Hiconics Eco-Energy Technology Co., Ltd. recently announced a plan to issue shares to specific investors, aiming to raise up to 1.652 billion yuan. The shares will be fully subscribed in cash by its controlling shareholder, Midea Group Co., Ltd. This represents another significant capital injection by Midea Group into Hiconics since it took control in 2020, reinforcing its support for Hiconics' operations in the new energy sector.
Hiconics has shifted its core business from high and low-voltage frequency converters to photovoltaic EPC. However, performance following this transition has been generally weak. The company reported a substantial net loss in 2023. For 2024 and 2025, after adjusting for non-recurring gains and losses, profits were merely around the break-even point. Furthermore, the company's accounts payable and debt ratio have risen sharply, indicating a growing reliance on utilizing funds from upstream suppliers.
It is noteworthy that Midea Group's recent acquisitions of stakes in listed companies to expand its presence in the new energy sector have not yielded successful outcomes. In 2020, Midea Group invested 743 million yuan to acquire a controlling stake in Hiconics, after which Hiconics' gross profit margin declined significantly. In 2022, Midea Group also acquired a stake in another company, which has continued to report losses since the acquisition.
Now, Midea Group is investing an additional 1.65 billion yuan into Hiconics, making a substantial bet on the uncertain prospects of the new energy industry.
Hiconics, formerly known as Hiconics Drive, was listed on the ChiNext board in January 2010. Initially focused on high-voltage frequency converters for industrial energy savings and sectors like power, metallurgy, and cement, the company gradually expanded into industrial control, energy conservation, and new energy vehicles, eventually rebranding as Hiconics Eco-Energy Technology.
In 2020, Midea Group's subsidiary acquired a controlling stake in Hiconics for 743 million yuan. Under Midea's control, Hiconics refocused its operations on three core areas: photovoltaic EPC, residential energy storage and photovoltaic inverters, and high-voltage frequency converters, while gradually phasing out businesses related to new energy vehicles, charging piles, and servo systems.
However, the transformation under Midea's ownership has not yielded the expected results. After two years of modest profits, Hiconics reported a significant net loss in 2023. According to a performance forecast released in January 2026, the company's net profit attributable to shareholders for the full year is projected to be between 50 million and 75 million yuan, representing a year-on-year increase of 385.62% to 628.43%. However, non-recurring gains and losses amounted to 50 million yuan, resulting in an adjusted net profit of only 8 million to 12 million yuan after excluding these items, similar to 2024 levels and just slightly above breakeven.
More critically, by the end of 2024, Hiconics' notes and accounts payable had surged to 2.315 billion yuan, a 6.6-fold increase from 349 million yuan at the end of 2021. The company's debt ratio has also risen steadily alongside the sharp increase in payables.
The significant utilization of supplier funds is closely linked to the underwhelming performance of Hiconics' business transformation. Since 2024, the company has strategically pivoted towards photovoltaic EPC projects, with revenue from this segment soaring from a low base in 2023 to account for 90.41% of total revenue in the first half of 2025, making it the dominant revenue source.
The EPC business model is capital-intensive, requiring substantial upfront procurement of components, inverters, supports, and cables. Consequently, accounts payable have climbed at a rate far exceeding revenue growth. The company has been forced to extend payment terms to suppliers, using their funds to alleviate its own cash flow pressures and support project operations.
Simultaneously, Hiconics faces high accounts receivable with slow collection, creating a funding gap where money is neither being collected nor paid out, posing significant financial risks to the company's operations.
Midea Group is a leading domestic manufacturer of white goods. According to data from the National Household Electrical Appliances Industry Information Center, the domestic sales scale of the home appliance industry in 2025 was 846.1 billion yuan, a slight decrease of 0.1% year-on-year.
With the domestic white goods market having reached saturation, competition is now primarily focused on existing market share. To sustain growth, Midea Group has been expanding into new sectors such as new energy and industrial robotics in recent years.
Hiconics currently operates as Midea Group's technology company focused on new energy and industrial automation. This private placement is viewed by the market as a key strategic move by Midea Group in the energy sector.
However, Midea Group's acquisitions of stakes in listed companies to bolster its new energy portfolio have not been successful. Following Midea's acquisition of a controlling stake in Hiconics in 2020, Hiconics' gross profit margin has declined consistently.
According to the third-quarter report of 2025, Hiconics' gross profit margin was only 8.66%, a significant decrease of 6.36 percentage points year-on-year, and a more than 20-percentage-point drop compared to the 30% margin in 2021.
In contrast, comparable companies in similar sectors, have maintained stable gross profit margins above 30-40% during the same period.
The continuous decline in gross margin is also closely tied to the dramatic shift in Hiconics' revenue structure. Besides being capital-intensive, the photovoltaic EPC business model is characterized by low profit margins. Although the company's high-end businesses, such as residential energy storage, hold promise, financial reports clearly indicate that the residential storage business is still in a developmental phase and is unlikely to reverse the gross margin downturn in the short term.
In December 2022, Midea Group acquired an 8.95% stake in another company for 837 million yuan. In May 2023, Midea Group subscribed to a private placement of 252 million shares in that company for 828 million yuan. After these transactions, Midea Group held a 29.96% stake, becoming the controlling shareholder.
From 2022 to 2024, that company reported net losses attributable to shareholders of 101 million yuan, 529 million yuan, and 464 million yuan, respectively. The 2025 performance forecast indicates continued losses. This means the company has been consistently unprofitable since Midea Group took control.
It is worth noting that in 2023, Midea Group had planned to fully subscribe to a 1.47 billion yuan private placement by Hiconics, but the issuance was ultimately unsuccessful.
According to the current private placement plan, the funds raised by Hiconics will be primarily used for the research, development, and industrialization of high-voltage frequency converters, photovoltaic grid-tied inverters, and residential energy storage systems. Funds will also be allocated for the construction of distributed photovoltaic benchmark power stations and for supplementing working capital.
However, both the completion of this private placement and the actual profitability of the funded projects remain highly uncertain. Midea Group's decision to inject another 1.65 billion yuan into Hiconics represents a major gamble on the unpredictable future of the new energy sector.
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