Huike Shares Passes IPO Review, Faces Multiple Challenges Behind 8.5 Billion Yuan Fundraising

How AI and the Panel Industry Cycle Influence Company Capital Operations

Reporter Chen Jingbin, Guangzhou

The upstream segments of the home appliance industry chain have traditionally exhibited strong cyclical characteristics. As the core components of terminal products like TVs and monitors, fluctuations in display panel prices not only directly impact the cost structure of device manufacturers but also transmit upstream through the industry chain, significantly affecting the operating performance of panel manufacturers. Under this industry trait, the operational performance, capital investment, and technological route choices of display panel companies are often highly linked to downstream demand changes and overall industry prosperity.

Against this backdrop, Huike Co., Ltd. (hereinafter “Huike”)’s progress in the capital market also shows features that align with industry cycles. The company voluntarily withdrew its IPO application on the Growth Enterprise Market in 2023, then shifted to the Shenzhen Stock Exchange’s main board, but the process was temporarily halted due to expired financial documentation. Subsequently, the company updated its application materials and resumed its listing process. According to the latest prospectus, Huike plans to raise 8.5 billion yuan, mainly for new display projects and working capital supplementation.

Recent developments show that on March 3, the Shenzhen Stock Exchange’s Listing Review Committee’s 2026 Ninth Meeting announced that Huike’s initial public offering has been approved, confirming that it meets the issuance, listing, and disclosure requirements.

Profit Recovery, Financial Indicators Still Under Pressure

The prospectus indicates that Huike’s main business involves the R&D, manufacturing, and sales of semiconductor display panels and other core display devices, as well as smart display terminals. The company adopts a vertically integrated industry chain model of “semiconductor display panels + smart display terminals,” with main products including TV panels, IT panels, and related display terminals, occupying a key upstream position in the home appliance industry chain.

Operationally, the company’s performance shows a clear linkage with the industry’s prosperity. In 2022, affected by falling panel prices, the company reported a net loss attributable to shareholders of 1.421 billion yuan. As industry prices recovered, Huike achieved profits of 2.582 billion yuan in 2023 and 3.32 billion yuan in 2024. However, starting in 2025, the growth pace has shown a phased change. Data indicates that from January to September 2025, the company’s operating revenue decreased by 0.36% year-over-year.

Regarding profitability structure, government subsidies constitute a significant part of profits. The prospectus discloses that from 2022 to June 2025, the company’s government subsidies recognized in profit and loss totaled 5.375 billion yuan, providing some support to non-operating income.

Meanwhile, the company maintains a high leverage level in its asset-liability structure. As of the end of June 2025, total liabilities reached 69.153 billion yuan, with an asset-liability ratio of 66.99%. Interest-bearing debt amounted to 42.709 billion yuan. Liquidity ratios during the reporting period were 0.64, 0.85, 0.99, and 1.17 times for the current ratio, and 0.51, 0.69, 0.85, and 0.98 times for the quick ratio. Except for the first half of 2025 when the current ratio exceeded 1, previous periods remained below 1.

In terms of inventory, Huike’s inventory levels have continued to grow. As of June 2025, inventory on the books reached 7.994 billion yuan, with a provision for inventory write-downs of 263 million yuan, accounting for 3.29% of inventory value. Under the backdrop of fluctuating panel prices, changes in inventory value have become a regulatory focus. Shenzhen Stock Exchange’s inquiries also emphasized concerns about gross margin fluctuations and the reasonableness of inventory write-down provisions.

Corporate governance shows high ownership concentration. According to the prospectus, Wang Zhiyong controls 52.31% of voting rights through Huike Investment Control and employee shareholding platform Shenzhen Huitong, and serves as chairman and general manager. Several family members also hold positions on the board and supervisory committee.

Related-party transactions have increased. Public data shows that in 2024, related-party transactions amounted to 2.86 billion yuan, with a three-year cumulative transaction amount of 887 million yuan involving entities controlled by the actual controller’s relatives.

