Taking a loss of 122 million yet rushing toward IPO, how big is the risk when Chery accounts for over 80% of Tianyun Share's business?

Guangde Tianyun New Technology Co., Ltd. is currently at a critical stage of its IPO on the Beijing Stock Exchange, riding on two tracks: automotive sunroofs and the recycling of waste textiles. In 2024, its revenue just surpassed 500 million yuan, and net profit reached 51.93 million yuan, showing a strong momentum. However, a closer look at the prospectus reveals issues behind these impressive numbers that raise concerns.

First, the most obvious problem is the unrecouped losses. As of the end of the first half of 2025, the company’s undistributed profits on the books are negative 1.22 billion yuan. Although the company has been profitable for three consecutive years since 2022, with net profits of 40.92 million yuan, 23.55 million yuan, and 51.93 million yuan respectively, the historical deficit is too large to be quickly offset. The company itself admits that it won’t be able to pay dividends to shareholders within the next few years after going public. Investors putting money in now won’t see short-term returns, which feels somewhat like buying a long-term lottery ticket with a constant sense of uncertainty.

What’s more concerning is the pressure from the betting agreement. In April 2025, the actual controller, Pan Jianxin, signed an agreement with Shenzhen Capital Group and Red Earth Venture Capital: if the company fails to successfully IPO by the end of 2026, he will need to pay 6 million yuan in cash compensation, which could also trigger a share buyback obligation. Based on equity, if the company repurchases the 14.2% stake, at the previous block trade price of 5 yuan per share, it would cost around 85 million yuan. Pan Jianxin holds 54.35% of the company himself, so this amount is not small for him. It sounds like a desperate gamble, with success or failure directly tied to his personal wealth.

Looking at customer structure, Chery Automobile has almost become the lifeline of Tianyun. During the reporting period, sales to Chery skyrocketed from 29.81% of total sales in 2022 to 82.61% in 2024. Although it dropped to 72.18% in the first half of 2025, it remains alarmingly high. In the auto industry, annual declines are normal; when a major customer pressures prices, small suppliers have little room to resist. The average selling price of Tianyun’s sunroof assemblies fell from 1,252 yuan per set in 2022 to 939 yuan in the first half of 2025, a 25% drop. The company relies on in-house glass edging and guide rails to somewhat cushion the pressure, but if Chery’s sales fluctuate or they shift to self-research or switch suppliers, the impact could be devastating.

New customer development shows some progress, such as entering the JAC Motors system and engaging with SAIC. But from initial orders to mass production, it takes at least one or two years, which is far from enough to match Chery’s scale. Accounts receivable are also piling up like a mountain, with a book value of 238 million yuan as of June 2025, accounting for 42.5% of total assets and 112.9% of current revenue. Over 120 million yuan has already been fully provisioned as bad debt, and there is 120 million yuan in receivables older than five years. If Chery’s payments slow down or credit issues arise, Tianyun’s cash flow could be immediately at risk.

Changes in gross profit margin are also a warning sign. In 2024, the gross margin for air conditioning components plummeted to 7.3%, a sharp decline from around 18% previously; interior parts also dropped from 33.95% in 2022 to 28.46%. The company claims this is due to product structure adjustments but did not specify the reasons. Such large fluctuations in the industry are often caused by a combination of price cuts, raw material price increases, and declining competitiveness. If these two segments continue to underperform, profitability could be seriously jeopardized.

Capacity issues are particularly prominent. In 2024, the utilization rate of automotive sunroof assembly capacity reached 199.92%, almost running at full throttle. Yet, in the first half of 2025, revenue actually decreased by 6.54% year-on-year, with sales only slightly up by 1.73%, and prices down by 8.13%. Despite full order books, profits are shrinking, indicating fierce price wars or weak market demand. The company plans to raise 225 million yuan in this IPO, with 115 million yuan allocated to expanding the sunroof project, along with new materials and R&D centers. The new capacity of 400,000 sets sounds ambitious, but can it be absorbed? Although China’s automotive sunroof market is still growing—total sales in 2024 reached 16.88 million sets—Tianyun only holds a 2.28% market share. To absorb the additional capacity, market share would need to double, but Chery is also localizing its supply chain, making the sustainability of incremental orders uncertain.

Market conditions are constantly changing. Chery’s sales, industry price wars, and the overall trend of new energy vehicles will directly impact Tianyun. If the company can quickly diversify its customer base, stabilize gross margins, and use the raised funds effectively, it might succeed. But if it continues to rely on a single customer and cannot digest the expansion, problems will arise. Do you think a company going public is truly aiming to strengthen itself, or just to solve immediate issues? Only time can tell.