Huayi Technology IPO: Shareholder reduction attracts attention, former director Huang Daqing cashes out 120 million yuan

（Source: Pre-IPO Review）

By Sun Subo, Rui Finance

Following the A+H wave, Huayi Technology (688071.SH), a core supplier for automotive testing and intelligent driving that has been listed on the STAR Market for five years, has submitted its listing application to the Hong Kong Stock Exchange.

As of now, Huayi Technology holds 130 granted patents, and its inertial navigation module has obtained relevant certifications for use in intelligent driving.

In 2024, Huayi Technology ranked first by revenue among China-based companies engaged in businesses related to intelligent testing solutions for new energy vehicle powertrains.

On the customer side, the company is deeply tied to mainstream new energy vehicle makers such as BYD and NIO, and its testing services business has strong long-term cooperation stickiness.

As of September 30, 2025, the balance of the company’s cash and cash equivalents on hand is only RMB 60.643 million, while its current borrowings are 712 million yuan.

01

Breaking into the STAR Market without a technical background

Shareholder selling sparks investor doubts

In the 1980s, Li Yin graduated from Fudan University’s German language program. Later, due to work needs, he was dispatched to Germany. His work and life experience in Germany made him feel the advanced development of Germany’s automotive industry and the gap that exists in China’s automotive industry—especially in the specific sub-sector of the automotive testing industry. With his dream of starting a business, after returning to China, Li Yin founded Huayi Technology.

Huang Daqing is Li Yin’s founding partner in entrepreneurship, and he also has a background in German. Before co-founding the business with Li Yin, after graduating from university, he worked continuously at the “Fourth Office of the Shanghai Municipal People’s Government.”

When Huayi Technology was established in November 1998, Li Yin invested RMB 350,000, holding 70%; Huang Daqing invested RMB 150,000, holding 30%.

“Not having a technical background doesn’t prevent you from doing professional work.” Adhering to this philosophy, Li Yin kept driving the company’s development and growth. On July 22, 2020, Huayi Technology was officially listed and began trading on the STAR Market.

Before submitting the listing application to the STAR Market, Li Yin directly held 32.66% of the company’s shares, making him the company’s actual controller; Huang Daqing was Li Yin’s person acting in concert, directly holding 14.35% of the company’s shares. As core partners who had co-founded the business for many years, they served as the company’s chairman, general manager, director, and deputy general manager, jointly steering the company’s operations and management.

However, after the company had been listed for two and a half years, the situation changed. In February 2023, upon the expiration of his term, Huang Daqing no longer served as a director or deputy general manager of Huayi Technology. In July 2024, the acting-in-concert agreement expired without renewal.

According to the prospectus that Huayi Technology submitted to the Hong Kong Stock Exchange in this offering, Huang Daqing currently serves as the general manager of Huayi Technology’s wholly-owned subsidiary—Shanghai Huayi Powertrain Testing Technology Co., Ltd.

Even more noteworthy is that starting from July 2025, Huang Daqing began reducing his holdings of Huayi Technology’s shares. Specifically, from July 14, 2025 to July 23, 2025, he cumulatively sold 1,093,787 shares of Huayi Technology, accounting for 1.29% of the company’s total share capital, for total proceeds of approximately RMB 42.7593 million. From November 5, 2025 to January 21, 2026, he cumulatively sold 2,507,925 shares, accounting for 2.96% of the company’s total share capital, for total proceeds of approximately RMB 80.4704 million.

By the completion of this round of share reduction in January 2026, Huang Daqing held 4,239,286 shares of Huayi Technology, and his proportion of the company’s total share capital dropped to 4.99%, meaning he is no longer a shareholder holding more than 5%. In just half a year, Huang Daqing cashed out approximately RMB 123 million in total through share reductions.

《Gangpai IPO》 noticed that Huang Daqing withdrew from the company’s management, which may be related to his age. When he exited the board and the executive team in 2023, Huang Daqing had just turned 60.

Before this listing filing, other directors, supervisors, executives, or former directors of Huayi Technology also reduced their holdings of the company’s shares.

Specifically, director and deputy general manager Pan Min, for example, reduced his holdings by 0.26% from May 31, 2023 to July 20, 2023, realizing RMB 10.4212 million; from July 17, 2025 to August 11, 2025, he reduced his holdings again by 0.14%, realizing about RMB 5.1267 million;

From July 14, 2025 to July 31, 2025, former director Qin Ligang reduced his holdings by 1.5%, realizing RMB 50.089 million.

