Aotu Technology Co., Ltd. (hereafter "Aotu Technology") recently responded to the second round of inquiry letters as it continues its push toward a STAR Market IPO. The company's prospectus reveals a striking anomaly: its gross margin is more than double the average of comparable listed peers, yet its inventory turnover and accounts receivable turnover ratios significantly lag behind—in some cases ranking the lowest among its peer group. Furthermore, Aotu Technology's R&D expenses, R&D headcount, and invention patent counts all rank at the bottom when compared with its industry counterparts, making its standout gross margin all the more puzzling.
If its products truly sell so well, why are collections slowing while receivables balloon? During the reporting period, Aotu Technology's revenue grew substantially, crossing the 300 million yuan threshold in 2025, which better aligns the company with the evaluation requirements for tech-innovation attributes. However, its accounts receivable grew at more than twice the pace of revenue, and the ratio of receivables to revenue climbed sharply, far outpacing industry norms. Adding to the concerns are a heavy concentration of revenue in the fourth quarter and the fact that gross margins from distributor sales exceed those from direct sales—both factors that cast doubt on the authenticity of its reported performance.
Gross margin double that of peers, yet inventory and receivables turnover at the bottom
According to the prospectus, Aotu Technology specializes in the R&D, production, and sale of programmable logic controllers (PLC), with medium-to-large PLCs serving as its core product. PLCs, along with CAD/CAM and robotics, are recognized as the three pillars of modern industrial automation, forming the foundational critical equipment of automated industrial systems. From 2023 to 2025, Aotu Technology generated revenues of 197 million yuan, 244 million yuan, and 318 million yuan, reflecting year-on-year growth of 38.75%, 23.74%, and 30.36%, respectively. Net profit attributable to shareholders stood at 53 million yuan, 89 million yuan, and 118 million yuan over the same period, up 43.81%, 67.75%, and 32.79% year-on-year.
It's clear that both revenue and net profit grew significantly during the reporting period, though net profit rose even faster—a trend partly attributable to the company's elevated gross margins. Between 2023 and 2025, Aotu Technology's comprehensive gross margin came in at 74.23%, 72.52%, and 75.64%, showing a steady upward trajectory. By comparison, the average gross margin for comparable listed companies in the same period was 37.55%, 36.25%, and 30.98%, respectively. Aotu Technology's margin is not only the highest but also roughly double the peer average. The company attributes this gap to differences in business focus and product mix.
Given such exceptional gross margins, one would expect Aotu Technology to outperform peers in both receivables and inventory turnover. Yet the opposite holds true. According to Wind data, the company's inventory turnover was 0.85 times, 1.23 times, and 1.6 times over 2023–2025, while the peer average was 2.1 times, 2.25 times, and 2.56 times. Despite an improving trend, Aotu Technology still ranks last among its peers. Wind data also shows its accounts receivable turnover at 3.22 times, 2.35 times, and 1.91 times for 2023–2025 (slightly different from the prospectus figures of 3.01 times, 2.19 times, and 1.76 times), versus peer averages of 6.4 times, 4.71 times, and 3.85 times. By 2025, the company's receivables turnover had fallen to the lowest among comparable firms.
In theory, a company with exceptionally high gross margins should demonstrate strong inventory efficiency and pricing power over downstream customers. Instead, Aotu Technology's inventory turnover is the weakest, and its receivables turnover keeps deteriorating, hitting a low in 2025—raising legitimate questions about the substance behind its impressive margins.
Multiple innovation metrics rank at the bottom
In 2025, Aotu Technology's R&D expenses totaled just 33 million yuan, the lowest among its comparable peers. For reference, Inovance Technology, Xinje Electric, Hochuan Technology, and SUPCON Technology spent 4.256 billion yuan, 199 million yuan, 134 million yuan, and 951 million yuan on R&D, respectively, in the same year. As of the end of 2025, Aotu Technology employed 73 R&D personnel, while Inovance, Xinje, Hochuan, and SUPCON had 7,670, 808, 363, and 2,011 R&D staff, respectively. The company and its subsidiaries held 38 invention patents applied to its main business and capable of industrialization as of end-2025. By end-2024, Inovance, Xinje, Hochuan, and SUPCON held 45, 62, 64, and 575 invention patents, respectively—all significantly surpassing Aotu Technology.
