HuiKang Technology's IPO re-listens, pre-listing family insiders cashing out over 600 million yuan draws attention

Why has the supplier shareholding by Huikang Technology raised regulatory concerns?

Recently, Ningbo Huikang Industrial Technology Co., Ltd. (referred to as “Huikang Technology”) has passed the review.

This is Huikang Technology’s second review. In both reviews, suppliers have attracted attention, with the focus on the historical evolution of major suppliers’ equity, cooperation history, and whether there are related party relationships with Huikang Technology and its affiliates.

It is understood that Huikang Technology’s main products include ice machines, refrigerators, freezers, and wine cabinets, generating tens of billions in annual revenue through “ice making.” However, in 2025, both revenue and net profit of Huikang Technology declined, which may be related to overdue accounts receivable from major customers. According to the prospectus, 60% of Huikang Technology’s revenue comes from its top five customers.

The actual controller of Huikang Technology is Chen Yuepeng. According to the prospectus, the Chen family has cashed out over 600 million yuan through equity transfers and cash dividends before the listing.

Two reviews, suppliers attract attention

In both reviews, the suppliers have attracted attention.

The main questions raised during the listing committee meeting were about explaining the historical evolution of major suppliers’ equity, cooperation history, and whether there are related party relationships with Huikang Technology and its affiliates.

According to the response letter from Huikang Technology, Ruiyi Electronics, Jiecheng Electronics, Anhui Tianhao, and Boshida are four relatively special suppliers that became the issuer’s suppliers shortly after their establishment.

Among these four suppliers, Ruiyi Electronics is Huikang Technology’s primary supplier. In 2017, due to its own planning adjustments and factory relocations, the actual controller Zhang Zhongli and his relatives planned to establish a new entity, Huisheng Electronics, to take over related assets and businesses, with Lao Baisheng holding 45% of Huisheng Electronics.

Lao Baisheng was the deputy director of Huikang Technology’s production workshop at the time. “Due to the frequent contacts and good relationship with Zhang Zhongli during earlier business collaborations, he requested Lao Baisheng to hold shares on his behalf.” This is how Huikang Technology described the shareholding arrangement in the response letter.

At the end of the year Huisheng Electronics was established, Huikang Technology initiated its listing plan, and to standardize management, it ceased transactions with Huisheng Electronics, and its business was taken over by an individual business owner, Bai Ruisi Hardware, established by Zhang Zhongli’s relative Chen Dijun. Huisheng Electronics was deregistered in September 2018.

It is worth noting that Lao Baisheng not only held shares for the supplier but also introduced his nephew to work at the supplier company.

Lao Kejie is the son of Lao Baisheng’s brother, and he worked in the technology department of Huikang Technology from 2002 to 2009. Around 2000, Lao Baisheng had business dealings with Chen Junhai due to his telephone business, and they were on good terms. In October 2009, Lao Kejie went to work at Chen Junhai’s company through an introduction from Lao Baisheng. Chen Junhai co-founded Jiecheng Electronics, which is a major supplier of Huikang Technology.

Currently, Huikang Technology’s main suppliers include Ruiyi Electronics, Qianjiang Refrigeration, Ningbo Anodan, LG CHEM, LTD, Ningbo Suopu, Huayi Compressor, Ningbo Bainuo, Jiecheng Electronics, Anhui Tianhao, and Boshida.

Data shows that from 2022 to the first half of 2025, the amount Huikang Technology procured from its top five suppliers accounted for 38.97%, 41.80%, 44.41%, and 41.44% of the company’s total procurement during the same period.

Major customers’ accounts receivable overdue

Information shows that Huikang Technology’s main products include ice machines, refrigerators, freezers, and wine cabinets, primarily used in residential and commercial fields.

From the sales model perspective, Huikang Technology’s sales model is direct sales, with buyout-style sales between the company and its customers, forming a business model primarily based on “ODM and supplemented by OBM.”

In the first half of 2022 to 2025, Huikang Technology’s ODM sales were 1.56 billion yuan, 2.075 billion yuan, 2.807 billion yuan, and 1.137 billion yuan, accounting for 81.10%, 83.59%, 88.19%, and 82.25%, respectively.

In terms of regions, from 2022 to the first half of 2025, Huikang Technology’s overseas sales revenue was 1.528 billion yuan, 1.871 billion yuan, 2.225 billion yuan, and 629 million yuan, accounting for 79.46%, 75.37%, 69.90%, and 45.46%, respectively. The main sales regions include North America, Australia, Europe, and South America, with the United States being the company’s largest export market.

In terms of products, Huikang Technology’s revenue mainly comes from ice machines. In the first half of 2022 to 2025, Huikang Technology’s ice machine revenue was 1.362 billion yuan, 1.948 billion yuan, 2.578 billion yuan, and 1.117 billion yuan, accounting for 70.83%, 78.44%, 81.00%, and 80.76% of the main business revenue, respectively.

Although the proportion of ice machine revenue is generally increasing, its selling price is decreasing. Data shows that from 2022 to the first half of 2025, the average selling price of Huikang Technology’s ice machine products was 435.22 yuan/unit, 403.97 yuan/unit, 385.90 yuan/unit, and 365.76 yuan/unit.

