Guangtai Vacuum, which raised tens of millions for salaries and failed a betting agreement with CITIC Securities Investment, will go for a second review!

Ask AI · How Do Citic Securities Investment’s Dual Roles Affect the Fairness of a Company’s IPO?

The sponsor’s subsidiary is the seventh-largest shareholder.

Author｜Zhuoma

Editor｜Liu Qinwen

Rare earth is like “magic powder” that lets modern industry “cheat,” and rare-earth permanent magnet materials are made using this powder—the strongest “industrial magnet” in history, effectively the “power core” of modern high technology.

Shenyang Gantai Vacuum Technology Co., Ltd. (hereinafter “Gantai Vacuum,” 874200.NQ) is an enterprise that produces industrial equipment mainly used in the rare-earth permanent magnet materials industry. Notably, Gantai Vacuum was previously scheduled for review at the Beijing Stock Exchange on December 29, 2025, but its review was deferred. On March 26, the company will be reviewed again for the second time at the Beijing Stock Exchange.

According to the prospectus, for this IPO, Gantai Vacuum plans to use the raised funds for the vacuum melting furnace and sintering furnace production expansion and renovation project, as well as the construction project of a R&D and product exhibition center.

01

Turnover of 300 million RMB per year from vacuum equipment,

Inventory value higher than revenue

According to the prospectus, Gantai Vacuum’s main business is the R&D, manufacturing, and sales of vacuum equipment. It has an integrated capability from independently designed equipment to manufacturing and delivery. Downstream application fields of its products include rare-earth permanent magnets, hydrogen storage material processing, photovoltaics, and mechanical and electronic processing, among other industries.

Gantai Vacuum’s products include vacuum sintering furnaces, vacuum melting furnaces, vacuum coating machines, and other vacuum equipment, among which the sintering furnace and melting furnace are the company’s main products. The vacuum sintering furnace is a special industrial piece of equipment that, under a “deoxygenated ultra-clean environment,” uses precisely controlled high temperatures to “bake” powders of metals, ceramics, and other materials into high-performance, high-purity, dense materials. It is an indispensable core piece of equipment in the high-end materials manufacturing field. From 2022 to 2024 and the first nine months of 2025 (hereinafter “each period”), the vacuum sintering furnace products generated revenues of 179 million RMB, 152 million RMB, 262 million RMB, and 190 million RMB respectively, accounting for 63.65%, 48.72%, 69.29%, and 55.67% of total revenue, respectively.

Meanwhile, a vacuum melting furnace is the ultimate melting equipment that uses high temperatures of over a thousand degrees Celsius and even several thousand degrees Celsius under a “deoxygenated ultra-clean environment” to melt, purify, and then smelt and refine those “delicate” or “difficult-to-handle” metals into high-performance, high-purity materials or castings. It is a cornerstone piece of equipment for high-end metallurgy and advanced materials preparation. In each period, this product achieved revenues of 77 million RMB, 139 million RMB, 104 million RMB, and 138 million RMB respectively, with its share of total revenue at 27.58%, 44.68%, 27.55%, and 40.32%, respectively.

That is, the combined revenue contributed by these two product types (sintering furnace and melting furnace) accounted for 91.23%, 93.4%, 96.84%, and 95.99% of Gantai Vacuum’s total revenue in each period, respectively—meaning the company’s product structure is relatively single.

Image source: prospectus

Worth noting is that in recent years, benefited by the rare-earth permanent magnet materials industry entering a high-cycle period of prosperity, Gantai Vacuum’s order amounts and business share from the rare-earth permanent magnet sector have risen rapidly. The rare-earth permanent magnet industry has become the downstream industry with the highest share of the company’s revenue. Within the industry, well-known rare-earth permanent magnet materials producers—including ZK3 (000970.SZ), Goldin Magnetics (300748.SZ, 6680.HK), Ningbo Yunsheng (600366.SH), and Northern Rare Earth (600111.SH)—are all customers of the company.

Based on this, Gantai Vacuum’s performance has continued to grow in recent years. From 2022 to 2024 and the first nine months of 2025 (hereinafter “each period”), it achieved revenues of 281 million RMB, 312 million RMB, 379 million RMB, and 342 million RMB respectively, and net profits attributable to the parent of 44.2559 million RMB, 73.0345 million RMB, 68.9441 million RMB, and 76.6747 million RMB respectively.

