In 2024, the approval rate for new energy IPOs in Hong Kong fell below 20%, primarily due to stricter regulations and diminished investor confidence. Considering REPT BATTERO's (00666) sluggish post-listing performance and other IPO disappointments, Guoxia Technology faces potential post-listing decline unless it clarifies its shareholding structure, optimizes its financial framework, and enhances technological capabilities.

The Hong Kong Stock Exchange has increasingly focused on fundamentals when reviewing new energy companies. While CATL's Hong Kong IPO application progresses smoothly due to high financial transparency, Guoxia Technology raises concerns across multiple dimensions. In this industry boom, solid fundamentals remain the foundation for success, making Guoxia Technology's IPO prospects appear challenging.

Revenue figures on financial statements soar like rockets, yet actual cash flows flicker like candles in the wind.

In April 2025, Jiangsu Wuxi-based energy storage company Guoxia Technology submitted its prospectus to the Hong Kong Stock Exchange, announcing its IPO sprint. The company's founders—Feng Lizheng, Zhang Xi, and Liu Ziye, three alumni from Jiangnan University—promoted their "AI + Energy Storage" concept, with their three-year revenue surge from 142 million to 1.026 billion yuan becoming a market sensation.

Under the spotlight of this capital feast, investors celebrate enthusiastically while the 6 billion yuan valuation story ferments during roadshows. However, a detailed examination of the prospectus reveals alarming fundamentals—plummeting gross margins, persistently negative cash flows, and mounting accounts receivable.

When regulatory inquiry letters arrived on July 11 with four pointed questions, they exposed the "anemic" reality beneath this capital celebration.

**01 "Profitability Anemia": Hemorrhaging Performance Behind Revenue Myths**

The opening page of Guoxia Technology's prospectus presents figures that could accelerate any investor's pulse: compound annual revenue growth of 168.9% from 2022 to 2024, with 2024 revenue exceeding 1 billion yuan. At first glance, this appears to be a money-printing machine operating at full capacity.

However, the profit statement reveals a startling truth. The company's gross margin dropped from 25.1% in 2022 to 15.1% in 2024, a single-year decline of 11.6 percentage points. More striking is the net profit margin—sliding from 17.1% to 4.8%, less than half of CATL's energy storage business net margin (10%).

This pathological "volume growth with price collapse" manifests most severely in the large-scale energy storage business. This segment's gross margin plummeted from 31.4% in 2022 to 11.9% in 2024, losing nearly 20 percentage points over two years. Amid the industry's brutal price war, the company showed no defensive capability.

"Price wars are the primary cause, with energy storage cell prices dropping 29% in 2024," the prospectus explains casually, exposing the absence of technological moats. While industry leaders maintain stability through patent barriers, Guoxia Technology remains trapped in commoditized competition, where increased revenue fails to translate to higher profits.

**02 "Cash Flow Anemia": Paper Gold Cannot Satisfy Hunger**

If the profit statement appears problematic, the cash flow statement is truly alarming. From 2022 to 2024, the company's operating cash flow remained negative for two consecutive years (-30.32 million yuan, -72.91 million yuan), barely turning positive to 3.73 million yuan in 2024.

This meager cash generation capability appears insignificant against mounting debt. As of February 2025, the company held only 22.56 million yuan in cash and equivalents while carrying 334 million yuan in short-term borrowings, resulting in a cash-to-short-term debt ratio of merely 0.07.

More peculiar is the accumulation of accounts receivable. Trade receivables reached 520 million yuan by end-2024, representing 50.7% of revenue—meaning for every 2 yuan earned, 1 yuan remains as IOUs. Accounts receivable turnover days extended from 56 days in 2022 to 120 days, indicating severely deteriorated collection capabilities.

While peers like Sungrow maintain receivables ratios below 30%, Guoxia Technology's fund management appears inadequate. Most remarkably, despite heavy debt burdens, the company provided 57.75 million yuan in non-business loans to "acquaintances" in 2024, representing a quarter of its cash flow. This desperate capital maneuvering crosses into irregular related-party transaction territory.

**03 Valuation Bubble: 14-Fold Capital Theater**

Despite such weak fundamentals, Guoxia Technology's valuation underwent a spectacular reversal. Company valuation stood around 400 million yuan in 2023; by March 2025, Kaibo Hongcheng's 100 million yuan investment pushed valuation to 1.6 billion yuan. Just one month later, Shenzhen Ninggan's 30 million yuan injection rocketed valuation to 6 billion yuan.

Fourteen times in fourteen months! The capital magician's sleight of hand astonished markets. This divergence between "soaring valuations" and "plummeting profits" creates one of IPO history's most glaring paradoxes.

