A leading supplier of automotive thermal management components and system modules, Jiangsu Chaoli Electric Co., Ltd. (hereinafter referred to as "Chaoli Electric") is currently pushing forward with its IPO on the ChiNext board. According to a review of the company's draft prospectus, the firm delivered steady growth in both revenue and net profit over the reporting period. However, its consolidated debt-to-asset ratio stood at a striking 94.22% by the end of 2023, and despite this high leverage, the company distributed cash dividends totaling 52.63 million yuan in 2023 and 2024 prior to its listing application, while simultaneously planning to raise 220 million yuan from the IPO to supplement working capital.

Within the 12 months leading up to its listing application, an affiliated capital entity of a major customer injected funds at 29.87 yuan per share in a last-minute stake purchase. Based on the proposed share issuance and the upper limit of fundraising, the implied IPO price for Chaoli Electric is roughly 51.9 yuan per share, creating a notable gap compared to that earlier investment price.

The prospectus reveals that Chaoli Electric has achieved significant business expansion in recent years. In 2023, 2024, and 2025, the company generated revenues of approximately 1.488 billion yuan, 1.870 billion yuan, and 2.311 billion yuan, respectively, with net profits of about 66 million yuan, 75 million yuan, and 125 million yuan. Yet, alongside this growth, the company has consistently carried an elevated debt burden.

Data shows that the consolidated debt-to-asset ratios at the end of 2023, 2024, and 2025 were 94.22%, 91.66%, and 75.16%, respectively. Even with such a high leverage ratio, the firm executed substantial cash dividends before the IPO. Specifically, it paid out 27.63 million yuan in 2023 and 25 million yuan in 2024, totaling 52.63 million yuan distributed to shareholders over the two years.

It's worth noting that after handing out more than 50 million yuan in dividends pre-IPO, the company then proposed to allocate a large portion of its IPO proceeds to replenish working capital. According to the prospectus, Chaoli Electric aims to raise a total of approximately 1.216 billion yuan from the public offering. Beyond funding projects such as the "Core Automotive Thermal Management System Components Production and Construction (Chaohu) Project," the "Core Automotive Thermal Management System Components Production and Construction (Guangzhou) Project," the "Smart Control Motors and Core Automotive Thermal Management System Components R&D and Production Project," and the "Headquarters and R&D Center Construction Project," the company also earmarked 220 million yuan specifically for working capital supplementation.

The juxtaposition of paying cash dividends to existing shareholders while simultaneously seeking 220 million yuan from the capital markets for working capital raises questions about the underlying financial logic. On the morning of September 17, a reporter sent an inquiry letter to Chaoli Electric regarding this issue, but received no response by the time of publication.

With over two decades of experience in the automotive thermal management sector, Chaoli Electric counts major domestic automakers among its key clients, including SAIC Motor, China FAW, Great Wall Motor, BAIC Group, GAC Group, Chery Automobile, Dongfeng Motor, Changan Automobile, Leapmotor, Li Auto, and Xpeng Motors.

Notably, within the 12 months before its prospectus was filed, the company brought in 11 institutional shareholders. Among them, Foshan Guangqi Xinchao Enterprise Management Partnership (Limited Partnership) (referred to as "Guangqi Xinchao") invested 30 million yuan in November 2025 at a price of 29.87 yuan per share to subscribe for 1,004,254 yuan of newly increased registered capital.

Slightly earlier, at the end of 2024, Shanghai SAIC Chuangyuan Venture Investment Partnership (Limited Partnership) (referred to as "SAIC Chuangyuan") made a substantial entry. It not only subscribed for 2,265,234 yuan of new registered capital with 50 million yuan but also spent 40 million yuan to acquire shares from controlling shareholder Mingquan Technology, quickly rising to become one of Chaoli Electric's top ten shareholders with a 5.89% stake.

A closer look at the equity structures of SAIC Chuangyuan and Guangqi Xinchao reveals that they are backed by Chaoli Electric's primary clients: SAIC Group and GAC Group, respectively. Tianyancha data shows that Shanghai Automotive Industry Corporation (Group) Financial Holding Management Co., Ltd. holds a 96.60% stake in SAIC Chuangyuan, and SAIC Group owns 100% of that financial holding entity.

Interestingly, in 2023, SAIC Group was not among Chaoli Electric's top five clients. However, in 2024 and 2025, SAIC Group ranked as the company's second and largest customer, contributing revenues of 122 million yuan and 269 million yuan, respectively.

As for Guangqi Xinchao, its partners include Suzhou Guangqi Zhixing Industry Investment Fund Partnership (Limited Partnership), which holds about 99.40% of the shares (per prospectus data). Upstream shareholders of that fund include GAC Capital Co., Ltd., a wholly-owned subsidiary of GAC Group. Chaoli Electric's prospectus clearly identifies GAC Group as one of its main customers, supplying products such as front-end cooling modules, radiators, and electronic fans.

The prospectus indicates that Chaoli Electric plans to issue no more than 23.4326 million ordinary shares, aiming to raise approximately 1.216 billion yuan. If priced at the upper limit, the issuance price would be 51.9 yuan per share, which is 1.74 times the price paid by Guangqi Xinchao.

In its inquiry letter, the reporter asked Chaoli Electric about the strategic rationale for bringing in client-affiliated capital as shareholders, the fairness of related-party transaction pricing, and the reasons for the disparity between the pre-IPO share price and the planned IPO issuance price.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Please verify all data before making any decisions. All investment risks are borne by the reader.