Image source: prospectus

In its prospectus, Gantai Vacuum also disclosed full-year 2025 performance and its 2026 Q1 report. In 2025, the company achieved revenue of 408 million RMB, a year-on-year increase of 7.79%; and net profit attributable to the parent of 81.6774 million RMB, a year-on-year increase of 18.47%. It expects that in 2026 Q1 it will achieve revenue of 117 million RMB to 123 million RMB, a year-on-year increase of 90.76% to 100.54%; and net profit attributable to the parent of 20 million RMB to 26 million RMB, a year-on-year increase of 38.99% to 80.69%.

However, Gantai Vacuum also states that if the rare-earth permanent magnet materials industry faces intensified competition, downstream demand declines, performance falls, or issues like low production ramp-up rates occur, there will be risks of period-based and structure-based excess capacity, which could lead to customers slowing investment plans, delaying project execution, and declining demand for capacity expansion, ultimately resulting in the company’s revenue growth rate slowing down and possibly revenue falling.

Despite having many well-known large customers, in each period, Gantai Vacuum’s recorded book value of inventory was 291 million RMB, 422 million RMB, 423 million RMB, and 413 million RMB respectively — all higher than revenue in each period. The company says this is because the execution cycle of large equipment is long, leading to a relatively large scale of goods-in-transit and work-in-progress within inventory.

Gantai Vacuum’s accounts receivable have also continued to grow in recent years. As of the end of each period, the book value of accounts receivable was 38.5492 million RMB, 32.5951 million RMB, 60.8102 million RMB, and 67.6854 million RMB respectively. Of these, 14.7898 million RMB, 25.6924 million RMB, 43.5568 million RMB, and 59.1227 million RMB respectively were already past the credit period, accounting for 38.37%, 78.82%, 71.63%, and 87.35% respectively. The company states that if the market environment or customers’ own operating conditions undergo major unfavorable changes, resulting in accounts receivable not being collected on time or not being collected in full, it will expose the company to the risk of bad debts.

02

Reviewed a second time at the Beijing Stock Exchange,

Questioned about the accuracy of revenue recognition

Notably, this is already Gantai Vacuum’s second time being reviewed at the Beijing Stock Exchange. On December 29, 2025, the company was reviewed for the first time at the Beijing Stock Exchange, but its review was deferred, making it one of the companies that were deferred after being initially reviewed for IPO on the A-share market in May 2025.

According to the review announcement, the Beijing Stock Exchange focuses on the accuracy of Gantai Vacuum’s revenue recognition, and requires the company to verify the status of projects that were not accepted more than one year after shipment, and to explain whether there are situations of agreeing with customers on acceptance times or recognizing revenue across accounting periods.

Image source: Beijing Stock Exchange website

After three rounds of extension requests for replying, Gantai Vacuum finally provided its response on March 18, 2026.

Gantai Vacuum said that its vacuum equipment products have characteristics such as a high degree of customization and complexity. After the product is shipped to the customer site, the company has installation and commissioning obligations under the contract. Ultimately, the company only recognizes revenue after the customer confirms the product is qualified and issues an acceptance report or acceptance certificate.

The period between shipment and acceptance involves multiple stages, including receiving sign-off (about 1 week for domestic customers and 1 to 3 months for overseas customers), starting installation (0 to 3 months), installation (1 to 3 months), on-site commissioning (1 to 3 months), and process acceptance and trial operation by the customer (1 to 6 months). Therefore, Gantai Vacuum states that a time from shipment to acceptance exceeding one year is not an abnormal situation and is a normal one within the industry.

In the response letter, Gantai Vacuum compared itself with Baiqida Intelligent Technology (Ningbo) Co., Ltd. (hereinafter “Batai Intelligent,” 872423.NQ, which has been delisted). The latter’s main products are equipment such as magnetic field forming presses. Its downstream application fields are also mainly the rare-earth permanent magnet industry, and there is overlap with some downstream customers of Gantai Vacuum.

The response letter shows that Batai Intelligent’s revenue cycle with the major customers that overlap with Gantai Vacuum is about 11 to 18 months. Gantai Vacuum claims that this duration is not significantly different from its own; therefore, some customers have relatively longer acceptance cycles for vacuum equipment products, which is somewhat reasonable.

