Weiyuan Energy Technology Co., Ltd. has submitted an application to list on the main board of the Hong Kong Stock Exchange. China International Capital Corporation (CICC) is acting as the sole sponsor, with Citigroup serving as a joint global coordinator. According to the prospectus, the funds raised from the IPO will be used for: 1) constructing a new production and operations center in East China, along with digital upgrades and capacity expansion at the headquarters' production base; 2) enhancing research, development, and product iteration capabilities; 3) expanding the marketing network and after-sales service infrastructure; and 4) working capital and other general corporate purposes.
As a digital energy solutions provider focused on smart power distribution networks, data centers, and new energy storage systems, Weiyuan Energy's listing has drawn significant attention. However, underlying operational, market, and financial risks, as well as various developmental challenges, have also become focal points for market scrutiny.
Established in 2013 as a subsidiary of Hong Kong-listed Weishang Holding, Weiyuan Energy initially focused on traditional power system equipment manufacturing. Its products and solutions are now widely used in diverse scenarios, including IDC, AIDC, power grids, and power generation.
In terms of operational data, while the company's revenue maintains a certain scale, its growth momentum has weakened. Revenue for 2023, 2024, and the first three quarters of 2025 were RMB 2.48 billion, RMB 2.90 billion, and RMB 1.97 billion, respectively. Year-on-year growth was 16.8% in 2024 but slowed to 12.0% in the first three quarters of 2025, indicating a clear deceleration trend.
Profitability performance raises concerns. Although the company's gross profit remained stable, with gross margins ranging from 23.5% to 26.5% during the period, and net profit attributable to shareholders increased from RMB 110 million to RMB 180 million (with the net profit margin rising from 4.5% to 9.2%), this improvement was not driven by core operational enhancements. Instead, it relied on accounting adjustments related to impairment losses on financial assets and contract assets. In 2023 and 2024, the company recorded net impairment losses of RMB 9.36 million and RMB 61.32 million under this item, respectively, while the first three quarters of 2025 saw a net reversal of impairment losses of RMB 22.49 million. Non-recurring gains and losses have become a key factor in boosting net profit, raising questions about the sustainability of profitability from core operations.
The disparity between stated R&D priorities and actual investment poses a core long-term risk. Although Weiyuan Energy emphasizes R&D as a strategic driver of long-term competitiveness, with 422 R&D personnel accounting for 29.6% of its total workforce (35.1% of whom hold master's degrees or intermediate professional titles, and 5.7% hold doctoral degrees or senior titles), the actual financial commitment to R&D lags significantly behind sales. From 2023 to the first three quarters of 2025, sales expenses were RMB 200 million, RMB 240 million, and RMB 160 million, consistently exceeding 8% of revenue. In contrast, R&D expenses were RMB 140 million, RMB 160 million, and RMB 96.79 million, with the proportion of revenue allocated to R&D declining from 5.5% to 4.9%.
In terms of compensation, the average salary for R&D personnel in the first three quarters of 2025 was only RMB 125,000, less than 80% of the sales team's average of RMB 163,000. Despite having more R&D staff than sales personnel, the total compensation for R&D remains lower. Insufficient R&D investment and lack of competitive incentives may hinder the iteration and upgrading of core technologies.
Market concentration and customer structure present significant operational risks. While Weiyuan Energy cites business expansion and global strategy as reasons for its Hong Kong listing, revenue remains heavily reliant on the mainland China market. In the first three quarters of 2025, revenue from mainland China accounted for 87.1% of the total (RMB 1.71 billion), with overseas markets contributing only 12.9%. The slow progress in global diversification leaves the company vulnerable to policy changes or demand shrinkage in the domestic digital energy sector.
Furthermore, the customer base is dominated by central state-owned enterprises such as State Grid and China Southern Power Grid. These clients possess strong bargaining power, which not only places the company in a passive position in negotiations but also leads to deteriorating accounts receivable turnover efficiency. The trade receivables and notes turnover days increased significantly from 248 days in 2023 to 334 days in the first three quarters of 2025. Prolonged cash collection cycles intensify working capital pressure and heighten the risk of bad debt losses, demanding highly efficient cash flow and operational management.
In the core power distribution equipment market, the competitive landscape remains challenging. Although the company improved its ranking in State Grid's switchgear category from 18th in 2024 to 7th in 2025, with its bid-winning share increasing from 0.7% to 1.3%, its overall market share remains below 2%. It ranks seventh among the top ten suppliers, reflecting strong market concentration and limited competitive advantage. Performance in the China Southern Power Grid market is weaker, with the bid-winning amount dropping from RMB 400 million in 2024 to RMB 380 million in 2025, and its share falling from 3.9% to 3.1%, causing its rank to drop from sixth to eighth. Facing intense competition, the company's bid-winning stability is insufficient, and failure to enhance product competitiveness could lead to further market share erosion.
Changes in ownership structure and listing pathway adjustments add uncertainty. Between December 2025 and January 2026, the company introduced strategic investors, including Boyu Investment and CATL's subsidiary Wending Investment, resulting in a post-investment valuation of RMB 4.77 billion. However, during this equity change, China Southern Power Grid's affiliate, Southern Grid Dual Carbon, exited completely as a shareholder. Meanwhile, CICC-related entity CICC Energy reduced its stake from 5.19% to 3.88%. The exit of key clients and sponsor-related entities may impact future business cooperation and capital operations.
Additionally, the company initially planned to list on the Shenzhen Stock Exchange's ChiNext board. After signing a辅导 agreement with CICC in December 2023, the plan was terminated in January 2026 due to lack of progress, leading to the shift to Hong Kong. This change not only suggests the company previously failed to meet A-share listing requirements but also exposes it to new challenges, including Hong Kong's valuation metrics and regulatory framework. Failure to adapt to the Hong Kong market environment could pressure post-listing performance.