Hong Kong IPO disclosure precedents · 10 companies, 10 items
Disclosures of proactive stockpiling or advance purchasing amid price rises or supply shortages, high-cost inventory recognised in cost of sales, inventory write-downs to net realisable value, and working capital or cash reallocation effects.
In 2023, 2024 and 2025, raw material costs represented approximately 60.4%, 60.5% and 61.4% of our cost of sales, respectively. For the four months ended April 30, 2025 and 2026, raw material costs represented approximately 60.4% and 62.9% of our cost of sales, respectively.
Financial Information · p. 204
While we seek to mitigate these risks through multi-sourcing, longer term supply arrangements, inventory planning, significant volatility could negatively impact our production efficiency, profitability and overall financial performance.
Financial Information · p. 204
Our profitability is also affected by our ability to price our products, which is in turn affected by market competition, raw materials price, pricing of similar products and solutions offered by our peers and our bargaining power.
During the Track Record Period and up to the Latest Practicable Date, while the prices of storage devices increased due to the increase in market prices of storage chips, we did not experience any other major price fluctuations, nor did we experience any overstock, delays or shortages in the supply of performance-critical components.
Business · p. 190
Our term deposits under current portion decreased from RMB82.8 million as of December 31, 2025 to RMB32.3 million as of June 30, 2026, primarily reflecting the reallocation of our cash resources toward the strategic procurement of hardware components during the period of relatively favorable pricing, in anticipation of further increase in hardware component costs and to support customer delivery schedules.
In particular, the cost of high-priced inventory recognized in our cost of sales for the year ended December 31, 2023 amounted to approximately RMB198.5 million, representing approximately 50.5% of our raw material costs for the same year.
Business · p. 156
For the year ended December 31, 2024, our gross profit from sales of chips increased to RMB80.8 million, with a gross profit margin of 16.6%, while the cost of such high-priced inventory recognized in our cost of sales further decreased to nil, and our average wafer procurement cost decreased by approximately 27.5% as compared to 2023.
Business · p. 186
In particular, our domestic wafer purchase amount accounted for 5.2% and 42.6%, respectively, of our total wafer purchase amount for the years ended December 31, 2023 and 2024.
In 2021, we purchased a batch of materials at relatively higher prices, which resulted in a higher unit cost for products subsequently produced until the high-cost materials were fully consumed.
Financial Information · p. 198
Given this profile, we may strategically increase wafer and die inventories when wafer input prices are within a favorable band, subject to demand-coverage thresholds and NRV safeguards.
The price of 8-inch wafers in China rose significantly from approximately RMB2.9 thousand per wafer in 2021 to approximately RMB3.7 thousand per wafer in 2022, primarily due to the global chip shortage caused by the COVID-19 pandemic and the rising demand for semiconductors from sectors such as AI, high-performance computing, 5G, NEVs and industrial applications.
Business · p. 172
As a result, we consumed wafers purchased at relatively higher prices in 2023, which contributed to higher material costs and gross loss for our intelligent tire sensing SoCs.
Business · p. 172
Specifically, we incurred heightened cost of sale in 2023 as we consumed the relevant inventories that we had procured in advance in light of the cyclical impact of the semiconductor sector supply chain, which had lowered our profit margin in 2023.
In 2023, 2024 and 2025, the cost of raw materials represented 18.4%, 25.0%, and 27.1%, respectively, of our total cost of sales.
Business · p. 127
In addition, we monitor market trends, price fluctuations of raw materials, inventory, customer orders and capital allocation to make informed decisions about stockpiling.
Business · p. 127
Our inventories increased by 42.8% from RMB194.7 million as of December 31, 2025 to RMB278.1 million as of March 31, 2026, primarily due to (i) continued inventory preparation for scheduled furnace maintenance, and (ii) strategic inventory build-up in response to tightening supply conditions and anticipated pricing pressure in electronic yarn, which is our major raw material.
Our cost of sales is influenced by the prices of key components and raw materials, including power semiconductors, chips, wire and permanent magnets.
Financial Information · p. 175
In 2023, we strategically maintained relatively high levels of raw material reserves for chips, semiconductors and magnetic steel, as there had been supply shortages in the market and we increased purchases towards the end of the year.
In addition, the cost and stability of wafer procurement have a material impact on our gross profit and overall profitability.
Financial Information · p. 185
The cost of wafers increased from RMB385.3 million in 2023 to RMB417.8 million in 2024, and further to RMB448.4 million in 2025.
Financial Information · p. 185
The high-cost inventories were mainly delivered in 2023, during a period of softening downstream demand and declining product prices, which led to the year-on-year decrease in our gross profit margin.
We pre-stocked LFP batteries as their price surged in 2022, resulting in a relatively higher average procurement cost of LFP batteries during the Track Record Period.
Summary · p. 21
Our cost of LFP batteries increased from RMB141.3 million in 2022 to RMB163.2 million in 2023 and RMB229.8 million in 2024.
Summary · p. 21
In 2022, 2023 and 2024, our costs of raw materials and components were RMB307.1 million, RMB399.1 million and RMB536.5 million, respectively, representing 87.3%, 87.8% and 89.6% of the total cost of sales in the corresponding periods.
In particular, the procurement costs of raw materials and consumables under our cost of sales increased from RMB136.6 million in 2021 to RMB336.8 million in 2022, which was mainly attributable to (i) the increase in sales of products and (ii) the supply crunch of semiconductor chips from late 2021 to the second half of 2022 due to a global supply shortage.
Summary · p. 7
In relation to the procurement of power management chips, we incurred expedited fees of approximately RMB1.1 million and RMB33.8 million in 2021 and 2022, respectively.
Business · p. 225
Indeed, our gross profit recovered and turned positive in the six months ended June 30, 2023 with a gross profit margin of 3.9%, from a gross loss margin of 7.4% in 2022.