New Stock Outlook | Huada Beidou: Leading domestic supplier of GNSS chips and modules, nearly six billion yuan in losses over the past four years.

Year after year of losses, sustained net cash outflows in operation, leading domestic GNSS chip and module supplier, Huada Beidou submits Hong Kong IPO for the second time. It is understood that recently, Huada Beidou has submitted its second listing application to the Hong Kong Stock Exchange main board, with CMB International and Ping An Securities (Hong Kong) as its joint sponsors. The company provides GNSS chip and module products, and according to Zhaoshi Consulting data, in 2024, based on shipment volume, the company ranks sixth in the global GNSS chip and module market with a market share of 4.8%; based on revenue, the company ranks eighth globally. Huada Beidou's revenue performance has been volatile, but it has maintained high growth in the past two years. In the first half of 2025, the revenue was 403 million yuan, a year-on-year increase of 20.2%. However, the company is still in a state of continuous annual losses, with net losses in the first half of the year from 2022 to 2025 totaling respectively 93 million yuan, 289 million yuan, 137 million yuan, and 69 million yuan, with a cumulative net loss of 588 million yuan. Due to the continuous consumption of cash and cash equivalents on the loss accounts, the balance has decreased from 830 million yuan to 244 million yuan during this period. In addition, from 2019 to 2022, the company has undergone a total of 9 rounds of financing from Series A to Series C2, with the cost per share for institutional entry increasing from 164 million yuan to 5.09 yuan, an increase of 2.1 times. Clearly, the company's resolute decision to go public is not only to provide a blood transfusion for performance losses and provide continued development momentum, but also to provide an exit channel for early investors, attract more cornerstone investors, and improve the shareholder structure. So, how is the fundamental situation of Huada Beidou, which has been in continuous loss for years, and is it worth paying attention to? Low gross profit margin and perennial losses Huada Beidou's product portfolio includes GNSS chips, modules, related solutions, and comprehensive chip and module business. The company's business model is based on synergy, with two business lines complementing each other. The design and sales of GNSS chips, modules, and related solutions are strategic focuses, while a range of third-party chip solutions are also provided according to customer needs. In terms of business performance, the distribution and direct sales of GNSS chips, modules, and related solutions have a slightly higher growth rate than the overall, with the revenue share continuously increasing from 27.7% in 2022 to 32.2% in the first half of 2025. Direct sales have performed impressively this year, with a growth of 197.8% in the first half of the year, contributing 24% of the revenue. The comprehensive chip and module business is the core business of the company, mainly adopting a direct sales model, with relatively stable growth. In the first half of this year, the business revenue increased by 5%, with a revenue share of 67.8%. From the customer perspective, the number of new customers in all Huada Beidou's businesses shows a slowing trend, but in terms of average revenue per customer, except for a decline in GNSS-related solutions, there has been a significant growth from 2022 to the first half of 2025. The average revenue increased from 110.6 thousand yuan to 229.7 thousand yuan for GNSS chips and modules, and from 400.4 thousand yuan to 487.7 thousand yuan for comprehensive chips and modules, representing growth rates of 107.7% and 21.8% respectively. The company's customer concentration is not high, with the top five customers contributing 45.0%, 46.3%, 38.6%, and 48.6% of revenue from 2022 to the first half of 2025, all direct sales customers, with the largest customer contributing 12.5%, 14.4%, 12.8%, and 18.1% of revenue. It is worth noting that the main issue facing the company is its continued state of loss, mainly due to the impact of low gross profit margin. While various expense ratios show an optimizing trend, the R&D expense ratio has optimized significantly, but the total is still far higher than the gross profit margin level. The company's gross profit margin shows a downward trend, reaching 10.5% in the first half of 2025, a slight increase compared to the previous year, but a decrease of 1.5 percentage points compared to 2022. The gross profit margin of GNSS chips, modules, and related solutions is relatively high, but the downward trend is evident. On the other hand, the gross profit margin of the comprehensive chip and module business, which contributes core income, is only in low single digits. In terms of adjusted EBITDA, the company incurred losses of 58 million yuan, 249 million yuan, 91 million yuan, and 27 million yuan in the first half of the years from 2022 to 2025. Insufficient cash flow generation capacity In terms of specific business operations, Huada Beidou focuses on the field of GNSS spatial positioning services, prioritizing highly integrated SoC design architecture and innovative concepts using advanced processes, with significant advantages in