Core Viewpoint - Defeng New Journey Technology Co., Ltd. is planning an IPO on the Hong Kong Stock Exchange, despite previous application setbacks, indicating a strong commitment to market entry and growth potential in the AIoT sector [1][2] Company Overview - Founded in March 2015 by Wang Qingjie and two other shareholders, Defeng New Journey is based in Beijing and focuses on AI-enabled Industrial Internet of Things (AIoT) technology [3] - The company aims to enhance energy efficiency, operational excellence, safety, and sustainability in China's energy, manufacturing, and mixed industries through innovative technology [3] Ownership Structure - Wang Qingjie holds 27.7% of the shares, with Dongzhong Chang holding 11.1% and Jin Longjie holding 5.6%, collectively controlling 44.4% of the company [4] Market Position - According to Frost & Sullivan, Defeng New Journey is the fifth largest independent AIoT service provider in China with a market share of approximately 1.8% and the third largest in the energy sector with a market share of about 9.9% for the fiscal year 2024 [4] Financial Performance - Revenue for the years 2022 to 2025 (first three quarters) was reported as 313 million, 442 million, 525 million, and 275 million CNY, showing steady growth with a 27% increase in the first three quarters of 2025 compared to the previous year [5] - The revenue breakdown for the first three quarters of 2025 shows 43% from system integrators, 23.7% from government and public services, 9.7% from industrial clients, and 9.4% from the energy sector [6] Losses and Cash Flow - The company has reported losses of 165 million, 297 million, 228 million, and 114 million CNY over the same period, indicating a narrowing of losses in 2024 and the first three quarters of 2025 [6] - Operating cash flow has also been negative but has shown improvement, with negative cash flows of approximately 193 million, 64 million, and 58 million CNY for the respective years [7] Profitability Metrics - Gross margins have remained stable, reported at 23.8%, 24.9%, and 25.3% for the years 2023, 2024, and the first three quarters of 2025 [8] Client Concentration Risk - The company faces a high client concentration risk, with the top five clients contributing 53%, 44.2%, and 49.4% of total revenue in 2023, 2024, and the first nine months of 2025, respectively [8] IPO Fund Utilization - The funds raised from the IPO are intended for enhancing AI capabilities, developing industrial robot solutions, expanding overseas operations in Southeast Asia and the Middle East, and general operational expenses [8]

Group 1 - The core viewpoint of the news is that Beijing Defeng New Journey Technology Co., Ltd. (Defeng Technology) has had its IPO application returned by the Hong Kong Stock Exchange (HKEX), marking the first "tied" case in two and a half years, which requires the company to wait at least 8 weeks before reapplying [1] - The "tied" mechanism is a criticism notification system implemented by HKEX to enhance the quality of listed companies, with a total of 25 applications returned since its inception, involving major underwriters like Goldman Sachs and Morgan Stanley [1] - Defeng Technology, established in March 2015, focuses on AI-enabled Industrial Internet of Things (AIoT) production optimization software solutions, having completed over 600 projects primarily for state-owned enterprises in China [2] Group 2 - The company had previously attempted to list on the Shanghai Stock Exchange's Sci-Tech Innovation Board in 2022 but terminated those plans in October 2024, subsequently applying for a listing on HKEX in November 2023 [2] - Defeng Technology's IPO involves a special agreement granting investors rights such as redemption rights and anti-dilution rights, with a revised IPO target date extended to December 31, 2026 [2] - The company has incurred redemption liabilities of RMB 1.224 billion, RMB 1.455 billion, and RMB 1.462 billion for the years 2023, 2024, and the first half of 2025, respectively, due to the granted redemption rights [3]

Core Viewpoint - Defeng Technology has submitted an IPO application to the Hong Kong Stock Exchange after terminating its A-share listing guidance in October 2024, aiming to raise funds for AI capabilities, industrial robotics solutions, overseas expansion, strategic investments, and general operational funding [1][12]. Group 1: Financial Performance - Defeng Technology has reported cumulative losses exceeding 730 million yuan over the past three and a half years, with no profitability achieved during the reporting period [6][7]. - The company’s revenue has consistently been in the billions, but it has faced significant losses due to the fair value changes of redeemable liabilities, which have been recorded as losses under accounting rules [7]. - As of the first half of 2025, the company’s accounts receivable and notes receivable amounted to approximately 214 million yuan, with an adjusted average trade receivables turnover days reaching 653 days [3][8]. Group 2: Market Position and Client Base - Defeng Technology holds a market share of only about 1.8%, making it the fifth-largest independent AIoT service provider in China according to a Frost & Sullivan report [4]. - The majority of the company’s revenue comes from state-owned enterprises and government clients, with this segment accounting for over 90% of revenue in the first half of 2024 [4][8]. - The company’s primary business segments include AIoT solutions, AIoT services, and AIoT product sales, with AIoT solutions consistently contributing over 80% of total revenue during the reporting period [4]. Group 3: Research and Development - The term "independent" appears over 20 times in the prospectus, emphasizing that Defeng Technology's core AIoT technologies are self-developed [5]. - The R&D outsourcing costs for the reporting period were 3.08 million yuan, 100,000 yuan, 17.1 million yuan, and 20.69 million yuan, with R&D expenses in the first half of 2025 amounting to 38.1 million yuan, indicating that over 50% of R&D costs were outsourced [5]. Group 4: Shareholder Dynamics - Just days before the IPO application submission, a major shareholder,招商盈趣, sold its shares at cost, indicating a lack of profit from its investment over approximately four and a half years [11]. - The company has undergone several rounds of financing, raising a total of 656 million yuan, with significant valuation increases noted between funding rounds [10]. Group 5: Strategic Intentions - The shift from A-shares to H-shares is intended to access international markets for viable funding sources to support business development and attract more investors [12].