Core Viewpoint - Shengruan Technology, a company spun off from Sinopec, is attempting to establish itself as an independent player in the smart oil and gas field, but faces significant challenges including high dependency on a major client, Sinopec, and declining profit margins [2][4][11]. Company Overview - Shengruan Technology was founded in January 2002 and was initially a subsidiary of Sinopec. It became fully employee-owned in 2004 [2][4]. - The founder, Xu Yafei, has a strong academic background in mathematics and has led the company for over two decades [3]. Financial Performance - The company reported revenues of 5.25 billion RMB in 2024, with a growth rate of 4.7% compared to 2023 [11]. - Revenue figures for the previous years were 3.91 billion RMB in 2022 and 5.02 billion RMB in 2023, showing a growth of 28.4% in 2023 [11]. - The gross profit margin has been declining, with figures of 41.4%, 38.1%, and 37.1% for 2022, 2023, and 2024 respectively, and a further drop to 24.6% in the first four months of 2025 [21][22]. Client Dependency - The company has a high dependency on Sinopec, with sales to Sinopec accounting for 64.9%, 51.4%, and 51.6% of total revenue from 2022 to 2024 [15]. - The top five clients contributed to 84.3%, 64.3%, and 70.3% of total revenue during the same period, indicating a significant concentration risk [15]. Operational Challenges - Shengruan Technology has faced issues with accounts receivable, with turnover days increasing dramatically to 1662 days in the first four months of 2025, highlighting potential cash flow issues [25]. - The company has experienced multiple accounting errors since 2021, leading to significant restatements of financial results and regulatory scrutiny [7][10]. Business Segments - The company operates primarily in three segments: smart energy solutions, smart manufacturing solutions, and smart city solutions, with smart energy contributing the largest share of revenue [11][13]. - The revenue breakdown for smart energy solutions was approximately 75.2%, 60.9%, and 69.4% for 2022, 2023, and 2024 respectively [12]. Future Prospects - Shengruan Technology plans to enhance its customer base and reduce reliance on major clients, having increased its customer count from 268 to 403 over three years [17]. - The company aims to invest in research and development, particularly in its oil and gas industry model, to improve its competitive position [27].

Core Viewpoint - Shandong Shengruan Technology Co., Ltd. has submitted a listing application to the Hong Kong Stock Exchange, aiming for a main board listing, with Guotai Junan Securities (Hong Kong) as the sole sponsor. This marks the company's second attempt to list in 2023 after previously withdrawing its application for the Beijing Stock Exchange in August 2024 [2] Company Background - Shengruan Technology was established in 1993, originally as part of the Sinopec Group. It became an independent entity in 2002 and has since developed into a digital solution provider for various industries, including oil and gas, offering intelligent manufacturing solutions across 12 sectors and supporting 88 industrial application scenarios [2][3] Business Model - The company operates three main business models: 1. Smart energy solutions for large and medium-sized energy enterprises in the oil and gas sector 2. Intelligent manufacturing solutions for small and medium-sized manufacturers in vertical industries such as petrochemicals and automotive parts 3. Smart city solutions for public management institutions [3] Market Position - Shengruan Technology is recognized as one of the top five independent solution providers in China's smart oil and gas solutions market, ranking second in the independent smart energy solutions sector. The company has completed approximately 5,000 smart energy projects and has expanded its services to other major energy companies in China and parts of the Middle East [5][8] Financial Performance - The company's revenue has shown consistent growth from 391 million RMB in 2022 to 525 million RMB in 2024, with profits increasing from 37.6 million RMB to 59.3 million RMB during the same period. However, the gross profit margin has been declining, from 41.4% in 2022 to 24.6% in the first four months of 2025 [8][10] Revenue Breakdown - The smart energy solutions segment is the primary revenue driver, contributing 75.2% of total revenue in 2022, which decreased to 65.4% in the first four months of 2025. The company also faces high customer concentration, with the top five customers accounting for over 70% of total revenue in recent years [10][12] Future Plans and Use of Proceeds - Shengruan Technology plans to use the funds raised from the IPO to enhance existing solutions, advance R&D, expand its sales network, and explore strategic investments and acquisitions in oil and gas fields. The focus is on strengthening technical capabilities and expanding market reach, aligning with the digital transformation trends in the energy sector [13]