A company is currently applying for an IPO on the Beijing Stock Exchange. The full name of the company is Henan Jiachen Intelligent Control Co., Ltd., with the stock abbreviation Jiachen Intelligent (874302.NQ). The sponsor is China International Capital Corporation Limited (601995.SH), and the sponsoring representatives are Yang Xi and Wei Dejun.
Jiachen Intelligent's core products are vehicle motion control and intelligent connected systems. Motor drive control, vehicle control, and intelligent connectivity are the three main subsystems. The products are primarily used in industrial vehicles. Hangcha Group Co.,Ltd. (603298.SH) has consistently been the largest customer, accounting for 36.12% of sales in the first half of 2025.
In terms of performance, the company has shown good results in recent years. Revenue growth in 2024 and 2025 was modest, at only 1.39% and 5.08% respectively. However, the growth rate of net profit during the same periods was higher than revenue growth, at 16.44% and 24.15% respectively. Growth is expected to continue in the first half of this year, with projected revenue increasing by 7.12% to 12.34% year-on-year, and net profit rising by 10.48% to 15.65% year-on-year.
While the general situation appears stable, there are significant concerns about this being a safe investment. Recent cases involving Wingtech Technology Co.,Ltd. (600745.SH), which reported billions in losses, and Tianqi Lithium Corporation (002466.SZ), which is striving to protect its core overseas assets, have heightened worries about the risks Jiachen Intelligent faces due to supplier dependency.
The level of Jiachen Intelligent's reliance on international giants is exceptionally high. For instance, the motor controller, a core component without which its products cannot function, is almost entirely sourced from the Italian multinational giant, Sapa Group.
Furthermore, chips are primarily procured from Germany's Infineon and Switzerland-based STMicroelectronics, which was formed by the merger of Italian and French companies in 1987.
Jiachen Intelligent has acknowledged this dependency on foreign suppliers as a risk factor in its IPO prospectus.
In response to inquiries on page 110 of its review response document, the company stated that foreign-branded chips like MOSFETs and MCUs used in production can be replaced with alternative solutions validated in the short term and quickly scaled for mass production.
However, it is noteworthy that despite having the conditions for substitution, data up to the first half of 2025 shows that Jiachen Intelligent continues to primarily source chips from these two multinational giants.
The risk of being constrained by an Italian multinational giant cannot be ignored. Italy's stance towards China has been complex. It joined the Belt and Road Initiative in 2019, becoming the first G7 member to do so, but later announced its withdrawal in 2023. Despite this, bilateral trade between China and Italy reached a high of $72.54 billion in 2024, with China remaining Italy's largest trading partner in Asia.
Recent reports also indicate that the Italian Prime Minister visited Japan and, alongside the Japanese Prime Minister, announced an upgrade of bilateral relations to a "Special Strategic Partnership." This cooperation spans economic security, military defense, critical mineral supply chains, among other areas. Some commentators suggest this move could have profound implications for the cross-regional balance of power between Europe and the Indo-Pacific region.
Setting aside grand geopolitical strategies and focusing purely on business, the critical issue for Jiachen Intelligent as an individual company is its severe dependency on an Italian multinational giant for core components. This reliance, and the associated risk of being constrained, raises serious questions about the company's core competitiveness and long-term operational sustainability. How should this risk be factored into the evaluation?