Brand customers directing designated suppliers to buy
Hong Kong IPO disclosure precedents · 10 companies, 10 items
Brand customers, after product validation, directing their designated third-party suppliers (e.g. OEM manufacturers) to place purchase orders with the company alongside direct sales channels.
As all commercial terms are determined through direct negotiations with the brand owners, the pricing model, profit margin, and other key commercial terms do not vary significantly.
Business · p. 163
During the same year/period, Customers G and I purchased our products as designated suppliers of Customers H and B, respectively, reflecting our penetration into the product supply chains of the relevant brand customers through both direct sales and designated procurement channels.
Summary · p. 19
Therefore, even where the same product was sold to both channels during the same period, the gross profit margin of our sales to designated third-party suppliers of brand owners and ODM manufacturers was generally higher than that of brand owners primarily because sales to these customers tend to involve more mature and mass-production-stage products with relatively stable production efficiency and yield rates.
In specific, we generated revenue of RMB6.1 billion, RMB17.2 billion, RMB24.7 billion and RMB9.3 billion from Customer A in 2023, 2024 and 2025 and for the five months ended May 31, 2026, accounting for 39.9%, 61.6%, 71.0% and 68.2% of our total revenue in the same years/period, respectively.
Business · p. 152
This is commonly referred to in the industry as the buy-and-sell model, where certain of our major customers require their suppliers, including us, to purchase raw materials and components manufactured or procured from themselves to exert overall control over the procurement process.
Business · p. 152
Our strategic and mutually beneficial relationship with Customer A/Supplier A started over 17 years ago.
In our engagement with OEMs, we typically enter into framework agreements under which the OEM designates specific Tier-1 suppliers to work directly with us.
Business · p. 141
Alternatively, we provide our solutions to Tier-1 suppliers who integrate our products into their system level offerings for onward provision to OEM customers.
Some of our major customers, such as Customer A, designate suppliers for certain components used in products sold to them, which is known as the “buy-and-sell” model.
Business · p. 151
Our pricing for sales to such customers includes an agreed “markup” on top of our procurement cost, despite the location of designated suppliers.
In particular, depending on the specific requirements of our customers and the relevant projects, we may procure certain necessary components or equipment that are not manufactured in-house and integrate them into our overall solutions for delivery to customers as a whole.
Business · p. 114
Certain of our customers reserve the rights to require us to purchase certain key raw materials and components used in products manufactured for the customer from designated suppliers, in order to exert control over the quality of the raw materials and components.
Business · p. 124
According to Frost & Sullivan, this is a common practice in the new electricity system solutions industry.
In 2023, 2024 and 2025, the number of accumulated general contractors were 50, 75 and 104, respectively, and to the best knowledge of our Directors, those general contractors are Independent Third Parties.
Business · p. 155
General contractors do not resell our products or services and as such, we do not consider them distributors, and their involvement does not give rise to any material concerns about channel stuffing, cannibalization, or trade receivable recoverability.
Business · p. 156
Given our technical superiority in certain fields and/or our industry reputation, end adopters may sometimes designate us as the supplier of selected software products and services, despite that another company has been selected as the general contractor.
We supply leading cathode companies directly and act either as a direct supplier or an indirect supplier (by providing products to the designated cathode companies) to world-renowned battery companies and top automotive brands.
Summary · p. 4
The sales volume of nickel-based materials decreased to a lesser extent from 42,900 metric ton in 2022 to 36,700 metric ton in 2024, primarily because Customer A engaged certain third-party cathode manufacturers to procure a portion of the nickel-based materials from us, rather than purchasing directly from us.
Customer/Supplier A requires its suppliers, including us, to purchase raw materials and components used in products manufactured for it from Customer/Supplier A itself in order to exert overall control of the procurement process and to better control the cost and quality of raw materials. This is commonly referred to in the industry as the buy-and-sell model.
Summary · p. 5
Certain of our customers require us to purchase certain key raw materials and components used in products manufactured for the customer from designated suppliers or to purchase such key raw materials and components from such customer after it has first purchased them from the upstream supplier, in order to exert control over the quality of the raw materials and components.
Business · p. 172
For example, our gross margin for complete device assembly was (1.6%), 2.6% and 1.3% in 2022, 2023 and 2024, significantly lower than our overall gross margin.
Contrary to typical distributors who onsell products to a diverse customer base and actively seek new customers, the procurements made by Shenzhen MPEG were for the fulfillment of specific purchase requests from the two major TV brands.
Business · p. 254
We recognize revenue for the sales to Shenzhen MPEG when the TV brands confirm receipt of our products.
Business · p. 254
We believe that channel stuffing risks, cannibalization risks and account receivables' recoverability risks are low in connection with the collaboration with Shenzhen MPEG in the advanced display business.
The customers of our EV battery products are primarily EV manufacturers and EV battery pack manufacturers designated by EV manufacturers, and our EV battery products are used in passenger vehicles, commercial vehicles, specialized vehicles and construction machinery such as forklift trucks, unmanned sweepers, low speed vehicles and construction vehicles.
Business · p. 273
(1) Suzhou KeyPower Technologies Co., Ltd., as the EV battery pack manufacturer designated by SAIC-GM- Wuling (上汽通用五菱), purchased EV battery cells from us, which assembled those EV battery cells together with other components, such as the BMS and EMS, into EV battery packs, and then sold those EV battery packs to SAIC-GM-Wuling (上汽通用五菱).
Business · p. 274
Under such arrangement, we generally enter into the contract with the designated EV battery pack manufacturers.