Author｜Kang Tian

Editor｜Wei Fanxi

The meteoric rise of new energy vehicles (NEVs), exemplified by BYD, Li Auto, XPENG, and Xiaomi Auto, has propelled a cohort of niche component suppliers into the spotlight of capital markets.

Recently, Anwen Technology Group Co., Ltd. (hereinafter referred to as "Anwen Technology") has taken a significant step by submitting an application to the Shenzhen Stock Exchange for a listing on the main board, aiming to raise RMB 2.005 billion.

While Anwen Technology may not be a household name like the vehicle brands it supplies, it has carved out a leading position in the automotive cockpit comfort and safety systems sector.

According to data from Frost & Sullivan, Anwen Technology commanded a 24.11% share of the domestic market and an 8.50% share of the global market in automotive seat comfort systems by revenue in 2024, ranking first domestically and fourth globally.

As NEVs continue to gain traction, automotive consumer preferences are shifting towards intelligent and comfortable experiences. Simultaneously, intensifying industry competition and sustained pressure from automakers to reduce prices are cascading down to the component supply chain.

At the cusp of its IPO, Anwen Technology is reaping the rewards of industrial upgrading while grappling with multiple challenges, including profitability and market competition.

Revenue Growth Outpaces Profit Expansion

Data from the China Association of Automobile Manufacturers reveals that from 2020 to 2025, annual NEV sales in China soared from 1.367 million units to 16.490 million units, with a compound annual growth rate (CAGR) of 64.5%. Penetration rates climbed from 5% to 48%, indicating that NEVs are no longer solely reliant on policy incentives but are becoming the preferred choice for domestic consumers.

Compared to traditional fuel vehicles, NEVs place a greater emphasis on cockpit texture, driving comfort, and intelligent sensing systems. Features such as seat heating, ventilation, massage, and occupant monitoring are gradually making their way from high-end models to mainstream mass-produced vehicles, offering substantial growth opportunities for upstream suppliers.

Benefiting from the industry's robust growth, Anwen Technology has experienced rapid revenue expansion. From 2023 to 2025 (the "reporting period"), its revenue reached RMB 2.307 billion, RMB 3.330 billion, and RMB 4.177 billion, respectively, with a CAGR of 34.56%.

However, revenue growth does not always equate to enhanced profitability.

During the reporting period, Anwen Technology's net profit attributable to shareholders stood at RMB 368 million, RMB 691 million, and RMB 495 million, respectively. Despite a revenue increase in 2025, net profit witnessed a significant decline, underscoring the issue of "revenue growth without proportional profit expansion."

This phenomenon is not unique to Anwen Technology among automotive component companies.

According to the prospectus, from 2024 to 2025, comparable peer Zhejiang Huayuan saw its revenue rise from RMB 682 million to RMB 763 million, while net profit attributable to shareholders fell from RMB 108 million to RMB 88 million. Similarly, Huamao Technology's revenue increased from RMB 2.213 billion to RMB 2.503 billion, but net profit dropped from RMB 240 million to RMB 153 million.

In recent years, the NEV market has become increasingly competitive, prompting automakers to continuously adjust prices to capture market share. Cost pressures are gradually being transferred up the supply chain.

Moreover, the automotive component industry typically adheres to an "annual price reduction" mechanism. After launching new models, automakers usually require suppliers to lower procurement prices by 3%-5% as sales expand and models are updated. However, this reduction has generally surpassed 10% in recent years.

These price reduction pressures are fully evident in the pricing of Anwen Technology's core products.

Anwen Technology's main product categories include thermal comfort, postural comfort, and sensing and detection. Thermal comfort products, which contribute nearly half of the company's revenue, saw their average unit price plummet from RMB 39.56/piece to RMB 29.44/piece during the reporting period. Sensing and detection products, accounting for about 16% of revenue, witnessed their average unit price decline from RMB 18.05/piece to RMB 17.37/piece. Postural comfort products' average unit price rose slightly from RMB 179.81/piece to RMB 186.50/piece, but this limited increase could not offset the negative impact of price reductions in other categories.

The continuous decline in prices of various core products directly dragged down the company's overall gross profit margin.

During the reporting period, the gross profit margin for thermal comfort products plunged from 40.41% to 24.67%, postural comfort products from 35.37% to 24.61%, and sensing and detection products from 52.06% to 41.71%. Consequently, the company's overall gross profit margin slid from 40.61% to 27.50%, even falling below the comparable company average of 27.98% in 2025.

Under these circumstances, if Anwen Technology fails to offset price declines through economies of scale, automated production, and cost control, its profit margins may continue to be squeezed.