Regarding the frequent share reductions by shareholders, an investor asked Huayi Technology on the exchange’s interaction platform: “Some shareholders have continued to reduce their holdings since the company’s listing. Don’t they have faith in their own company?”

In response, Huayi Technology said, “Shareholders’ selling of shares is based on their individual needs.”

02

A-shares raised funds: 40% used for replenishing working capital

Before going public in Hong Kong, there is a funding gap of RMB 650 million

From the timeline, Huayi Technology’s IPO process on the A-shares market advanced with overall efficiency. The company submitted its STAR Market listing application on July 14, 2020 and it was accepted. By December 31 of the same year, it was approved by the Listing Committee. Ultimately, on June 8, 2021, it obtained the CSRC registration approval, and on July 29, 2021, it officially listed on the exchange, taking about 12 months in total throughout the process.

In terms of equity structure, in December 2019, Huayi Technology introduced Anhui Anliang Xingye Co., Ltd., a state-owned enterprise that controls the company, and Anhui Guofu Industrial Investment Co., Ltd., a state-owned enterprise holding a stake, as important external strategic investors.

Ultimately, before the listing, the company’s actual controller, Li Yin, and his person acting in concert still jointly held 57.07%, maintaining the founders’ absolute dominance over the company. Meanwhile, it also leveraged resources networks through state-owned capital to strengthen market credibility endorsement.

After listing, Huayi Technology did not stop pursuing financing. Doing R&D, repaying loans, operating the company… multiple layers of funding needs kept the company’s reliance on capital high.

According to WIND data, since Huayi Technology’s listing, its cumulative direct financing amount has been approximately RMB 816 million. Of that, the initial public offering financing was about RMB 250 million, while follow-on placement (private placement to specific parties) financing was about RMB 566 million.

《Gangpai IPO》 noted that when it first listed on the STAR Market that year, Huayi Technology clearly stated that “repaying bank loans and replenishing working capital” would be a major direction for the use of raised funds, corresponding to an investment of RMB 150 million.

However, just a little over one month after listing, the company adjusted the planned scale of募集资金 for its projects: the “Intelligent Testing Equipment Capacity Expansion and Upgrade Construction Project” and the “R&D Center Construction Project” had their planned募集资金 reduced to 0. The募集资金投入 for the “Testing Center Construction Project” was reduced from RMB 83.8551 million to RMB 43.8971 million. Only the funding scale for “replenishing working capital and repaying bank loans” remained unchanged.

In May 2023, about half a year after the first follow-on placement after listing was completed, Huayi Technology again adjusted the planned募集资金 scale for its follow-on placement projects. The “Construction Project of the Hydrogen Energy Fuel Cell Testing and R&D Center” was reduced to 0. The planned investment for the “Construction Project of the New Energy Vehicle and Intelligent Driving Testing Base” and the “Integrated Inertial Navigation R&D and Production Project” were respectively reduced by RMB 93.3728 million and RMB 2.9954 million. Meanwhile, in this follow-on placement, the RMB 200 million allocated to the “working capital replenishment project” still remained at its original scale without change.

Judging by where Huayi Technology’s raised funds flowed, since the company’s listing, more than 40% of its direct financing has gone toward liquidity replenishment and debt repayment.

As of September 30, 2025, Huayi Technology’s cash and cash equivalents were approximately RMB 60.643 million. In the same period, its short-term borrowings (including accrued interest payable) were approximately RMB 712 million. That means that as of September 30, 2025, Huayi Technology had an estimated funding gap of about RMB 650 million.

In addition, it is worth noting that in 2024, Huayi Technology once again attempted to ease its funding pressure through follow-on placement financing. It planned to raise funds to replenish the company’s working capital, but this placement plan was ultimately terminated.

Specifically, the total amount it intended to raise in this offering would be no more than RMB 381 million (inclusive). After deducting relevant issuance expenses, the net proceeds would be used entirely to replenish working capital. The subscribers were Huayi Technology’s actual controller, Li YIn, and its wife, Li Chuanwen, who wholly owned Shanghai Xizejia Intelligent Technology Co., Ltd., an affiliated company of Huayi Technology.

03

Revenue increases after listing, but profits do not

Cumulative R&D spending surpasses RMB 100 million in three years

Specifically, Huayi Technology’s business mainly consists of three parts: “new energy vehicle powertrain testing services,” “intelligent driving business,” and “powertrain intelligent testing equipment.” From the revenue structure perspective, “new energy vehicle powertrain testing services” is the company’s main revenue engine. In 2023, 2024, and the first nine months of 2025, it contributed 46.2%, 54.8%, and 51.1% of the company’s revenue, respectively.

