Hong Kong IPO disclosure precedents · 324 companies, 337 items
sales through distributors: share of revenue, number and movement of distributors, relationship (sell-in / consignment), measures against channel stuffing and inventory build-up
We sold our products through distributors during the Track Record Period, which is in line with the industry norm, according to Frost & Sullivan.
Business · p. 167
We generally do not set any sales target for our distributors.
Business · p. 168
During the Track Record Period and up to the Latest Practicable Date, we did not experienced any material product return or exchange from our distributors.
During the Track Record Period, revenue generated through distributor-based sales accounted only for approximately 2.6%, 4.5%, 4.6% and 4.3% of our total revenue in 2023, 2024 and 2025 and the three months ended March 31, 2026, respectively.
Business · p. 137
During the Track Record Period, we discontinued business relationships with certain distributors primarily due to (i) our efforts to optimize the distributor network by phasing out underperforming distributors, (ii) non-compliance with contractual obligations, including pricing and regional restrictions, and (iii) changes in distributors’ business focus or operational capabilities.
Business · p. 139
(i) Payment discipline. Distributors are generally required to make payment prior to shipment, reducing incentives for excessive or speculative ordering;
In 2023, 2024 and 2025, we had a network of 49, 47 and 48 distributors, respectively, and generated 2.4%, 1.9% and 1.5% of our revenue from sales to distributors, respectively.
Business · p. 153
All orders are linked to a unique parking facility ID within our BI system, which allows us to monitor the inventory level of our distributors and minimizes the risk of channel stuffing.
Business · p. 153
As such, our Directors are of the view that the current measures for managing our distributors are sufficient and effective.
In 2023, 2024 and 2025, our distribution network remained stable, which consisted of nine, six and eight distributors, respectively. During the Track Record Period, our revenue from distributors amounted to RMB47.5 million, RMB52.6 million and RMB65.5 million in 2023, 2024 and 2025, respectively.
Business · p. 125
This strict policy prevents distributors from returning unsold inventory of our products.
Business · p. 125
To the best of our knowledge, during the Track Record Period and up to the Latest Practicable Date, none of our distributors were owned or controlled by our former or current employees, and all of our distributors were Independent Third Parties.
In 2023, 2024 and 2025, our revenue generated from sales to distributors amounted to RMB2,388.8 million, RMB2,999.0 million and RMB3,609.9 million, respectively, accounting for 91.3%, 89.6% and 92.6%, respectively, of our revenue for the corresponding years.
Financial Information · p. 177
As of December 31, 2025, we had 169 distributors.
Business · p. 154
The increase in 2025 was primarily due to the acquisition and integration of two companies primarily engaged in distribution, whose distributor networks were subsequently consolidated into our own as part of our efforts to broaden our distribution reach.
In 2023, 2024 and 2025, we generated revenue of RMB24.4 million, RMB21.2 million and RMB58.2 million from sales to distributors, respectively, accounting for 2.9%, 2.2% and 4.1% of our revenue in the same years.
Business · p. 140
To minimize the risk of cannibalisation, we generally take the following measures in relation to our distributors: (i) when selecting our distributors, we take into consideration their respective geographic coverage to avoid potential competition among the distributors within a region; (ii) our distribution agreements specify the designated distribution regions; and (iii) we regularly communicate with our distributors to monitor various aspects of their sales activities and keep track of any potential cannibalisation or competition among our distributors.
Business · p. 141
Our relationship with distributors is a standard buyer-seller relationship.
As a result of our strategic management of our distribution channels, our revenue attributable to distributors grew from RMB194.9 million in 2023 to RMB253.3 million in 2024 and further to RMB392.3 million in 2025, accounting for 3.6%, 5.7% and 7.5%, respectively, of our total revenue.
Business · p. 132
In our form agreement with distributors, distributors are required to provide rolling three-month demand forecasts and monthly sales reports.
Business · p. 134
During the Track Record Period and up to the Latest Practicable Date, we were not aware of any significant accumulation of excess inventory in our distribution network, any cannibalization among distributors, sub-distributors, system integrators, installers and EPCs, or any predatory pricing practices.
During the Track Record Period, we had only one Contracted Distributor.
Business · p. 140
During the Track Record Period, revenue generated from Contracted Distributor accounted for 4.9%, 3.8% and 3.8% of our total revenue for the years ended December 31, 2023, 2024 and 2025, respectively, representing a stable contribution to our overall sales.
Business · p. 140
Revenue generated from sales to traders accounted for 7.6%, 5.1% and 5.8% of our total revenue for the years ended December 31, 2023, 2024 and 2025, respectively.
In 2023, 2024 and 2025, our revenue from our distributors for our smart power distribution and utilization equipment and solutions amounted to RMB1,002.6 million, RMB1,205.2 million and RMB920.0 million, respectively, representing 11.9%, 10.8% and 8.2% of our revenue from our smart power distribution and utilization business for the corresponding years.
Business · p. 140
Number of distributors at the end of the year | 50 | 59 | 84
Business · p. 140
To the best of our knowledge, during the Track Record Period, all of our distributors were Independent Third Parties.
In 2023, 2024 and 2025, we had 12, 10 and 10 distributors, respectively.
Business · p. 142
During the Track Record Period, six distributors in aggregate suspended their business relationships with us, primarily because they placed orders solely to satisfy the procurement needs of specific end users.
