On January 2, 2026, Zhejiang LaiFu Harmonic Drive Co., Ltd. (referred to as "LaiFu Harmonic") confidentially submitted a listing application to the Main Board of the Hong Kong Stock Exchange, with CMB International as the sole sponsor. The company received filing approval from the China Securities Regulatory Commission on May 29 and passed the listing hearing on June 14.
In terms of industry competition, there is a significant gap between LaiFu Harmonic and the market leader, Leader Harmonious Drive Systems Co.,Ltd.. LaiFu's revenue-based market share is only 12.9%, trailing the leader by approximately 15 percentage points, indicating relatively weak industry influence.
On the profitability front, LaiFu Harmonic's revenue growth is heavily reliant on a volume-for-price strategy. The average selling price of its core product has dropped sharply by 28.2% over two years, directly causing a continuous decline in the gross margin for both its core product and overall operations. Furthermore, its expense management capability is significantly weaker than that of Leader Harmonious Drive Systems Co.,Ltd.. The company reported continuous net losses during the reporting period and remained unprofitable even after excluding special items, presenting a stark contrast to the stable profitability of its larger rival.
Operational and financial risks are more pronounced. LaiFu Harmonic's accounts receivable have been persistently high, exceeding 90% of its revenue. Its days sales outstanding is twice as long as that of Leader Harmonious Drive Systems Co.,Ltd., indicating substantial pressure from capital being tied up. Compounding this issue, the company has experienced consecutive periods of significant net cash outflow from operating activities, revealing a lack of self-sustaining cash generation from its core business and a high dependence on external financing to maintain operations.
Currently, LaiFu Harmonic's cash balance has shrunk considerably, while its short-term and long-term debt has surged, causing its debt repayment gap to widen continuously. Coupled with weak overseas market expansion and structural shortcomings in its business, these multiple overlapping issues cast significant uncertainty over the company's future operational development post its Hong Kong listing.
Revenue Doubles, Yet Market Share Remains Less Than Half of Leader's
Founded in 2013, LaiFu Harmonic is a leading Chinese provider of core precision transmission components for robots, offering a comprehensive product portfolio including harmonic reducers, joint modules, robotic arms, and even automated workstations. Its products are primarily used in industrial robots and humanoid robots.
The harmonic reducer industry has long been dominated by international giants like Japan's Harmonic Drive Systems Inc., with the process of domestic substitution progressing slowly. In recent years, local companies represented by Leader Harmonious Drive Systems Co.,Ltd. and LaiFu Harmonic have continuously broken through key technologies, rapidly reshaping the global competitive landscape. Market analysis indicates that the harmonic reducer industry exhibits significant oligopolistic characteristics—high barriers to entry formed by technology, production capacity, and customer certification make the trend of leading players getting stronger irreversible.
Based on 2025 shipment volume, the Chinese robot harmonic reducer market shows a clear duopoly structure. Leader Harmonious Drive Systems Co.,Ltd. holds a market share of 27.5%, while LaiFu Harmonic holds 21.4%. Together, these two companies account for nearly half of the domestic market, creating a clear gap with other manufacturers. In the global market, LaiFu Harmonic also firmly occupies a position in the first tier.
However, when calculated based on 2025 revenue, LaiFu Harmonic's market share is only 12.9%, significantly widening the gap with Leader Harmonious Drive Systems Co.,Ltd. (referred to as "Company A" in the chart above), which maintains a market share of 27.6%—a difference of about 15 percentage points.
From July 2017 to December 2022, LaiFu Harmonic completed seven rounds of financing, raising a cumulative total of 470 million yuan. It attracted well-known investors including China Electronics & CICC Fund, Lenovo Capital, China Development Bank Capital, and Yuechao. As of the Series F financing, the post-investment valuation of LaiFu Harmonic was 1.5 billion yuan.
During this period, some investors locked in partial returns early by transferring equity. In November 2021, Yuechao transferred registered capital of 1.21 million yuan to Lenovo Capital, cashing out 10 million yuan. In October 2022, Su Shang United Fund transferred registered capital of 3.182 million yuan to Hongyu Investment, cashing out 46.7 million yuan. In December of the same year, Rushan Emerging transferred registered capital of 2.915 million yuan to Runxin Dianjing and Haihe Furui, cashing out 20 million yuan.
