Sige New Energy’s performance surges at explosive speed amid concerns: the debt-to-asset ratio soars, and the unit prices of its core products fall

《Harbor Business Observation》Xu Huijing

Sige New Energy (Shanghai) Co., Ltd. (hereinafter referred to as “Sige New Energy”) has applied for a Hong Kong stock IPO three times within less than 14 months. The sponsor has revised its arrangements twice, and the time pressure imposed by the performance guarantee agreements has loomed like a shadow.

But the good news is that the company has finally passed the hearing recently, and unless something unexpected happens, it is about to list on the Hong Kong Stock Exchange.

A simple recap: the company’s listing journey began in February 2025. For the first filing, CITIC Lyon Securities and Société Générale Paris Securities served as joint sponsors; after the 6-month validity period expired, the hearing was not passed, and the prospectus automatically became invalid. Later that same year in September, for the second filing, there was no sponsor adjustment and there was still no progress; in early March 2026, it expired again. Only a few days later, on March 9, 2026, the third filing was submitted; the joint sponsors were changed to CITIC Securities and Société Générale Paris Securities.

The prospectus discloses that the company has signed performance guarantee clauses (betting terms) with investment institutions including Hillhouse Venture Capital and Warde International. If the company withdraws its application, is rejected, or fails to complete the listing within 18 months after submitting the application, the investors will trigger a redemption. With the first two filings failing consecutively, the countdown has already been significantly narrowed. Whether the third filing succeeds or fails will not only determine risk avoidance related to the performance guarantee, but also whether the sponsor’s “upgrade” can help achieve a breakthrough in the review—this has also become a key focus of the market.

1

Explosive growth in performance, with unit prices declining year by year

According to the prospectus and Tianyancha, Sige New Energy was established in May 2022. It is an innovative company focusing on distributed energy storage system (DESS) solution services. The company is mainly engaged in the R&D, production, and sales of stackable distributed solar-storage integrated units. Its flagship product, SigenStor, adopts a modular, stackable design that seamlessly integrates a solar inverter, a DC charging module, an energy storage converter (PCS), an energy storage battery, and an energy management system (EMS) into one.

Financial data shows that in 2023, 2024, and from January to September 2025 (hereinafter referred to as the reporting period), Sige New Energy achieved revenue of RMB 58.30 million, RMB 1.330 billion, and RMB 5.641 billion, respectively.

From the growth trend, the company’s operating revenue shows explosive growth. Revenue in 2024 increased by approximately 22.8 times compared with 2023; revenue in the first nine months of 2025 increased by approximately 7.1 times compared with the same period in 2024. This rapid growth is mainly attributable to the rapid expansion of the global energy storage market and the company’s continuous improvement in product competitiveness.

Regarding gross margin, during the reporting period, the company’s consolidated gross margins were 31.3%, 46.9%, and 51.6%, respectively, showing a continuous upward trend. This is mainly due to the rapid expansion of production and sales scale, which lowered unit production costs, as well as improvements in profitability brought by product-structure optimization.

In terms of net profit, the company recorded a net loss of RMB 373 million in 2023, mainly because it was in the early stage of development and made heavy investments in expanding capacity, expanding its global distributor network, and advancing product R&D. In 2024, the company turned losses into profits, recording a net profit of RMB 83.85 million; in the first nine months of 2025, net profit further reached RMB 1.890 billion, and adjusted net profit (a non-IFRS measurement indicator) was RMB 2.168 billion.

From the perspective of product structure, the flagship product SigenStor is the absolute mainstay of the company’s revenue. During the reporting period, SigenStor sales accounted for 96.4%, 90.6%, and 92.8% of total revenue, respectively. As of September 30, 2025, the company’s SigenStor sales volume reached 2,355 MWh, up approximately 9.7 times from 220 MWh in the same period in 2024.

What is worth noting is that the company’s average selling price shows a downward trend. The average selling price of SigenStor fell from RMB 3.17 per watt-hour in 2023 to RMB 2.69 per watt-hour in 2024, and further declined to RMB 2.22 per watt-hour in the first nine months of 2025. The company explained that this is mainly because after sales volumes increased significantly, the company provided higher overall sales rebates to downstream distributors.

