Ostin Technology Group Aims For $13.5 Million US IPO

Summary

• The Ostin Technology Group has filed to raise $13.5 million in a US IPO.
• The firm manufactures TFT-LCD displays in China for consumer, outdoor and automotive markets.
• OST has grown rapidly across major metrics and seeks investment to finance its growth initiatives in a growing industry, so the IPO is worth a look.
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Quick Take

Ostin Technology Group (NASDAQ:OST) has filed to raise $13.5 million in an IPO of its ordinary shares, according to an F-1 registration statement.

The firm manufactures TFT-LCD display modules in China.

OST is growing rapidly and seeks IPO financing to further its expansion initiatives in a growing industry.

For investors with a risk-on appetite for a China-based manufacturer, the IPO is worth consideration.

Company & Technology

Nanjing, China-based Ostin was founded to design, develop and manufacture TFT-LCD display modules in a variety of sizes and for a range of customer types.

Management is headed by Chairman and CEO Mr. Tao Ling, who has been with the firm since inception and was previously at electronics firms such as Uniden, Harris, Ericsson and Hitachi.

Below is a brief overview video of how TFT-LCD displays work:

Source: Thomas Schwenke

The company's primary offerings include:

• Consumer electronic displays

• Outdoor LCD displays

• Automotive displays

Ostin has received at least $10.5 million from investors including SHYD Investment Management (Chairman Ling), JQZY Investment Management (Director Yin) and Renown Investment Management (Director Yuan).

Customer Acquisition

The company utilizes a direct sales approach to obtain customers in computer manufacturer, automotive electronics and other target industries.

OST has also received government subsidy support for various aspects of its business.

Ostin currently operates three manufacturing facilities with an aggregate square footage of about 45,000 sf.

Selling and Marketing expenses as a percentage of total revenue have dropped as revenues have increased sharply, as the figures below indicate:

Selling and Marketing	Expenses vs. Revenue
Period	Percentage
FYE Ended Sept. 30, 2020	1.6%
FYE Ended Sept. 30, 2019	1.9%

Click to enlarge

Source: Company registration statement

The Selling and Marketing efficiency rate, defined as how many dollars of additional new revenue are generated by each dollar of Selling and Marketing

Analyst’s Disclosure:I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.