Majie Electronics to IPO in Hong Kong: Mysterious Seychelles Distributor Accounts for Over 30% of Revenue

The Daily Economic News | by Cai Ding | The Daily Economic News Editor | by Huang Bowen

According to the website of the Hong Kong Exchanges and Clearing Limited (HKEX), Kunshan Maji Electronics Co., Ltd. (hereinafter referred to as “Maji Electronics”) submitted its application materials for a Main Board listing to HKEX on March 31. Ping An Securities (Hong Kong) is the sole sponsor.

As a supplier specializing in providing advanced-process chip power inductor solutions for the consumer electronics, automotive electronics, and high-performance computing sectors, Maji Electronics disclosed in its prospectus that, based on the revenue from power inductor solution sales for advanced-process chips in 2024, the company ranks first among suppliers headquartered in mainland China.

After reviewing Maji Electronics’ prospectus, reporters from The Daily Economic News found that the company’s fundamentals have several objective features worth paying close attention to. For example, more than 30% of Maji Electronics’ revenue comes from an overseas distributor registered in the African country of Seychelles, and multiple entities in the company’s top five suppliers and customer roster overlap in identity.

In addition, the company’s costs for subcontracted processing have risen sharply over the past three years, and in 2025 the figure already exceeded 30%. In terms of compliance and financial health, over the past three years the company has accumulated more than RMB34 million in unpaid social insurance and housing provident fund contributions; more than 80% of the leased production premises have not been filed for record; and the company was also in a state of significantly high net liabilities from current liabilities in 2023 and 2024.

“Also a customer, also a supplier” from multiple suppliers

In building its sales network and supply-chain system, Maji Electronics has shown a highly concentrated customer dependence and complex cross-transaction characteristics.

The prospectus shows that Maji Electronics’ revenue depends to a large extent on its top five customers. In 2023, 2024, and 2025 (hereinafter referred to as the reporting period), the company’s revenue from its top five customers was RMB285 million, RMB342 million, and RMB331 million, respectively, representing 78.7%, 78.4%, and 70.2% of the total, respectively.

Among them, Customer A, which ranked first, holds an absolute dominant position. According to the information, Customer A was registered and established in Seychelles with registered capital of USD5 million, and mainly engages in the distribution business of electronic components and electronic products. During the reporting period, Maji Electronics’ sales revenue to that customer was RMB123 million, RMB151 million, and RMB153 million, respectively, accounting for 34.1%, 34.7%, and 32.5% of the company’s total revenue for the respective year.

Maji Electronics frankly stated that if any material delay, change, cancellation, or reduction occurs in purchase orders from such customers, or if there is any change in the purchasing model (which may stem from changes in each of its customers’ needs and purchasing models), it may have a material adverse impact on the company’s business, financial condition, and operating performance.

Apart from the high concentration of customers, Maji Electronics also has complex “dual-identity” transactions with several core suppliers. The prospectus discloses that, during the reporting period, several companies among the company’s top five suppliers were also the company’s customers. Taking major supplier B as an example, during the reporting period, Maji Electronics’ purchase amounts from supplier B were RMB27.4774 million, RMB38.2045 million, and RMB41.442 million, respectively, accounting for 12%, 14%, and 15.1% of the company’s total purchases for the respective year.

Meanwhile, supplier B is also one of Maji Electronics’ customers. During the reporting period, Maji Electronics sold equipment and products totaling RMB2.7822 million, RMB0.4207 million, and RMB0.4769 million to supplier B, respectively. The prospectus explains that the company sells certain equipment to supplier B, and then supplier B uses the equipment in its capacity as a contract manufacturer to outsource the production of power inductors. After that, Maji Electronics repurchases those power inductors.

The same identity overlap and cross-trade also occurs between supplier D and supplier F. For example, in 2024 and 2025, Maji Electronics purchased products of RMB15.1563 million and RMB22.1003 million from supplier F, respectively, and in the same period it also sold power inductors of RMB0.44 million and RMB1.2852 million to supplier F, respectively. The prospectus also shows that, as of the time of filing, Dongguan Qinhe, an investor in Maji Electronics’ Series B financing, holds approximately 9.87% of supplier F’s equity.

Subcontracted processing cost ratio exceeds 30%

In its discussion of its business model, Maji Electronics emphasizes that one of its competitive advantages is that it has a “vertically integrated R&D platform,” which can “provide end-to-end power inductor solutions.” However, reporters noticed that the company is outsourcing processes at a relatively fast pace in the actual production and manufacturing stage.