High Customer Concentration Poses Risks

Anwen Technology's rapid revenue growth in recent years is closely tied to its deep-rooted partnerships with high-quality customers.

According to the prospectus, Anwen Technology's direct customers include global renowned automotive seat manufacturers such as Faurecia, Lear, and Magna, as well as global well-known steering wheel manufacturers like ZF, Autoliv, and Joyson Electronics. Its products ultimately support domestic autonomous brands like BYD, Geely Auto, and Changan Automobile, NEV brands such as NIO, Li Auto, and Seres, and overseas brands including BMW, Audi, and Mercedes-Benz.

During the reporting period, revenue from Anwen Technology's top five customers accounted for 68.47%, 64.47%, and 55.54%, respectively, with the largest customer contributing 20.68%, 18.35%, and 13.10%. Although both indicators show a declining trend, customer concentration remains high. If key customers reduce their procurement shares or switch to competitors, the company's performance could face downside risks.

From a regional perspective, Anwen Technology still heavily relies on the domestic market. During the reporting period, its domestic revenue was RMB 2.237 billion, RMB 3.200 billion, and RMB 3.898 billion, accounting for 97.53%, 96.38%, and 93.69% of its main business revenue, respectively.

However, Anwen Technology is striving to expand its overseas business through offshore production bases. In 2025, leveraging the gradual commissioning of its Romanian production base, the company's overseas revenue and share increased significantly. Nevertheless, its overseas business is still in its infancy, with relatively small revenue volume.

Relying solely on high-quality customer resources is insufficient to build a long-term, robust competitive barrier. Currently, the NEV and intelligent cockpit sectors are evolving rapidly, with automakers demanding higher standards for product functionality, cost control, and iteration speed. Coupled with intensifying competition from international component giants, local peers, and some automakers' in-house R&D systems, the industry remains fiercely competitive.

In this context, R&D investment provides crucial support for Anwen Technology to solidify its market competitiveness. During the reporting period, its R&D expenses were RMB 133 million, RMB 174 million, and RMB 243 million, accounting for 5.76%, 5.22%, and 5.81% of revenue, respectively. This R&D expense ratio is higher than the average of comparable companies in the industry, though it gradually lagged behind Songyuan Safety's 6.22% in 2025.

For this IPO, Anwen Technology plans to allocate RMB 257 million to an automotive electronic components production project, RMB 585 million to a Tianjin automotive components production and R&D project, RMB 577 million to a Zhejiang automotive components production construction project, and RMB 209 million to another automotive electronic components production project, along with funds for digitalization and working capital supplementation.

It is worth noting that increased R&D investment does not necessarily lead to higher profits. In 2025, Anwen Technology's R&D expenses rose year-on-year, but its gross profit margin declined significantly, indicating a gap between technological iteration and profit realization.

Rising Accounts Receivable Raise Concerns

From a cash flow perspective, Anwen Technology's net cash flow from operating activities remained positive throughout the reporting period, at RMB 116 million, RMB 303 million, and RMB 298 million, respectively, indicating stable self-financing capabilities in its main business.

As of the end of 2025, Anwen Technology held RMB 689 million in cash and cash equivalents, sufficient to cover its RMB 30.2487 million in non-current liabilities due within one year and RMB 14.2167 million in long-term borrowings.

However, influenced by factors such as the strong bargaining power of downstream customers and long settlement cycles, the company's accounts receivable have continued to rise. During the reporting period, its accounts receivable were RMB 1.214 billion, RMB 1.733 billion, and RMB 2.123 billion, accounting for 53.08%, 54.07%, and 45.94% of total assets, respectively. Although the proportion decreased in 2025, the absolute scale continued to expand.

Anwen Technology's customers are primarily large automotive component suppliers, so the risk of bad debts is relatively controllable. However, high accounts receivable still mean a significant amount of operating capital is tied up. If downstream customers extend their payment cycles in the future or if industry price wars increase their financial pressure, Anwen Technology's cash flow stability could be affected.

Anwen Technology's inventory levels have also been rising continuously. During the reporting period, its inventory was RMB 359 million, RMB 426 million, and RMB 597 million, respectively. Meanwhile, Anwen Technology stated in its prospectus that its inventory balance may increase further as its business scale expands in the future.

In summary, Anwen Technology has capitalized on the industrial upgrading trends in NEVs and intelligent cockpits, achieving rapid revenue expansion through its key customer resources. However, amid automakers' price wars and supply chain cost reduction pressures, whether the company can offset price declines through technological upgrades and product mix optimization to maintain profitability remains to be seen.