The contract manufacturer behind brands like Li Ning and Adidas is making a push for an A-share listing.

Recently, Guangdong Longxingtianxia Technology Co., Ltd., a major Chinese sports footwear manufacturer known as Longxingtianxia, submitted a prospectus to the main board of the Shanghai Stock Exchange, aiming to raise approximately 1.409 billion yuan. The lead underwriter is China Merchants Securities.

The company's client roster is impressive, with Li Ning, Adidas, Under Armour, Decathlon, and ANTA Sports serving as its top five customers, accounting for nearly ninety percent of its revenue. However, an examination of the prospectus reveals the thin profit margins typical of an OEM. In 2025, the ex-factory price for a pair of its running shoes was just 93.38 yuan, against a cost of 77.42 yuan, yielding a profit of less than 20 yuan.

As of the end of 2025, Longxingtianxia's accounts receivable reached 1.253 billion yuan, with Adidas alone accounting for 320 million yuan of this amount. Concurrently, the company's revenue growth rate for 2025 plummeted to 4.4%, and its non-GAAP net profit declined by 10.3% year-over-year, highlighting a struggle with increasing revenue without corresponding profit growth.

The company's capital market journey has also drawn attention. Longxingtianxia listed on the New Third Board in November 2025 and submitted its application for listing guidance to the Shanghai Stock Exchange just one month later. Notably, its current board secretary, Song Li, was previously an investment banking executive at the lead underwriter, China Merchants Securities, joining the company with virtually no cooling-off period after leaving the securities firm.

The Challenge of Slim Margins for a Contract Manufacturer

In essence, Longxingtianxia is a sports shoe contract manufacturer. Its client list is notable, featuring long-term, stable partnerships with major domestic and international sportswear brands like Li Ning, ANTA Sports, Adidas, Under Armour, and Decathlon. By the end of 2025, the company operated 26 factories across China, Vietnam, and Indonesia, selling 51.75 million pairs of sports shoes that year.

However, behind this strong market position, underlying operational concerns are emerging. Prospectus data shows that from 2023 to 2025, Longxingtianxia's revenues were 4.211 billion yuan, 5.588 billion yuan, and 5.834 billion yuan respectively, indicating sustained growth but a clear deceleration in pace. Revenue surged 32.7% year-over-year in 2024, but growth slowed to just about 4.4% in 2025.

Sports shoes constitute the company's primary revenue source, accounting for over 90% of the total. Within this segment, revenue from running shoes grew from 1.557 billion yuan to 2.076 billion yuan between 2023 and 2025, and casual shoe revenue increased from 513 million yuan to 1.214 billion yuan. However, revenue from professional sports shoes declined from 1.283 billion yuan to 1.24 billion yuan, becoming a significant factor dragging down overall growth.

Accompanying the slowing revenue growth is notable volatility in profitability. From 2023 to 2025, the company's net profit attributable to shareholders was approximately 209 million yuan, 282 million yuan, and 258 million yuan respectively, with the 2025 figure representing an 8.6% year-over-year decline. Its non-GAAP net profit was 199 million yuan, 272 million yuan, and 244 million yuan over the same period, falling 10.3% in 2025 and illustrating the classic dilemma of revenue growth without profit expansion.

The prospectus also sheds light on the ex-factory pricing for footwear products supplied to major brands like Li Ning and Adidas. In 2025, the average unit price for Longxingtianxia's running shoes was 93.38 yuan, 121.7 yuan for professional sports shoes, 105.52 yuan for casual shoes, and 144.18 yuan for outdoor shoes.

Major Client Dependence and Payment Delays

From 2023 to 2025, the top five customers contributed 86.74%, 88.86%, and 86.25% of Longxingtianxia's revenue, respectively. Brands including Li Ning, Adidas, Under Armour, Decathlon, and ANTA Sports have long dominated the company's revenue streams. Li Ning has been the largest customer for three consecutive years, contributing over 20% of sales.

For Longxingtianxia, this heavy reliance on a few large clients is a double-edged sword. While deep ties with leading brands ensure order stability and continuity, any operational issues faced by these clients or a decision to switch suppliers could severely impact the company's performance. The company's risk disclosures acknowledge that significant adverse changes in the business conditions or cooperative relationships of major customers could lead to a sharp decline in revenue.