With respect to expense control, during the reporting period, the company’s selling and distribution expenses were RMB 53.422 million, RMB 169 million, and RMB 276 million, respectively; the selling expense ratios were 91.6%, 12.7%, and 4.9%, respectively. As its revenue kept soaring, the expense ratios showed a rapid downward trend.

Over the same period, R&D expenses were RMB 193 million, RMB 280 million, and RMB 365 million, with R&D expense ratios of 331.0%, 21.1%, and 6.5%, respectively.

Although the company’s R&D spending continues to increase, the product quality risk that emerged a few months ago is still somewhat worrying.

The prospectus discloses that in November 2025, the company proactively initiated a voluntary product recall for a limited batch of inverter models sold in Australia. The reason was that a small number of AC plug components were damaged due to installation issues, creating a potential fire risk.

As of now, the company has not received any reports of property damage or personal injury, and the matter does not have a material impact on the company’s business, financial condition, or operating performance. The company implemented the following preventive and remedial measures: initiating firmware updates and proactively monitoring system operation; providing affected users with free replacement of inverters equipped with updated AC plug components; and providing an additional 2-year warranty for the replaced inverters beyond the original 10-year standard warranty.

Yu Fenghui, an invited researcher at the China Finance Think Tank, said that, given Sige New Energy’s reliance on a single big product and overseas compliance risks, this situation truly poses challenges to the company’s long-term sustainability. A high proportion of revenue derived from a single product exposes the company to substantial market risk. If market demand for that product changes or it is replaced by technology, it will directly affect the company’s revenue.

2

The risk of reliance on the distribution network is significant, and the debt ratio has surged

One major risk Sige New Energy faces is high customer concentration. During the reporting period, the proportion of revenue generated by the company’s top five customers as a share of total revenue for the corresponding periods was 72.5%, 37.1%, and 48.6%, respectively, while the revenue contribution of the largest customer was 22.9%, 8.9%, and 14.7%, respectively.

In terms of sales model, the company mainly relies on partnerships with distributors for global marketing and product sales. As of September 30, 2025, the company has built a wide cooperation network with 161 distributors across more than 80 countries and regions. During the reporting period, the revenue generated through distributor channels accounted for nearly 100% of the company’s revenue, meaning the company is highly dependent on the distribution network; there is no direct or indirect legal or contractual relationship with secondary distributors (including installers).

Yu Fenghui further noted that a highly concentrated customer and channel structure increases business instability. The recall incident in Australia further exposed potential risks in the company’s product quality control and compliance management in overseas markets. These factors may lead to lower market multiples when valuing the company’s Hong Kong IPO, and during the review process, the company may also need to provide more detailed risk disclosures and response measures.

Regarding suppliers, during the reporting period, the company’s purchases from its top five suppliers accounted for 41.1%, 43.8%, and 41.9% of total purchases, respectively, and the largest supplier’s purchase share was 14.3%, 17.9%, and 15.0%, respectively. Supplier concentration is at a relatively reasonable level, but price fluctuations in core raw materials such as batteries and semiconductors may still put pressure on the company’s cost side. During the reporting period, the proportion of material costs as a share of cost of sales was 67.8%, 81.8%, and 82.2%, respectively.

Meanwhile, the company’s trade receivables and bills receivable were RMB 20.30 million, RMB 357.6 million, and RMB 2.320 billion, respectively, showing a rapid growth trend. The days sales outstanding for trade receivables were 63 days, 51 days, and 64 days, respectively, and overall turnover efficiency remained stable.

As for inventory, as of September 30, 2025, the company’s inventory carrying balance was RMB 2.568 billion, up approximately 182.8% from RMB 0.908 billion at the end of 2024.

From the perspective of financial health, the company’s asset-liability ratio increased from 59.8% in 2023 to 65.4% as of September 30, 2025. The current ratio decreased from 1.4x to 1.3x, and the quick ratio decreased from 0.9x to 0.8x.

