Thousandth IPO: Profit Surged 833% in Three Years but Operating Net Cash Flow Remains Negative; Sponsor Securities Company Affiliates Both Invested in Shares and Previously Participated in Earn-out Agreements

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Produced by: Sina Finance Listed Company Research Institute

Author: IPO Refinance Team / Turing

Recently, Shenzhen Qianfenyi Intelligent Technology Co., Ltd. (hereinafter “Qianfenyi”) updated its filing materials and continues to push for a GEM IPO.

Qianfenyi’s revenue has increased more than fourfold and profits over eightfold in the past three years, but the net cash flow from operating activities has remained negative throughout this period, diverging sharply from net profit. One reason for the revenue surge is increased transactions with some major clients, but the top five clients’ revenue share is significantly higher than the industry average.

Before the IPO application, Qianfenyi engaged in a sudden share purchase, boosting its valuation from 850 million yuan to 1.5 billion yuan. Additionally, the sponsor broker Guolian Minsheng Securities, which controls about 2.4% of the company, has related parties involved, and these parties have participated in profit-sharing agreements. The independence and objectivity of Guolian Minsheng’s sponsorship warrant attention. The company’s capacity utilization rate in 2025 has sharply declined, yet it plans to raise funds to increase capacity by about 55%.

Profits surged 830% over three years, but operating cash flow remains negative

The prospectus shows that Qianfenyi is a provider of smart pen technology solutions. Its smart pens are used in business, education, design, and various daily scenarios, mainly paired with tablets, learning devices, laptops, and smartphones. In 2023-2025, the company’s smart pen revenue accounted for 97.22%, 96.87%, and 94.85% of total revenue, respectively.

From 2022 to 2025, Qianfenyi achieved operating revenues of 191 million yuan, 331 million yuan, 636 million yuan, and 1.026 billion yuan, respectively, with net profits attributable to shareholders of 15 million yuan, 36 million yuan, 102 million yuan, and 140 million yuan. In 2025, revenue was 537% of 2022 levels, more than quadrupling over three years; net profit attributable to shareholders in 2025 was 933% of 2022, increasing over eight times.

Qianfenyi states that during the reporting period, main business revenue increased annually mainly due to rising sales of smart pens. On one hand, strong demand from downstream consumer electronics, coupled with expanded online marketing channels, led to continuous growth in smart pen sales; on the other hand, product mix optimization and marketing strategies caused some price fluctuations.

Despite significant profit growth, the net cash flow from operating activities has been negative for three consecutive years. In 2023-2025, net cash flows from operating activities were -35 million yuan, -28 million yuan, and -2 million yuan, respectively, diverging sharply from current net profits. This indicates that the substantial profit increase has not translated into actual cash, representing a form of “book wealth.”

Qianfenyi explains that since 2023, the negative cash flow from operating activities mainly results from discounting commercial acceptance bills and bank acceptance bills with lower credit ratings, which are classified as financing activities. Excluding the impact of bill discounting (treating cash obtained from bills that do not meet financial asset termination conditions as operating cash flow), the net cash flows from operating activities in 2023-2025 would be 14.72 million yuan, 25.36 million yuan, and 79.45 million yuan, respectively.

While this explanation is reasonable, the net cash flow from operating activities in 2023-2025 remains far below current net profits.

Relaxed credit policies for some major clients; top five clients’ revenue share far exceeds industry peers

In fact, the accounts receivable of Qianfenyi have grown significantly, which also ties up company funds and impacts operating cash flow.

At the end of 2022-2025, accounts receivable balances were 22 million yuan, 64 million yuan, 142 million yuan, and 195 million yuan, with growth rates of 189.63%, 120.96%, and 37.02%, respectively, from 2023 to 2025.

Meanwhile, revenue growth in 2023-2025 was 72.98%, 92%, and 61.3%. In 2023 and 2024, the growth rate of accounts receivable exceeded revenue growth for two consecutive years, indicating slower collections, possibly due to relaxed credit policies or early revenue recognition.

According to the latest inquiry reply from the company, Qianfenyi indeed relaxed credit policies for some major clients. For example, the credit period for Asus changed from 60 days monthly settlement to 90 days; for TAL Education, from prepayment to 30 days monthly settlement. For Lenovo, a major client with a significant increase in transaction volume, the credit period is set at 120 days, while other clients’ periods do not exceed 90 days.

