IPO Analysis | Huanchuang Technology to List on HKEX: How Can a Technical "Hidden Champion" Solve the Problem of Revenue Growth Without Profit Growth?

In the wave of smart homes, robot vacuums are undoubtedly one of the categories with the fastest penetration growth. Behind this revolution of "liberating hands," spatial perception technology, which serves as the "eyes" of robot vacuums, is becoming the core battleground determining the level of product intelligence. Recently, Shenzhen Huanchuang Technology Co., Ltd. (hereinafter referred to as "Huanchuang Technology") has formally passed the Hong Kong Stock Exchange listing hearing. This "hidden champion" deeply engaged in LiDAR and spatial perception technology is just one step away from the capital market. Spatial perception is a technology-intensive and capital-intensive industry that requires "investment first, profitability later." The company is currently still in a stage of thin profits and continuous net operating cash outflow. Against the backdrop of the robot vacuum industry's continued expansion and the accelerated penetration of dTOF and line laser technologies, can Huanchuang Technology, with its multi-scenario product layout beyond medium and large sizes and its accumulated self-developed chip capabilities, open up new growth space under the multiple tests of highly concentrated customers, margin pressure, and technological iteration? Industry Tailwinds and the Rise of a "Hidden Champion" As mentioned at the outset, the track Huanchuang Technology occupies is a critical upstream segment in the smart robot vacuum industry chainspatial perception. According to data from China Insights Consultancy, the global robot vacuum spatial perception market is expanding at an astonishing pace, projected to grow from RMB 3.1 billion in 2025 to RMB 9.1 billion in 2030, with a compound annual growth rate of 24.3%. The growth logic is clear: as robot vacuums evolve from "random collision" to "precise navigation" and "proactive obstacle avoidance," demand for core components such as LiDAR, dTOF, and line laser sensors is rising in both volume and price. In this niche market, Huanchuang Technology has already established a significant market position. According to the prospectus, based on 2025 revenue, Huanchuang Technology ranks first among robot vacuum spatial perception suppliers in China, with a market share of approximately 20.0%. Behind this achievement is its deep binding with industry-leading customers. Huanchuang Technology not only serves four of the top five global market participants in the robot vacuum industry, but has also achieved cumulative shipments of over 39 million spatial perception products. In terms of business structure, Huanchuang Technology's product matrix covers triangulation LiDAR, dTOF LiDAR, and line laser sensors. Among these, traditional triangulation LiDAR is its cash cow business, but the company is actively transitioning toward the higher-barrier dTOF and 3D perception domains. Notably, Huanchuang Technology is not merely a hardware assembly plant; it emphasizes its self-developed sub-millimeter spatial data processing chip design capabilities and core algorithms. This vertically integrated capability of "algorithm + hardware + chip" constitutes its moat for maintaining competitiveness amid fierce price wars. However, industry prosperity is not without concerns. It is noted that although the market is growing, the competitive landscape is becoming crowded. There are not only traditional LiDAR manufacturers but also robot vacuum giants with self-development capabilities. Huanchuang Technology must outpace its customers' in-house development in technological iteration speed to maintain its competitive position as a core component supplier. The "Revenue Growth Without Profit Growth" Dilemma Behind the Earnings Surge How this competitive pressure ultimately manifests in operational qualitythe financial performance provides the most direct answer. On the revenue side, Huanchuang Technology has delivered impressive results. From 2023 to 2025, the company's revenue was RMB 332 million, RMB 433 million, and RMB 614 million, respectively, with a compound annual growth rate of 35.9%. Entering 2026, this growth momentum continued, with revenue reaching RMB 196 million in the first three months alone, a year-over-year increase of 48.7%. This growth was mainly driven by the downstream robot vacuum market's expansion and the commercialization of new products such as dTOF and line laser. However, on the profit side, Huanchuang Technology's performance appears somewhat volatile. In 2023 and 2024, the company recorded net losses of RMB 900,000 and RMB 31.4 million, respectively. Although it successfully turned profitable in 2025 with a net profit of RMB 2.2 million and raised its net margin to 4.0% in the first quarter of 2026, the overall profitability level remains weak. The fluctuation in gross margin reveals deeper issues. In 2023, the company's gross margin was 21.5%, dropping sharply to 16.3% in 2024, slightly recovering to 16.5% in 2025, and rebounding to 19.2% in Q1 2026. The sharp decline in 2024 gross margin had two direct causes: first, the newly launched dTOF LiDAR and line laser sensors had not yet achieved