Electric Giant IPO: Related Transactions Continue, Data "Fight" Revealed

This article is authorized by《China Business》

Author: Fang Sheng

Editor: Zhang Jiamei

In December 2023, Hebei Rixin Electrical Co., Ltd. (hereinafter referred to as "Rixin Electrical") filed an application for IPO with the Northbound Market and received approval. However, in the following year or so, Rixin Electrical experienced three instances of suspension and has since resumed its audit process.

Rixin Electrical is primarily engaged in the development, production, and sales of electric network safety control equipment and power quality optimization governance devices. In recent years, more than six-tenths of its revenue have come from domestic electricity networks and Southern Power Grid. Research shows that Rixin Electrical's performance fluctuations, related transactions, and inconsistencies in disclosure are all worthy of attention.

Multiple financial data appear to be fluctuating

Rixin Electrical's IPO prospectus only disclosed the draft report for this period, covering January 2020 to June 2023. During this period, the company's total annual revenue remained around RMB 1.8 billion, with net profits declining from RMB 5,154.50 million in the first half of 2020 to RMB 1,744.58 million in the first half of 2023.

The new three-board annual report shows that Rixin Electrical's revenue for 2023-2024 was RMB 24,474.70 million and RMB 23,708.80 million, respectively, with net profits attributable to shareholders of the listed company being RMB 4,503.01 million and RMB 4,808.87 million, respectively.

Evidently, Rixin Electrical's sales scale has expanded in recent years, with net profits also showing a "rebound" trend, although still not reaching the level of 2020. The fluctuations in profitability or the decline in gross profit margin may be due to various factors.

In terms of sales and gross profit rates, Rixin Electrical's three-year average for 2022-2024 was 42.78%, which is lower than that of comparable companies such as Kaifu Electronics, Hikei Electrical, and Dayun Electrical.

(Screenshot from Zhonghua Fund)

According to the inquiry responses, Rixin Electrical's sales and gross profit rates are closer to those of two other new three-board listed companies than its own. Rixin Electrical's revenue is slightly higher, but its gross profit rate is lower.

(Screenshot from inquiry responses)

According to Rixin Electrical's audit report, in the first quarter of 2025, the company's revenue was RMB 3,396.67 million, with net profits of RMB 694.50 million, representing year-on-year growth of 21.35% and 108.91%, respectively. However, the report did not provide detailed analysis of gross profit rates, while the doubling of net profits may be a matter of concern.

Related transactions continue to unfold

After filing for IPO, Rixin Electrical's related suppliers attracted widespread attention.

Between 2020 and 2022, Taihe Electronics Co., Ltd. (hereinafter referred to as "Taihe") was a major supplier of Rixin Electrical, with the two companies having a close relationship.

Rixin Electrical's revenue from Taihe reached its peak in 2022 and then suddenly declined to RMB 56.16 million in 2023, and RMB 0 in the first half of 2024.

After stopping its related transactions with Taihe, Rixin Electrical began to establish a close relationship with another supplier, Hebei Dingxiu Electronics Co., Ltd. (hereinafter referred to as "Dingxiu"), which is also controlled by Shijiazhuang Lixun Investment Co., Ltd.

According to the company's annual report, in 2024, Dingxiu's revenue was RMB 3,193.83 million, with Rixin Electrical's procurement accounting for approximately 32.52% of its revenue.

Notably, Dingxiu's net profits were only RMB 9,911.87 yuan, and the company did not realize any profits from its internal transactions.

This article was first published on WeChat public account: Minshang Finance. The content is the author's personal opinion, and does not represent the stance of Hexun.com. Investors should operate based on their own judgment and assume responsibility for any risks.