By Zhang Ranqi, Gangwan Business Observer

Against the backdrop of accelerated import substitution in key sectors such as power batteries and electric drive systems, a host of component companies that have long remained behind the scenes in the industrial chain are now stepping into the limelight of the capital market. Jiangsu Lianbo Precision Technology Co., Ltd. (hereinafter referred to as "Lianbo Shares") is one such contender.

On June 29, Lianbo Shares submitted its prospectus to the Growth Enterprise Market (GEM) and received acceptance from the Shenzhen Stock Exchange, with Guojin Securities acting as the sponsor. However, beneath the impressive growth figures, persistent challenges such as high customer concentration, raw material price volatility, and reliance on a single market segment persist. As the growth rate of new energy vehicles shifts, Lianbo Shares is attempting to craft a new narrative with humanoid robots as its second growth engine. Whether this capital story will resonate with regulators and the market remains to be seen over time.

1. Core Product Quantities Increase, Prices Decline; Third-Party Payments Exceed Hundreds of Millions Annually

According to the prospectus and Tianyancha data, Lianbo Shares was established in 2011, primarily serving as an auto parts supplier. Its core offerings include precision stamped iron cores for new energy vehicle drive motors, automotive EPS motors, and micro and special motors.

From a financial standpoint, Lianbo Shares has delivered stellar performance. From 2023 to 2025 (hereinafter referred to as the "reporting period"), the company's operating revenues were RMB 977 million, RMB 1.063 billion, and RMB 1.347 billion, respectively, with a compound annual growth rate (CAGR) of 17.39%. Net profits attributable to the parent company's owners were RMB 44.8639 million, RMB 43.3096 million, and RMB 119 million, respectively, boasting a CAGR as high as 63.04%.

The year 2025 marked a "bumper year" for Lianbo Shares, with net profit surging by 175.37% year-on-year, nearly tenfold the revenue growth rate. This profit surge was driven by cost dilution through economies of scale and an increase in the proportion of high-end products.

In terms of profitability indicators, the company's comprehensive gross profit margins during the reporting period were 14.08%, 15.89%, and 16.91%, respectively, with a 2.49 percentage point increase in 2025 year-on-year. The gross profit margins for automotive motor iron cores were 14.72%, 15.92%, and 14.67%, respectively.

From a business structure perspective, precision stamped iron cores constitute the lion's share of the company's primary business revenue, generating revenues of RMB 854 million, RMB 916 million, and RMB 1.137 billion during the reporting period, accounting for 97.01%, 96.38%, and 92.41% of the primary business, respectively.

From a product segmentation standpoint, iron cores for new energy vehicle drive motors serve as the core growth engine, with rapidly expanding revenue. During the reporting period, revenues from these products were RMB 545 million, RMB 581 million, and RMB 823 million, accounting for 61.94%, 61.16%, and 66.92% of the primary business, respectively, becoming the driving force behind the company's revenue growth.

Notably, the core products exhibit typical characteristics of "quantitative increase and price decline." During the reporting period, the average selling price of the company's new energy drive motor iron cores continued to decline, reaching RMB 26,500/ton, RMB 26,200/ton, and RMB 25,000/ton, respectively.

In the traditional business segment, EPS motor iron cores performed relatively stably, generating revenues of RMB 224 million, RMB 226 million, and RMB 210 million during the period, accounting for 25.39%, 23.82%, and 17.08% of the primary business, respectively. Other automotive micro and special motor iron cores accounted for a relatively low proportion and have not yet formed effective large-scale revenue.

Precision stamping molds generated revenues of RMB 26.3416 million, RMB 34.4193 million, and RMB 93.3566 million during the reporting period, accounting for 2.99%, 3.62%, and 7.59% of the primary business, respectively.

It is worth noting that during the reporting period, the company's third-party payments amounted to RMB 202 million, RMB 165 million, and RMB 159 million, respectively, accounting for 20.65%, 15.57%, and 11.79% of the current operating revenue.

Lianbo Shares stated that third-party payments primarily involve the company, its customer Nidec Automotive Motor (Zhejiang) Co., Ltd., and Mitsubishi UFJ Bank (China) Limited, Hangzhou Branch, signing a "Basic Contract for Assignment of Claims," which stipulates that the company can assign its accounts receivable from Nidec Automotive Motor (Zhejiang) Co., Ltd. to Mitsubishi Bank.

The company also clarified that the aforementioned third-party payments were generated based on business needs and were reasonable. All third-party payments that occurred during the reporting period had genuine business backgrounds, with no fictitious transactions or disputes over payment attribution arising from third-party payments. There were no affiliated relationships between the company, its actual controllers and their concerted parties, directors, and senior management, and the major clients involved in third-party payments and their payment parties.

