On October 31, Suzhou Tian Tong Wei Shi Electronic Technology Co., Ltd. (hereinafter referred to as "Tian Tong Wei Shi") submitted a listing application to the Main Board of the Hong Kong Stock Exchange, with BOC International, HSBC, and Huatai International serving as joint sponsors.
Despite rapid revenue growth in recent years, Tian Tong Wei Shi has yet to achieve profitability. The company reduced losses by significantly cutting R&D expenses, resulting in an R&D expense ratio far lower than comparable companies. Can it maintain its technological moat amid intensifying competition? In fact, to expand its L4-level business, the company adopted a "volume-for-price" strategy, leading to a continuous decline in gross margin, which has fallen by over 15 percentage points cumulatively—now less than half that of its L2-L2+ business.
Notably, Tian Tong Wei Shi explicitly listed SAIC Motor Corporation Limited as a related party while simultaneously claiming that all five major customers (except ZF) are independent third parties. Additionally, the company provided conflicting dates ("2021" and "2024") for the start of its business relationship with VinFast. Why do such inconsistencies exist? How reliable is the prospectus?
**Persistent Losses Amid Rising Founder Compensation & Pre-IPO Share Sale at Low Price** Tian Tong Wei Shi is a leading Chinese software-centric intelligent driving solutions provider, offering full-stack solutions and services covering L2-L2+ advanced driver-assistance systems (ADAS) and L4 autonomous driving. Its products have achieved large-scale deployment in both L2-L2+ and L4 segments, completing the technology-to-market cycle.
Under China’s national standard for driving automation classification (effective March 1, 2022), automation is divided into six levels: L0 to L2 require continuous driver monitoring, L3 is conditional automation, L4 is high automation, and L5 is full automation.
Before the IPO, founder Wang Xi directly held 28.39% of the company’s shares and indirectly controlled 8.78% and 4.44% through employee持股 platforms, totaling approximately 41.61%. As chairman, executive director, and CEO, Wang has received substantial compensation despite the company’s losses—his pay rose from RMB 2.218 million to RMB 2.672 million over three years, totaling nearly RMB 9 million in 3.5 years.
Tian Tong Wei Shi has completed seven funding rounds, raising nearly RMB 1 billion from investors including China Unicom, BAIC, SAIC Motor, Sensetime Investment, Horizon Robotics, and ZF. The latest Series D round in June raised RMB 448 million. However, on September 19, the company secured an interest-free convertible loan of RMB 29 million from Tianjin Dongli Economic Development Industrial Fund, convertible at RMB 25.37 per share—lower than its Series C+ (RMB 26.47) and Series D (RMB 32.24) rounds. Why the urgency to sell shares at a discount pre-IPO? Is there potential利益输送?
**R&D Intensity Lags Peers; L4 Business Margins Keep Declining** From 2022 to H1 2025, Tian Tong Wei Shi’s revenue grew at a 67.7% CAGR to RMB 157 million in H1 2025, while net losses totaled RMB 284 million (adjusted). R&D expenses dropped from 108.7% of revenue in 2022 to 11.6% in H1 2025, far below peers like WeRide (322.9%) and Pony.ai (272.4%), whose R&D spending was 35x and 38x higher, respectively.
The L4 business saw volatile revenue (42.2% to 57.2% of total) and shrinking margins—gross margin fell from 38.7% in 2022 to 22.3% in H1 2025, now half that of L2-L2+ (47.8%). This "volume-for-price" strategy raises sustainability concerns.
**High Customer Concentration & SAIC Motor Affiliation Puzzle** Top five clients contributed 63.5% of H1 2025 revenue, with VinFast’s sales plunging 73.4% YoY in 2024 before exiting the top five. Oddly, the prospectus inconsistently dates the VinFast partnership as starting in either 2021 or 2024—a glaring oversight by the company and sponsors.
SAIC Motor, a major investor via its subsidiary SAIC North America, was labeled both a related party and an "independent third party" (as "Customer D"). Sales to SAIC fluctuated sharply, dropping 74.4% in 2024 before rebounding in 2025. Such contradictions cast doubt on disclosure integrity.
**Industry Challenges** "Capital has lost faith in L4-focused firms. Without near-term commercialization or self-sustaining cash flow, they rely entirely on funding," said Gao Chao of China Autonomous Driving Industry Innovation Alliance. Tightening investment has triggered industry consolidation, as seen in Pony.ai and WeRide’s dual listings (down 21% and 15% since debut).
Tian Tong Wei Shi’s cash flow remains negative (RMB 74 million net outflow in H1 2025), underscoring its reliance on external financing—a key motive for its IPO bid amid sector headwinds.
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