HX Technology has submitted an application for listing on the Hong Kong Stock Exchange's GEM board. The company, which provides automotive testing services, is heavily influenced by the overall condition and cyclical trends of the automobile industry.
In the first three quarters of 2025, intense price competition in the new energy vehicle market significantly compressed the company's gross profit margin, which now lags considerably behind its listed peers. Financially, HX Technology relies heavily on bank loans to support its working capital. As of the end of December 2025, the company's total debt reached 1.84 billion yuan, approximately five times its cash and cash equivalents, indicating severe liquidity pressure and making an urgent case for its listing to raise funds.
A point of concern is the experience of its IPO sponsors and coordinators. The sole sponsor for this offering lacks a successful track record in sponsoring Hong Kong IPOs. Furthermore, one of the global coordinators has its license subject to multiple restrictions from Hong Kong's securities regulator, raising questions about its capability to fulfill the coordinator role effectively.
Founded in 2017, HX Technology is a leading automotive testing solutions provider in Zhejiang province, engaged in vehicle testing, integrated testing systems, and automotive component sales. Prior to its IPO, the company completed five funding rounds, raising a total of 1.97 billion yuan.
The company's financial performance shows that while revenue grew, its gross profit margin saw a sharp decline in the first three quarters of 2025. The overall gross margin fell to 30.4%, a decrease of 5.5 percentage points compared to the same period last year. This decline is attributed to the company's deep ties to the new energy vehicle sector. Although revenue from new energy vehicle testing surged, the gross margin for this segment plummeted by 12.9 percentage points, dragging down the company's overall profitability.
Compared to industry competitors, HX Technology's gross margin is the lowest, suggesting weaker market competitiveness. The company's prospectus also contained a basic clerical error, misstating a key client concentration figure.
Financially, accounts receivable have grown substantially, accounting for a high proportion of current assets. The company's reliance on debt is significant, with short-term borrowings creating considerable repayment pressure. HX Technology has also engaged in sale-and-leaseback transactions to secure additional liquidity. The company's total debt is substantially higher than its cash reserves, underscoring a critical liquidity situation.
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