Xinyuan Co., Ltd. at Critical Stage of Hong Kong IPO: "Revenue Growth Without Profit Growth" Results Fall Short of Institutional Expectations, 2025 Net Profit Declines Over 16%, Operating Cash Flow Plummets 40%

Ask AI · Key Period for Hong Kong Listing: Will Underwhelming 2025 Annual Report Affect the Process?

By Caiding, Daily Economic News; Edited by Biluming

On the evening of March 19, Xinquan Co., Ltd. (SH603179, stock price 69.53 RMB, market cap 35.47 billion RMB) disclosed its 2025 annual report. The company achieved revenue of 15.524 billion RMB in 2025, a year-on-year increase of 17.04%; net profit attributable to shareholders was 815 million RMB, down 16.54% year-on-year; non-recurring net profit was 809 million RMB, down 16.5%; basic earnings per share were 1.66 RMB, down 17%. The company will pay a cash dividend of 3 RMB per 10 shares (tax included) to all shareholders, with remaining undistributed profits carried forward to future years, and capital reserve converted into share capital, with 4 shares bonus for every 10 shares, no stock dividends.

Source: Xinquan Co., Ltd. 2025 Annual Report

Based on the disclosed data, Xinquan Co. experienced “increased revenue but decreased profit” in 2025. According to Wind Financial compilation data, 15 institutions’ consensus forecast for 2025 net profit attributable to shareholders was 992.3 million RMB. Compared to the company’s disclosed 815 million RMB, it fell short of expectations (-17.86%) and was below all 15 institutions’ predicted values.

Source: Wind

Submitted to HKEX

In addition to key financial data, as of the end of 2025, Xinquan Co.‘s total assets reached 18.418 billion RMB, a year-on-year increase of 15.75%; shareholders’ equity increased significantly by 32.23%, reaching 7.413 billion RMB.

According to the annual report, Xinquan Co. closely follows the development of new energy vehicles, supporting more EV projects in 2025, including companies like Li Auto, Geely, GAC New Energy, BYD, NIO, Xiaomi Auto, and internationally renowned electric vehicle brands. This provides a strong customer base for the company’s long-term growth.

In terms of globalization strategy, to mitigate international trade risks and expand into European and American markets, Xinquan Co. increased overseas investments in 2025: investing an additional 45 million euros in Slovakia to expand capacity. Additionally, the company established subsidiaries in Germany (Munich, Bavaria Ingersoll) and Kentucky, USA.

Regarding capital operations, the company has submitted an application to HKEX for issuing H-shares and listing on the Main Board, actively advancing approval and registration processes.

The annual report also shows that Xinquan Co. completed the acquisition of a 70% stake in Anhui Ruqi Automobile Parts Co., Ltd. in 2025, actively developing automotive seat business and diversifying product offerings. In December 2025, Xinquan Co. also established Changzhou Xinquan Intelligent Robot Co., Ltd., focusing on core robot components and collaborating with automotive clients to create the company’s “second growth curve.”

Provision of Bad Debt Reserves to Multiple Automakers Exceeds 28 Million RMB

Despite achieving many milestones during the reporting period, Xinquan Co. ultimately delivered a “revenue growth but profit decline” result. Besides declines in net profit attributable to shareholders and non-recurring net profit, industry competition and price reduction pressures caused gross margin of the main business (auto parts) to decrease by 1.96 percentage points to 17.09% compared to the previous year.

Furthermore, in 2025, net cash flow from operating activities was 768 million RMB, a significant drop of 40.60% from the previous year, mainly due to increased cash payments, according to the company.

On the expense side, although main business revenue grew by 24.35%, main business costs increased by 27.37%, with costs rising faster than revenue. Specifically, in 2025, Xinquan Co. saw significant increases in various expenses: management expenses surged by 42.90% year-on-year, selling expenses increased by 25.76%, and R&D expenses grew by 25.79%.

Source: Xinquan Co., Ltd. 2025 Annual Report

Source: Xinquan Co., Ltd. 2025 Annual Report

Additionally, as the automotive industry faces intensified “淘汰赛” (elimination race), some automakers’ financial difficulties have impacted the company’s accounts receivable. The annual report shows that Xinquan Co. made bad debt provisions for several automakers, including GAC Fiat Chrysler, WM Motor, Hechuang Auto, and Uone New Energy. The total accounts receivable balance was approximately 35.53 million RMB, with bad debt provisions totaling about 28 million RMB, justified by “expected inability to fully recover within credit terms.” This reflects the direct financial impact of downstream industry reshuffling on supply chain companies.

Source: Xinquan Co., Ltd. 2025 Annual Report

Daily Economic News reporter also noted that Xinquan Co.'s seat product capacity is 360,000 sets, but actual output in 2025 was only 83,100 sets, with a utilization rate of just 23.09%.

Source: Xinquan Co., Ltd. 2025 Annual Report

The annual report also clearly states that as the company’s overseas expansion deepens, external risks such as geopolitical frictions, stricter trade compliance, and tariff policy uncertainties will be major challenges in 2026 and beyond. During the reporting period, overseas markets’ profitability still faced difficulties: gross margin in North America decreased by 7.71 percentage points, and in Europe, it dropped sharply by 13.26 percentage points.

Source: Xinquan Co., Ltd. 2025 Annual Report

Daily Economic News