Aotu Technology maintains that it is dedicated to its positioning as a PLC-focused company, with medium-to-large PLCs as its core offerings. These products carry high technical barriers and market entry hurdles, and the company claims to have earned recognition from customers and regulatory bodies through robust R&D strength, reliable product performance, and quality localized service. It further asserts that its technological, product, and application-case advantages have helped it gain market traction, sustaining high margins on core products while scaling operations. The company attributes the maintenance of high profitability primarily to a pricing strategy that commands a significant technology premium.
Some investors, however, question how its technology can be truly leading when its invention patent count trails so far behind. If there is a genuine technology premium, why does its R&D headcount amount to only a fraction of what peers employ? These inconsistencies add yet another layer of doubt to the sustainability and credibility of Aotu Technology's high gross margin.
Multiple financial red flags surface
During the reporting period, Aotu Technology maintained revenue growth of around 30%, exceeding the minimum 25% threshold set for tech-innovation attribute evaluation. In 2025, its revenue crossed the 300 million yuan mark, satisfying the evaluation criterion of "annual revenue of at least 300 million yuan in the most recent year." On paper, the company's innovation credentials are looking progressively better. However, its accounts receivable have grown even faster—more than double the pace of revenue—and the receivables-to-revenue ratio has risen dramatically, far outstripping industry trends. Additional concerns include the high share of fourth-quarter revenue, distributor channel margins exceeding direct sales margins, and certain suppliers and customers becoming top players shortly after their inception—all factors that could undermine confidence in the accuracy of reported results.
Data shows Aotu Technology's accounts receivable surged from 54 million yuan in 2022 to 146 million yuan in 2024, further climbing to 214 million yuan in 2025. At the end of each year from 2023 to 2025, the combined book balance of accounts receivable, contract assets, and contract assets under other non-current assets reached 78.50 million yuan, 148.27 million yuan, and 215.68 million yuan, representing 39.86%, 60.84%, and 67.89% of corresponding annual revenue, respectively. More telling is the divergence in growth rates: in 2025, receivables rose approximately 45% from the prior year-end, while revenue grew only 30.36%. Over the full 2023–2025 period, revenue increased 61.31%, but receivables at end-2025 were up 177.28% from end-2023—a stark gap.
Financial professionals suggest that receivables growing far faster than revenue indicates slower collections, which could signal relaxed credit policies or premature revenue recognition. Aotu Technology denies any instances of rushed revenue confirmation or revenue inflation, stating that it has not proactively extended credit terms or stretched payment cycles to stimulate sales among major customers. The declining receivables turnover ratio, however, tells a different story. The prospectus shows the ratio dropping from 3.01 times in 2023 to 2.19 times in 2024 and further to 1.76 times in 2025. The company attributes the significant decline to lengthened payment cycles among certain key customers.
In 2025, Aotu Technology's accounts receivable book value as a percentage of revenue stood at 62.07%, the highest among its comparable peers. Inovance, Xinje, Hochuan, and SUPCON recorded figures of 25.54%, 18.03%, 50.08%, and 48.06%, respectively, for the same period. Compounding the receivables surge, the company also shows a heavy fourth-quarter revenue concentration. From 2023 to 2025, main business revenue recognized in Q4 accounted for 37.61%, 36.09%, and 36.80% of annual totals, respectively. Aotu Technology explains that its customer base is primarily system integrators and end-users, with products mainly applied in large industrial sectors such as hydropower, petrochemicals, marine, rail transit, defense, municipal, and metallurgy. It argues that the seasonal procurement patterns of end-users in these large-scale projects naturally create seasonality in its sales.
Adding to the paradox, while Aotu Technology's overall gross margin far exceeds peers, the margin on its core medium-to-large PLC products sold through distributors is actually higher than through direct sales. From 2023 to 2025, gross margins for medium-to-large PLCs under the direct sales model were 83.45%, 79.26%, and 77.61%, whereas distributor channel margins were 84.03%, 84.02%, and 83.95%. Typically, distributors or dealers assume sales functions and should receive price discounts—their purchasing prices ought to be lower than those offered to direct customers, even if their end-market prices might be higher. The fact that Aotu Technology achieves higher margins from distributor sales is counterintuitive: it implies distributors purchase at higher prices yet still manage to profit in the market, which strains commercial logic.
Aotu Technology contends that the higher gross margin under the distributor model is primarily driven by its NJ series products. During the reporting period, NJ series products sold through direct channels were concentrated in the hydropower sector, accounting for over 50% of revenue on average, while distributor-sold NJ series products leaned heavily toward marine and defense applications, together representing more than 75% of sales on average. The company argues that systematic differences in customer characteristics, pricing strategies, and margin levels across application areas explain the overall gross margin divergence between the two sales models.