Prior to the IPO, Zhang Jie, founder, chairman, executive director, and general manager of LaiFu Harmonic, directly and indirectly controls 32.67% of the voting rights at the company's shareholders' meeting. Together with LaiFu Investment and Jieyang Information, he will constitute the company's single largest shareholder group after listing.
Harmonic Reducer Relies on Price Cuts for Volume, Gross Margin Continues to Decline
After 13 years of development, LaiFu Harmonic still faces considerable challenges as it enters the full commercialization phase.
From 2023 to 2025, LaiFu Harmonic's operating revenue grew significantly from 94.545 million yuan to 260 million yuan. However, this growth largely depended on a "volume-for-price" sales strategy. During the reporting period, the sales volume of its core product, the harmonic reducer, increased from 115,300 units to 291,500 units, but the average selling price dropped from 795 yuan per unit to 571 yuan, a decrease of 28.2%.
LaiFu Harmonic acknowledges that it has implemented strategic price adjustments for its harmonic reducers to gain greater market share. Concurrently, driven by growing demand for humanoid robots, the sales proportion of smaller-specification harmonic reducers has increased. These products, which require less material and have shorter production cycles, have lower costs and consequently lower selling prices.
Influenced by these factors, the gross margin of LaiFu Harmonic's harmonic reducers has continued to decline, falling sharply from 29.9% in 2023 to 24.6% in 2025, a drop of 5.3 percentage points. The company's overall gross margin also decreased from 29.5% in 2023 to 24.1% in 2024. However, thanks to the scaled mass production of joint modules, robotic arms, and automated workstations, the company's overall gross margin rebounded to 25.6% in 2025.
Compared to Leader Harmonious Drive Systems Co.,Ltd., LaiFu Harmonic's profitability remains relatively weak. From 2023 to 2025, the overall gross margin of Leader Harmonious Drive Systems Co.,Ltd. was 41.1%, 37.5%, and 36.9% respectively, more than 10 percentage points higher than LaiFu Harmonic's gross margin for the same periods. Specifically, the gross margin for harmonic reducers and metal components at Leader Harmonious Drive Systems Co.,Ltd. remained at a relatively high level above 36%, recorded at 41.2%, 36.1%, and 36.8% for each reporting period, with the latest period showing a year-on-year increase of 0.7 percentage points—a trend opposite to that of LaiFu Harmonic's harmonic reducer gross margin.
Additionally, LaiFu Harmonic's expense control capability is weak. From 2023 to 2025, its period expense ratio was 59.4%, 51.8%, and 33.9% respectively. In contrast, the period expense ratio for Leader Harmonious Drive Systems Co.,Ltd. during the same period was only 22.8%, 21.0%, and 16.3%, less than half of LaiFu Harmonic's ratio.
Under the combined influence of these dual factors, Leader Harmonious Drive Systems Co.,Ltd. has long been profitable, while LaiFu Harmonic remains deeply mired in losses. From 2023 to 2025, LaiFu Harmonic reported net losses of 170 million yuan, 170 million yuan, and 170 million yuan respectively. Even after deducting special items such as redemption liability and share-based payments, the company still incurred losses of 23.735 million yuan, 23.726 million yuan, and 8.901 million yuan respectively. In contrast, Leader Harmonious Drive Systems Co.,Ltd. achieved a cumulative net profit of 270 million yuan over the same period.
Regarding overseas expansion, LaiFu Harmonic's progress has fallen far short of expectations. In 2025, the company generated overseas revenue of 6.993 million yuan, accounting for only 2.7% of total revenue, a year-on-year decrease of 1.5 percentage points. In comparison, Leader Harmonious Drive Systems Co.,Ltd. achieved overseas revenue of 58.251 million yuan during the same period, with its revenue share exceeding 10%.
Receivables Exceed 90% of Revenue, Days Sales Outstanding Double That of Leader
While LaiFu Harmonic's revenue has grown rapidly, its accounts receivable balance has also continued to climb. A large volume of products have been delivered to customers, but payment collection has been significantly delayed.
