IPO Radar | Bearing Giant Renben Stock Advances, High-Leverage Expansion Gamble Awaiting Resolution

As a leading company in China’s bearing industry, Renben Co., Ltd. (hereinafter referred to as “Renben”) has attracted significant market attention with its process to go public on the main board. This bearing manufacturer, which has ranked first domestically in production and sales for twelve consecutive years, plans to raise 3.8 billion yuan to invest in projects such as robotics bearings and new energy vehicle bearings.

In the hundreds of pages of the company’s IPO prospectus, Jiemian News reporters found a series of issues including high debt levels, large accounts receivable and inventories, complex shareholding arrangements, and large-scale expansion amid underutilized capacity. Is Renben’s IPO a strategic move to break through bottlenecks, or a high-stakes gamble on capital?

How substantial is the “top ten” global ranking?

“Currently, the company is the only Chinese enterprise among the top ten global bearing companies.” This is Renben’s most shining credential in its push into the capital market. The company states that going public aims to “strengthen and expand the capacity and market share of high-end bearings, laying a solid foundation for further becoming a global leader in the bearing industry.”

So, how valuable is this credential?

In 2024, Renben’s revenue is projected to be 11.96 billion yuan. Meanwhile, the international bearing giant Schaeffler from Germany reported revenue of 18.188 billion euros, approximately 136.877 billion yuan, more than 11 times larger; Japan’s JTEKT had revenue of 91.205 billion yuan; and NACHI, the smallest among the top eight global players, reported 11.611 billion yuan. It is evident that NACHI and Renben are in the same scale.

Renben states that “there is still a gap compared to the top eight international companies in fundamental bearing research and the competitiveness of bearings for major equipment.” The company plans to raise nearly 3.8 billion yuan, with over 2.8 billion yuan allocated to high-end bearing projects in robotics, new energy vehicles, and high-end equipment.

Data source: Prospectus

Renben’s revenue from major equipment bearings remains low, accounting for only 3.25% in the first half of 2025. Although the company claims breakthroughs in rail transit bearings and wind power main shaft bearings, high-speed rail traction motor bearings are still undergoing durability tests, and the axle box bearings have only completed 80 km of testing, with no large-scale production yet. Additionally, the company is involved in national key projects such as “high-speed rail gear box bearing development” and “helicopter transmission shaft bearing development.” For example, as of June 2025, the “high-speed rail gear box bearing project” is still in the “initial prototype trial” stage.

High-end bearing R&D cycles are long and validation is difficult, especially in fields like rail transit and aerospace, which require years or even over a decade of rigorous testing and validation. In other words, Renben’s IPO is more like a future-oriented “technological breakthrough” financing.

Data source: Prospectus

It is noteworthy that, despite existing capacity not being fully saturated, Renben plans to expand production on a large scale. During the reporting period, the utilization rates of finished bearing capacity were 80.04%, 79.87%, 80.66%, and 80.23%. The new projects will add annual capacities of 90 million sets of robotics and intelligent equipment bearings, 75 million sets of new energy vehicle bearings, and high-precision industrial bearings. If future market demand falls short of expectations, the new capacity may face idle risks, further increasing the company’s financial pressure. Renben has not disclosed details about existing order support for this expansion.

High debt levels coupled with liquidity pressure

As of June 2025, Renben’s consolidated asset-liability ratio reached 66.63%, with bank loans accounting for 62.39% of total liabilities. In the same period, the average asset-liability ratio of comparable industry companies was only 46.51%. Renben explains that the bearing industry is capital-intensive, and the company’s previous financing channels were limited, mainly relying on bank loans, leading to high debt ratios. Additionally, the company’s current current ratio and quick ratio are 1.08 and 0.76, respectively, below the industry averages for machinery manufacturing, indicating short-term debt repayment pressures.

Data source: Prospectus

“Renben’s financing heavily depends on bank loans. If credit policies tighten or operational conditions worsen, there is a risk of being unable to repay maturing debts,” said Li Qiang, an analyst at a mid-sized private equity firm in Shanghai, to Jiemian News. “In an upward industry cycle, high leverage can amplify returns, but during downturns or macroeconomic tightening, high interest expenses and repayment pressures can severely erode profits and even trigger liquidity crises.” The company plans to raise 1 billion yuan specifically for “working capital supplementation,” which signals a strong cash flow demand.

Coupled with high debt, accounts receivable and inventories are also elevated.

As of June 2025, Renben’s accounts receivable stood at 3.221 billion yuan, and inventories at 3.267 billion yuan, together accounting for 57% of current assets, with idle funds exceeding 6.5 billion yuan. The company explains that receivables increased due to expanded revenue, while high inventories are related to the “consignment model” used by downstream major clients, where products are stored in customer warehouses and settled upon use. However, this model not only reduces Renben’s bargaining power but also risks inventory backlog and receivables collection.

“Consignment is common in auto parts, but it essentially means Renben is providing ‘zero inventory’ supply chain services to clients like Geely and BYD using its own funds,” Li Qiang told Jiemian News. “While it strengthens customer relationships, it also consumes a lot of operating capital, turning cash into receivables and shipped goods. If key customers face operational pressure, the risk of bad debts and asset devaluation will surface.”

Looking at aging, over 98% of Renben’s receivables are within one year, with a provision rate of 5%, not significantly different from peers. However, as revenue grows, receivables increased sharply from 2.322 billion yuan in 2022 to 3.421 billion yuan by June 2025, roughly tracking revenue growth. This indicates that Renben’s growth is largely driven by increasing credit sales rather than cash inflows.

In addition, the company’s history of shareholding arrangements has also attracted attention. Since its establishment in 1991, Renben has undergone four instances of shareholding proxy arrangements. From the six “virtual shareholders” at Wenzhou Bearing Factory in 1991, to employee shareholding proxies during restructuring in 1997, to long-term mutual proxies among founding shareholders from 2001 to 2018, and finally to large-scale proxies after introducing an employee shareholding platform in 2020.

In 2024, Renben recognized a one-time gain of 55.5236 million yuan from “clearing proxies” under “other non-recurring gains and losses,” offsetting share-based payment expenses. This non-recurring gain directly increased net profit attributable to shareholders by nearly 55.5 million yuan, nearly 7% of that year’s net profit. While this “internal digestion” effectively clarified ownership issues, it also created a closed loop of large fund flows within the company. The ultimate source of these funds and ownership rights remain opaque to external investors.

Currently, the domestic bearing industry exhibits a “big but not strong” pattern. In 2024, the industry’s revenue reached 231.5 billion yuan, with over 1,300 enterprises above designated size. The top ten companies hold only 20-30% of the market, with market concentration far below international levels. In high-end bearings, domestic companies still rely heavily on imports.

For Renben, this IPO is both an opportunity to break through growth bottlenecks and a gamble on the future. Whether large-scale capacity expansion under high debt can succeed, or whether high-end transformation can overcome technological barriers, remain open questions. These issues, like precision bearings, will determine whether the company can race smoothly on the capital market track.