Group 1 - The China Securities Regulatory Commission (CSRC) issued supplementary material requirements for overseas listing applications, specifically requesting additional information from Zhejing Electronics [1][2] - Zhejing Electronics is seeking to list on the Hong Kong Stock Exchange and has submitted its application [1] - The CSRC has raised concerns regarding the compliance of the company's implemented equity incentive plan and the reasonableness of the share price for new shareholders in the past 12 months [2] Group 2 - The CSRC has requested Zhejing Electronics to clarify whether its business scope involves areas listed in the "Negative List for Foreign Investment Access (2024 Edition)" [2] - The company must provide a detailed explanation of the differences in share prices for new shareholders and whether there are any issues related to benefit transfer [2] - Zhejing Electronics is recognized as a leader in innovative smart cockpit visual and interactive solutions, offering products such as the CyberLens and CyberVision HUD solutions [2]

Core Viewpoint - Jiangsu Zejing Automotive Electronics Co., Ltd. (referred to as "Zejing Electronics") has achieved significant growth in the automotive electronics sector, attracting investments from notable institutions despite not yet being profitable, with a recent valuation exceeding 2.5 billion RMB [1][2]. Company Overview - Zejing Electronics was founded in 2015 and has become the second-largest supplier of vehicle HUD solutions in China, with a market share of approximately 16.2% [15][16]. - The company specializes in innovative smart cockpit visual and interaction solutions, primarily focusing on HUD technologies [15]. Financial Performance - Over the past three years, Zejing Electronics has reported cumulative losses of approximately 577 million RMB, with total liabilities increasing significantly [2][14][17]. - The company's revenue for 2022, 2023, and 2024 was 214 million RMB, 549 million RMB, and 578 million RMB, respectively, while losses for the same periods were 256 million RMB, 175 million RMB, and 138 million RMB [16][17]. - The asset-liability ratio reached 215.6% in 2024, indicating a high level of debt relative to assets [17]. Investment and Growth - Zejing Electronics has undergone multiple financing rounds since its inception, with the latest E-round valuation reaching 2.585 billion RMB, marking a 42-fold increase over seven years [11][12]. - The company plans to use funds from its upcoming IPO for production line expansion, automation upgrades, and enhancing research and development capabilities [19]. Leadership Background - The co-founders, Zhang Tao and Zhang Bo, bring over 20 years of experience in the automotive and electronics sectors, respectively, which has contributed to the company's strategic positioning [5][8].

Core Viewpoint - The company Zejing Automotive Electronics is seeking to capitalize on the growing demand for intelligent cockpit visual interaction solutions, particularly in the HUD (Head-Up Display) market, which is expanding in both high-end and mid-to-low-end automotive segments [1][5]. Group 1: Company Overview - Zejing Automotive Electronics has submitted its listing application to the Hong Kong Stock Exchange, aiming to become a leading player in the HUD market following Huayang Group [1]. - The company specializes in innovative visual and interaction solutions for smart cockpits, primarily offering W-HUD and AR-HUD solutions [1]. - As of 2024, Zejing has over 20 main engine factory clients and has secured 90 model designations, ranking second in the Chinese HUD market with a market share of 16.2% [2][5]. Group 2: Financial Performance - Revenue has shown significant growth, increasing from 214 million RMB in 2022 to 549 million RMB in 2023, and projected to reach 578 million RMB in 2024, with a compound annual growth rate (CAGR) of 64.3% from 2022 to 2024 [2][3]. - Despite revenue growth, the company has incurred net losses of 256 million RMB, 175 million RMB, and 138 million RMB from 2022 to 2024, totaling approximately 569 million RMB in losses over three years [3][4]. - The company’s cash flow situation is tight, with operating cash outflows of 139.9 million RMB and 124.5 million RMB in 2022 and 2023, respectively, but a slight cash inflow of 29 million RMB in 2024 [3]. Group 3: Market Trends - The Chinese HUD market is experiencing rapid growth, with the market size expected to increase from 1 million units in 2020 to 3.9 million units by 2024, representing a CAGR of 41.2% [5][6]. - W-HUD solutions are anticipated to penetrate mid-to-low-end models, with sales projected to rise from 3.2 million units in 2024 to 7 million units by 2029, at a CAGR of 19.0% [6]. - AR-HUD solutions are expected to lead industry growth, with sales forecasted to grow from 600,000 units in 2024 to 5.7 million units by 2029, achieving a CAGR of 45.9% [6]. Group 4: Competitive Landscape - The competition in the HUD market is intensifying, with local manufacturers increasing their market share from approximately 16.7% in 2020 to 79.2% in 2024, expected to expand further by 2029 [9]. - Zejing ranks second in the market but faces challenges due to its reliance on a narrow product line and high customer concentration, with the top five clients accounting for over 80% of total revenue [9][11]. - The company has invested heavily in R&D, with expenses reaching 39% of revenue in 2022, although this has since decreased to around 10% [10].

