Core Viewpoint - The successful approval of the stock issuance and listing of Suzhou Huichuan United Power Co., Ltd. marks a significant event in the "A拆A" (A-share split listing) landscape, indicating a shift in regulatory signals that "strict" does not equate to "halt" [1][2] Company Overview - Huichuan Technology, a leading player in the industrial control sector, has a robust technical foundation, brand advantage, and financial strength, with a reported revenue of 37.041 billion yuan in 2024, reflecting a year-on-year growth of 21.77% [4][10] - United Power, established in 2016, focuses on electric drive systems and power systems for electric vehicles, showcasing strong business independence and a distinct operational focus compared to Huichuan Technology [3][10] Financial Performance - United Power's revenue projections from 2022 to 2024 are 5.027 billion yuan, 9.365 billion yuan, and 16.178 billion yuan, with a compound annual growth rate of approximately 79.39%, significantly exceeding industry averages [3][4] - The company has achieved a net profit turnaround, moving from a loss of 179 million yuan in 2022 to a profit of 936 million yuan in 2024 [3] Regulatory Environment - The new "National Nine Articles" policy has introduced stricter standards for split listings, emphasizing compliance and quality, which United Power successfully met through its independent operational structure and technological innovation [2][7] - The approval process for United Power involved rigorous scrutiny from regulatory bodies, focusing on financial independence, asset integrity, and strategic necessity [7][8] Industry Context - The electric vehicle sector is a strategic emerging industry in China, with United Power positioned at the core of the supply chain, contributing to the integration and upgrading of the automotive industry [5][6][11] - The successful split listing of United Power is expected to enhance the visibility and valuation of both the parent company and the subsidiary, fostering a clearer focus on their respective core businesses [4][10] Innovation and Growth - United Power has developed 26 core product technologies and holds 98 invention patents, demonstrating its commitment to technological leadership in the electric vehicle sector [3][5] - The company serves over 40 automotive manufacturers and 170 vehicle models, indicating its significant role in the industry and potential for future growth [11]

Core Viewpoint - The successful listing of Suzhou Huichuan United Power Co., Ltd. marks a significant development in the "A-share split" process, indicating that strict regulations do not equate to a complete halt in the market, but rather a new normal for regulatory practices [2][5]. Summary by Sections Recent Developments - Huichuan Technology's subsidiary, United Power, has received approval for its initial public offering on the ChiNext board, becoming the second case of "A-share split" after the new "National Nine Articles" policy [1]. Regulatory Environment - The approval of United Power reflects a shift in regulatory signals, suggesting that high-quality and compliant split listings are still viable under the new regulatory framework [2][4]. - The new "National Nine Articles" policy aims to curb blind splits and arbitrage, establishing a clear boundary for future split listings [4]. Company Qualifications - United Power meets stringent regulatory standards in terms of business independence, technological innovation, and sustainable growth, which are critical for passing the regulatory scrutiny [5]. - The company has established a robust independent operational framework since its inception in 2016, focusing on electric drive systems and power systems for electric vehicles [5]. - United Power has developed 26 core product technologies and holds 98 invention patents, showcasing its technological leadership [5]. Parent Company Stability - Huichuan Technology, as a leading player in the industrial control sector, has demonstrated strong financial health, with a reported revenue of 37.04 billion yuan in 2024, up 21.77% year-on-year [6]. - The split is expected to enhance both companies' focus on their core businesses and improve overall market visibility and valuation [6]. Industry Synergy - United Power plays a pivotal role in the electric vehicle supply chain, linking upstream components and serving downstream automotive manufacturers, thus contributing to the integration and upgrading of China's automotive industry [7]. - The company aligns with national strategies for developing the electric vehicle sector, which is a key area for sustainable economic growth [7]. Market Implications - The case of United Power serves as a benchmark for future split listings, emphasizing the need for financial independence and strategic necessity for subsidiaries seeking to go public [9][10]. - The regulatory focus on maintaining a balance between strict oversight and promoting high-quality development is evident in the scrutiny applied to United Power's listing process [10][11]. Conclusion - The successful split of United Power not only provides a new platform for its growth but also exemplifies the role of capital markets in supporting technology-driven companies, potentially leading to more compliant and high-quality "A-share split" cases in the future [14][15].

