As an automotive seat and interior/exterior components supplier, Guangxi Shuangying Group Co., Ltd. (hereinafter referred to as "Shuangying Group") suddenly switched from targeting the Shenzhen Stock Exchange main board to the Beijing Stock Exchange, with its IPO currently in the inquiry stage.

Although showing overall growth trends in performance, Shuangying Group's operational quality appears somewhat insufficient, with approximately 40% of the company's total profit relying on tax incentives from employing disabled workers. Shuangying Group's core seat products include seat assemblies and seat components. Under intensified automotive market competition, the average unit price of seat assemblies has declined consecutively, hampering seat product performance and revealing sluggish growth in comprehensive gross margin. Additionally, high customer concentration and continuously growing accounts receivable further intensify operational risks. Core client Saic Motor Corporation Limited (600104.SH) has faced significant profit pressure in recent years, raising concerns about Shuangying Group's future operational capabilities.

According to the prospectus, 98% of Shuangying Group's total investment of 692 million yuan will use raised funds. Although planning to use 200 million yuan for "working capital supplementation," the company has allocated 600 million yuan in idle funds for wealth management. Furthermore, against the backdrop of declining seat capacity utilization and unimproved market share, Shuangying Group's countercyclical expansion has left the market puzzled.

**Tax Incentives Account for About 40% of Total Profit**

The prospectus shows that Shuangying Group is a high-tech enterprise primarily engaged in research, development, production, and sales of automotive seats and interior/exterior components. The company's products include various automotive seat assemblies, door interior panels, dashboards and other automotive interior/exterior components, as well as precision molds. From 2022 to 2024 (hereinafter referred to as the "reporting period"), seat revenue accounted for approximately 70%, while interior/exterior component revenue accounted for less than 30%.

In 2022 and 2023, Shuangying Group recorded revenues of approximately 2.051 billion yuan and 2.205 billion yuan respectively, with corresponding net profits attributable to parent company of 71.9891 million yuan and 108 million yuan. However, the growth momentum halted in 2024, achieving revenue and net profit attributable to parent company of 2.58 billion yuan and 97.4451 million yuan respectively, representing year-on-year growth of 17% and -9.41% respectively. The profit decline in 2024 was mainly due to some newly established factories achieving less revenue in the early stage while incurring larger costs and expenses.

In the first half of 2025, Shuangying Group achieved double-digit growth, realizing revenue and net profit attributable to parent company of 1.594 billion yuan and 32.8244 million yuan respectively, representing year-on-year growth of 55.71% and 44.98% respectively.

Tax incentives related to employing disabled workers account for approximately 40% of total profit during the reporting period. In each reporting period, Shuangying Group's VAT immediate refund benefits for employing disabled personnel were 36.1496 million yuan, 41.4438 million yuan, and 44.4869 million yuan respectively, accounting for 44.45%, 36.03%, and 39.59% of total profit respectively. During the same periods, the company enjoyed enterprise income tax benefits from additional wage deductions for disabled employee salaries of 3.9054 million yuan, 4.6511 million yuan, and 4.5149 million yuan respectively, accounting for 4.8%, 4.04%, and 4.02% of total profit.

Shuangying Group acknowledges that if the actual number of disabled personnel employed significantly decreases in the future, causing the company to fail to meet welfare enterprise certification standards, or if welfare enterprise tax incentive policies change, it will adversely affect the company's profitability.

Compared to profit support from tax incentives, Shuangying Group's main business faces significant pressure. As automotive market competition continues to intensify, automakers' cost reduction demands increase daily, and pricing pressure gradually transmits to automotive parts manufacturers.

Shuangying Group's seat business includes seat assemblies and seat components, with seat assemblies being the core revenue source. During the reporting period, seat sales revenue continued to grow, but average unit prices fluctuated at 80.52 yuan/unit, 94.42 yuan/unit, and 85.65 yuan/unit respectively. Although seat component average unit prices increased period by period, seat assembly average prices showed a downward trend at 364.21 yuan/unit, 333.2 yuan/unit, and 323.36 yuan/unit respectively.

Additionally, mold average prices showed significant fluctuations during the reporting period at 77,700 yuan/set, 148,400 yuan/set, and 78,200 yuan/set respectively. Shuangying Group explains that molds are typically customized products, influenced by many factors including customer new model launch schedules, existing model redesign arrangements, original development mold design changes, and differences in mold settlement methods, resulting in significant pricing variations.

Pricing pressure transmitted to the profit level shows insufficient momentum in Shuangying Group's gross margin growth. Seat and mold gross margins showed an initial increase followed by decline trend, dropping to 15.08% and 21.23% respectively in 2024, decreases of 0.32 and 7.15 percentage points, hampering overall gross margin performance. During the reporting period, Shuangying Group's comprehensive gross margins were 12.17%, 15.71%, and 16.01% respectively, with increases of 3.54 and 0.3 percentage points in 2023 and 2024 respectively.

**Accounts Receivable Increased Over 60% in Two Years**

Shuangying Group's customer base includes not only mainstream automakers such as SAIC-GM-Wuling, Chongqing Changan Automobile Company Limited (000625.SZ), GEELY AUTO (00175.HK), and Changan Kuayue, as well as internationally renowned first-tier automotive parts manufacturers like Faurecia, Lear, and Adient, but also well-known new energy vehicle manufacturers including Byd Company Limited (002594.SZ) and Seres Group Co.,Ltd. (601127.SH).

