China’s Copton Files for IPO

The China Securities Regulatory Commission (CSRC) approved an initial public offering application from Qingdao, Shandong province-based lubricant producer Copton Technology.

The company aims to raise up to 25 million (U.S. $4 million) at the Shanghai Stock Exchange for several purposes, including construction of a research and development center, a new blending facility with annual capacity to make 40,000 metric tons of lubes, as well as regional sales networks.

Copton focuses on marketing of engine oils and auto care products. So far, it has 521 sales agencies nationwide, which helped the company score 59.5 million in net profits in 2013, up 18 percent from 2012.

In the prospectus, Copton also warned of risks to its business, which include overly relying on sales agencies, and a volatile exchange rate between the U.S. dollar and Chinas yuan. The latter is a factor because Copton buys part of base stocks from overseas.

Despite the approval, Copton has to further clarify the questions from the CSRC, including internal risk management, as well as sales agency management.