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%

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 RMB, market capitalization 35.47 billion RMB) disclosed its 2025 annual report. In 2025, the company achieved revenue of 15.524 billion RMB, a year-on-year increase of 17.04%; net profit attributable to shareholders of the parent company was 815 million RMB, down 16.54% year-on-year; non-recurring net profit was 809 million RMB, down 16.5%; basic earnings per share were 1.66 RMB, down 17%. The company will pay a cash dividend of 3 RMB (tax included) for every 10 shares to all shareholders. Remaining undistributed profits will be carried forward to future years and converted into capital reserves to increase share capital, with every 10 shares converted into 4 additional shares, without issuing bonus shares.

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

According to the annual report data, Xinquan Co. experienced a “revenue growth but profit decline” in 2025. Additionally, according to Wind Financial compilation data, 15 institutions’ consensus forecast for net profit attributable to shareholders in 2025 was 992.3 million RMB. Based on the company’s disclosed figure of 815 million RMB, the result is below expectations (-17.86%) and lower than all 15 institutions’ predicted values.

Image source: Wind

Besides key financial data, as of the end of 2025, Xinquan Co.‘s total assets reached 18.418 billion RMB, a year-on-year increase of 15.75%. Shareholders’ equity attributable to the listed company increased significantly by 32.23%, reaching 7.413 billion RMB.

According to the annual report, Xinquan Co. 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 cope with international trade risks and expand into European and American markets, Xinquan Co. increased overseas investments in 2025: investing an additional 45 million euros in Slovakia to expand capacity. The company also 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 Co. completed the acquisition of a 70% stake in Anhui Ruqi Automobile Parts Co., Ltd., actively developing the automotive seat business and diversifying product offerings. In December 2025, the company established Changzhou Xinquan Intelligent Robot Co., Ltd., focusing on core robot components and collaborating with automotive clients to create a “second growth curve.”

Despite numerous achievements during the reporting period, Xinquan Co. ultimately delivered a “revenue growth but profit decline” report card. 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 RMB, 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 increased by 24.35%, main business costs grew by 27.37%, with costs rising faster than revenue. Specifically, in 2025, several expenses saw notable increases: management expenses surged by 42.90%, selling expenses increased by 25.76%, and R&D expenses grew 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’ financial difficulties have affected the company’s accounts receivable. The annual report shows that Xinquan has made bad debt provisions for several automakers, including GAC Fiat Chrysler, WM Motor, Hechuang Auto, and Hezhong New Energy. The total accounts receivable on the books amount to 35.2296 million RMB, with a total provision for bad debts of 28.0043 million RMB, 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 design 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 with the deepening of the overseas expansion strategy, geopolitical frictions, stricter trade compliance, and tariff policy uncertainties will become major external risks that the company must face in 2026 and beyond. During the reporting period, the company’s overseas markets still faced profitability challenges: gross profit margins in North America decreased by 7.71 percentage points, and in Europe, the gross profit margin dropped significantly by 13.26 percentage points.

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

Cover image source: Meiri Media Asset Library