first-mover positions. The company has established a wide range of product portfolios spanning various sectors such as transportation (traffic management, bike-sharing, and smart driving), consumer electronics (smartphones, Internet of Things, and wearable devices), and environmental monitoring and warning (weather detection and deformation monitoring). In terms of product lines, GNSS chips and modules mainly include standard accuracy and high-precision types. In terms of "quantity-price," both sales volumes have maintained double-digit growth rates, with sales volumes accounting for 65.4% and 34.6% in the first half of 2025. However, the selling prices have been continuously declining, with average prices of 4.8 yuan and 16.3 yuan in the first half of the year, representing decreases of over 35% compared to 2022. While quantity and price changes offset each other to a certain extent, overall income continues to show a growth trend. GNSS-related solutions integrate GNSS terminals, front-end data acquisition systems, and the company's proprietary safety monitoring cloud service platform, providing real-time and automated safety monitoring for a wide range of industry applications such as water conservancy, geohazard prevention, and mine tailings facilities. As of the feasible date, the company has signed over 570 contracts with more than 280 clients for GNSS-related solution projects. As an authorized distributor of third-party manufacturers, the company sells a wide range of products from third-party communication and memory products, including communication chips and modules, memory chips and modules, and RF chips. In the comprehensive chip and module business, the revenue from sales of third-party brand products accounts for over 85%, and in the first half of 2025, the company sold chips and modules from 14 third-party brands. In this business, communication chip and module prices are relatively stable, memory chip prices have slightly increased, but sales volumes have declined significantly, while RF chip prices have halved, but sales volumes have doubled, indicating a "quantity for price" strategy, with the sales volume proportion increasing from 31.1% in 2022 to 67.5% in the first half of 2025. However, this business mainly sells third-party brand products with relatively low profit margins and a high dependence on suppliers, limiting the potential for profit margin improvement. Furthermore, Huada Beidou's business has insufficient cash flow generation capacity, with net cash outflows from operating activities continuously in the first half of 2022 totaling 80 million yuan, 107 million yuan, 141 million yuan, and 88 million yuan respectively. This is mainly due to the low gross profit margin of the company, as well as a high proportion of accounts receivable. The percentage of trade accounts receivables to revenue in the above-mentioned period ranges from 33.4% to 93.12%. Early investors may have exit demands From an industry perspective, according to Zhaoshi Consulting, the global GNSS spatial positioning service market size was 22,863 billion yuan in 2024, with a compound annual growth rate of only 1.9% in the past five years, and it is expected to reach 33,447 billion yuan by 2029, with a compound annual growth rate of 7.9%. However, there are also localized opportunities, such as the growth in consumer electronics, low-altitude economy, and transportation scenarios benefiting from artificial intelligence. The GNSS industry has a high concentration, with the top ten participants in terms of GNSS chip and module shipments in 2024 possessing a combined global market share of 81.1%. Huada Beidou ranks sixth globally with a market share of 4.8%, making it the top company in mainland China. In terms of global sales value of GNSS chips and modules, the top ten participants in 2024 hold a combined market share of 91.6%, with the company ranking eighth globally with a market share of 1.1% and third place in mainland China. While Huada Beidou may not be strong enough in global competition, it does have a certain level of competitiveness among domestic peers and derives its revenue mainly from the Chinese market (mainland and Hong Kong). With the penetration of artificial intelligence, some scenarios still have high market prospects. In addition, the company has introduced industrial and institutional investment capital from Series A to Series C2 financing, including investments from Zhuhaigeli Venture Capital, Zhuhaigeli Venture Capital, and Bosch Ventures. In conclusion, the fundamentals of Huada Beidou are still acceptable, with all three business models achieving relatively high growth this year. However, the high proportion of low gross profit margin in the comprehensive chip and module business has resulted in a low overall gross profit margin. This dependence on third-party brand products makes it challenging to increase profitability. The company has been continuously recording losses year after year, with insufficient cash flow generation capacity and decreasing cash reserves. As of now, there is limited cash reserves, and the company is in urgent need of an IPO to raise funds. Additionally, early investors have low costs, and with multiple rounds of financing, the valuation has increased. This IPO may provide an exit opportunity for them.