Investing in stocks requires reading Golden麒麟 analyst reports, which are authoritative, professional, timely, and comprehensive, helping you uncover potential thematic opportunities! 'Slowing performance growth.' Author | Zhang Wei In December, Hangzhou Gote Electronic Equipment Co., Ltd. (hereinafter referred to as "Gote Electronics" or the "Company"), a manufacturer of Battery Management System (BMS) products, disclosed its response document to the second round of IPO review inquiries on the official website of the Shenzhen Stock Exchange. Gote Electronics submitted its Prospectus in June this year and entered the IPO inquiry phase in July. Regulators focused on issues including Gote Electronics' equity changes, control rights and corporate governance, revenue recognition, accounts receivable, and cash flow. Among these, revenue recognition and accounts receivable were queried twice. Gote Electronics cited CNESA data, stating that the scale of the national new energy storage market is expected to reach 291.2 GW by 2030, with a compound annual growth rate exceeding 20% over the next five years. The promising prospects of the energy storage industry will also drive the development of the BMS sector. Whether Gote Electronics can expand its business scale and enhance its industry competitiveness through the listing remains to be tested by time. 01 Multiple Business Transformations Information shows that Gote Electronics has undergone three industrial iterations, starting from traditional lead-acid battery detection, then entering the power battery BMS field, and finally shining in the new energy storage BMS sector, achieving explosive growth in company performance. It is understood that BMS is the "nerve center" of a new energy storage system, used for multi-dimensional data collection, diagnosis, safety management, and proactive maintenance of the battery system, ensuring its safe, reliable, stable, and economical operation. However, over 20 years ago, domestic BMS technology was virtually non-existent. Looking back to around 2000, with the expansion of national basic power infrastructure, lead-acid batteries, as a core component of backup power supplies, developed simultaneously. However, at that time, detection of lead-acid batteries in the industry mainly relied on manual methods or voltage monitoring, with accuracy and efficiency needing improvement. In this context, Xu Jianhong, who had worked in the semiconductor industry for many years, spotted a business opportunity. Together with Xu Tao, Li Zhenjiang, and Shen Binghua, he founded Gote Electronics to develop high-precision online internal resistance detection technology for lead-acid batteries. In 2003, Gote Electronics launched China's first lead-acid battery BMS, breaking through the limitations of traditional battery detection technology. In 2010, as China's new energy vehicle industry began to develop, Gote Electronics, leveraging its years of technical accumulation in the lead-acid battery detection industry, followed the trend and entered the BMS field for new energy vehicle power batteries, becoming an early independent third-party supplier capable of providing power battery BMS technology. However, as a third-party supplier, Gote Electronics primarily faces challenges from vehicle manufacturers and battery cell producers. Statistics show that in 2022, the domestic power battery BMS market size was approximately 13.8 billion yuan. Among this, vehicle manufacturers held a 48% market share, battery cell producers held 30%, leaving only 22% for third-party BMS suppliers. Two main reasons account for this situation. Firstly, vehicle manufacturers, concerned with battery data sovereignty and vehicle safety, tend to develop BMS technology in-house. Secondly, core data for power batteries is held by battery cell producers, who leverage this data advantage to enter the BMS supply chain. This leaves limited market space for third-party BMS suppliers. Gote Electronics managed to break through, thanks to the rise of new energy storage applications like wind and solar power. It is understood that compared to power batteries, new energy storage power stations involve an exponential increase in the number of sampling points and wiring harnesses, increasing management difficulty and safety risks. Gote Electronics' over 20 years of BMS technology积淀 played to its strengths in the new energy storage field. For example, the company's second-generation energy storage BMS core chip, GT2818, was a world-first "voltage-temperature-safety valve" three-parameter synchronous acquisition chip, which can reduce battery thermal runaway detection time to seconds, significantly lowering accident risks. Gote Electronics' technical advantages in the new energy storage BMS field have also gained recognition from leading battery cell manufacturers such as EVE Energy and Hithium, making it a supplier to energy storage enterprises including Hithium, Gotion High-tech, EVE Energy, and Csi Solar. After several transformations, the company's development finally entered a fast lane. 02 Equity Repurchase Dispute Ruled for Enforcement While undergoing business transformation, Gote Electronics did not relax its efforts in external financing. The Prospectus shows that when Gote Electronics was founded, its registered capital was 500,000 yuan, with the four co-founders—Xu Jianhong, Xu Tao, Li Zhenjiang, and Shen Binghua—holding shares of 65%, 30%, 3%, and 2% respectively. However, by the time the equity restructuring was completed in 2016, the largest shareholder of Gote Electronics had become Guiyuan Holding, with a