Image source: response letter

In fact, the response letter shows that for Gantai Vacuum’s sintering furnace equipment, the time from shipment to acceptance ranges from 12 months to 32 months, and for melting furnaces, it ranges from 13 months to 28 months. That means that for Gantai Vacuum’s longest single order, it takes nearly three years for the revenue to be received.

From 2022 to 2024 and the first nine months of 2025, the amounts for which acceptance occurred more than one year after shipment were 26 million RMB, 41 million RMB, 136 million RMB, and 133 million RMB respectively, accounting for 9.27%, 13.05%, 35.9%, and 38.83% of revenue for the respective periods.

Regarding the relatively high amounts in 2024 and the first nine months of 2025, the company says it was affected by the prosperity of the rare-earth permanent magnet industry. In 2022, downstream customers expanded production capacity or increased demand for equipment upgrades, and some projects were completed and accepted only in 2024 and the first nine months of 2025, leading to an increase in projects with longer acceptance cycles; at the same time, in 2024 and the first nine months of 2025, there were more projects completed and accepted for the four-type melting furnace and large custom sintering furnace products, because the equipment processes are relatively complex and the acceptance cycles are usually long.

Gantai Vacuum states that any cases where some customers are unable to complete acceptance beyond one year are due to objective factors, such as factors including the customer’s process maturity, whether further process improvements are made, and product operational stability, which result in a longer time from the end of on-site installation and commissioning to acceptance; customers’ production lines not yet being fully built, or due to the temporary lack of basic conditions such as water and electricity, preventing installation for the time being, leading to a longer wait time after shipment for installation; and customers purchasing new processes or new-generation products, where the difficulty of installation and commissioning is greater, leading to a longer time for on-site installation and commissioning, etc.

Overall, in the response letter, Gantai Vacuum attributes the reasons why projects were not accepted for a long time to the customers.

From the perspective of accounting standards, companies recognize revenue based on whether “control” is transferred, which falls into two methods: the over-time method and the point-in-time method—i.e., recognizing revenue in stages during performance or recognizing revenue when control is transferred.

The method used by Gantai Vacuum is the point-in-time method: revenue is recognized only once, after the customer’s final acceptance signature—this also prolongs the time for the company to recognize revenue. As for why it does not use the over-time method, Gantai Vacuum says that before the equipment is fully delivered, finally commissioned, and passes acceptance, customers cannot obtain control of the equipment and cannot use the equipment to bring economic benefits to themselves.

At the same time, Gantai Vacuum says that the company and customers conduct acceptance based on equipment commissioning status, and there is no circumstance where the parties negotiate and determine the acceptance time point.

In addition, Gantai Vacuum claims that the two comparable listed companies—Dingli Technology (874127.NQ) and Hengjin Sensing (920870.BJ)—use the same approach: they also recognize revenue using the point-in-time method, with acceptance being the point at which control transfers. Its own revenue recognition policy aligns with industry practice and is reasonable.

As of now, the amount of projects that have been shipped more than one year ago but still have not been accepted totals 118 million RMB.

In addition to the issue of revenue recognition, Gantai Vacuum’s R&D expense ratio is also relatively low. The prospectus shows that Gantai Vacuum’s R&D expense ratios for each period were 4.63%, 5.35%, 4.9%, and 5.11%, while the averages for comparable companies in the same industry were 8.8%, 11.2%, 9.26%, and 11.66% respectively. Gantai Vacuum’s R&D expense ratio is only about half of the industry average.

Image source: prospectus

For this IPO, Gantai Vacuum plans to raise 168 million RMB. The company intends to use 69.3798 million RMB of this for the R&D and product exhibition center construction project. And it is worth noting that in the specific funding use breakdown for this project, 21.85 million RMB will be used to pay R&D personnel salaries, which is the largest expense category in the project, accounting for 31.49%.

Meanwhile, as of the end of September 2025, the company’s total number of employees is only 274, including just 40 R&D personnel, accounting for 14.6% of the total employees.

For the reasonableness of this spending, Gantai Vacuum says it was calculated based on the number of R&D personnel expected to increase during the project construction period and the average salary levels of R&D personnel disclosed by some vacuum equipment companies that are listed or publicly traded.