2. High Customer Concentration, Declining R&D Investment

During the reporting period, Lianbo Shares continued to expand its overseas business, with export revenues of RMB 19.5625 million, RMB 105 million, and RMB 440 million, accounting for 2.22%, 11.07%, and 35.74% of the primary business, respectively, showing a gradual increase in overseas proportion.

However, due to the concentrated market share characteristics of downstream new energy vehicle markets, the company exhibited a highly concentrated customer structure during the reporting period.

During the reporting period, revenues from the company's top five customers accounted for 68.57%, 67.30%, and 67.90% of the primary business revenue, respectively. Volkswagen Group, Nidec, Huayu Automotive Electric, Bosch Group, and Founder Motor constituted the company's core customer matrix.

While deep binding with international giants is a testament to competitiveness, the flip side is also evident. Once enterprises adjust their electrification strategies, vehicle model sales fall short of expectations, or supply chain systems change, Lianbo Shares' core business performance will be directly impacted.

An even more fundamental risk than customer concentration lies in the raw material end. The company's core raw materials are various types of non-oriented electrical steel (silicon steel sheets), with procurement amounts of RMB 693 million, RMB 831 million, and RMB 713 million during the reporting period, accounting for 96.07%, 95.58%, and 95.90% of the total procurement, respectively.

As a commodity, silicon steel prices are influenced by multiple factors such as macroeconomics, the steel industry cycle, and supply-demand relationships, with historically volatile fluctuations. The 2022 silicon steel price surge and subsequent decline remain fresh in the minds of many component manufacturers. For Lianbo Shares, with a gross profit margin of less than 20%, every 5 percentage point fluctuation in raw material prices could directly erode several percentage points of profit.

The company also admitted in its prospectus that if raw material prices such as silicon steel rise in the future and product prices cannot be adjusted in a timely manner, it will adversely affect the company's profitability.

Against the backdrop of continuous revenue expansion, Lianbo Shares' R&D investment has shown a contracting trend, significantly lagging behind industry peers.

During the reporting period, the company's R&D expenses were RMB 21.2184 million, RMB 24.6759 million, and RMB 19.2826 million, respectively, with R&D expense ratios of 2.17%, 2.32%, and 1.43%. In comparison, Lianbo Shares' R&D expense ratio was significantly lower than the average of comparable listed companies in the same industry during the same period, which were 3.79%, 3.60%, and 3.62%, respectively.

Lianbo Shares stated that its R&D expense ratio was lower than comparable listed companies in the same industry during the reporting period, primarily because those companies expanded into new businesses and products in different directions after listing, while the company's main products and R&D directions were relatively concentrated, with a more focused R&D field.

In terms of other financial data, at the end of each reporting period, the company's accounts receivable balances were RMB 355 million, RMB 372 million, and RMB 403 million, respectively, accounting for 36.28%, 34.97%, and 29.95% of the operating revenue. Bad debt provisions were RMB 18.0282 million, RMB 19.2340 million, and RMB 20.9152 million, respectively.

During the same period, the company's inventory book values were RMB 117 million, RMB 264 million, and RMB 172 million, respectively, with provision for decline in value of RMB 7.8208 million, RMB 10.6683 million, and RMB 12.3714 million, respectively.

3. Declining Capacity Utilization Rate Year by Year, Yet Planning for Expansion

The most controversial aspect of Lianbo Shares' IPO lies in its large-scale expansion plans against a backdrop of low capacity utilization rates.

During the reporting period, the capacity utilization rates of the company's main product, motor iron cores, were 75.32%, 62.39%, and 60.99%, respectively, showing a continuous decline over three years and reaching a relatively low level just above 60%.

Despite this, Lianbo Shares still plans to raise RMB 1.1 billion, with RMB 560 million earmarked for the expansion project of producing 16.5 million sets of ultra-precision automotive motor core components annually; RMB 200 million for the establishment of an intelligent production base in Serbia for producing 2 million sets of core components for new energy vehicle electric drive systems annually; RMB 140 million for the Lianbo Zhiqu and Robotics Core Technology Research Institute; and the remaining RMB 200 million for supplementing working capital.

Regarding the continuous decline in capacity utilization rates, the company stated that during the reporting period, the new energy vehicle industry experienced rapid expansion, and the company successively reached in-depth cooperation with leading domestic and foreign enterprises such as Volkswagen Group, Bosch Group, Nidec, BorgWarner, FAW Hongqi, Leapmotor, Huayu Automotive Electric, and Inovance Technology. Automotive industry chain clients consider suppliers' existing capacity and long-term capacity planning as core evaluation criteria during project bidding and evaluation. To serve existing clients and ensure incremental supply for new projects from Volkswagen Group, equipment procurement needs to be planned 1-2 years in advance. The company completed the construction and commissioning of its Zhenjiang subsidiary's factory and the Serbian overseas base in mid-2023 and late 2024, respectively. In 2025, all previously ordered equipment will be in place, and the overall capacity reserve layout will be fully implemented, with capacity deployment outpacing production growth. Therefore, while production volume significantly increased during the reporting period, capacity utilization rates remained low. As mass production orders from clients such as Volkswagen Group gradually materialize in 2026, the company's capacity utilization rates will steadily rebound.

