Three and a half years of losses totaling 2 billion yuan, cash flow is running out: Is Aodong New Energy’s Hong Kong IPO a “charge” or a “lifeline”?

Ask AI · How can Aodong New Energy break through the profit dilemma of the swapping battery model?

Our newspaper (chinatimes.net.cn) reporter Huang Haiting and Hu Mengran Shenzhen report

Recently, Aodong New Energy, a new energy swapping battery company founded with the participation of “Chaozhou Toy King” Cai Dongqing, officially submitted its listing application to the Main Board of the Hong Kong Stock Exchange, aiming to challenge the “First Hong Kong Stock Swap Battery.”

This move quickly attracted high attention from the capital market. However, along with the “first stock” halo, there is a set of eye-catching financial data: from 2022 to the first half of 2025, Aodong New Energy’s cumulative net loss reached 2.02B yuan; in the first half of 2025, revenue fell by 31.7% year-on-year, operating cash flow turned negative, and cash on hand was only 438M yuan.

On one side is the high-profile push of capital actions; on the other side are continuous financial pressures. This leading swapping battery enterprise, once favored by capital, under the leadership of Cai Dongqing, a capital expert, is its IPO a “call to expand” or a “lifeline” driven by reality? The “Huaxia Times” reporter conducted an in-depth investigation, combined with interviews from industry insiders, to restore the true situation faced by this company and to focus on the “big test” that the entire swapping battery track is experiencing.

The “Blood-boost” Logic Behind the IPO

According to the prospectus, as of the end of the first half of 2025, Aodong New Energy’s cash and cash equivalents amounted to 438M yuan. If estimated based on the net cash flow from operating activities in the first half of 2025, this cash reserve can support the company’s operations for about 2.5 years without external financing. However, in the first half of 2025, the company’s operating cash flow turned negative, indicating that its main business can no longer “generate its own blood.”

“I think this is not a company choosing to go public at its best, but rather at a point when funding constraints have become very real,” said Huang Lichong, President of Hui Sheng International Capital, in an interview with the “Huaxia Times” reporter. He stated that this judgment is not based on emotion but stems from an objective presentation of the company’s financial status.

Huang further pointed out that from 2022 to the first half of 2025, the company’s net loss exceeded 2 billion yuan, revenue in the first half of 2025 dropped over 30% year-on-year, operating cash flow turned negative, and cash on hand was only 438M yuan. “In my view, this IPO is not a typical trend-following financing but more of a capital move with a clear blood-boosting intent.”

Aodong New Energy’s financing background is quite impressive, having received investments from leading institutions including CATL and SoftBank Energy. However, during its ongoing expansion, the speed of capital consumption is equally astonishing. The reporter noted that the company has built 800 swapping stations nationwide, covering 60 cities, and has reduced carbon emissions by 900k tons. Behind this scale are huge capital expenditures and operational costs.

Zhang Yi, CEO and chief analyst of iiMedia Consulting, told the “Huaxia Times” that from an industry perspective, the swapping model itself is a heavy asset operation, with large upfront investments and long return cycles. “For a large-scale station deployment like Aodong’s, the capital demand is very high. If the company’s self-sustaining ability is insufficient, continuous capital market support is indeed necessary.”

Zhang emphasized that raising capital through an IPO is not inherently wrong, but the key lies in the direction and efficiency of fund use. “If the funds raised can effectively improve station utilization, shorten the payback period, then this IPO has value. But if it just continues the existing loss-expansion model, the market will quickly vote with its feet.”

However, viewing Aodong New Energy’s difficulties in the context of the entire swapping battery track, it is not an isolated case. In recent years, as the penetration rate of new energy vehicles has rapidly increased, the swapping model was once regarded as a “second energy supplement” alongside charging, attracting a large influx of capital. But by 2025, market attitudes toward the swapping track have shifted significantly—from initial “believing in the track,” to “chasing the leading players,” to now “waiting for the numbers.” Capital is beginning to question: what kind of business is a swapping station? How long is its return cycle? With fast-charging technology continuously advancing, how long can the differentiated value of the swapping model be maintained?

