Shanghai Top Numerical Control Technology (1726745D CH)

Shanghai Top Numerical Control Technology is looking to raise about US$100m in its upcoming Hong Kong IPO. Shanghai Top Numerical Control Technology (STNCT) is a leading enterprise in China specializing in the research, design, production, and sales of high-end intelligent manufacturing equipment, with a primary focus on five-axis CNC machine tools, and it mainly serves the aviation industry. STNCT presents a compelling growth story, underpinned by its strong foothold in the aviation segment and steadily improving financial performance. However, several risks temper the upside - Decline in unit sales in its core aviation product, negative cash flow and a highly fragmented market, limiting clear market leadership. In this note, we look at the company’s past performance.