During the reporting period, Shuangying Group's sales to top five customers accounted for 82.83%, 82.78%, and 76.16% respectively. The high customer concentration is mainly related to the high proportion of business with Saic Motor Corporation Limited. The company's revenue from its largest customer Saic Motor Corporation Limited was 1.271 billion yuan, 1.221 billion yuan, and 1.238 billion yuan respectively in each period, accounting for 61.97%, 55.38%, and 47.98% of revenue respectively.

Shuangying Group's main customer is SAIC-GM-Wuling under Saic Motor Corporation Limited, with seat assembly sales accounting for over 50% of SAIC-GM-Wuling's vehicle sales during the reporting period. However, as a core customer, Saic Motor Corporation Limited has faced profit pressure in recent years, with net profit attributable to parent company declining from 16.12 billion yuan in 2022 to 1.666 billion yuan in 2024, and down 9.21% year-on-year to 6.018 billion yuan in the first half of this year.

In the first round of inquiries, the Beijing Stock Exchange required Shuangying Group to analyze whether transaction scales with major customers are stable and sustainable, whether Saic Motor Corporation Limited's recent significant business performance decline would have major adverse effects on the company's future operating performance, and whether the company faces risks of insufficient major customer stability affecting sustainable operating capability.

Additionally, the Beijing Stock Exchange required explanation of the company's position and competitive advantages and disadvantages in the supplier systems of major customers like Saic Motor Corporation Limited, whether it is an important supplier, whether replacement risks exist, and whether cooperative relationships with major customers are stable.

Accompanying high customer concentration are continuously rising accounts receivable. During the reporting period, Shuangying Group's accounts receivable book values were 429 million yuan, 642 million yuan, and 698 million yuan respectively, with 2024 showing over 60% increase compared to 2022, and 565 million yuan in the first half of this year.

These accounts receivable mainly come from major customers including Saic Motor Corporation Limited, Chongqing Changan Automobile Company Limited (000625.SZ), and Zhejiang Geely Holding Group Co., Ltd. (hereinafter referred to as "Geely Holding"). Shuangying Group acknowledges certain credit concentration risks, with top five accounts receivable debtors accounting for 67.71%, 71.92%, and 64.07% respectively during the reporting period. At the end of the first half of this year, 75.29% of the company's accounts receivable came from the top five customers.

Specifically, Saic Motor Corporation Limited ranked as the largest accounts receivable debtor throughout the reporting period, accounting for 40.74%, 40.96%, and 24.28% of period-end balances respectively. Notably, in the first half of this year, Geely Holding surpassed Saic Motor Corporation Limited as the largest accounts receivable debtor, with the company's accounts receivable book balance of 226 million yuan, accounting for 37.43% of accounts receivable balance. Saic Motor Corporation Limited accounted for 132 million yuan, or 21.91%.

**Questions About "Working Capital Supplementation" and Expansion Remain**

The prospectus shows that Shuangying Group plans to raise 681 million yuan, to be invested in the Shuangying Group New Energy Vehicle Seat Construction Project (hereinafter referred to as "Seat Construction Project"), Chongqing Juxian Auto Parts Manufacturing Co., Ltd. Factory Construction Project, Chongqing Juxian Auto Parts Manufacturing Co., Ltd. Factory Construction Project, R&D Center Upgrade Construction Project, and working capital supplementation, with planned investments of 184 million yuan, 191 million yuan, 106 million yuan, and 200 million yuan respectively.

The above projects have total investments of approximately 692 million yuan. Except for the Chongqing Juxian Auto Parts Manufacturing Co., Ltd. Factory Construction Project, all other project investments will use raised funds entirely.

From financial data, Shuangying Group's funds are indeed tight. As of the end of the first half of this year, Shuangying Group's asset-liability ratio was 78.71%, maintaining around 80% throughout the reporting period. Additionally, long-term credit sales have made Shuangying Group's cash flow tight, with operating cash flows negative for three consecutive years during the reporting period. Although increasing 84.33% year-on-year in the first half of this year, it remained at only -28.7613 million yuan, with cash flow tensions persisting.

Regarding the 200 million yuan for "working capital supplementation," Shuangying Group claims a funding gap of approximately 353 million yuan over the next three years. However, two days before IPO acceptance, Shuangying Group announced using up to 600 million yuan in idle funds to purchase wealth management products, raising questions about the reasonableness of fundraising for "working capital supplementation."

Therefore, the Beijing Stock Exchange required Shuangying Group to explain the calculation basis for using raised funds to supplement working capital, and combined with held monetary funds, financial conditions, cash dividend situations, etc., explain the reasonableness of using raised funds to supplement working capital.

Regarding capacity construction, the seat construction project will add annual production capacity of 400,000 new energy vehicle seats. Shuangying Group's seat capacity utilization rates were 93.71%, 86.24%, and 84.16% in each period, with domestic automotive seat market shares of 4%, 4.04%, and 3.81% respectively. Both capacity utilization rate and market share showed declining trends in 2024.

Regarding consecutive declines in seat capacity utilization, Shuangying Group explains that mainly because the company's seat capacity utilization was approaching saturation in 2022, to accommodate business scale expansion, the company continuously increased seat capacity, but seat output growth was lower than capacity growth. During the reporting period, Shuangying Group's seat production-sales ratios were also unstable at 99.61%, 102.22%, and 91.91% respectively.

As the seat construction project progresses, will Shuangying Group's future seat capacity utilization further decline? Against the backdrop of no obvious improvement in market share, will increased expansion drag down the company's profit levels? These are undoubtedly realistic issues that Shuangying Group needs to address.