In terms of customers, Huikang Technology has a high dependence on major customers. Data shows that from 2022 to the first half of 2025, Huikang Technology’s revenue from the top five customers was 1.139 billion yuan, 1.479 billion yuan, 2.070 billion yuan, and 811 million yuan, accounting for 59.04%, 59.30%, 64.61%, and 58.40%, respectively.

According to the prospectus, Huikang Technology’s major customers include Ningbo Haomi, Curtis, ROWAN, CNA, BESTQI, and Beijing Jingdong, with all but Jingdong being ODM brand clients. Beijing Jingdong is a wholly-owned subsidiary of Jingdong Group.

As the dependence on major customers increases, so do accounts receivable. Data shows that from 2022 to the first half of 2025, Huikang Technology’s accounts receivable balance was 215 million yuan, 490 million yuan, 490 million yuan, and 626 million yuan, accounting for 11.16%, 19.64%, 15.28%, and 45.03% of operating income, respectively.

As accounts receivable increase, the bad debt provision also grows year by year. Data shows that from 2022 to the first half of 2025, Huikang Technology’s bad debt provision for accounts receivable was 12.7543 million yuan, 26.6127 million yuan, 40.7257 million yuan, and 38.8065 million yuan.

Huikang Technology frankly stated in the prospectus that there are overdue accounts receivable from major customers such as Curtis, ROWAN, and Ningbo Haomi, which have affected Huikang Technology’s cash flow and operating performance to some extent.

In 2025, Huikang Technology’s total revenue and net profit were 2.872 billion yuan and 391 million yuan, respectively, down 10.35% and 13.33% year-on-year.

Before the listing, the actual controller’s family cashed out over 600 million yuan

Huikang Technology’s predecessor is Huikang Co., Ltd., which was established as a joint venture funded by Huikang Group and Kuwait Trade. It later expanded the number of shareholders through equity transfers and capital increases.

It is worth noting that the equity transfers in Huikang Technology in 2022 and 2023 attracted significant attention.

From April to June 2022, Changxing Huipeng, Huikang Group, Huikang Co., Ltd., Chen Yuepeng, and Chen Qihui signed multiple “Equity Transfer Agreements” with Changxing Guoyue Jun’an, Jiaxing Wuyuan, and Yanchuang Yaoshang.

Among them, Changxing Huipeng transferred equity to Changxing Guoyue Jun’an and Caitong Innovation for transaction prices of 29 million yuan and 476,300 yuan, respectively; Changxing Hongpeng transferred equity to Wang Huanxing, Jiaxing Wuyuan, Ningbo Feng’erde, Caitong Innovation, Beifeng Lingyun, and Zhang Yuhua for transaction prices of 130 million yuan, 63 million yuan, 47 million yuan, 39.5237 million yuan, 17 million yuan, and 5 million yuan, respectively; Huikang Group transferred equity to Yanchuang Yaoshang, Yanchuang Xiangshang, and Yanyuan Yaoshang for transaction prices of 16.6667 million yuan, 13.3333 million yuan, and 10 million yuan, respectively.

In November and December 2023, Huikang Group, Changxing Hongpeng, Huikang Technology, Chen Yuepeng signed “Share Transfer Agreements” with Deqing Shuzhi, Hangzhou Shuzhi, Changshan Youfu, Jiaxing Chenyue, Nanjing Xiangzhong, and Suzhou Xiangzhong.

Among them, Huikang Group transferred a total of 7.2927 million yuan in registered capital to six assignees, with a total transfer price of about 144 million yuan. Changxing Hongpeng transferred a total of 2.3166 million yuan in registered capital to Nanjing Xiangzhong and Suzhou Xiangzhong, with a total transfer price of 45.8054 million yuan.

After these equity transfers, Changxing Huipeng and Changxing Hongpeng exited the list of Huikang Technology’s shareholders. Tianyancha shows that Changxing Hongpeng is a wholly-owned subsidiary of Huikang Group, and Changxing Huipeng is jointly held by Huikang Group and Chen Yuepeng’s sister.

According to the prospectus, Huikang Group is Huikang Technology’s controlling shareholder, holding 33.74% of the shares, which are 100% owned by Chen Qihui and his son Chen Yuepeng. Among them, Chen Yuepeng is the actual controller of Huikang Technology, indirectly holding 33.74% of the shares through Huikang Group and 4.49% through Changxing Yupeng, totaling 38.24%.

This means that the funds from the aforementioned equity transfers ultimately flowed to the actual controller Chen family. Based on the amount of the equity transfers, Chen Yuepeng’s family cashed out approximately 561 million yuan.

In addition, in 2023 and 2024, Huikang Technology’s cash dividends totaled 209 million yuan. Based on the shareholding ratio, Chen Yuepeng’s dividend was approximately 79.9887 million yuan.

Now, Huikang Technology is about to face its second review, and whether it can successfully pass the “inspection” of the capital market amidst declining performance, overdue accounts receivable from major customers, and significant cash-outs by the actual controller’s family remains to be seen.