Core Viewpoint - Defeng Technology has submitted its listing application to the Hong Kong Stock Exchange, but its financial performance raises concerns about its profitability and operational sustainability [1][2][3]. Group 1: Company Overview - Defeng Technology specializes in AI-enabled Industrial Internet of Things (AIoT) solutions, focusing on enhancing energy efficiency and operational excellence for Chinese state-owned enterprises [3]. - The company has completed over 600 projects and serves around 200 clients, including major players in the energy and manufacturing sectors [3]. - As of 2024, Defeng Technology is the fifth largest independent AIoT service provider in China, with a market share of approximately 1.8% [3]. Group 2: Financial Performance - Defeng Technology's revenue for the reporting periods was 313 million, 442 million, 525 million, and 159 million yuan, with a compound annual growth rate of about 29.7% [6]. - The adjusted net profits for the same periods were -42.36 million, -8.72 million, 5.52 million, and -28.58 million yuan, indicating a generally loss-making status [6]. - Employee costs have remained high, accounting for nearly 40% of total revenue despite a 57.7% reduction in workforce [2][6]. Group 3: Shareholder Activity - Prior to the listing application, major shareholder招商盈趣 sold its entire stake at the original investment price, raising questions about the fairness of the transaction [2][4]. - The founder, Wang Qingjie, controls 44.38% of the company, raising potential concerns about governance and shareholder interests [5]. Group 4: Cash Flow and Debt Concerns - The company has faced significant cash flow issues, with net cash outflows totaling approximately 467 million yuan over the reporting periods [12]. - High accounts receivable turnover days and increasing bad debt risks indicate potential liquidity challenges [12][13]. - As of mid-2025, the company had only 43.99 million yuan in cash and cash equivalents, a decrease of 51.31% from the beginning of the year [13].