The cost of this client concentration is also evident in collection efficiency. From 2023 to 2025, the book value of accounts receivable was approximately 752 million yuan, 1.19 billion yuan, and 1.253 billion yuan, respectively, with the proportion of current assets represented by receivables expanding from 36.77% to 42.2%. This indicates a slowdown in sales collection, with more capital tied up in customer payment cycles.

As of the end of 2025, the top five customers by accounts receivable balance were Adidas, Decathlon, Deckers Brands, Li Ning, and ANTA Sports, with a combined balance of about 1.024 billion yuan. Adidas alone accounted for 320 million yuan of this total. These five clients represented 80.62% of the total receivable balance, with a provision for bad debts of 10.24 million yuan.

Furthermore, high client concentration weakens the company's bargaining power. Amid intensifying competition in the sports footwear manufacturing industry, it becomes increasingly difficult to pass on rising costs to downstream brand clients. As a contract manufacturer, Longxingtianxia cannot capture the gross margin benefits associated with brand premium.

The company's overall gross margin declined from 19.18% in 2023 to 17.56% in 2024, recovering slightly to 18.48% in 2025. This remains at the lower end of the industry spectrum; according to the prospectus, the average gross margin for comparable listed peers was approximately 19.3%.

A Swift Transition to the Main Board

Longxingtianxia is a typical family-run enterprise. The ultimate controlling shareholders—Long Shuchu, Long Jinchu, and Chen Tongju—collectively hold about 71.58% of the company's shares and control approximately 92.48% of the voting rights. Long Shuchu and Long Jinchu are brothers, and although Chen Tongju is not related by blood, he has been a business partner of the Long brothers since 1998, with the three acting in concert.

Chairman Long Shuchu holds a combined direct and indirect stake of 30.06% and received a salary of 7.9216 million yuan from the company in 2025, the highest among the management team.

Regarding dividends, the company distributed a cash dividend of 20 million yuan in 2024. The proposed dividend for 2025 is 1.31 yuan per 10 shares, totaling approximately 45 million yuan. Based on the controlling shareholders' stake, they would collectively receive about 46.53 million yuan.

Notably, the company's path to capital markets is unusual. It listed on the New Third Board in November 2025 and, just one month later, swiftly submitted its application for main board listing guidance to the Shanghai Stock Exchange. Additionally, Board Secretary Song Li joined the company in November 2025. He previously served as Vice President of Investment Banking and a sponsor representative at China Merchants Securities, the lead underwriter for this IPO.

Inquiries regarding the transition plan from the New Third Board to the main board and the appointment of the board secretary were made to the company's securities department, but no response was received prior to publication. In response to media, Longxingtianxia stated that it had fully assessed independence and conflict of interest compliance issues before hiring Song Li and that this appointment would not create an affiliation between the company and the underwriter.

China Merchants Securities also served as the sponsoring broker for Longxingtianxia's New Third Board listing. Analysis suggests that applying for main board guidance just one month after a New Third Board listing is uncommon in the market. The company listed on the basic tier of the New Third Board, which has no direct transfer channel to the main board. It is possible that lead underwriter China Merchants Securities had a comprehensive plan from the outset, as the audit reports, legal opinions, and corporate governance materials required for the New Third Board listing significantly overlap with the documentation needed for an IPO, meaning the listing preparation process effectively completed most of the preliminary work for the IPO.

It is worth noting that, according to relevant regulations, individuals holding shares in a New Third Board listed company for over one year are temporarily exempt from the 20% personal income tax on dividend income. This implies that if Longxingtianxia's 2025 dividend is distributed while the company is still listed on the New Third Board, the controlling shareholders could temporarily avoid paying approximately 6.44 million yuan in taxes.

Regarding the appointment of Board Secretary Song Li, analysis indicates that a sponsor representative moving to a pre-IPO company as board secretary is a mature and common career path in investment banking circles. However, the sensitivity in this case stems from the combination of two factors: first, the virtually non-existent cooling-off period—Song Li left China Merchants Securities in October 2025, joined Longxingtianxia in November, and the company submitted its listing guidance application in December; second, his former employer happens to be the lead underwriter for this very IPO.

It is pointed out that during the regulatory feedback process, a core question will likely be whether Song Li was involved with Longxingtianxia's project during his tenure at China Merchants Securities. If he participated in preliminary due diligence, it would constitute a hard conflict regarding independence. If he was indeed not involved, China Merchants Securities would need to provide materials such as information barrier records as proof. The company's public response has not directly addressed this specific point, stating only that it "fully assessed independence."