Image source: prospectus

03

The founder and former colleague co-founded a business together,

Dividend payouts totaling 45 million RMB in two years

As a company mainly engaged in the R&D, manufacturing, and sales of vacuum equipment, Gantai Vacuum’s founder, Liu Shungang, has many years of industry experience.

According to the prospectus, Liu Shungang was born in February 1964, holds a high school education, and since March 1987 has worked as a sales representative and sales section chief at Beipiao Vacuum Valve Factory, sales vice president at Shenyang Zhongbei Vacuum Technology Co., Ltd., and then roles such as sales department head, sales vice president, and general manager assistant at Aeon-Pneumatics Zhongbei Vacuum (Shenyang) Co., Ltd., accumulating many years of experience in the vacuum equipment industry.

In March 2008, Liu Shungang founded his own Shenyang Gantai Vacuum Equipment Co., Ltd. (hereinafter “Gantai Equipment,” which was deregistered in November 2020), and served as general manager. In May 2013, Gantai Equipment, Liu Shungang, and Wang Jigang, a colleague of his during his time at Aeon-Pneumatics Zhongbei Vacuum, jointly established Gantai Vacuum’s predecessor, Gantai Limited.

Wang Jigang was born in November 1975, has an undergraduate degree, and holds a senior engineer title. He previously served as a mechanical engineer at Shenyang Vacuum Technology Research Institute Co., Ltd., and as a mechanical engineer and head of the melting department at Aeon-Pneumatics Zhongbei Vacuum. In fact, just over a year after Gantai Equipment was established, in December 2009, Wang Jigang joined the company as a mechanical engineer and took full responsibility for the design and R&D of the melting furnace.

As of now, Liu Shungang directly holds 66.23% of the equity in Gantai Vacuum and indirectly controls an additional 19.3% through Gantai Holdings and the employee shareholding platform Gantai Hi-Tech. Combined, he controls 85.53%—making him the controlling shareholder and the actual controller of the company, and he serves as the company’s chairman. Wang Jigang directly holds 4.45% of the company’s shares and serves as a director and deputy general manager.

Image source: prospectus

In addition, Gantai Vacuum paid dividends in both 2022 and 2023—23.27M RMB and 32.85 million RMB respectively—accounting for 52.58% and 44.98% of net profit in the respective periods. Based on the aforementioned shareholding ratio, Liu Shungang’s total dividend payouts over two years amount to 45.6414 million RMB.

Image source: prospectus

Worth noting is that, more than one year after Gantai Vacuum changed into a joint-stock company, in October 2023, Citic Securities Investment injected 10 million RMB of its own funds into Gantai Vacuum for an increase in capital.

The two parties also signed a valuation adjustment (betting) agreement. If Gantai Vacuum fails to list by December 31, 2025, Citic Securities Investment may request Gantai Vacuum to repurchase all shares held by the former at one time, and Liu Shungang shall bear joint liability. However, this agreement was terminated in May 2024, and Citic Securities Investment did not require Gantai Vacuum to repurchase the shares.

What is somewhat intriguing is that Citic Securities Investment is a wholly-owned subsidiary of Citic Securities. Shortly after the termination of the above valuation adjustment agreement, in July 2024, Citic Securities became the sponsor for Gantai Vacuum’s application to list on the National Equities Exchange and Quotations system. In March 2025, Citic Securities again became the tutoring institution for Gantai Vacuum’s application to list on the Beijing Stock Exchange.

As of now, Citic Securities Investment holds 2.44% of the shares of Gantai Vacuum, making it the company’s seventh-largest shareholder. At the same time, it is also the company’s sponsor and lead underwriter.

Image source: canned图库

Bai Wenxi, Chief Economist for China Enterprises Capital Alliance (China region), said that Citic Securities’ model of “being both a shareholder and a sponsor” is fully compliant under the Beijing Stock Exchange’s system framework, but such a model does involve potential conflicts of interest. Strict internal control mechanisms need to be established, including information isolation systems, staff recusal and part-time restrictions, compliance review and disclosure obligations, among others.

From starting as a sales representative at a vacuum valve factory, to founding his own company and starting a business with former colleagues, and then to leading the company to the doorstep of the Beijing Stock Exchange—Liu Shungang has walked an 18-year entrepreneurship journey.

Do you like Gantai Vacuum’s listing this time? Feel free to discuss it in the comment section.

Author’s statement: personal views only, for reference