Shenzhen Cheng Tai Technology Co., Ltd. has updated its prospectus as it renews its attempt to list on the Main Board of the Hong Kong Stock Exchange, with Guotai Haitong acting as the sole sponsor.

The company faces significant risk due to its heavy reliance on a single customer, BYD Company Limited, which accounts for over 96% of its revenue. While this relationship appears stable, it has resulted in Cheng Tai Technology conceding substantial pricing power. In 2025, to align with BYD's requirements, the company significantly altered its product mix and reduced sales prices, causing its gross profit margin to halve year-on-year and weakening its profitability.

Influenced by BYD's supply chain finance platform, Cheng Tai Technology's financials show a growing disparity between reported earnings and actual cash flow. While revenue surged in 2025, its operating cash flow deteriorated sharply, with the net outflow expanding nearly 19-fold compared to the previous year. A large amount of its working capital is tied up, signaling a red alert for its operating cash flow. As of the end of January this year, the company's short-term borrowings had soared to 323 million yuan, while its cash and cash equivalents stood at just 50.653 million yuan, indicating substantial short-term debt repayment pressure.

This business model raises questions about whether Cheng Tai Technology possesses the capability to independently develop its market should it lose the support of BYD.

Notably, just before the IPO application, the company's CFO and Board Secretary made a last-minute equity investment.

Established in 2016, Cheng Tai Technology is a millimeter-wave radar supplier, primarily providing core perception sensors for automotive intelligent driving systems. According to industry data, by shipment volume in 2024, it was the largest domestic supplier of front-view millimeter-wave radars in China and the third-largest supplier of automotive millimeter-wave radars overall, with market shares of 9.3% and 4.5%, respectively.

Since its founding, the company has completed seven rounds of financing, raising approximately 360 million yuan and attracting investors including Shenzhen Green Pine Capital Partners, Jiangsu High-tech Investment Group, and China Science & Merchants Investment Management Group. Following a Series C financing round in May 2024, the company was valued at 1.32 billion yuan.

In May 2025, just before the initial listing application, several shareholders conducted concentrated share reductions. Transactions occurred at varying valuations, ranging from 436 million yuan to 881 million yuan, representing a 33% to 67% devaluation compared to the Series C round. Particularly, one transaction involving the CFO/Board Secretary was priced at a valuation of approximately 450 million yuan, roughly half the valuation of other transactions around the same time and a 70% discount to the Series C valuation.

In September 2025, the China Securities Regulatory Commission requested the company to provide supplementary explanations regarding the rationale behind the significant differences in pricing for these equity transfers occurring within the 12 months preceding its overseas listing application.

Prior to the IPO, the co-founders collectively control 35.79% of the voting rights through direct holdings and持股 platforms, making them the controlling shareholders.

The company's "parasitic" development model raises serious questions about its operational independence.

From 2023 to 2025, Cheng Tai Technology's revenue grew nearly sevenfold, from 157 million yuan to 1.122 billion yuan. Millimeter-wave radar products contributed over 98% of revenue during this period. However, this rapid growth was primarily driven by increased volumes from a single major customer, referred to as Customer A, rather than the acquisition of new clients. This reliance prompts scrutiny over the company's ability to operate independently.

Disclosures identify Customer A as a multinational company listed in Shenzhen and Hong Kong, manufacturing electric passenger vehicles, electronic components, and batteries. The payment method used is the "A Chain," clearly identifying the customer as BYD.

Revenue from BYD accounted for 91.3%, 93.6%, and 96.4% of total revenue in 2023, 2024, and 2025, respectively, showing a逐年上升 trend. To maintain this crucial relationship, Cheng Tai Technology has continuously conceded profitability, leading to a declining gross margin. Its comprehensive gross margin was 31.1%, 34.0%, and 15.1% over those three years. In 2025, the margin halved year-on-year, dropping below 30% for the first time, even as revenue expanded rapidly.

This margin compression was due to a strategic shift in its product mix. The proportion of revenue from higher-priced, higher-margin front-view radars plummeted from 63.9% in 2024 to 22.3% in 2025. Conversely, revenue from lower-priced, thinner-margin corner radars surged to 77.6%. The company explained this shift was a strategic response to penetrate BYD's mid- to low-end vehicle models with more competitive pricing, essentially adopting a "volume-for-price" strategy.

The severe pressure on gross margins significantly compressed the company's profitability. From 2023 to 2025, it recorded net losses of 96.598 million yuan, 21.768 million yuan, and 5.822 million yuan, respectively, accumulating a total loss of 124 million yuan over three years. While the company achieved profitability on an adjusted basis—excluding share-based compensation and financial instrument revaluations—its adjusted net profit margin remained low at 2.77% in 2025, indicating that real profitability is still under pressure.

A major issue associated with BYD is its "Di Chain" payment system, an electronic debt instrument platform that extends payment terms, often to 3-6 months. This system effectively provides BYD with an interest-free loan, while transferring financing costs to its suppliers. Despite a industry-wide commitment in mid-2025 to limit payment terms to 60 days, concerns persist about potential workarounds, such as the use of acceptance drafts that further delay cash settlement.

Reflecting this, Cheng Tai Technology's accounts receivable balance surged from 52.859 million yuan in 2023 to 346 million yuan in 2025, representing an increasing proportion of its current assets. Receivables from BYD constituted the vast majority. Although BYD committed to a 60-day payment term, the company's accounts receivable days outstanding remained at 75 days in 2025. The minimal amount of notes receivable suggests the "Di Chain" remains the primary settlement tool.

Consequently, a large amount of the company's operating capital is immobilized, triggering alarms regarding its cash flow. From 2023 to 2025, its net operating cash flow was an outflow of 61.886 million yuan, 6.981 million yuan, and 138 million yuan, respectively. The drastic 19-fold worsening of the cash outflow in 2025, despite improved adjusted profits, indicates that the profitability improvement is largely confined to the accounting books—a case of "paper prosperity."

The situation creates significant liquidity pressure. With short-term borrowings of 323 million yuan and cash reserves of only 50.653 million yuan as of late January, the company faces immense short-term refinancing risk. Even after adjusting for specific liabilities, its asset-liability ratio stands at 73.24%, considerably higher than industry peers.