New stock preview | Ezhi Intelligent sprints for HK IPO: Acquiring 50% stake in Contemporary Amperex Technology, difficult to conceal "growing pains".

As the global lithium battery industry enters a lean manufacturing stage with safety, consistency, and whole-line yield as its core, the deep integration of intelligent equipment and machine vision technology is becoming a key barrier to industry competition. Against this backdrop, Guangzhou Yihong Intelligent Equipment Co., Ltd. (hereinafter referred to as "Yihong Intelligent"), a leading provider of lithium battery machine vision inspection solutions in China, recently submitted an application for listing on the Main Board of the Hong Kong Stock Exchange. Guotai Junan Financing and Dongfang Financing (Hong Kong) serve as joint sponsors for the listing. Amid the current wave of new energy sweeping the globe, how likely is Yihong Intelligent, a leading player in the lithium battery industry chain, to succeed in listing on the Hong Kong Stock Exchange? From vision inspection to integrated equipment, strategic transformation is underway According to the prospectus, Yihong Intelligent was established in 2014, headquartered in Guangzhou, and has now formed two core product lines: lithium battery intelligent integrated equipment and lithium battery machine vision inspection solutions. According to data from Frost & Sullivan, based on revenue calculation in 2025, Yihong Intelligent ranks second in the Chinese domestic lithium battery machine vision inspection solution market and first in the global large-width roll-to-roll slitting machine market. Of particular note, the company is the only solution provider in China that possesses deployment capabilities for machine vision inspection of lithium batteries across the entire process, embedding machine vision into core process equipment capabilities, and cross-process data closed-loop management capabilities. In terms of business model evolution, Yihong Intelligent is undergoing a strategic shift from the sale of standalone inspection systems to the integration of high-value-added intelligent equipment. The company's intelligent equipment product line now includes core equipment such as large-width roll-to-roll slitting machines integrated for rolling and cutting processes, laser die cutting winding machines, and high-speed automatic assembly lines for cylinder cells with full tabs. Compared to traditional segmented production equipment, such integrated equipment can avoid issues such as multiple material handling and process transfer lag, significantly improving production continuity and consistency at the edge of the electrode sheets. Especially in the field of large-width roll-to-roll slitting machines, Yihong Intelligent already occupies about 50% of the equipment on Contemporary Amperex Technology's production line by 2025, demonstrating its ability to deeply bind with top customers. In addition, the company completed the sales and delivery of the first high-speed automatic assembly line for full-tab cylindrical cells in 2025 and successfully received an order from a top cylindrical cell manufacturer based in South Korea for their Nanjing production base, indicating a breakthrough in commercialization in the field of new generation battery technology equipment. It is understood that in terms of customer structure, Yihong Intelligent's customer base already covers six of the top ten lithium battery manufacturers globally based on shipments in 2025, as well as eight of the top ten lithium battery manufacturers in China. However, such deep binding also brings significant customer concentration risks. The prospectus shows that as of the end of the years 2023, 2024, and 2025, the top five customers accounted for 98.7%, 97.2%, and 94.4% of total revenue, respectively, with the largest customer Contemporary Amperex Technology contributing as high as 86.0%, 67.1%, and 75.8% in each period. Although management believes that such high levels of revenue contribution are unlikely to have a significant adverse impact and has listed reasons such as long-term cooperation, industry competitive landscape, and mutual dependency, such high customer concentration in any manufacturing supply chain implies potential risks of order fluctuations. If major customers were to cut capital expenditures or shift to internal R&D equipment, it would directly impact the company's performance. High revenue growth, but fluctuating profit quality Looking at the financial data, Yihong Intelligent achieved rapid revenue growth over the past three years, but the fluctuation in its profit structure is also worth noting. As of the financial years ending on December 31, 2023, 2024, and 2025, the company's revenue was 294 million yuan, 394 million yuan, and 552 million yuan, with a compound annual growth rate of approximately 37%. Net profits for the same periods were 709,000 yuan, 51.28 million yuan, and 69.67 million yuan, with the significant jump in profits in 2024 mainly due to a substantial improvement in gross profit margin and fair value gains from the sale of financial assets. The DRIVE behind revenue growth