In 2025, operating cash flow plummeted by 40%. New泉股份, a leading car accessories company, plans to go public in Hong Kong to "raise funds."

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Zhongjing reporter Guo Yangchen and Shi Yingjing reported from Shanghai

On March 19, 2026, Jiangsu Xinquan Automotive Decoration Co., Ltd. (hereinafter referred to as “Xinquan”, 603179.SH) released its performance report for 2025. Among them, revenue was 15.524 billion yuan, a year-on-year increase of 17.04%; net profit attributable to shareholders was 815 million yuan, a year-on-year decrease of 16.54%; net cash flow from operating activities was 768 million yuan, a year-on-year decrease of 40.60%.

Previously, Xinquan had submitted a listing application to the main board of the Hong Kong Stock Exchange. If the Hong Kong listing is successful, this automotive decoration “runner-up,” founded in 2001 and headquartered in Changzhou, Jiangsu Province, will form a dual capital platform structure of “A+H shares.”

The prospectus shows that the funds raised from this Hong Kong listing will mainly be used for expanding automotive seat production lines over the next three years, building new factories both domestically and abroad, researching next-generation technologies and materials, investing in high-precision equipment and intelligent software systems to improve automation and digital production, and developing robotics and automation technology.

This also aligns with Xinquan’s business layout. Reporters from China Business Journal noticed that over the past year, Xinquan has achieved a breakthrough in its automotive seat business through acquisitions, and its internationalization strategy has been further advanced by increasing overseas investments in factories. In addition, Xinquan is determined to enter the humanoid robot sector.

Regarding the progress of the Hong Kong listing and the situation of new business layouts, reporters sent an interview request to Xinquan. Xinquan stated that it is currently in a silent period for listing and is inconvenient to respond. However, Xinquan noted in its annual report that it will actively promote various tasks related to this (Hong Kong) issuance and listing, and will fulfill its information disclosure obligations in a timely manner based on progress.

2025 performance did not meet expectations

On March 19, 2026, Xinquan disclosed its A-share annual report for 2025, which did not meet external expectations. An automotive industry analyst told reporters that the core reason for the lack of profit growth in automotive parts companies is the weak industry landscape, strong pressure on pricing from manufacturers, extended payment terms, and thin profits. Parts companies often rely on a few large OEMs as major customers, which weakens bargaining power and leads to continuous price pressure from OEMs, resulting in compressed gross margins; even if sales and revenue expand, unit profits remain thin.

In fact, Xinquan does have a “big customer dependency.” The Hong Kong prospectus shows that Xinquan’s top five customers are Tesla, Geely Automobile, Chery Automobile, Li Auto, and BYD. In the first three quarters of 2024 and 2025, the revenue from the top five customers was 9.888 billion yuan and 8.735 billion yuan, accounting for 74.6% and 76.5% of total revenue, respectively. Among them, the largest customer’s contributions were 2.994 billion yuan and 3.3577 billion yuan, accounting for 22.6% and 29.4% of total revenue.

The aforementioned automotive industry analyst further stated that due to the general trend of OEMs extending payment terms and occupying supplier funds, companies need to make large upfront investments in production, leading to significant increases in financial and capital costs. Coupled with fluctuations in raw material prices, insufficient capacity utilization, and rigid expenditures on R&D and manufacturing, revenue may grow, but net profit and net profit margins decline.

Reporters noted that in addition to the decline in net profit attributable to shareholders and net profit after excluding non-recurring gains and losses, the gross margin of Xinquan’s main business of automotive parts also declined due to industry competition and pricing pressure, decreasing by 1.96 percentage points to 17.09% compared to the same period last year.

It is worth noting that the annual report shows that in 2025, Xinquan’s net cash flow from operating activities was 768 million yuan, a significant year-on-year decline of 40.60%. In response, Xinquan explained that this was mainly due to an increase in cash payments.

At the same time, the intensification of the “elimination race” among car manufacturers has also affected Xinquan’s accounts receivable. The annual report shows that Xinquan made provisions for bad debts for several car companies, including GAC Fiat Chrysler, WM Motor, Hechuang Automobile, and Hozon New Energy, with a total book balance of accounts receivable amounting to 35.2696 million yuan and a total provision for bad debts of 28.0043 million yuan, with the reason for the provisions being “expected to be unable to collect all during the credit period.”

New business capacity utilization just over 20%

In recent years, as an industry leader, Xinquan has expanded into seats and seat accessories, mainly supplying passenger car customers, and this new business has primarily come from acquisitions.

