Core Viewpoint - Shenzhen Huafu Technology Co., Ltd. has submitted its IPO application to the Hong Kong Stock Exchange, with plans to use the raised funds for R&D, AI service enhancement, strategic investments, and general corporate purposes [1][3]. Group 1: Company Background and Business Operations - Huafu Technology is a pioneer in full-stack AI technology solutions, focusing on integrating advanced AI algorithms, computing power management, and hardware technology for various industry applications [4]. - The company has experienced a decline in revenue, with total income dropping from 4.22 billion RMB in 2022 to 1.69 billion RMB in 2025, reflecting a downward trend [9]. - The net profit has shown significant volatility, with figures of 553.76 million RMB in 2022 and 250.87 million RMB in 2025 [9]. Group 2: Financial Health and Risks - As of June 30, 2025, Huafu Technology's accounts receivable, prepayments, and other receivables accounted for 63.76% of current assets, indicating high credit risk [11]. - The company's accounts receivable ballooned from 210 million RMB to 790 million RMB between 2022 and 2024, with the proportion of accounts receivable to revenue soaring from 49.71% to 204.68% [10]. - The bad debt provision of 18.33 million RMB is significantly lower than the overdue accounts receivable, raising concerns about the adequacy of provisions [13]. Group 3: Shareholding and Control Issues - The actual controller, Zhang Huan, increased his voting power from 29.94% to 40.96% by signing voting rights entrustment agreements with several shareholders just before the IPO application [5][6]. - There are concerns regarding the timing of the voting rights agreements and whether there are undisclosed arrangements that could affect corporate governance [5][8]. Group 4: Competitive Landscape and Market Position - Huafu Technology's core business, AI vertical industry applications, has seen a significant revenue decline, dropping from 281 million RMB in 2022 to 82 million RMB in 2024 [15]. - The company has shifted focus to AI computing services, which have shown rapid growth, but the overall competitive pressure in the AI sector is expected to increase [16][17]. - The reliance on a few major clients for revenue raises questions about the stability and sustainability of its business model [14].