In 2023-2025, sales to Lenovo were 16.61 million yuan, 94.12 million yuan, and 168.23 million yuan, with year-over-year increases of 77.51 million yuan and 74.11 million yuan in 2024 and 2025.

Relaxing credit policies for major clients implies weaker bargaining power with these clients. Additionally, Qianfenyi has significantly reduced the unit price of its core product, smart pens, mainly offering discounts to offline customers.

Furthermore, dependency on the top five clients is higher than industry peers. In 2023-2025, the combined sales share to the top five clients was 46.32%, 44.42%, and 42.53%, respectively. In 2023 and 2024, the average share among comparable companies was 18.80% and 17.77%, significantly lower than Qianfenyi’s around 45%.

Qianfenyi states that its customer concentration is higher than comparable companies mainly because: (1) unlike peers with diversified product lines, its main product is a smart pen with a relatively simple product structure, and its downstream clients are mainly well-known brands with high purchase volumes; (2) competitors have a higher proportion of online sales, whereas Qianfenyi primarily relies on offline sales, with more dispersed online customers.

Even if Qianfenyi’s explanation is reasonable, the high reliance on the top five clients poses greater risks than industry peers. The company admits that if product or service quality issues lead to significant adverse changes in cooperation with major clients, or if these clients’ business deteriorates, resulting in a sharp decline in orders, it could negatively impact the company’s performance.

Sponsor broker related parties both invested and participated in profit-sharing; capacity utilization rate sharply declined yet expansion plans continue

For this IPO, Qianfenyi plans to issue no more than 19.72 million new shares, accounting for at least 25% of total post-issue shares, aiming to raise 992 million yuan. Based on this, the company’s estimated IPO valuation is about 40 billion yuan.

However, prior to the IPO application, a share transfer valued the company at only 1.5 billion yuan—why did the valuation jump to about 40 billion yuan within half a year?

In December 2025, the company’s IPO application was accepted. In June 2025, Changsha Quanzhong Investment and other institutions suddenly invested in Qianfenyi, pushing its valuation to 1.5 billion yuan. Lian Sheng Gongying transferred its holdings of 1.5%, 1.2%, and 0.3% of Qianfenyi for 22.5 million yuan, 18 million yuan, and 4.5 million yuan, respectively, to Changsha Quanzhong Investment, Suzhou Xiangzhong Investment, and Nanjing Xiangzhong Investment.

Compared to the valuation of about 850 million yuan in August 2024, the valuation increased by 76% within less than a year. In August 2024, Lian Sheng Gongying transferred its 4.7059% stake in Qianfenyi for 40 million yuan to Jingheli.

Besides the sudden share purchases before the IPO, the sponsor broker Guolian Minsheng Securities and related parties have both sponsored and invested in the company, and participated in profit-sharing agreements.

The prospectus shows that Guolian Minsheng Securities, the sponsor broker, which underwrites and sponsors, controls 1.2% of Qianfenyi through Minsheng Securities Investment Co., Ltd. (Minsheng Investment). Guolian Minsheng also controls Minsheng Equity Investment Fund Management Co., Ltd., which acts as the private fund manager and executive partner of Suzhou Yuanchuang Investment, holding another 1.2%.

Additionally, Minsheng Investment and Suzhou Yuanchuang have participated in profit-sharing agreements. Although Qianfenyi terminated the profit-sharing clause in September 2025, the independence and objectivity of Guolian Minsheng’s sponsorship remain noteworthy.

The prospectus states that Qianfenyi plans to use the 992 million yuan raised from the IPO for projects including smart pen and smart lifestyle product manufacturing bases, company headquarters, and R&D centers, with planned investments of 392 million yuan, 350 million yuan, and 250 million yuan, respectively.

Once completed, the smart pen and smart lifestyle product manufacturing base will have an annual capacity of 10 million smart pens and 200,000 smart lifestyle products.

According to the company, as of the end of 2025, capacity was 18.12 million units, with capacity utilization dropping from 99.06% in 2024 to 70.81%. The planned expansion of an additional 10 million units (about 55% of the 2025 capacity) raises questions about whether the company can absorb this increased capacity.