In terms of cash flow, in 2023 the company recorded net cash flow used in operating activities of RMB 288 million, mainly due to increased investment in working capital, especially the increase in accounts receivable and inventory. In 2024, net cash flow used in operating activities fell sharply to RMB 36.97 million, and in the first nine months of 2025, net cash flow generated from operating activities was RMB 24.65 million, indicating an improvement in cash flow conditions.

Yu Fenghui believes that the simultaneous surge in inventory and accounts receivable indicates that the company’s customer cash collection efficiency is not high, and there may be inventory backlogs or excessively lenient credit policies—both of which pose threats to cash-flow management. With the asset-liability ratio as high as 65.4%, together with the pressure from the IPO performance guarantee clauses, this means the company not only faces high financial leverage risk, but may also affect governance stability and shareholders’ interests if it fails to meet the performance guarantee conditions. Under these circumstances, investors will pay more attention to the authenticity of the company’s performance and the healthy status of future cash flows. If these problems cannot be effectively improved, it will have a negative impact on the company’s IPO pricing and the subsequent stock-price performance.

3

Huawei-connected entrepreneur; red-ocean competition puts it to the test

Sige New Energy was established in May 2022, but it only began commercial production and sales in May 2023. Because its operating history is relatively short, there is substantial uncertainty about the company’s business sustainability and future development prospects.

The prospectus indicates that the main risks the company faces include: limited operating history, which may not represent future financial performance, and the possibility that it may not be able to maintain historical growth rates; if it cannot successfully manage rapid growth, its business and prospects may suffer major adverse effects; and the company recorded net losses and operating cash outflows during the track record period, and there is no guarantee that it can maintain profitability going forward.

Regarding the equity structure, as of the last practicable date, founder, chairman, and executive director Mr. Xu Yingtong directly controls about 10.18% of the shares. Through his holding entities (Jiaxing Oujie, Jiaxing Gulin, Jiaxing Mailin, and Jiaxing Maitai), he indirectly controls about 39.10% of the shares, for a total control of approximately 49.28% of the voting rights, making him the controlling shareholder of the company.

What is worth noting is that Xu Yingtong is a “Huawei-connected” entrepreneur. Before founding Sige New Energy, he worked at Huawei for about 20 years, holding positions including President of Huawei’s Smart PV business and representative of Huawei’s Poland office, among others, and he has rich industry experience and management capabilities. This background has also become a focus of market attention. Multiple media outlets have linked him to Huawei’s “technical genes” and management philosophy.

In terms of financing history, from June 2022 to January 2024, the company conducted multiple rounds of financing and cumulatively raised approximately RMB 715 million. Investors include Hillhouse Capital (via Zhuhai Meiheng), Wande International (via Guangzhou Huaxin), Yunhui Capital (via Suzhou Yunhui, Jinan Yunhui, etc.), Zhongding Capital (via Jiaxing Dingyun), SF Investment (via Xiamen Xiaoyu), and other well-known investment institutions. These investors’ backing not only provided the company with funding support, but also improved the company’s market recognition to a certain extent.

From the perspective of industry development trends, the global energy storage system market is in a period of rapid growth. According to a report by Frost & Sullivan, the global shipment volume of stackable distributed solar-storage integrated solutions is expected to reach 47.9 GWh by 2030, and the compound annual growth rate from 2025 to 2030 will be 65.8%. However, as major market participants strongly promote stackable distributed solar-storage integrated solutions in 2025, competition in the market will become increasingly intense.

Based on data from the same institution, Sige New Energy has already occupied a leading position in its sub-segment, with a global share of 28.6% in the global stackable distributed solar-storage integrated solutions market, ranking first worldwide. In the overall distributed solar-storage integrated solutions market, the company also ranks in the global top three with a 8.2% share. However, in the broader global distributed energy storage systems and the overall energy storage systems markets, the company’s share remains relatively limited, at 0.6% and 0.2% respectively for the same period.

In its IPO prospectus, Sige New Energy states that it plans to use the IPO proceeds to further expand its R&D team and enhance its R&D equipment and technology; strengthen marketing and after-sales service; expand production capacity; diversify product portfolios and expand commercial and industrial solar-storage charging solution services; as well as working capital and general corporate purposes. (Produced by Harbor Finance)

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