The identity of sudden shareholders proves intriguing. Kaibo Hongcheng, the largest investor, connects to CNGR Advanced Material—this battery giant holds nearly 50% of the fund through Kaibo Capital. CNGR happens to be both a major client and supplier to Guoxia Technology, contributing 22.7% of revenue in 2023.

Industrial capital, valuation manipulation, and related transactions form a perfect closed loop. When capital players inflate valuations through pre-IPO investments, secondary market investors inevitably hold the final bag.

**04 Governance Deficiencies: Jiangnan Alumni Interest Network**

The prospectus's shareholding structure reveals an intricate "Jiangnan network." Three founding shareholders—Feng Lizheng, Liu Ziye, and Zhang Xi—collectively hold 58.54% but haven't signed acting-in-concert agreements, creating ambiguous control definitions. This "seemingly united but actually divided" equity design plants seeds for post-listing control battles.

Most dramatic is Chen Junde's wealth creation story. As Feng Lizheng's former supervisor at Wuxi Special Steel, this Jiangnan University Class of '83 alumnus invested 5 million yuan during the company's 2019 startup phase, now holding stakes worth 929 million yuan. This 185-fold return over six years far exceeds any reasonable industrial investment range.

Management composition appears thin. Core executives are mostly born in the 1980s and 1990s, hastily promoted after 2022. CFO Wang Zhenlin comes from real estate, essentially an "outsider steering" in the technology-intensive energy storage sector. Five executive directors' sudden appointments in February 2025 render management stability virtually nonexistent.

When the company provides nearly 60 million yuan in loans to "acquaintances" and former supervisors enjoy extraordinary investment returns, insider control risks become evident. Irregular governance structures permeate this capital feast with hints of benefit transfers.

**05 Business Foundation: Fatal Tightrope Walking Transformation**

Guoxia Technology's business transformation resembles high-stakes gambling. The company shifted from 72.1% dependence on European residential storage markets in 2022 to 79.9% reliance on domestic large-scale energy storage by 2024. This "rapid small-ship turnaround" strategy thrust the company into bloodier battlefields.

Large-scale energy storage markets appear vast but harbor hidden reefs: strong policy dependence, extended payment cycles, and razor-thin margins. While Guoxia Technology's large storage sales surged from 58MWh in 2022 to 1,653.7MWh in 2024, gross margins compressed to a critical 11.9%.

Narada Power Source (300068) serves as a cautionary tale, experiencing 45.56% revenue decline and 1.497 billion yuan losses in 2024 due to industry price wars and delayed local subsidies. Narada's top five customers represent 37.81% of revenue with the largest at 12.53%, while Guoxia Technology's customer concentration far exceeds Narada's. With the latest net margin at 4.80%, it faces similar industry risks.

Customer concentration remains elevated. While top five customer revenue share dropped to 66.5%, the largest client still accounts for 27.9%. Four core clients in 2023 were newly signed that year; if Sinomec International, representing 27.9% of 2024 revenue, withdraws orders, the company faces catastrophic revenue collapse.

The touted "AI + Energy Storage" concept similarly masks embarrassment. R&D investment represented only 3.08% of revenue in 2024, less than half the industry average for technology companies. Compared to CATL's hundreds of AI scheduling algorithm patents, Guoxia Technology's "AI empowerment" resembles marketing gimmicks for prospectus packaging.

More concerning, product warranty periods span only 2-5 years, well below the industry's standard 15 years. This "borrowing from tomorrow" quality commitment plants seeds for massive future compensation liabilities.

Regulatory inquiry letters' four consecutive questions pierce through the fog like searchlights. Are new shareholder investment prices reasonable? Do benefit transfers exist? Are equity rights complete? Each question targets this capital game's vital points.

As energy storage industry consolidation accelerates and 300 integrators compete for 10% market gaps, Guoxia Technology's "scale-for-market" desperate expansion shows fatigue. Beneath the 6 billion yuan valuation edifice, 520 million yuan in receivables tick like time bombs while the 0.07 cash-to-short-term debt ratio resembles a death sentence.

In 2024, Hong Kong new energy IPO approval rates fell below 20% due to stricter regulations and insufficient investor confidence. Referencing REPT BATTERO's (00666) post-listing stock price decline and other IPO disappointments, Guoxia Technology faces high probability of post-listing decline and underperformance unless it clarifies shareholding relationships, optimizes financial structures, and enhances technological capabilities.

The Hong Kong Stock Exchange increasingly focuses on fundamentals when reviewing new energy companies. CATL's Hong Kong IPO application progresses smoothly due to high financial transparency, while Guoxia Technology raises multiple concerns. Above market trends, solid fundamentals remain the foundation for success, making Guoxia Technology's IPO prospects appear challenging.