On October 16, Leo Group Co., Ltd. announced plans to sell up to 135 million of its own shares. Previously, the company had spent 400 million yuan to repurchase 278 million shares at prices ranging from 1.36 yuan to 1.57 yuan per share. Based on the current stock price, Leo Group has achieved floating profits exceeding 200% on these repurchased shares.
As a leading domestic AI marketing company, Leo Group's stock has frequently been targeted by speculative investors due to its association with popular concepts like AI applications and AI agents. However, the company's core internet marketing business has struggled with profitability. Under the leadership of its actual controller Wang Xiangrong, Leo Group appears more adept at investment and stock trading than at its primary business operations.
1. Declining Core Digital Marketing Revenue, Limited Profit Improvement After AI Model Launch Leo Group originated as a water pump R&D institute in 1995 before transitioning into digital marketing through acquisitions in 2014. While digital marketing now accounts for 77.78% of total revenue (16.47 billion yuan in 2024), profitability remains weak. Two major subsidiaries reported either minimal profits (0.8% net margin) or losses in 2024.
The company launched its proprietary AI model "Leo Guiyi" in 2023 to enhance advertising efficiency, but H1 2025 results showed an 11% year-over-year decline in digital marketing revenue to 7.477 billion yuan, with only marginal (0.21%) gross margin improvement.
2. Investment Obsession? Selling Repurchased Shares After 200% Gain Leo Group's most successful investment was in Li Auto (formerly Ideal Auto), yielding over 6 billion yuan in fair value gains in 2020. Since 2021, the company has gradually divested Li Auto shares while expanding other investments, including an attempted $50 million investment in SpaceX that was later withdrawn.
Notably, executives engaged in buy-low-sell-high transactions of company stock. Four executives purchased shares between 1.45-1.50 yuan in July 2024, then sold portions (some exceeding original purchase volumes) at 5.73-6.11 yuan in September 2025 - realizing multiples of their initial investment.
3. Abundant Cash Reserves (70+ Billion Yuan) Despite Planned Hong Kong IPO Despite holding 27.81 billion yuan in cash and 42.63 billion yuan in tradable financial assets (mostly low-risk money market funds), plus 1.817 billion yuan in remaining Li Auto shares, Leo Group plans a Hong Kong IPO to fund: - AI infrastructure development (including computing power centers) - Expansion of IGBT/SiC semiconductor capacity through subsidiary LionGate Semiconductor
The company maintains relatively low debt (under 3 billion yuan in interest-bearing liabilities) with a 40% debt-to-asset ratio. Questions remain about the necessity of equity financing given existing liquidity and whether computing power investments could have been made earlier with available funds.
With digital marketing margins remaining compressed and valuation at historical highs after the 200% stock surge, market observers continue monitoring whether Leo Group can successfully list in Hong Kong.