economies of scale and recorded negative gross margins; second, triangulation LiDAR adopted more competitive pricing strategies to capture market share. The traces of the price war are clearly visible. The average selling price of triangulation LiDAR dropped from RMB 68.6 per unit in 2023 to RMB 43.3 per unit in 2025, a decline of approximately 37%. The company acknowledges that this was a "sales and marketing initiative to capture higher market share," while also proactively adjusting pricing "to respond to competitive market dynamics and certain customers' internal LiDAR development projects." In other words, customers can not only choose other suppliers, but some leading brands are also developing LiDAR in-house, further squeezing Huanchuang Technology's pricing power. The performance of new product lines is one of the few comforting signals in the financial reports. dTOF LiDAR revenue jumped from RMB 4.2 million in 2024 to RMB 65.03 million in 2025, while line laser sensors grew from RMB 19.3 million to RMB 134 million. Together, the two new products contributed 32.4% of revenue. The revenue share of triangulation LiDAR dropped from 98.3% to 65.7%, representing substantive progress in product structure diversification. More critically, as production volume increased, the gross margins of new products turned from negative to positive: dTOF LiDAR gross margin improved from -32.8% in 2024 to 7.0% in 2025, and line laser sensors from -6.1% to 13.6%. In Q1 2026, both approached 20%. Changes in R&D investment also warrant attention. R&D costs as a percentage of revenue declined from 16.4% in 2023 and 17.7% in 2024 to 9.7% in 2025 and 7.6% in Q1 2026. This reflects, on one hand, that earlier R&D investments are beginning to commercial results, and on the other hand, that the company is proactively controlling expenses to improve profitability. However, the cash flow situation remains under pressure. From 2023 to 2025, the company's net cash used in operating activities was RMB 34.83 million, RMB 39.99 million, and RMB 9.04 million, respectively, with a continued net outflow of RMB 5.32 million in Q1 2026. Trade receivables turnover days extended from 75 days in 2023 to 100 days in Q1 2026, reflecting the objective pressure on payment terms brought by customer concentration. Dual Challenges Under Deep Binding with Giants Meanwhile, Huanchuang Technology's customer concentration is at a high level. From 2023 to 2025, revenue from the top five customers accounted for 93.6%, 89.2%, and 80.4%, respectively. Although this proportion is declining year by year, it remains at an extremely high level. This deep binding is a double-edged sword. On one hand, it ensures that Huanchuang Technology can secure sufficient orders during the industry's explosive growth period and rapidly scale up; on the other hand, it means the company's fate is closely tied to the rise and fall of a few robot vacuum giants. The company explicitly states that if major customers reduce procurement, shift to in-house development, or change suppliers, it would deal a significant blow to the company's business. Notably, some customers have already begun attempting to develop LiDAR products in-house. Although currently used mainly for differentiated models, if expanded to mainstream products in the future, it would pose a direct threat to Huanchuang Technology. Facing the risk of a single track, Huanchuang Technology is also actively seeking a "second growth curve." According to the prospectus, the company is attempting to extend its spatial perception technology to areas such as lawn-mowing robots, pool-cleaning robots, humanoid robots, and XR. As of now, the company has generated revenue in the XR and industrial inspection sectors and has received non-binding letters of intent from some pool-cleaning and lawn-mowing robot customers. However, expanding into new businesses is not achieved overnight. Currently, these emerging areas have not yet formed large-scale mass production orders, and whether the company can replicate its success in the robot vacuum sector remains uncertain. Overall, Huanchuang Technology, with its technological accumulation and market positioning in spatial perception, has successfully seized the dividends of the robot vacuum industry's explosion. However, its financial data also clearly reveals the hidden concerns behind high growth: thin profits, cash flow pressure, high customer concentration, and fierce price wars. Looking ahead, Huanchuang Technology's story will unfold along two main lines: first, in the core robot vacuum market, whether it can leverage new products such as dTOF and line laser to hold its ground against customers' in-house solutions and improve profitability; second, in new tracks such as XR and lawn-mowing robots, whether it can successfully replicate its technological advantages to create a genuine "second growth curve." For investors, Huanchuang Technology's value lies not only in its current position as an industry leader but also in whether it can successfully realize the commercial value of its technological accumulation under the dual pressures of technology intensity and capital intensity, ultimately achieving sustainable profit growth. And this test has only just begun.