From 2023 to 2025, LaiFu Harmonic's days sales outstanding were 201 days, 246 days, and 207 days respectively, consistently remaining above 200 days. During the same period, the days sales outstanding for Leader Harmonious Drive Systems Co.,Ltd. were 87 days, 113 days, and 108 days respectively, only half that of LaiFu Harmonic.
From 2023 to 2025, the ending balance of LaiFu Harmonic's accounts receivable was 84.657 million yuan, 94.951 million yuan, and 240 million yuan respectively, accounting for 89.5%, 88.2%, and 91.4% of its revenue for the corresponding periods. In contrast, the proportion of accounts receivable to revenue for Leader Harmonious Drive Systems Co.,Ltd. during the same period was 27.2%, 38.0%, and 34.0% respectively, significantly lower than LaiFu Harmonic's figures.
Apart from delayed collections, LaiFu Harmonic may also face inventory backlog risks. From 2023 to 2025, the company's inventory turnover days were 376 days, 355 days, and 184 days respectively. As of the end of 2025, the inventory balance reached 111 million yuan, an increase of 28.3% compared to the end of the previous year.
During the same period, the inventory turnover days for Leader Harmonious Drive Systems Co.,Ltd. were 432 days, 372 days, and 265 days respectively, significantly longer than LaiFu Harmonic's in 2025. This is primarily due to differences in their sales models.
According to the prospectus, LaiFu Harmonic employs a hybrid sales channel, selling products through both direct sales and distribution. Revenue from the distribution model was 39.296 million yuan, 46.069 million yuan, and 133 million yuan respectively, with a year-on-year growth of 188.74% in 2025, 80 percentage points higher than the growth rate of the direct sales model. The proportion of distribution revenue to total revenue was 41.6%, 42.8%, and 51.0% respectively, exceeding that of direct sales for the first time in 2025.
Under the distribution model, standardized, small-batch general-purpose reducers are shipped in bulk to distributors at once, and revenue can be recognized upon shipment from the warehouse. This not only facilitates rapid inventory turnover, avoiding long-term stockpiling of finished products, but also significantly shortens the time inventory stays in the factory. Furthermore, LaiFu Harmonic's harmonic reducers saw a price drop of 28.6% over two years. By proactively offering discounts to promote sales, even at the expense of gross margin to quickly digest inventory, the company further accelerated inventory monetization.
In contrast, Leader Harmonious Drive Systems Co.,Ltd. maintains a direct sales revenue share consistently above 90%. Its clientele primarily consists of leading industrial robot and humanoid robot manufacturers, with a high proportion of large framework orders and project-based orders. To ensure delivery capability and maintain customer relationships, the company needs to proactively secure raw materials in advance and schedule production for inventory.
Delayed collection of receivables, coupled with the capital tied up in inventory, means that LaiFu Harmonic's core business has yet to develop self-sustaining "cash-generating" capability. Its working capital is highly dependent on external financing. From 2023 to 2025, the company's net cash flow from operating activities was -35.229 million yuan, -33.693 million yuan, and -63.411 million yuan respectively, resulting in a cumulative net outflow of 132 million yuan, far exceeding the total adjusted net loss for the same period.
As of the end of 2025, the cash and cash equivalents on LaiFu Harmonic's balance sheet were only 33.753 million yuan, a sharp decrease of 52.3% compared to the end of the previous year. Meanwhile, the company's short-term borrowings surged to 100 million yuan, a year-on-year increase of 224.0%, causing the short-term debt repayment gap to widen dramatically. Additionally, the company's long-term borrowings increased by 1148.3% year-on-year to 91.128 million yuan.
As of the end of April this year, the cash on LaiFu Harmonic's balance sheet further shrank to 22.477 million yuan, while short-term borrowings had increased to 160 million yuan. Even including 37.2 million yuan in structured deposits and 5.404 million yuan in restricted cash, the overall funding scale still falls short of covering debt repayment needs, representing a drop in the bucket.
With a core business lacking "cash-generating" ability, even a successful listing on the Hong Kong Stock Exchange would merely add another financing channel, ultimately addressing the symptoms rather than the root cause.
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