Reporter Su Hao and Cao Xueping report from Beijing

(Photo courtesy of Kangzhong Medical Fundraising and Construction Project Company).

Recently, Kangzhong Medical (688607. SH) announced a news about the postponement of its fundraising investment project. The Company plans to update the timeline for the expected completion and commissioning of the fund-raising investment project. Specifically, the company has postponed the estimated completion dates of the "flat panel detector production base construction project" and the "R&D service center construction project" from December 2024 to December 2025.

The reporter of "China Business Daily" noticed that from the initial fundraising IPO to the end of November 2024, the overall investment progress of Kangzhong Medical's fundraising and investment projects was less than half, and the overall project construction progress was slow. In addition, judging from the production and sales data of the company's main products in recent years, there may be a risk of overcapacity after the new production capacity is launched.

In this regard, on January 3, 2025, the relevant person in charge of the medical securities department of Kangzhong said in an interview with reporters that the construction progress of the fundraising project was not as expected and the project was delayed, the main reasons were the company's lack of experience in engineering construction management, the revision and update of relevant building regulations in the construction process, and the actual construction such as the upgrading and selection of production processes, the second review and approval of drawings for the renovation and construction of some fire protection facilities and building structures, and the site restrictions on the construction site. It is caused by the comprehensive influence of multiple factors such as special process requirements in the medical device industry.

Twice postponed

According to the prospectus of Kangzhong Medical, the company plans to use the raised funds for new production capacity at the time of the initial IPO, of which the construction project of flat panel detector production base is expected to invest 214 million yuan, and the construction project of R&D service center is expected to invest 102 million yuan. Kangzhong Medical believes that after the above projects are put into production, the company will expand its production capacity, and it is expected to add a total of about 13,000 flat panel detectors of various specifications per year.

The reporter noted that from the launch of Kangzhong Medical's initial fundraising project to the end of November 2024, the overall investment progress of the company's fundraising project is less than half of the original plan.

According to the announcement, as of November 30, 2024, the cumulative investment amount of Kangzhong Medical's fundraising project "Flat Panel Detector Production Base Construction Project" is about 100 million yuan, and the cumulative investment progress is 47.20%; The cumulative investment amount of the "R&D service center construction project" is 43.4074 million yuan, the cumulative investment progress is 42.60%, and the overall investment progress of the fund-raising project is 45.71%.

It is worth mentioning that this is not the first time that the fundraising project of Kangzhong Medical has been postponed.

On June 20, 2023, Kangzhong Medical announced that it had decided to extend the estimated usable status date of the "Flat Panel Detector Production Base Construction Project" and the "R&D Service Center Construction Project" from the end of 2023 to December 2024.

At that time, Kangzhong Medical said that the reasons for the delay included but were not limited to the combined impact of macro factors, limited site constraints of the fundraising and investment project, shortage of electricity at the construction site of the fundraising and investment project, and the unsatisfactory approval time of the administrative approval involved in the fundraising and investment project, resulting in the slower than expected progress of the fundraising project.

According to public information, Kangzhong Medical is an enterprise engaged in the research and development, production, sales and service of digital X-ray flat panel detectors. The products cover medical general radiotherapy, breast, dynamic fluoroscopy, radiotherapy, oral 3D imaging, industry, security, pet medical and other fields.

In February 2021, Kangzhong Medical landed on the A-share market. However, just after the company went public, its performance began to decline.