall liquidity of the Beijing Stock Exchange is not high; the total daily turnover of the Beijing 50 Index is currently less than 30 billion yuan.

After learning about the company briefly, Xiao Yu stopped paying attention. Yun Shu had already stepped in, and their relationship was just one step away from being officially confirmed. Xiao Yu was definitely going to give her cousin-in-law a chance to get close to Lingjing Technology.

But now that the opportunity has been given, whether they can firmly hold onto it depends on whether Zhou Chengyang and Likang Technology can stand up for themselves.

If it doesn't stand up, Xiao Yu will still cut it. Humanoid robots are another key business of Lingjing Technology, and are the precursor technology for the exoskeleton armed power armor that the military has been eagerly anticipating.

……

(End of this chapter)