In terms of cash distribution, Huike has implemented sizable dividends in recent years. In 2024, the company paid dividends of nearly 200 million yuan, and in the first half of 2025, another 400 million yuan was distributed, totaling nearly 600 million yuan. Meanwhile, the IPO plan still allocates 1 billion yuan for working capital and bank debt repayment.

Regarding industry environment, the company responded to inquiries by stating that display panel prices are mainly influenced by terminal demand changes, brand inventory adjustments, overall industry capacity utilization, and raw material costs. The company believes that as supply-demand dynamics continue to improve and raw material procurement costs decline, panel prices are expected to stabilize overall.

State Capital Cooperation and Repurchase Terms Await Optimization

From the perspective of corporate financing structure and industry expansion paths, Huike’s recent capacity-building model has formed close cooperation with local state-owned assets.

In the context of expanding investment in display panel capacity, the company has advanced production line construction through joint ventures with state-owned platforms in Chuzhou, Mianyang, Changsha, and other regions. The prospectus shows that these cooperation agreements generally include listing milestones and share repurchase arrangements.

Lin Xianping, associate professor at Zhejiang University City College and executive deputy secretary-general of the China Urban Experts Think Tank, said that such repurchase clauses often have rigid repayment features, differing from traditional equity investment risk-sharing mechanisms. “If these terms are not moderately adjusted in the future, the company may face potential repurchase pressures after listing, which could constrain liquidity.”

Lin believes that the recent approval of the IPO reflects regulatory tolerance for strategic manufacturing industries like display panels, but this does not mean relaxed compliance requirements. “Companies still need to optimize ownership structures, improve cash flow, and renegotiate cooperation terms with state-owned partners to gradually shift repurchase arrangements toward more market-oriented equity investment relationships.”

Industry veteran Liang Zhenpeng also noted that from a capital structure perspective, if repurchase clauses have fixed income attributes, their debt-like characteristics may become more apparent in the financial structure. “Once triggered, the company could face cash flow pressures.”

Liang suggests that companies can gradually optimize financing structures through methods such as private placements or equity swaps, converting some state-owned investments into listed company equity; establishing dedicated debt repayment funds or issuing long-term debt instruments to extend repayment periods; and continuously strengthening operational cash flow to mitigate potential funding pressures.

Beyond financing, the alignment between fundraising and technological layout is another market focus.

According to the fundraising plan, about 7.5 billion yuan of the 8.5 billion yuan will be invested in new display technologies such as OLED, Oxide, and Mini-LED. Compared to this, the company’s current R&D investment is relatively limited. Data shows that in 2024, R&D expenses accounted for 3.51% of revenue, below the industry average.

Regarding technological development, the company stated in its reply that future display industry development may involve parallel development of LCD, OLED, MiniLED, and MicroLED technologies. The company will continue to pursue multi-technology layout. Currently, it has mass-produced Oxide LCD panels and laptop panels, lit its first OLED mobile phone display, and is advancing MiniLED display terminal products to mass production.

In production capacity, the company has established four G8.6 high-generation lines in Chongqing, Chuzhou, Mianyang, and Changsha, capable of producing multiple sizes through die-cutting. The company states that leveraging these lines and customer resources allows for rapid response to downstream home appliance and consumer electronics demands.

Public information shows that clients include TCL Group, Hisense Group, LG Group, Samsung Group, Xiaomi Group, Skyworth Group, and Haier Group, with the top five customers averaging over 8 years of cooperation.

However, from an industry structure perspective, new display technologies are still in ongoing development, and the match between capacity expansion and market demand remains to be further validated.

Lin Xianping noted that Huike’s case is representative among upstream home appliance industry companies. “In asset-heavy industries, companies often expand capacity through cooperation with local governments. But if financing relies heavily on investment arrangements with repurchase clauses, it could impose financial constraints once the company enters the capital market.”

Liang Zhenpeng added that during industry upgrades, companies need to maintain a dynamic balance between capacity expansion and capital structure. “In the long run, industry competition may shift from mere scale expansion to improvements in technological efficiency and industrial synergy.”