mainly came from the explosion of the lithium battery intelligent equipment business. The business revenue surged from 96.16 million yuan in 2023 to 461 million yuan in 2025, accounting for a proportion of total revenue climbing from 32.7% to 83.6%. In contrast, revenue from machine vision inspection solutions business decreased from 174 million yuan in 2023 to 71.48 million yuan in 2025, with the percentage shrinking from 59.1% to 12.9%. This structural shift reflects the company's proactive adjustment in strategic focus from selling standalone vision inspection systems to selling integrated, high-end equipment with higher unit prices. The average selling price of intelligent equipment in 2024 was 1.56 million yuan per unit, significantly higher than the 1.2 million yuan in 2023, while sales volume surged from 116 units in 2025 to 309 units, indicating an increasing market acceptance of its high-end equipment. The changing gross profit margin reveals differences in the profitability of different business lines. The company's overall gross margin increased from 19.6% in 2023 to 30.9% in 2024, but then fell back to 26.2% in 2025. The core reason for this fluctuation is that the gross margin of the lithium battery intelligent equipment business surged from 3.1% in 2023 to 27.0% in 2025, reflecting the positive impacts of economies of scale, capacity utilization, and enhanced bargaining power. However, the gross margin of the machine vision inspection solutions business plummeted from 40.8% in 2024 to 14.4% in 2025. Management explains this is due to intensified market competition leading to lower average selling prices and shrinking revenue contribution after the strategic focus shift. However, this change is worth being vigilant aboutit suggests that the company's pricing power in the field of vision inspection may be eroded by competitors, where the company originally had its strongest technological foothold. Industry opportunities and barriers coexist Looking at the industry outlook, the global lithium battery intelligent equipment market is expected to grow from 583 billion yuan in 2025 to 1,417 billion yuan in 2030, with a compound annual growth rate of 19.4%. The growth rates in the European and North American markets are particularly significant, expected to maintain annual growth rates of around 28.3% and 25.9%, providing structural opportunities for Chinese equipment suppliers to go global. Yihong Intelligent has already set up subsidiaries in Hungary and the UK, and their bare cell pairing and appearance inspection machine has been exported to German factories, marking the initial outline of their overseas layout. However, the evolution of the competitive landscape is also challenging. In the market for large-width roll-to-roll slitting machines, the top three manufacturers globally dominate with a combined market share of 95.1%, showing a highly concentrated oligopoly; but in the machine vision inspection solutions market, the combined market share of the top five suppliers is only 31.2%, still relatively dispersed and competitive. Some large battery manufacturers have strong financial and technical resources and may seek to independently develop internal intelligent equipment or vision inspection capabilities, further squeezing the market space for external suppliers. The risk of technological iteration is also not to be underestimated. Lithium battery technology is evolving towards solid-state batteries, dry electrode processes, full-tab cylindrical cells, and other directions, each placing new demands on manufacturing equipment. While the company has already laid out related R&D work and delivered the first pilot production line for polymeric solid-state batteries, there are many uncertainties in scaling up new technologies from pilot to mass production, and continuous significant R&D investment is necessary to maintain competitiveness. It is worth noting that the share of R&D expenses in revenue has decreased from 12.8% in 2023 to 8.9% in 2025, and whether the decline in R&D intensity will impact long-term competitiveness is something to watch out for. Overall, Yihong Intelligent's listing application showcases a company with technological barriers and top customer resources in the lithium battery vision inspection and intelligent equipment fields undergoing a strategic transformation. Its upgrade path from standalone inspection systems to integrated high-end equipment aligns with the trend of lean manufacturing in the industry, and the expansion into overseas markets opens up new growth opportunities. However, the high customer concentration, fluctuating operating cash flows, sharp decline in gross profit margins in some business lines, and intensifying industry competition are real issues that cannot be overlooked. With the overall new energy industry chain entering a period of capacity digestion and technological differentiation, whether Yihong Intelligent can maintain its technological leadership while continuously improving the quality of profitability will be the core question it needs to answer to investors after its listing on the capital market.