On October 31, Nanjing Asia Vets Technology Group (referred to as "Asia Vets") submitted its IPO application to the Hong Kong Stock Exchange, aiming to become the "first digital human stock" on the main board. CMB International and DBS serve as joint sponsors.

While Asia Vets reported rapid revenue growth during the reporting period, it achieved profitability in the first half of this year primarily through drastic operational cost reductions. However, questions linger over whether this approach is sustainable.

From 2022 to 2024, the company's R&D expense ratio dropped from 33.85% to 22.91%, further declining to 20.42% in H1 2025. Concurrently, layoffs accelerated: employee costs under "salaries, wages, and benefits" fell by 14%, 27%, and 41% YoY in 2023, 2024, and H1 2025, respectively.

Amid rapid iterations in large-model AI technology, the barriers to entry in the digital human sector are lowering. Tech giants like ByteDance, Tencent, and Alibaba are expanding their presence, while smaller players carve out niches—posing challenges to Asia Vets' market leadership.

**Founder’s Controversial "All-Staff Layoff" Remark: Rumor or Cover-Up?** Asia Vets specializes in digital human avatars and multimodal interactive technologies, covering speech recognition, NLP, and computer vision.

From December 2017 to June 2025, the company completed eight funding rounds (Pre-A to D), raising approximately RMB 870 million. Post-D-round, its valuation exceeded RMB 3 billion, with recent reports suggesting a near-$1 billion (RMB 7+ billion) valuation.

Pre-IPO, founder Sima Huapeng and his entities control 36.81% of Asia Vets. Tencent holds 16.59% as the second-largest shareholder, alongside investors like Sequoia Capital and 360.

In early August 2025, a screenshot allegedly showed Sima announcing an "all-staff layoff plan," citing unsustainable costs. While sources confirmed its authenticity, Asia Vets dismissed it as "fake news," attributing it to malicious cyberattacks and media rumors. The company later pledged to add hundreds of jobs in 2025–2026.

Yet, layoffs are undeniable. Employee costs plummeted by 41% YoY in H1 2025, with underpaid social insurance and housing funds adding to scrutiny. Meanwhile, executive pay soared—directors’ total compensation rose from RMB 6.7 million in 2023 to RMB 13.4 million in 2025.

By June 2025, Asia Vets had fewer than 100 employees (65 in R&D). Strikingly, 15 sales staff earned an average monthly salary of RMB 109,000, while R&D personnel received just RMB 25,900—less than a quarter of sales. CFO Chen Liping’s pay stood out at RMB 14.55 million over 3.5 years, half from equity incentives.

**Heavy Client Reliance and R&D Cuts: A Sustainable Strategy?** Revenue grew from RMB 223 million in 2022 to RMB 655 million in 2024 (71.5% CAGR), but H1 2025 growth slowed to 11.15%.

Asia Vets claims a 32.2% market share in China’s digital human sector, ranking second globally. However, IDC’s 2024 report placed Baidu first (9.8% share), raising doubts about its self-reported dominance.

Profitability remains weak. Adjusted net losses totaled over RMB 100 million in 3.5 years, with operating cash flow persistently negative. H1 2025’s slim profit (RMB 52.89 million) stemmed from cost cuts, not margin improvements—gross margins fell from 38.5% in 2022 to 31.6% in H1 2025.

Operational costs dropped to 32.73% of revenue in H1 2025 (down 24.92% YoY), with R&D spending down 18.95%. The company admits to "competitive pricing" for major clients like China Mobile, which contributed 64.4% of 2024–H1 2025 sales. This reliance on low-margin, single-client revenue questions its technological edge.

**Valuation Risks Amid Tech Disruption** With over 1.36 million digital human-related firms in China (36.9% YoY growth in 2024), competition is intensifying. Despite touting its "Yandi" AI model, Asia Vets’ prospectus lacks details on patent moats or churn rates—critical for justifying its valuation.

Comparatively, global peer Synthesia (subscription-based, $4 billion valuation) highlights Asia Vets’ vulnerability. Its heavy dependence on China Mobile and opaque metrics may lead to a valuation gap: secondary markets could price it at 2–3x P/S (software-outsourcing multiples), far below its primary-market RMB 3.15 billion valuation.

As giants and startups alike disrupt the sector, Asia Vets’ high valuation and thinning tech differentiation risk appearing increasingly bubble-like.