Core Viewpoint - Suzhou Huichuan United Power System Co., Ltd. (referred to as "United Power") has submitted its IPO prospectus to the Shenzhen Stock Exchange, raising concerns about its operational independence from its parent company, Huichuan Technology, due to significant related party transactions and governance issues [1][2]. Group 1: Company Structure and Independence - United Power is the only entity under Huichuan Technology that operates electric drive systems and power systems for new energy vehicles [1]. - Huichuan Technology holds 94.51% of United Power's shares, raising questions about the independence of United Power's operations and governance [2]. - Concerns have been raised regarding the independence of United Power, particularly due to substantial related party transactions, with Li Auto being its largest customer, contributing over one-third of its revenue [1][2]. Group 2: Equity Incentives and Governance Issues - United Power granted stock options to six employees of Huichuan Technology, who are not employees of United Power, which has sparked discussions about the compliance of this practice [2][3]. - The stock options granted to these six employees amount to a total of 1.45 million shares, with a potential value exceeding 7 million yuan based on the IPO pricing [3]. - The timing of the stock option grants, which occurred before the IPO announcement, raises questions about the appropriateness of such incentives [4]. Group 3: Shared Resources and Accounting Concerns - United Power has acknowledged the use of Huichuan Technology's ERP system without charge, which has led to investor concerns regarding the implications for financial reporting and the independence of operations [6][7]. - The rationale for the "free use" of the ERP system has been questioned, particularly in light of the complexities introduced by the dual listing of both companies [6][7]. - Legal experts have indicated that while the practice of granting stock options to non-employees is not explicitly prohibited, it raises issues regarding compliance with regulations governing equity incentives [4][7].

Core Viewpoint - Suzhou Huichuan United Power System Co., Ltd. (hereinafter referred to as "United Power") has achieved rapid revenue growth through related party transactions, raising concerns about its operational independence as it prepares for an IPO on the ChiNext board [1][2]. Group 1: Business Operations and Revenue Growth - United Power primarily engages in the research, production, and sales of electric drive systems and power systems for new energy vehicles, being the sole entity under Huichuan Technology (300124.SZ) for this business [2]. - The company reported significant increases in revenue from related party sales, with major transactions amounting to 9.6 billion, 19.67 billion, and 44.49 billion yuan over the reporting period, representing 19.11%, 21.01%, and 27.50% of total revenue respectively [4]. - The largest customer, Li Auto (02015.HK), accounted for over one-third of United Power's revenue, raising concerns about the impact of ongoing price wars in the automotive sector on profitability [1][8]. Group 2: Market Position and Competition - United Power's market share for its main products is around 10%, with significant competition in the automotive supply chain, leading to increased pricing pressure from automakers [10]. - The company has established a stable partnership with Li Auto, with sales of electric drive systems and power systems continuing to grow as Li Auto's vehicle deliveries increase [8]. - In the new energy passenger vehicle market, United Power ranks first among third-party suppliers for its electric control products and motors, with market shares of approximately 10.7% and 10.5% respectively [9]. Group 3: Related Party Transactions and Regulatory Scrutiny - The company has faced regulatory inquiries regarding its independence and the nature of its related party transactions, particularly with Changzhou Huixiang and Suzhou Huichuan, which are affiliated entities [3][4]. - United Power's sales to Changzhou Huixiang, a joint venture with Li Auto, have significantly increased due to the successful sales of Li Auto's vehicles, leading to a strategic partnership [5][8]. - The pricing of related party transactions is claimed to be fair and based on market references, although the regulatory body has requested further analysis of these transactions [5][6].