After lingering outside the capital market for nearly three years, the IPO process of Jiangxi Aifenda HVAC Technology Co., Ltd. (referred to as “Aifenda”) finally achieved a key milestone in late May. Its application for listing on the ChiNext board was changed to “submitted for registration”. This company, mainly engaged in electric heating towel racks, went through a series of twists and turns such as the first application for acceptance in June 2022, several rounds of inquiries, changing the accounting firm, and three times of suspension of the review process. It was only a step away from entering the capital market. However, through the information disclosed in the prospectus, the hidden financial risks and operational hazards behind it gradually emerged, drawing deep attention from the market to its sustainable profitability and governance structure.
Financial： The dual challenges of a tight capital chain and fluctuating profits
The financial statements of Aifenda reveal three core risks, among which the most urgent one is the deteriorating short-term debt repayment pressure. As of the end of 2024, the company’s cash reserves were only 136 million yuan, while short-term loans reached 210 million yuan, non-current liabilities due within one year were 22.215 million yuan, and the total short-term debt was approximately 232 million yuan, creating a gap of 95.2 million yuan compared to the cash reserves. This gap has continued to expand from 26 million yuan in 2022 and 71 million yuan in 2023, increasing by 260% over the two years, highlighting the intensification of its liquidity crisis. In this context, Aifenda listed “supplementing working capital” as an important use of the funds raised in the IPO, reflecting its reality of relying on the capital market for “blood transfusion” to maintain operations rather than focusing on strategic expansion or technological innovation. This undoubtedly raises doubts among investors about its growth potential.
The “roller coaster”-like fluctuations in the company’s profitability are also cause for concern. From 2022 to 2024, Aveda’s revenue increased from 762 million yuan to 1.05 billion yuan, seemingly showing a steady growth. However, its net profit attributable to the parent company was 0.93 billion yuan, 1.64 billion yuan, and 1.18 billion yuan respectively. After a 76% year-on-year increase in 2023, it dropped by 28.04% in 2024. A detailed analysis revealed that the high profit growth in 2023 was not due to an improvement in the competitiveness of its main business, but rather relied on “falsifying” through non-recurring gains – the “other income” (government subsidies, land acquisition compensation) reached 59.87 million yuan, and “asset disposal income” was 53.87 million yuan. After excluding these items, the non-GAAP net profit was only 0.87 billion yuan, showing a downward trend compared to 0.89 billion yuan in 2022. This exposed the deep-seated problems of its poor profit quality and insufficient core business’s ability to generate income.
Business Model and Governance Structure: Doubtful Growth Potential on Two Fronts
Aveda’s business model is highly dependent on overseas ODM (Original Design Manufacturing) production. Although this model can bring stable orders, it also limits its brand premium and independent innovation capabilities. In the context of intensified global supply chain competition, excessive reliance on ODM may expose it to risks such as high customer concentration, weak bargaining power, and compressed profit margins. In the long run, this is not conducive to building a differentiated competitive advantage.
Furthermore, the family-like characteristics in the corporate governance structure have drawn attention. The prospectus reveals that there is a situation where “former Air China flight attendants” hold positions as directors in the company. Whether this non-professional management configuration, with its family management model, possesses sufficient industry insight and strategic decision-making capabilities, and whether it can meet the requirements for standardized operation of listed companies, all these factors set the stage for the future effectiveness of its governance. In the current era where the capital market has increasingly raised demands for corporate governance transparency and professionalism, Aifenda needs to take measures such as improving the board structure and strengthening the functions of independent directors after going public to eliminate market doubts about its governance capabilities.
Although Aveda is about to cross the threshold of an initial public offering (IPO), the challenges it faces are far from over. How to break through the deadlock of the capital chain, strengthen the profitability of its core business, get rid of its reliance on non-recurring gains and losses, and optimize its business model and governance structure will be the major survival tests it must face after entering the capital market. For investors, while paying attention to its listing progress, they also need to carefully assess its financial health and sustainable development capabilities, and avoid being misled by the surface growth in revenue.
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