Zhang Xiang, Chief New Energy Expert at Yuanda International Exhibition Co., Ltd., analyzed that early on, the new energy vehicle industry experienced rapid expansion, and some component enterprises fully enjoyed the industry dividends, with sufficient orders and considerable profits. However, as domestic industry growth slowed and a large number of participants entered the market segment, overcapacity issues emerged, industry competition intensified, and corporate profit margins were continuously compressed.

Against this industry backdrop, Lianbo Shares' decision to pursue large-scale expansion has two sides. On the one hand, expansion can dilute unit costs for R&D, manufacturing, and management through economies of scale, thereby enhancing product price competitiveness. On the other hand, if downstream demand falls short of expectations and the already low capacity utilization rate persists, further expansion will exacerbate capacity idleness, increase depreciation pressure on fixed assets, and continuously erode profits.

Zhang Xiang further stated that for domestic component manufacturers facing intensifying competition, establishing overseas factories to explore international markets is a crucial outlet, as incremental demand from overseas markets can absorb new capacity. However, going overseas represents a critical turning point for enterprise development, and overseas factory construction faces multiple uncertainties such as localization, supply chains, and policies. Once the transition falls short of expectations, enterprises may encounter development stagnation or even performance declines.

Zhou Di, an expert from the Ministry of Science and Technology's National Science and Technology Expert Database, believes that Lianbo Shares' current domestic iron core capacity utilization rate is only around 60%, yet it is simultaneously pursuing domestic expansion and building a factory in Serbia. This expansion logic considers client localization deployment, but the pressure to digest capacity is objectively high and a key point of scrutiny during reviews.

From a positive standpoint, the establishment of this overseas factory primarily caters to leading European automotive manufacturers, notably Volkswagen. By supplying locally, the company can reduce logistics costs, bypass trade barriers, and secure overseas designated orders (Note: "designated" is used to accurately reflect the context of obtaining specific orders). Meanwhile, the domestic new production lines are dedicated to high-value-added products, such as high-end drive motor iron cores and molds. These products are distinct in positioning from the currently underutilized traditional micro and special iron core production lines, indicating that the expansion is not merely a repetition of low-end capacity.

However, notable risks and challenges in capacity absorption persist:

Firstly, the company's product selling prices are on a downward trend, and its core business profitability remains weak. The current net profit margin of the Serbian facility is notably low. Should orders from overseas clients like Volkswagen fall short of expectations, the new overseas factory may continue to operate at suboptimal capacity levels, further diminishing overall capacity utilization rates and eroding profits.

Secondly, the company exhibits extremely high customer concentration, heavily relying on the Volkswagen Group. Consequently, the performance of the overseas base is closely tied to a select few major clients, amplifying the risks associated with demand fluctuations.

Thirdly, the existing domestic capacity is already underutilized. Compounded by fierce competition and ongoing price wars in the industry's iron core market segment, any weakening in vehicle demand could lead to significant overcapacity pressure when combining old and new production capacities.

Regarding solvency, at the end of each reporting period, the company's consolidated asset-liability ratios stood at 65.43%, 71.14%, and 60.27%, respectively. In contrast, the average consolidated asset-liability ratios of comparable listed companies during the same periods were 57.11%, 57.81%, and 52.88%, respectively. The company's current ratios were 1.42, 1.34, and 1.41, while its quick ratios were 1.22, 0.99, and 1.21, respectively.

During the same timeframes, the company's short-term borrowings amounted to RMB 181 million, RMB 260 million, and RMB 218 million, respectively, accounting for 31.95%, 33.63%, and 25.29% of its current liabilities.

In terms of equity structure, as of the prospectus signing date, Xiao Qingpeng directly held 20,373,493 shares of the company, representing a 25.88% stake. Rao Zhihui directly held 15,222,519 shares, equating to a 19.34% stake. Furthermore, Xiao Qingpeng indirectly controlled 18.52%, 1.57%, and 0.24% of the company's voting rights through his positions as the executive partner of Zhenjiang Changxingfa, Zhenjiang Jujiurong, and Zhenjiang Jiushengju, respectively.

In June 2022, Xiao Qingpeng and Rao Zhihui entered into a...