Why Does the Swapping Business “Keep Losing Money”?

Aodong New Energy’s losses are not an unexpected “black swan” but a common problem faced during the commercialization of the swapping model. The reporter found that the current gross loss rate of the company’s swapping stations has reached 23.3%, meaning that after deducting direct costs, its core business is still operating at a loss. More worrying is that this loss has appeared despite years of large-scale expansion.

“If a company’s current gross loss rate of its swapping stations is already 23.3%, and it still continues to focus on expanding its swapping network through fundraising, I believe this capital allocation needs to be seriously scrutinized,” Huang Lichong said. “This number alone shows that the current expansion model has not proven itself.”

He further analyzed: “I’m not against expansion; I oppose enlarging a model that hasn’t been proven. Because that’s not growth, that’s just making losses bigger. The biggest fear for capital markets is not temporary losses but companies using new funds to repeat old problems.” In his view, Aodong New Energy is not facing a temporary adjustment but is in a typical dilemma of entering large-scale replication before its business model has been validated.

Regarding the commercial nature of the swapping model, Huang believes it is not a “pseudo-proposition,” but it is also not a “panacea.” It is valid in specific scenarios, such as high-frequency operation vehicles and fleets highly sensitive to charging efficiency, where time costs are critical and swapping has real value.

“But the problem is, capital markets don’t just listen to technological logic—they care about the business closed loop. Whether the swapping model can ultimately succeed depends on several very practical issues: Is the station network dense enough? Can standards be unified? Who owns the battery assets? Can station utilization rate improve? Is the payback period acceptable?” Huang said.

In fact, during field visits, the reporter also noticed that although Aodong New Energy’s official website emphasizes “800 stations built” and carbon reduction data, it does not disclose key operational indicators such as station utilization rate, daily service vehicle count per station, or payback period. These metrics are precisely the core basis for capital markets to evaluate whether the swapping business model can be viable. The expansion of station numbers without operational efficiency evidence may instead magnify financial risks.

From the industry perspective, the profitability dilemma of the swapping model has structural reasons. Zhang Yi from iiMedia Consulting pointed out that the cost structure of swapping companies is quite heavy: station construction costs are usually hundreds of thousands of yuan, battery reserves cost increase linearly with the number of service models, and land rent and operational labor costs are rigid expenses. “If station utilization cannot be improved, the larger the scale, the more likely losses will worsen.” He noted that currently, no company achieving station profitability relies on more than two conditions: one, concentrated service models with high battery turnover efficiency; two, swapping frequency above the break-even point. For multi-brand, multi-model independent operators, these are the hardest to achieve.

More importantly, the entire new energy charging and swapping field is undergoing profound technological changes. Zhang Yi highlighted the continuous progress of fast-charging technology: “If fast charging can be completed in 10 to 15 minutes, the rigid demand for swapping in private passenger car scenarios will be further compressed. That is, the future of swapping is not without opportunity, but the opportunities will increasingly concentrate in a few high-frequency, highly operational, efficiency-heavy niche scenarios.” This means the overall market space for swapping is being eroded by fast-charging tech, and players must find profitability in narrower segments.

Shortcomings of Independent Third Parties

In addition to financial pressure and unproven business models, Aodong New Energy’s positioning in the industry is also a core concern. As an independent third-party swapping operator, it is not dependent on any automaker, theoretically capable of serving more brands and models, and easier to tell the “platform infrastructure” story. But this identity also brings unavoidable shortcomings.

“Its advantage is neutrality and openness, which can serve more brands and models, and is easier to promote as platform infrastructure. That’s the space for imagination in the capital market,” Huang said. “But its drawbacks are also obvious. It lacks the natural traffic from automakers and the standard-setting ability and industry synergy of battery giants. Without built-in traffic or a strong industry closed loop, it tends to become a middleman doing heavy asset-intensive business. That position is not easy.”

From an investment preference, Huang believes the market favors players backed by strong industry resources. “Automakers have users, battery companies have resources. An independent third party without strong operational efficiency and scale will easily fall into a ‘seemingly important but actually hard’ situation.”