Core Viewpoint - Jiangsu Zejing Automotive Electronics Co., Ltd. (referred to as "Zejing Electronics") has submitted an IPO application to the Hong Kong Stock Exchange despite consecutive net losses from 2022 to 2024 and increasing total liabilities, along with high customer concentration issues [1][3]. Financial Performance - Zejing Electronics reported revenues of approximately RMB 214.09 million, RMB 549.36 million, and RMB 577.62 million for the years 2022, 2023, and 2024, respectively [2]. - The company incurred net losses of approximately RMB -256 million, RMB -175 million, and RMB -138 million for the same years, totaling a cumulative net loss of about RMB -577 million [2]. - The gross profit margins improved from 22.6% in 2022 to 25.6% in 2024, despite the ongoing net losses [2]. Debt Situation - The total liabilities of Zejing Electronics increased from approximately RMB 820 million in 2022 to RMB 1.674 billion in 2024 [3]. - The debt-to-asset ratios were reported at 246%, 213.8%, and 215.6% for the years 2022, 2023, and 2024, indicating a concerning financial leverage situation [3]. Research and Development - The total R&D expenditure over the reporting period was RMB 200 million, with R&D expenses as a percentage of total revenue decreasing from 39% in 2022 to 9.9% in 2023 and 10.7% in 2024 [3]. - As of December 31, 2024, the R&D department comprised 128 employees, accounting for 35.1% of the total workforce [3]. Customer Concentration - The revenue from the top five customers accounted for 93%, 93.8%, and 80.9% of total revenue from 2022 to 2024, indicating high customer concentration [4]. - The revenue from the largest customer, referred to as Customer F, represented 47.6%, 26.1%, and 23.2% of total revenue during the same period, showing a significant decline [4]. Market Outlook - The global market for W-HUD is expected to grow from 10.7 million units in 2024 to 20.9 million units by 2029, while AR-HUD sales are projected to increase from 2 million units to 7.6 million units during the same period [5]. - Zejing Electronics aims to leverage its technological advantages and collaborate with domestic and international automotive manufacturers to capture overseas market opportunities [5].

Core Viewpoint - Zejing Electronics, established in 2015, focuses on providing HUD solutions, including CyberLens and CyberVision, with sales typically experiencing seasonal fluctuations, particularly lower sales in the first quarter [2] Financial Performance - Revenue for the periods 2022 to 2024 was reported as 214.1 million, 549.4 million, and 577.6 million RMB respectively, while net losses were 256 million, 175 million, and 138 million RMB, totaling cumulative losses of 569 million RMB over three years [2][3] - Gross profit margins improved from 22.6% in 2022 to 27.3% in 2024, while sales costs decreased from 77.4% to 72.7% over the same period [3] Debt and Financial Health - The company reported net liabilities of 487 million, 644 million, and 897 million RMB for the respective years, with debt-to-asset ratios of 246%, 213.8%, and 215.6% [4] - Trade receivables and notes were recorded at 124 million, 286 million, and 296 million RMB, with turnover days increasing from 102.2 to 140.5 days over the reporting period [4][7] Customer Concentration Risk - Revenue from the top five customers accounted for 93.0%, 93.8%, and 80.9% of total revenue during the reporting periods, with the largest customer contributing 47.6%, 26.1%, and 23.2% respectively [7] - The company highlighted that fluctuations in trade receivables from major customers could significantly impact cash flow, and delays in payments may necessitate impairment provisions [7]