IPO Preview | Hotlink Group: Driven by Three Major Industries, Revenue Steady but Net Profit Margin Below 1%

With an income scale exceeding 270 billion yuan and a net profit margin of less than 1%, the leading commodity trading service provider, Helian Group, has submitted another application to the Hong Kong Stock Exchange. It has been reported that Helian Group has recently submitted a listing application to the main board of the Hong Kong Stock Exchange, with China International Capital Corporation (CICC) as its exclusive sponsor. The company, based in China, is a provider and trader of commodity industry services. According to Frost & Sullivan, it ranks as the fifth largest commodity industry service provider and trader in China by trade volume and sales revenue, with market shares of 0.9% and 0.8% respectively for 2025. The company primarily purchases and distributes commodities, including black metals and raw materials, chemicals, non-ferrous metals, and over 294 types of other physical products. The income scale is considerable, increasing from 252.132 billion yuan to 270.48 billion yuan from 2023 to 2025, with a compound annual growth rate of 3.64%. In the first five months of 2026, income was 110.49 billion yuan, a year-on-year increase of 0.9%. However, the profit margin is quite low, with net profit margins for the mentioned period being 0.4%, 0.5%, 0.6%, and 0.5%. Helian Group has a large scale, but as a trading enterprise, it has a low profit margin, making healthy cash flow crucial. The company has maintained a continuous net cash inflow in its operating cash flow and, as of June 2026, it had cash and cash equivalents of 4.853 billion yuan. This is its second submission of a listing application to the Hong Kong Stock Exchange, mainly to supplement cash flow and facilitate financing plans, making listing a necessity. Three major industries drive the company, with steady income but low profit margins. Helian Group was established in 2001, initially focusing on the import of steel-related commodities. It expanded its export business in 2003 and deepened its layout in the black metals value chain in 2009, successfully extending upstream to steel-making raw materials. Currently, the company's operations cover three major industry systems: black metals and raw materials, chemicals, and non-ferrous metals, with revenue expected to exceed 270 billion yuan by 2025. From the revenue perspective, black metals and raw materials account for the majority of the income, showing steady growth with an increasing revenue contribution, which rose to 58.5% in the first five months of 2026; chemicals represent the second-largest income source, experiencing a continual decline in revenue contribution to 35.9% after a surge in 2024; the income from non-ferrous metals has shown a significant downward trend, with revenue contribution dropping from 14.9% in 2023 to 4% in the first five months of this year. In terms of products, black metals and raw materials include steel, iron ore, coal, hot-rolled sheets, rebar, special steel, and stainless steel products. Among these, steel and iron ore are core products, with stable revenue contribution from steel and a rising trend in iron ore, which saw a revenue growth of 33.3% in the first five months of 2026, elevating its contribution to 15%. The chemical category includes olefins, aromatics, polyester, rubber, pulp, and liquefied petroleum gas, with core products being polyester and aromatics, which have shown an upward trend from 2023 to 2025, although revenue declined in the first five months of 2026 with contributions of 9.3% and 10.9%, respectively. Helian Group conducts its commodity trading business through four trade models, including domestic trade, import trade, export trade, and triangular trade covering different commodity categories, primarily selling goods to trading companies in China and overseas. From 2023 to the first five months of 2026, the number of trading company clients was 13,334, 14,964, 15,215, and 8,364, respectively, while the revenue contribution from sales to trading companies was 76.2%, 75.7%, 72.7%, and 66.5%. The company has a large number of customers with low concentration and small customer dependency risks. From 2023 to the first five months of 2026, the revenue contributions from the top five customers were 8.3%, 8.6%, 9.8%, and 11.7%, with the largest client contributing only 2.1%, 2.4%, 3.1%, and 4.9% respectively. Additionally, its suppliers mainly include large steel mills, mining companies, coking plants, chemical manufacturers, and major commodity trading companies headquartered in China, with the share of the top five suppliers being stable and not high, at 13% in the first five months of 2026, which indicates relatively low procurement risks. Due to the nature of the trading business, Helian Group has a low profit margin, with gross margins of 0.9%, 0.7%, 0.6%, and 1.9% from 2023 to the first five months of 2026. However, under economies of scale, the profits remain considerable, and all expenses are quite stable, with a sales expense ratio of 0.2%-0.4%, an administrative expense ratio stable at 0.3%, and a financial expense ratio of 0.3%-0.4%. Over the mentioned period, the company's net profit margin remained stable at 0.4%, 0.5%, 0.6%, and 0.5%. The growth of the industry is slow, with various risk points undermining competitiveness. From an industry perspective, according to Frost & Sullivan, the market size of Chinas commodity industry services and trading sector is growing relatively slowly. By trade volume, the market size is projected to be 16.6 billion tons in 2025, accounting for 60% of the Asian market, with a compound growth rate of only low single digits over the past five years. Within this framework, black metals account for 38%, chemicals for 19.9%, and non-ferrous metals for 7.8%, with compound growth rates of 0.6%, 3.9%, and 8.8%, respectively. The commodity industry is undergoing structural changes. Against the backdrop of the "dual carbon" goal, the development of the new energy industry is driving explosive demand for green metals like lithium and cobalt, while the steel industry's decarbonization transition is continuously expanding the trade scale of recycled resources such as scrap steel. However, competition is fierce; in the Chinese market, the top five participants in the commodity industry services and trading sector hold only 6.2% of the market share by commodity trade volume. Although Helian Group has a scale exceeding 270 billion yuan, its market share by sales revenue is only 0.8%, ranking fifth in the industry. The company also has several products that rank in the top five of the industry. For example, by steel trading volume, it ranks fourth with a market share of 2.4%; it ranks second in iron ore trading with a market share of 2.9%; it ranks third in rubber trading with a market share of 6%; and it ranks fourth in ethylene glycol trading with a market share of 8.6%. Furthermore, the company's globalization strategy follows three progressive stages: "internationalization - regional localization - globalization." It has established a global business footprint, with subsidiaries and branches in 17 countries and regions as of August 2, 2026, conducting trade activities in over 80 countries and regions. Its overseas revenue is primarily concentrated in East Asia, Southeast Asia, and West Asia, remaining relatively stable, with 14.7% of revenue contribution in the first five months of 2026. However, it is important to note that the company has a high proportion of interest-bearing debt. As of June 12, 2026, the interest-bearing loans and other borrowings in current liabilities reached 31.195 billion yuan, accounting for 51.57% of current liabilities, while its cash equivalents were only 4.853 billion yuan. Additionally, its financial assets measured at fair value mainly comprise investment products worth 4 billion yuan, totaling 8.853 billion yuan, which is less than 30% of interest-bearing current liabilities. The company holds 23.198 billion yuan in inventory, which can alleviate some working capital demands. In summary, Helian Group, as a leading player in China's commodity industry services and trading sector, is driven by three industry categories: black metals, chemicals, and non-ferrous metals, showing steady income growth. Its globalization strategy is being continuously advanced, and the overseas market is stable, likely contributing to growth. However, the growth prospects of the industry remain low, competition is fierce, and the company has weak profitability, low net profit margins, high interest-bearing debt, and low cash coverage, which may weaken its competitiveness and investment attractiveness in the industry.