Business · p. 142
We typically do not set minimum purchase requirements for our distributors.
We have adopted a distributorship model for a portion of the sales and distribution of our products to end customers, mainly comprising Tier 1 suppliers and automotive aftermarket enterprises.
Business · p. 166
We recognize sales revenues from distributors when the control over our products is transferred to such distributors.
Business · p. 166
To mitigate our channel stuffing risks, we generally check the inventory status with distributors to monitor their inventory level and to ensure that they maintain an optimal inventory level that is commensurate with market demand.
During the Track Record Period, our revenue from distributorship amounted to RMB881.7 million, RMB659.1 million and RMB530.8 million in 2023, 2024 and 2025, respectively.
Business · p. 106
During the Track Record Period, the sales discounts we offered to distributors amounted to RMB117.1 million, RMB88.3 million and RMB44.9 million in 2023, 2024 and 2025, respectively, accounting for 13.3%, 13.4% and 8.5% of the revenue from sales to distributors during the respective years.
Business · p. 107
Offering sales discounts and the engagement of sub-distributors could potentially increase the risk of channel stuffing, as distributors or their sub-distributors might be incentivized to purchase more products than they can sell in order to benefit from discounts or maintain relationships.
We have adopted a distributorship model for a portion of the sales and distribution of our products to end customers, under which we remain principally responsible for maintaining relationship with the end customers, formulating the product specifications and providing technical supporting services, while the distributors are responsible for delivery to end customers and settlement with us.
Business · p. 143
The number of exiting distributors increased from five in 2024 to 20 in 2025, primarily due to our proactive strategic adjustment regarding our new AI Scaler, which is in its late lifecycle stage.
Business · p. 144
To mitigate the risk of channel stuffing, we have implemented a dynamic inventory management mechanism that is driven by end customer demand.
We derive the majority of our revenue from distributors.
Business · p. 163
As of December 31, 2023, 2024 and 2025, we collaborated with 2,087, 2,224 and 2,564 distribution partners, respectively.
Business · p. 163
In 2023, 2024 and 2025, we categorized our business relationships as inactive with 809, 1,185 and 1,235 distribution partners, respectively, primarily due to our increased leverage in business negotiations attributable to the continued expansion of our business operations.
We sell our self-branded products through both direct sales and distribution channels to amplify our reach and achieve comprehensive market coverage.
Business · p. 144
We also participate in offline marketing initiatives such as the “Asia Pet Business Academy (亞 寵商學院)” and “Snail Store Roadshow Salon (蝸牛小店巡迴沙龍)” to strengthen and deepen our relationship with distributors and achieve win-win business growth, consolidating and expanding our core channel system.
In 2023, 2024 and 2025, our revenue generated from distribution was RMB12.8 million, RMB21.9 million and RMB9.8 million, respectively, accounting for 5.8%, 9.3% and 3.0% of our total revenue for the same years, respectively.
Summary · p. 5
Our distributors typically purchase products from us and then directly resell them without further processing or upgrading.
Business · p. 159
Based on the above, our Directors believe that, even though we do not monitor our distributors' inventory levels or the amount of unsold inventory at the end of each year/period during the Track Record Period, the risk of channel stuffing in our distribution channel is effectively mitigated.
Our distributors typically purchase products from us on a buy-sell basis and resell them to downstream customers.
Business · p. 119
As of the end of each year during the Track Record Period, the number of our active distributors decreased from 305 in 2023 to 282 in 2024, and further decreased to 183 in 2025, primarily due to certain distributors not having generated any actual transactions during the relevant years and therefore not being counted as active distributors.
Business · p. 119
We have adopted the following measures and policies to better manage the network of our distributors: (i) we require our distributors to make full payment when making the purchase orders; (ii) we generally do not require a minimum purchase amount for our distributors; (iii) our distributorship agreements generally do not stipulate return policies; and (iv) we require our distributors to comply with all relevant anti-corruption and anti-bribery laws and regulations and any breach of such laws and regulations would allow us to unilaterally terminate the underlying distribution agreements pursuant to the early termination right.
We do not impose sales targets, geographic restrictions or customer allocation requirements on trading partners, and our interactions with them are limited to individual transactions.
Business · p. 136
Trading partners do not have incentives to accumulate inventory beyond their operational needs, as they bear the full commercial risks associated with downstream sales.
Business · p. 137
During the Track Record Period, we did not observe any material inventory accumulation or abnormal procurement behavior among our trading partners.
As of December 31, 2025, we had entered into distribution agreements with 81 offline distributors and ten online distributors and developed and implemented comprehensive policies to manage our distributors.
Summary · p. 11
We had entered into distribution agreements with 49 and 81 offline distributors as of December 31, 2024 and 2025, respectively.
Business · p. 197
As of December 31, 2025, our distributors had returned 23,777 boxes of azvudine, representing approximately 16.3% of the number of azvudine contributing to our revenue in 2025, as we terminated the business relationship with one distributor.
As of December 31, 2023, 2024 and 2025, the number of our store partners was 7, 13 and 18, respectively, and we had 7, 18 and 22 partner-operated stores, respectively.
Business · p. 141
In 2023, 2024 and 2025, revenue generated from partner-operated stores amounted to RMB5.1 million, RMB19.4 million and RMB15.4 million, respectively.
Business · p. 141
We retain centralized control over key operational matters, including product procurement, pricing policies, cashier and point‑of‑sale systems, and unified operational standards.