Topstar Files for A+H Listing for the Second Time: Performance Under Pressure in Past Three Years, Nearly RMB 550 Million in Related-Party Transactions Draws Attention

$Guangdong Topstar Technology (300607.SZ)$

On July 20, 2026, Guangdong Topstar Technology Co., Ltd. (hereinafter referred to as "Topstar," 300607.SZ) updated its Hong Kong stock prospectus for the second time. On August 2, the company issued an amendment announcement, additionally appointing Tianfeng International as the overall coordinator. This filing came just four days after the expiration of the initial application materials, with a nearly seamless transition that clearly reflects the company's urgent financing needs. Huatai International serves as the exclusive sponsor for this offering.

Two Filings for Hong Kong Listing: The Triple Strategy Behind the A+H Structure

Established in Dongguan in 2007, Topstar is recognized by Guangdong Province as a "chain master" enterprise in the intelligent robotics industry chain. Its business portfolio covers four major segments: industrial robot bodies, injection molding equipment, five-axis CNC machine tools, and intelligent energy and environmental engineering. Leveraging specialized robots for injection molding to create a differentiated competitive edge, the company is simultaneously deploying humanoid and quadruped embodied AI devices, forming a synergistic business model of "Scenario-Robot-Data-AI."

Topstar's move to list H-shares was not impulsive. Having listed on the ChiNext board in 2017 and deeply cultivated the smart manufacturing sector for nearly two decades, Topstar is making another push for the HKEX Main Board nine years later, striving to build a dual A+H capital platform. In January this year, Topstar submitted its initial Main Board IPO application to the HKEX. Subject to HKEX rules, the prospectus documents are valid for only six months. After the initial materials automatically expired in mid-July, the company left no buffer window, quickly updating all financial, operational, and compliance data to complete the secondary filing. The tight timeline sufficiently evidences the company's strong desire for an overseas listing.

Market participants suggest that Topstar's establishment of dual A+H share listing platforms reflects three clear strategic considerations: First, aligning with its global business layout. Prospectus data shows overseas revenue accounted for 11% of total revenue in 2023, rising to 26.6% in Q1 2026. With continuous expansion of overseas clients in Southeast Asia and Mexico, a Hong Kong listing facilitates access to global industrial capital and enhances overseas brand awareness. Second, diversifying financing channels. Given the lengthy cycle for refinancing in the A-share market, independent fundraising via H-shares can be specifically allocated to core R&D in embodied intelligence and five-axis CNC machine tools, expansion of overseas outlets, repayment of existing bank loans, and replenishment of working capital. Third, improving the global talent incentive system. Post-H-share listing, the company can introduce equity incentive plans tailored for overseas core technical and sales staff, thereby binding the global core team.

On July 13, 2026, Topstar disclosed that it expects net profit attributable to shareholders to range from RMB 90 million to RMB 115 million, representing a year-on-year increase of 213.24% to 300.25%. Net profit attributable to shareholders after deducting non-recurring items is expected to range from RMB 80 million to RMB 105 million, a year-on-year increase of 291.61% to 413.99%.

On July 14, 2026, a research report by Dongguan Securities pointed out that the company's revenue from industrial robots and automation application systems increased significantly year-on-year, with a notable improvement in gross profit margin, driven by enhanced product competitiveness and deeper, broader cooperation with leading 3C clients. Furthermore, the company has strengthened the collection of outstanding accounts receivable, achieving positive results in cash recovery and reducing credit impairment losses year-on-year. The commercial closed-loop model promotes expansion into downstream sectors, while business divestitures help accelerate the company's development. Having cultivated the intelligent manufacturing sector for many years, the company's three major mother machine businesses have achieved synergy. Leveraging the 'scenario + product + data + AI' commercial closed loop, the company is driving its business expansion from the industrial sector deep into the commercial sector.

Dongguan Securities assigns a 'Buy' rating. It forecasts the company's EPS for 2026 to 2028 to be RMB 0.26, RMB 0.31, and RMB 0.38, respectively, corresponding to P/E ratios of 136x, 113x, and 93x, maintaining a 'Buy' rating.

Significant pressure on performance over the past three years; robotics business viewed favorably

However, reviewing the financial reports from 2023 to 2025 and Q1 2026 (the reporting period), Topstar's operating scale has continued to shrink, and the negative impact of business structure adjustments has been considerable. During the reporting period, the company's operating scale showed a clear contraction trend, with total operating revenues of RMB 4.553 billion, RMB 2.872 billion, RMB 2.51 billion, and RMB 538 million, respectively. Net profit attributable to shareholders varied drastically, recording RMB 106 million, -RMB 239 million, RMB 73.141 million, and RMB 42.845 million, respectively.

During the reporting period, Topstar's revenue came almost entirely from its core operating segments. Main business revenues for each period reached RMB 4.539 billion, RMB 2.85 billion, RMB 2.473 billion, and RMB 528 million, respectively. The proportion of main business revenue to total revenue remained stable at over 98% annually, specifically 99.7%, 99.2%, 98.5%, and 98.2%, indicating an extremely high concentration of business revenue.