shareholding ratio of 51.14%. Business information indicates that Guiyuan Holding is 100% held by Xu Jianhong, Shuai Kehong, and Xie Jianjiang, with Xu Jianhong holding approximately 91%. Equity penetration shows that Xu Jianhong remains the actual controller of Gote Electronics. During its financing process, Gote Electronics also encountered disputes with investment institutions. According to disclosures on the China Judgments Online, in August 2015, Guiyuan Holding transferred 2% of its equity in Gote Electronics to Tanggula Investment. In June 2018, due to disagreements with Guiyuan Holding, Tanggula Investment decided to exit its investment. As a result, Guiyuan Holding, due to financial constraints, failed to pay the repurchase amount on schedule, leading Tanggula Investment to file a lawsuit. Concurrently, another institution, Puyuan Investment, also sued Guiyuan Holding and Xu Jianhong over an equity transfer dispute. Information from Qichacha shows that in July 2019, due to the equity dispute case with Tanggula Investment, Guiyuan Holding and Xu Jianhong were ruled to enforce a payment of 970,000 yuan; in October 2019, due to the equity dispute case with Puyuan Investment, Guiyuan Holding and Xu Jianhong were ruled to enforce a payment of 6.45 million yuan. The two cases combined resulted in enforced payments totaling approximately 7.43 million yuan. After resolving the equity disputes, Gote Electronics initiated multiple rounds of financing, introducing investment institutions including Sinopec Capital, Kunlun Capital, CMB International, Huaqiang Capital, as well as affiliated companies of listed firms such as Csi Solar, Jinko Solar, and Montage Technology Co.,Ltd.. Customer details show that in 2023, 2024, and the first half of this year, Csi Solar was Gote Electronics' largest customer. Additionally, Jinko Solar is also an important customer of Gote Electronics. Regarding this, regulators required Gote Electronics to explain the rationality and fairness of the investments by the affiliated companies of Csi Solar and Jinko Solar; and to disclose whether there are other cases of suppliers or customers' affiliated entities holding shares in the company, apart from Csi Solar and Jinko Solar. Prior to this IPO, Xu Jianhong, through Guiyuan Holding and Wuershi Investment, collectively controls 46.17% of Gote Electronics' shares, making him the actual controller; the affiliated companies of Jinko Solar and Csi Solar hold 2.14% and 1.37% of shares, respectively. 03 Business May Face Policy Risks The Prospectus indicates that Gote Electronics' products are mainly divided into three categories: energy storage BMS-related products, integrated control units and data services, and products and services such as backup power supplies and power battery BMS. From 2022 to the first half of 2025 (hereinafter referred to as the "Reporting Period"), the revenue contribution from energy storage BMS-related products increased from 88% to 94%, while the revenue shares of the other two categories were relatively lower. During the Reporting Period, the company's revenue increased from 344 million yuan in 2022 to 919 million yuan in 2024, exceeding 500 million yuan in the first half of this year. Net profit rose from 53.75 million yuan to 98.42 million yuan, surpassing 51 million yuan in the first half of this year. However, the growth rates of Gote Electronics' revenue and net profit have noticeably slowed. In 2023, the company's revenue increased by 125% year-on-year, but only by 18% in 2024. Net profit increased by 64% year-on-year in 2023, but only by 12% in 2024. The slowdown in performance growth may be related to significant declines in product prices. In 2024, the average winning bid price for Gote Electronics' products was 58% lower than in 2022. Overall product prices showed a downward trend during the Reporting Period. Gote Electronics stated that factors such as intensified market competition and downstream cost-reduction demands led to the decline in its performance growth rate, further squeezing profit margins. Simultaneously, Gote Electronics' accounts receivable surged sharply. At the end of 2022, the company's accounts receivable were only 185 million yuan. After 2023, they increased rapidly, reaching 577 million yuan by the end of the first half of this year, with accounts receivable consistently exceeding 50% of revenue. The fact that most revenue has not been converted into cash inflows also led to negative net operating cash flow for Gote Electronics in both 2022 and 2023. It was 9.95 million yuan in 2024 and 2.13 million yuan at the end of the first half of this year. However, the changes in Gote Electronics' monetary funds are peculiar: only 12 million yuan in 2022, surging to 310 million yuan in 2023, and 255 million yuan at the end of the first half of this year. Regarding this, regulators required Gote Electronics to explain the reasons for the sudden significant increase in monetary funds in 2023. The intended use of raised funds shows that Gote Electronics plans to raise 850 million yuan in this IPO, with 250 million yuan earmarked for supplementing working capital and 600 million yuan for expanding production capacity. In January this year, the national "Document No. 136" explicitly canceled mandatory energy storage allocation requirements for new energy projects. Sales data indicates that new energy配建储能 accounts for over 40% of Gote Electronics' downstream market. If the market environment changes in the future, how to absorb the新增产能 will be an issue that Gote Electronics needs to address. (Produced by Thinking Finance) ■