Zhang Yi from iiMedia Consulting analyzed from the industry pattern that as the swapping track enters reshuffling, capital is concentrating toward leading players, but “leading” does not mean simply the largest in scale, but those with industry synergy and the ability to form a closed loop. “Small brands with low procurement volume, low technological moat, and rising costs will either raise prices and lose market share or suffer losses to survive, with their space shrinking significantly. The future market will further concentrate on top players, but only if they prove they are not just ‘copying losses.’”

Zhang Yi further pointed out that for the swapping industry to truly succeed, several core issues must be addressed: first, standardization to reduce cross-brand and cross-model operation costs; second, a profitable station model that can be replicated; third, stronger collaboration with automakers and battery manufacturers, rather than operating alone. For Aodong New Energy, the first two are not yet achieved, and the third is a natural bottleneck for its independent third-party position.

This awkward situation of “no car manufacturer traffic, no battery manufacturer backing” limits Aodong New Energy’s bargaining power and resource integration in the industry chain. As the industry moves toward refined operations, independent operators lacking industry collaboration are often the first to feel funding and cost pressures.

Looking at the broader swapping track, a clearer trend emerges: the future of swapping is likely not dominated by “independent third parties,” but by a dual structure of automaker and battery manufacturer systems. Companies like NIO, which build their own swapping networks, naturally have stable vehicle inflow; CATL and other battery giants have advantages in battery asset management and standard setting. The middle-positioned independent operators, needing to solve “where do the cars come from” and “who manages the batteries,” face the most difficult situation.

Regarding Aodong New Energy’s IPO prospects, Huang Lichong gave a cautious view: “If it ultimately succeeds in listing, it will indeed boost the financing sentiment for the entire swapping track in the short term, and other companies may follow. But I want to emphasize that this does not mean the whole industry will enter a period of easy financing. On the contrary, after the first stock appears, the market will scrutinize more carefully. Because the capital market will not forgive your profitability issues just because you are the ‘first stock.’”

He advised that companies should adjust their narrative in subsequent capital market communications: “Less talk about grand narratives, more about station returns. Less about disruptive visions, more about utilization, standardization, payback periods, and cash flow. The market ultimately recognizes not the loudest voice but those who can first clarify their accounts.”

Zhang Yi also offered his industry cycle perspective: he believes the swapping track is experiencing a critical shift from “scale expansion” to “profit verification.” “Previously, everyone competed on who built stations faster and who deployed more broadly. Now, the market asks who can profit first and who can break even first. This shift is a test for all players, especially for independent third-party operators like Aodong.”

He sees the next two years as a key period for reshaping the industry landscape: “Storage capacity shortages and rising supply chain costs will further squeeze out small players. The head effect in the swapping track will become more pronounced, but who can stay in the game depends not on size but on who can first establish profitable station models.”

The “Huaxia Times” reporter contacted Aodong New Energy for an interview on the above issues; as of press time, no response was received. The reporter saw on their official website that they still prominently display nationwide deployment maps and carbon reduction data, but have not disclosed more details on station profitability models or fund utilization efficiency. Between grand narratives and specific operations, Aodong New Energy seems to prefer the former, but the capital market needs the latter more.

For Aodong New Energy, IPO is only the starting point, not the end. Facing 3.5 years of losses totaling 2 billion yuan, negative cash flow, and only 2.5 years of cash on hand, whether the capital market will buy into the “First Swap Stock” story depends on whether it can prove in the shortest time that it is not “making losses bigger” but “running profits.” Behind this lies not only financing ability but also a clear understanding of the business model’s essence and pragmatic adjustments.

From a broader perspective, the “big test” of the swapping track is far from over. As fast-charging technology continues to approach, as automakers and battery manufacturers’ ecosystems become more solid, and as capital’s demand for “accounting” becomes stricter, the question that independent swapping operators must answer is: without relying on industry giants, how do you make money? The answer to this question will determine whether Aodong New Energy’s IPO is a “charge” or a “lifeline,” and will also influence the future pattern and direction of the entire swapping track.

Editor: Xu Yunqian Chief Editor: Gong Peijia