The main business is divided into four core tracks: industrial robots and automation application systems, injection molding equipment, CNC machine tools, and smart energy and environmental projects. The remainder consists of other supporting businesses such as spare parts and maintenance.

Among these, the smart energy and environmental projects segment is the core issue dragging down the company's overall revenue and profit. In 2023, this segment was once the largest revenue pillar, generating RMB 2.686 billion, accounting for 59% of that year's total revenue. However, due to continued pressure in downstream photovoltaic and lithium battery industries, extended project acceptance cycles, and uncontrollable on-site retrofitting costs, the segment's revenue plummeted for three consecutive years. It fell to RMB 1.229 billion in 2024 (42.8% of total revenue), further declined to RMB 915 million in 2025 (36.5% of total revenue), and generated only RMB 30.351 million in Q1 2026, with its revenue share dropping sharply to 5.6%.

The profitability stability of the smart energy and environmental projects segment is extremely poor. The gross margin was 8.4% in 2023, dropped directly to -11.7% in 2024, causing a substantial loss of RMB 239 million for that year. Although it recovered to 14.7% in 2025, it fell back to 4.6% in Q1 2026, with existing projects continuing to exert pressure on profits.

The company has clearly outlined its strategic adjustment plan, aiming to essentially exit the low-margin, long-cycle engineering business by the end of 2026. Going forward, it will only undertake a limited number of projects under an agency model, charging a 3% service fee. The continuous divestment of this segment is the primary reason for the nearly 50% drop in corporate revenue over the past two years.

In sharp contrast, the industrial robotics and automation systems business has seen its share of revenue steadily rise as orders from overseas consumer electronics clients recover, gradually taking over as the main growth driver. During the period, revenue for this segment was RMB 969 million, RMB 755 million, RMB 685 million, and RMB 322 million, respectively, with its revenue contribution climbing annually from 21.3% to 59.9%. By Q1 2026, it had already become the company's largest source of income.

A research report by Northeast Securities on July 24 pointed out that the company stands to benefit significantly from the demand for processing humanoid robot components. The company focuses on the R&D and production of five-axis simultaneous CNC machine tools, with products covering the GMU series of five-axis simultaneous machining centers, featuring self-developed spindles and GTRT gear-driven cradle rotary table technology.In 2025, the CNC machine tool segment received nearly 400 orders throughout the year, a 37% year-on-year increase, with shipments reaching nearly 300 units, up 15% year-on-year. Demand for processing components related to humanoid robots increased significantly. Five-axis simultaneous CNC machine tools can be used to process finger joints, load-bearing hip connectors, thoracic structural parts, sole components, limb structures, joint structures, and precision transmission parts required by robots, directly benefiting from the industrialization process of humanoid robots.

Risks in Topstar's customer structure should not be overlooked. The revenue contribution from the top five customers during the reporting period rose year by year, amounting to RMB 1.683 billion, RMB 1.251 billion, RMB 1.037 billion, and RMB 320 million, representing 37%, 43.6%, 41.3%, and 59.5% of total revenue, respectively, indicating rising customer concentration. Among them, the revenue share from the largest customer climbed annually, with sales revenues of RMB 457 million, RMB 416 million, RMB 510 million, and RMB 264 million, accounting for 10%, 14.5%, 20.3%, and 49.1% of total revenue, respectively. With a single customer contributing nearly half of the revenue, the company is heavily tied to leading consumer electronics manufacturers. Any contraction in downstream capital expenditure, price pressure, or delayed payments will directly impact the company's quarterly revenue and profits.

Meanwhile, although overseas business has expanded steadily, with its revenue share increasing from 11% to 26.6%, the lack of diversification among overseas customers, longer cross-border collection cycles, and exchange rate fluctuations mean that these factors cannot offset the operational risk of reliance on a single major customer in the short term.

Operating cash flow turns negative; inventory surges

High accounts receivable, inventory backlog, significant cash flow volatility, and consecutive goodwill impairments are the four most alarming financial red flags disclosed in Topstar's prospectus. These are also key risk points closely monitored by overseas institutional investors, with several core operating indicators deteriorating continuously over three years.

During the reporting period, Topstar's balance of trade receivables plus notes receivable was RMB 2.346 billion, RMB 1.44 billion, RMB 1.19 billion, and RMB 1.209 billion, respectively. While the book balance appears to have decreased, collection efficiency has continued to weaken, with days sales outstanding (DSO) extending from 180 days to 202 days, significantly higher than the average collection cycle in the automation equipment industry.

More severely, long-overdue accounts have surged, with accounts receivable aged 3 to 4 years jumping from RMB 10.851 million in 2023 to RMB 133 million in Q1 2026. Recovering large volumes of aged debts is extremely difficult, creating pressure for significant bad debt provisions in the future. Additionally, contract assets have remained between RMB 456 million and RMB 673 million for years, with many completed projects unable to settle, resulting in the company's working capital being tied up by downstream clients for extended periods.