Going back to March 2025, Xinquan acquired a 70% stake in Anhui Ruqi Automotive Parts Co., Ltd. (hereinafter referred to as “Anhui Ruqi”) for 161 million yuan. At the same time, Xinquan agreed with the non-controlling shareholders of Anhui Ruqi to acquire the remaining 30% of the equity by 2028.

It is worth mentioning that Anhui Ruqi was previously a factory of the international parts giant Lear in Anhui Province, mainly producing seat and seat accessory systems. After the acquisition, by the end of the first three quarters of 2025, Xinquan’s seat sales grew from zero to approximately 122,600 sets, bringing in 95.206 million yuan in revenue.

However, the capacity utilization of Xinquan’s automotive seat business remains low. The latest data from the annual report shows that as of the end of 2025, Xinquan’s designed capacity for seat products was 360,000 sets, but the actual output in 2025 was only 83,100 sets, resulting in a capacity utilization rate of 23.09%.

Nevertheless, Xinquan has decided to continue investing in new businesses. Xinquan stated in its prospectus that it plans to expand automotive seat capacity and advance the strategic layout of seat and seat accessory businesses to enhance the value per vehicle. Part of the funds raised will be used to recruit managers, production engineers, and R&D personnel to support the capacity enhancement of new projects and the development of next-generation seat system processes and new products.

Reporters noted that in addition to expanding the capacity of seat and seat accessory businesses, Xinquan also plans to explore markets in Europe and America. Currently, in the overseas market, Xinquan has established three production bases in Malaysia, Slovakia, and Mexico, and set up two R&D centers in Germany and the United States.

In April 2025, Xinquan held a board meeting to increase investment by 45 million euros in Slovakia to meet the capacity expansion of new designated projects at the Slovakia site, better serve local customers, and expand European market operations. In May and June 2025, Xinquan established subsidiaries in Munich, Germany, and Ingolstadt, Bavaria; in September 2025, Xinquan established a subsidiary in Kentucky, USA.

The prospectus shows that part of the funds raised from Xinquan’s Hong Kong listing will be used to purchase land and construct new production facilities in Mexico, Europe, and Southeast Asia, while also upgrading existing plants to enhance capacity and operational flexibility.

It is reported that Xinquan is constructing three factories domestically and establishing four overseas factories in the USA, Germany, and Slovakia, mainly producing interior system solutions. Upon completion, the annual designed capacity will increase by approximately 7.7 million sets per year.

However, Xinquan’s profitability in overseas markets still faces challenges. The annual report data shows that in 2025, Xinquan’s gross margin in North America was 18.66%, a year-on-year decrease of 7.71 percentage points; in Europe, the gross margin was 21.18%, a significant decrease of 13.26 percentage points.

“Second-generation successors” enter the embodied intelligence track

In October 2025, just before Xinquan’s listing in Hong Kong, its founder and one of the actual controllers, Tang Aoqi, passed away.

Following the inheritance changes, Tang Aoqi’s son, Tang Zhihua, became the new actual controller of Xinquan. It is reported that Tang Zhihua directly holds 44.32 million shares of the company, accounting for 8.69% of the total share capital, and through the controlling shareholder Xinquan Investment, he holds 18.57% of Xinquan’s total share capital, totaling 27.26%.

At the same time, after “taking over,” Tang Zhihua began to lead Xinquan into the booming humanoid robot sector. In December 2025, Xinquan established Changzhou Xinquan Intelligent Robot Co., Ltd. with a registered capital of 100 million yuan, focusing on the core components of robots, collaborating with the company’s customers and robot manufacturers to promote product development and mass production.

On January 26, 2026, Xinquan announced the signing of a strategic cooperation agreement with Kaidi Co., Ltd. (605288.SH), with both parties jointly laying out the key component track for robots. As a leading company in the linear drive field, Kaidi has accumulated significant technological barriers and advantages in precision transmission and motor control, which will inject core technological momentum into the collaboration and promote the rapid implementation of projects, achieving deep integration of technology and industry.

Morgan Stanley’s report indicates that from a global industrial perspective, humanoid robots are entering the mass production preparatory stage, with structural parts, shells, and lightweight materials being the first to achieve scale. The Chinese automotive supply chain has a comparative advantage globally. However, cross-industry companies may face issues of large investments, slow returns, and difficulty breaking through technological barriers if they blindly rush into core components.

Guotai Junan also believes that the robot business will bring more valuation enhancement but has limited impact on current profit fundamentals, and the pressure from traditional core businesses remains the main contradiction.