A detailed breakdown of Maji Electronics’ cost structure in the prospectus shows that in 2023, the company’s subcontracted processing costs were RMB28.77 million, accounting for 9.6% of total cost of sales. In 2024, the company’s subcontracted processing costs increased to RMB77.743 million, and the share jumped to 22%. In 2025, the subcontracted processing costs further increased to RMB114 million, accounting for 30.8%. Over the reporting period, the absolute amount of subcontracted processing costs increased by nearly three times.

In response to the sharp changes in subcontracted processing costs, Maji Electronics explained that, to optimize cost efficiency and respond to relatively high capacity utilization rates, it outsourced some standardized and labor-intensive processes to subcontracting service suppliers.

However, capacity utilization rate data disclosed in the prospectus shows that, during the reporting period, the overall production facilities’ capacity utilization rates were 76.1%, 80.0%, and 86.1%, respectively. This means that even in 2025—the year with the largest business volume—there remained nearly 14% of idle capacity in-house that was not activated.

In the consumer electronics sector, which has been heavily outsourced, is precisely the absolute revenue pillar for Maji Electronics. During the reporting period, the consumer electronics segment contributed revenue of RMB230 million, RMB291 million, and RMB318 million, respectively, with its share consistently staying at a high level of 63.4% to 67.5%.

Reporters noted that this deepening reliance on external contract manufacturers coincides with the industry cycle in which its core products are facing pricing pressure. The prospectus shows that the overall average selling price of Maji Electronics’ power inductor components decreased from RMB0.37 per unit in 2023 to RMB0.35 per unit in 2024, and further to RMB0.34 per unit in 2025. Against the backdrop of continuous market squeeze on terminal product prices, the subcontracted processing cost data that keeps growing subjects Maji Electronics’ claim of a “vertically integrated R&D platform providing end-to-end power inductor solutions” to substantive data scrutiny.

Unpaid social insurance and provident fund

In addition, Maji Electronics has also revealed weaknesses in basic internal compliance and financial structure health.

The prospectus discloses that, during the reporting period, Maji Electronics failed to fully pay social insurance and housing provident fund contributions for certain employees within mainland China in accordance with regulations. Specifically, the shortfalls in social insurance and housing provident fund contributions by Maji Electronics during the reporting period reached RMB11.70 million, RMB10.80 million, and RMB11.90 million, respectively. That means that during the reporting period, the company generated a cumulative RMB34.40 million in compliance arrears for social insurance and housing provident fund contributions.

Data shows that, as of the end of February 2026, Maji Electronics’ cash and cash equivalents on its books were approximately RMB72.064 million. If the above cumulative arrears are treated as contingent liabilities that could be settled at any time, the amount is nearly half of the company’s available cash reserves as of the end of February 2026.

In terms of compliance in the use of production and office premises, Maji Electronics also has widespread non-compliant situations. As of the time of filing, the company leased 21 properties within China in total; however, as many as 18 of them had not registered the lease agreements with the relevant authorities, resulting in an unregistered rate of 85.7%. According to relevant regulations, the relevant government authorities may impose a fine ranging from RMB1,000 to RMB10,000 for each unrecorded lease agreement. Therefore, the company’s maximum total fine could be up to RMB180,000.

Beyond compliance defects, in 2023 and 2024, the balance sheets of Maji Electronics show that the company’s net liability position was RMB115 million and RMB137 million, respectively. Meanwhile, the company’s net liabilities from current liabilities were RMB336 million and RMB327 million in those two years, and the company attributed this to the impact of redeeming liabilities.

The prospectus shows that these financing arrangements with a “betting/gambling” nature bring heavy interest expenses. During the reporting period, Maji Electronics paid RMB14.496 million, RMB15.114 million, and RMB13.036 million, respectively, for interest related to redeeming liabilities alone. It was not until the end of 2025 that those redeemable liabilities were derecognized and transferred to equity, enabling the company, on the eve of filing, to record RMB39.358 million in net current assets and RMB228 million in net assets.

Against the backdrop of pressure to repay more than RMB34 million for social insurance and provident fund contributions, as well as large proportions of leased properties not being registered, Maji Electronics’ upcoming IPO in Hong Kong (an initial public offering) will face further scrutiny by the capital market regarding its compliance and financial soundness.

Regarding the multiple issues described in the article, on the afternoon of April 1, the reporter obtained the contact email disclosed in the company’s 2025 annual report through Tianyancha and sent the company interview questions (the company’s official website indicated “server error”). As of the time of this release, the reporter had not received a response from the company.

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