Meanwhile, the company's inventory and contract costs have continued to rise, reaching RMB 699 million, RMB 630 million, RMB 918 million, and RMB 936 million, respectively. Days sales of inventory (DSI) surged from 90 days to 230 days, representing an increase of over 156% in three years. Given the rapid iteration cycles of industrial robots and CNC equipment, older models and customized non-standard parts are highly prone to depreciation. This is compounded by a significant backlog of auxiliary machinery and engineering materials following the contraction of its energy business, leading to continuously rising warehousing and management costs. If capital expenditure in the manufacturing sector declines, the company faces the risk of substantial inventory impairment losses.

Furthermore, Topstar's operating cash flow has exhibited significant volatility, with net inflows of RMB 277 million in 2023, RMB 132 million in 2024, and RMB 428 million in 2025, before turning into a net outflow of RMB 130 million in Q1 2026. Cash flow came under pressure due to concentrated stockpiling, bill payments, and project advance payments in the first quarter. The cash conversion cycle briefly dropped to 57 days in 2025 but rebounded to 94 days in Q1 2026, indicating a prolonged capital recovery period. In terms of monetary funds, the book balance stood at RMB 1.12 billion at the end of 2025 but shrank to RMB 820 million by Q1 2026. Coupled with ongoing capital investments and debt repayments, the company's short-term liquidity safety cushion continues to thin.

The company's goodwill stems entirely from the acquisition of Dongguan Efm CNC. Its carrying value has shrunk year by year, recording balances of RMB 85.232 million, RMB 70.505 million, RMB 49.026 million, and RMB 49.026 million during the respective periods. Goodwill impairments of RMB 20.48 million, RMB 14.73 million, and RMB 21.48 million were recognized in 2023, 2024, and 2025, respectively. Three consecutive years of impairment directly point to Efm's five-axis machine tools consistently underperforming against the performance commitments made at the time of acquisition.

Additionally, the company's intangible assets have also declined annually, falling from RMB 51.525 million in 2023 to RMB 23.631 million in Q1 2026. An additional impairment provision of RMB 7.49 million was recorded in 2024 for intangible assets related to outdated technology. Impairment losses on acquired assets were a major driver of the company's significant loss in 2024, and there remains room for further impairment provisions as industry competition intensifies.

Departure of Vice President Draws Attention to RMB 548 Million in Related-Party Transactions

Regarding shareholding structure, Wu Fengli, the founder and largest single shareholder, directly holds 145 million shares, accounting for 30.32% of the total share capital. Excluding treasury shares, he exercises approximately 30.47% of the voting rights at shareholders' meetings, making him the core actual controller of the enterprise. Currently, no other shareholder has signed a concerted action agreement with Wu Fengli; this stake is held entirely by him personally. In contrast, the second-largest shareholder holds only 3.44%, indicating that equity concentration is significantly tilted toward the founder. Major corporate matters, including operations, dividend distributions, refinancing, and H-share issuances, are dominated by Wu Fengli's decisions.

Wu Fengli and his parties acting in concert have pledged a total of 8.85 million shares, representing 1.86% of the company's total share capital, with a corresponding market value of RMB 296 million. The pledge ratio for his personal holdings stands at 6.12%. The estimated warning line for the pledges is RMB 33.80, and the liquidation line is RMB 29.58. With the company's current A-share price at RMB 34.39, it is only slightly above the warning level.

The Eagle Eye Warning Monitoring Model has classified this shareholder's pledges as high-risk. Should the A-share market experience a phased correction, the actual controller will face the need to provide additional collateral. In extreme market conditions, there is a risk of forced liquidation of shares, which could easily trigger a chain reaction of declines in the secondary market. Institutional investors in the Hong Kong stock market will closely monitor the stability of the actual controller's equity.

Notably, in December 2025, Huang Daibo, the former director and vice president of the company, officially resigned. Under the listing rules of the Hong Kong Stock Exchange, enterprises controlled by senior executives within 12 months of their departure are considered statutory related parties. Huang Daibo controls two entities, Suzhou Boyi Intelligence and Dongguan Junye Green Energy, through multi-layered shareholding platforms.The prospectus disclosed that actual related-party transactions between the two parties amounted to only RMB 758,200 in 2025. However, the annual related-party transaction quota approved by the shareholders' meeting for 2026 reached a high of RMB 548 million, comprising RMB 123 million for Suzhou Boyi and RMB 425 million for Dongguan Junye. These transactions cover product supply and sales, factory leasing, and procurement for green energy projects.

The core concern lies in the fact that, just one month after a former executive's departure, an annual cap of hundreds of millions for related-party transactions was finalized. However, the prospectus failed to disclose the actual scale of transactions already executed in 2026, making it difficult to intuitively verify the fairness of pricing, business necessity, or the potential existence of benefit transfers. The Hong Kong Stock Exchange maintains strict scrutiny over large-scale related-party transactions added during the IPO application period. Sponsors and auditors are required to conduct comprehensive due diligence to justify these arrangements. This issue is highly likely to become a focal point of inquiries for H-share listings, potentially delaying or even obstructing the listing process, and represents a key governance flaw that primary market institutions seek to avoid. (Produced by Harbor Finance)

Xiao Xiuni, Harbor Business Observer

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