Based on cumulative data, Huayi Technology’s operating revenue has continued to grow steadily from its post-listing period through the first three quarters of 2025. In 2021, 2022, 2023, 2024, and the first nine months of 2025, total revenue was RMB 321 million, RMB 337 million, RMB 352 million, RMB 423 million, and RMB 386 million, respectively.

However, in sharp contrast to the revenue growth, profitability has fluctuated. First, in 2022, the net profit attributable to the parent company declined year over year by 37.32% to RMB 36.3634 million. Then, in the first nine months of 2023, 2024, and 2025, Huayi Technology recorded net losses of RMB 15.91 million, RMB 45.753 million, and RMB 29.256 million, respectively, resulting in a total cumulative loss of about RMB 90.91 million.

In 2022, 2023, 2024, the first nine months of 2024, and the first nine months of 2025, Huayi Technology’s gross margin was 49.47%, 39.5%, 26.7%, 31%, and 21.7%, respectively, showing a trend of step-by-step decline. That is to say, although the company’s business scale has expanded, the profit generated by revenue from each business and the cost structure it covers have been continuously weakening.

Looking back to 2018, 2019, and 2020—before Huayi Technology’s A-share listing—it was consistently in a situation of double growth in both revenue and net profit. In 2021, as the company’s year of listing, its financial performance still exhibited “high growth, high profitability” characteristics. That year, the company achieved operating revenue of RMB 321 million, up 6.22% year over year; and net profit attributable to the parent company reached RMB 60.78 million, up 45.14% year over year.

《Gangpai IPO》 noted that one of the reasons for the company’s profit margin being subject to rigid compression is that the growth rate of fixed costs and period expenses far outpaced the growth rate of operating revenue in the same period.

To seize growth opportunities in the new energy vehicle testing market, Huayi Technology has continuously expanded capacity in recent years, including commissioning new testing service laboratories and building a testing center in Munich, Germany. These capital expenditures have brought large depreciation and amortization expenses.

Data shows that in 2024, Huayi Technology’s manufacturing expenses were RMB 166 million, accounting for 53.97% of total operating costs for the period, up 62.98% year over year from RMB 102 million in 2023, mainly due to the increase in depreciation and amortization expenses. Meanwhile, in 2024, the company’s operating revenue grew 20.36% year over year, while cost growth was twice the revenue growth rate.

Beyond depreciation, Huayi Technology’s various operating expenses have also expanded across the board. In 2022, 2023, and 2024, the company’s selling expenses were RMB 13.994 million, RMB 16.028 million, and RMB 21.653 million; and its R&D expenses were RMB 31.886 million, RMB 42.358 million, and RMB 49.904 million.

Even more severe is the pressure from financial expenses. In 2024, they surged 51.46% year over year, primarily related to the company’s tight operating funds and the increase in short-term borrowings. These rigid increases in period expenses, against the backdrop of declining gross margin, further magnified the magnitude of net losses.

Unfortunately, Huayi Technology expects that in fiscal year 2025, its net profit attributable to the owners of the parent company will be between -RMB 53.5 million and -RMB 64.0 million, with losses continuing to widen compared with 2024.

In response, Huayi Technology stated that, in the current period, testing service laboratories and others were put into operation successively, fixed costs (such as depreciation) increased, and new capacity release requires a process, so the contribution to revenue in the current period was limited, leading to a year-over-year decline in gross margin. Affected by intensifying competition in the auto industry, some payments were not recovered as expected in this period.

What is commendable is that Huayi Technology did not sacrifice technical investment due to short-term profitability pressure. In the first three quarters of 2025, Huayi Technology’s R&D expenses were RMB 34.907 million, and against the backdrop of the company’s overall cost control, they only decreased slightly by 4% year over year. In the same period, its financial expenses and selling expenses decreased by 56.2% and 14.73% year over year, respectively.

If this listing of H shares is successful, it will provide Huayi Technology with valuable capital and time to improve capacity utilization, thereby diluting fixed costs and restoring gross margin.

Appendix: List of intermediary institutions related to Huayi Technology’s listing and issuance

Sole sponsor: Agricultural Bank of China International Financing Limited

Reporting accountants and independent auditors: PricewaterhouseCoopers Certified Public Accountants

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