Xinyuan Co., Ltd. at Critical Stage of Hong Kong IPO: "Revenue Growth Without Profit Growth" Results Fall Short of Institutional Expectations, 2025 Net Profit Declines Over 16%, Operating Cash Flow Plummets 40%

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Daily Economic News Reporter | Cai Ding    Daily Economic News Editor | Bi Luming

On the evening of March 19, Xinquan Co., Ltd. (SH603179, stock price 69.53 yuan, market value 35.47 billion yuan) disclosed its 2025 annual report. The company achieved revenue of 15.524 billion yuan in 2025, a year-on-year increase of 17.04%; net profit attributable to shareholders of the parent company was 815 million yuan, down 16.54% year-on-year; non-recurring net profit was 809 million yuan, down 16.5%; basic earnings per share were 1.66 yuan, down 17%. The company will distribute a cash dividend of 3 yuan (tax included) for every 10 shares to all shareholders, with remaining undistributed profits carried forward to future years, converted into share capital via capital reserve, with 4 shares bonus for every 10 shares, no stock dividends.

Image source: Xinquan Co., Ltd. 2025 Annual Report

Based on the data disclosed in the annual report, Xinquan Co. experienced “increased revenue but decreased profit” in 2025. According to Wind Financial compilation data, 15 institutions’ consensus forecast for net profit attributable to shareholders in 2025 was 992.3 million yuan. Therefore, the disclosed figure of 815 million yuan falls short of expectations (-17.86%) and is below all 15 institutions’ predicted values.

Image source: Wind

In addition to key financial data, as of the end of 2025, Xinquan’s total assets reached 18.418 billion yuan, a year-on-year increase of 15.75%; net assets attributable to shareholders of the listed company increased significantly by 32.23%, reaching 7.413 billion yuan.

According to the annual report, Xinquan closely follows the development of new energy vehicles, supporting more NEV projects in 2025, including companies like Li Auto, Geely, GAC New Energy, BYD, NIO, Xiaomi Auto, and internationally renowned electric vehicle brands. This provides a strong customer base for the company’s long-term development.

In terms of globalization strategy, to mitigate international trade risks and expand into European and American markets, Xinquan increased overseas investments in 2025: investing an additional 45 million euros in Slovakia to expand capacity. Additionally, the company established subsidiaries in Germany (Munich, Bavaria Ingersoll) and Kentucky, USA.

Regarding capital operations, the company has submitted an application to the Hong Kong Stock Exchange for issuing H-shares and listing on the Main Board, actively advancing approval and registration processes.

The annual report also shows that in 2025, Xinquan completed the acquisition of a 70% stake in Anhui Ruqi Automobile Parts Co., Ltd., actively developing the automotive seat business and continuously enriching product categories. In December 2025, Xinquan also established Changzhou Xinquan Intelligent Robot Co., Ltd., focusing on core robot components and collaborating with automotive clients to create the company’s “second growth curve.”

Despite numerous achievements during the reporting period, Xinquan ultimately delivered a “revenue increase but profit decrease” result. Besides declines in net profit attributable to shareholders and non-recurring net profit, industry competition and price pressure led to a 1.96 percentage point decrease in the gross profit margin of main business (auto parts) to 17.09% in 2025.

Furthermore, in 2025, net cash flow from operating activities was 768 million yuan, a significant decrease of 40.60% compared to the previous year, mainly due to increased cash payments, the company stated.

On the expense side, although main business revenue grew by 24.35%, main business costs increased by 27.37%, with costs rising faster than revenue. Specifically, in 2025, Xinquan saw notable increases in several expenses: management expenses surged by 42.90%, selling expenses increased by 25.76%, and R&D expenses rose by 25.79%.

Image source: Xinquan Co., Ltd. 2025 Annual Report

Image source: Xinquan Co., Ltd. 2025 Annual Report

Additionally, as the automotive industry faces intensified “淘汰赛” (elimination race), some automakers’ operational difficulties have affected the company’s accounts receivable. The annual report shows that Xinquan made provisions for bad debts for several automakers including GAC Fiat Chrysler, WM Motor, Hechuang Auto, and Hezhong New Energy. The total accounts receivable balance was 35.2296 million yuan, with a provision for bad debts totaling 28.0043 million yuan, both based on the expectation that these amounts cannot be fully recovered within the credit period. This reflects the direct financial impact of downstream industry reshuffling on supply chain companies.

Image source: Xinquan Co., Ltd. 2025 Annual Report

The Daily Economic News reporter also noted that Xinquan’s seat product capacity is 360,000 sets, but actual production in 2025 was only 83,100 sets, with a utilization rate of just 23.09%.

Image source: Xinquan Co., Ltd. 2025 Annual Report

The annual report also clearly states that as the company deepens its overseas expansion, geopolitical frictions, stricter trade compliance, and tariff policy uncertainties will become major external risks that must be faced in 2026 and beyond. During the reporting period, profitability in overseas markets remained challenging: gross profit margins in North America decreased by 7.71 percentage points, and in Europe, the decline was even more significant at 13.26 percentage points.

Image source: Xinquan Co., Ltd. 2025 Annual Report

Cover image source: Meiri Media Asset Library