Shenghuo Holdings' Hong Kong IPO: Over 90% of revenue comes from the top five clients, with a large proportion of cash dividends paid before the IPO

Question: Does high dividend payout before an IPO affect a company’s capital chain after going public?

By Dianman Finance / Dianman Account

On one side, the controlling shareholder cashes out through high dividends; on the other, the company’s performance heavily depends on a single client—Shenghuo Holdings’ prospectus for its Hong Kong listing, which acts like a prism reflecting the conflicting scenarios faced by some companies rushing into the capital market.

On March 13, Shenghuo Holdings updated its prospectus and submitted a listing application to the Main Board of the Hong Kong Stock Exchange, with Cinda International as the sole sponsor.

The prospectus shows that Shenghuo Holdings is a marketing company providing integrated marketing services, marketing technology services, and advertising marketing services in China. The group was established in 2013 as an integrated marketing and advertising service provider, with business offices located in Guangzhou, China. To keep pace with the digital transformation of the fast-moving consumer goods industry and remain competitive in a rapidly evolving market environment, the company has gradually enhanced its technological capabilities, upgraded and expanded its integrated and advertising marketing services, aiming to seize more business opportunities.

From 2023 to 2025, Shenghuo Holdings is expected to achieve revenues of 163 million yuan, 252 million yuan, and 301 million yuan, respectively, with net profits of 27.152 million yuan, 33.204 million yuan, and 38.607 million yuan.

Shenghuo Holdings has a very high customer concentration, relying on its largest customer for 40% of its revenue. During the reporting periods, revenue from the top five customers accounted for 91.2%, 79.8%, and 91.3% of total revenue, respectively, with the largest customer (Customer A) contributing 78.6%, 49.3%, and 40.4%.

From 2023 to 2025, the company’s accounts receivable turnover days were 117.3 days, 180.1 days, and 206.0 days, respectively, with the collection cycle continuously lengthening. By the end of 2025, accounts receivable totaled 159 million yuan, accounting for 69.46% of total assets.

In 2024 and 2025, Shenghuo Holdings declared and paid dividends of 10.4 million yuan and 77.6 million yuan, respectively, with total dividends paid over nearly three years reaching 88.92% of net profits. Based on the latest shareholding ratios, the actual controllers’ couple received at least 65 million yuan in dividends.

Dianman Finance will continue to monitor the developments.