Renzu's Hong Kong IPO: Gross margin rivals Moutai as CCTV exposes rental phone consumption 'trap'

Author: A Fei

As 'everything can be rented' becomes the new consumer philosophy among young people, a hidden trillion-dollar market is quietly emerging. Smartphones, laptops, cameras, and even drones—just pay a few hundred yuan per month to enjoy the latest tech products.

However, when the storyteller is ready to step onto the stage of the capital market, the spotlight reveals quite a different scene.

On January 26, Guangzhou Yanqu Information Technology Co., Ltd. (hereinafter referred to as 'Renren Leasing'), the parent company of the largest online rental consumption service platform in the country 'Renren Leasing', officially submitted its prospectus to the Hong Kong Stock Exchange. This online leasing platform, which claims to have over 20,000 merchants and 1.7 million paying users, carries a gross profit margin comparable to Moutai, attempting to tell the capital market a story about 'circular economy' and 'new leasing'.

The highly profitable game of 'asset-light'

Renren Leasing mainly operates credit leasing services, covering major product categories such as mobile phones and accessories, computers and tablets, cameras and aerial drones, health and therapy products, home appliances, travel gear, and more.

In terms of performance, Renren Leasing achieved revenues of 294 million yuan, 421 million yuan, and 356 million yuan respectively for the fiscal years 2023-2024 and the first three quarters of 2025, with net profits of 79.6 million yuan, 119 million yuan, and 89 million yuan respectively, showing strong overall growth trends.

In its business model, Renren Leasing does not need to stock a single mobile phone or produce a single computer; its secret is simple — it is a super intermediary that takes from both ends.

Renren Leasing takes from merchants by building an online leasing platform to attract various merchants to join. Merchants are responsible for providing goods, shipping, and after-sales service, while Renren Leasing provides platform services to merchants and charges service fees and commissions.

According to Renren Leasing’s prospectus, merchants joining the platform are required to pay annual fees ranging from 6,800 to 19,800 yuan per year, and Renren Leasing also takes around 10% of each transaction fee as commission.

From the perspective of Renren Leasing's revenue structure, transaction commissions are the absolute backbone of its revenue, consistently contributing over 80% of total income.

Renren Leasing also takes from consumers. Consumers choose products on the platform and pay rent in installments through a credit deposit-free method. At the end of the lease period, they can choose to return the product or pay a 'buyout price' to keep it. If consumers fail to pay rent on time, according to Renren Leasing's agreement, if rent is overdue for more than 15 calendar days, the leasing service relationship automatically converts into a sales relationship between the merchant and the consumer.

Throughout the entire process, RentEase does not bear inventory risks, depreciation risks of goods, or even logistics, after-sales service, and overdue risks, which are mainly shouldered by merchants. Similar to a 'real estate agent,' it only acts as a matchmaker and collects rent.

It is precisely this extreme 'asset-light' model that has enabled RentEase to achieve exceptionally strong profitability. In the first three quarters of 2023 to 2025, RentEase’s gross margins were as high as 80.5%, 82.3%, and 82.9%, respectively. The gross margin for value-added services even exceeded 90%. By comparison, Kweichow Maotai, known for its high margins, boasts a gross margin above 90%, while e-commerce giant PDD Holdings stays around 60%.

This high gross margin isn't supported by a 'technological moat.' In the first three quarters of 2025, RentEase’s R&D expenditure accounted for only 7.4% of total revenue, while sales and marketing expenses made up a whopping 42.5%. This means RentEase's growth heavily relies on 'burning cash' to buy traffic. Once marketing expenditures are scaled back, user growth and retention will face significant challenges.

With this business model, RentEase has claimed the top spot in China's online rental market. However, behind these high margins lies the reality that the platform shifts most of the risks—such as product quality, pricing, and privacy security—to the merchants and consumers, while sitting comfortably to collect hefty tolls.

Under dual scrutiny from CCTV exposure and platform complaints

If RentEase’s story remained solely at the level of financial data, it might be considered a perfect business case. However, behind its impressive performance, the compliance risks RentEase faces cannot be ignored.

In April 2025, CCTV Finance's 'Finance Investigation' program turned its spotlight on RentEase. The report questioned whether RentEase’s so-called 'credit leasing' was essentially a disguised form of 'usury.'

According to the report, for a phone priced at 9,999 yuan on the official website, users would need to pay high buyout fees after 12 installments, bringing the total cost to 12,798 yuan, or 1.27 times the original price. If calculated based on the merchant’s purchase price of 8,700 yuan, the actual annualized interest rate borne by users exceeds 47%.

IPO Reference tests revealed that a phone sold on JD.com for 9,699 yuan had a total cost of 12,398 yuan when leased via RentEase, estimating an annualized interest rate as high as 42.5%. This far exceeds the judicial protection cap for private lending rates (typically 24%) and breaches regulatory red lines in the financial sector.

On the other hand, to prevent user defaults, RentEase and its merchants often pre-install monitoring software on rented phones, capable of remotely locking the device. This is not just a simple risk management tool but poses severe risks of privacy breaches. Some merchants admitted collecting user information to threaten them in cases of late payments. Although RentEase issued an apology letter and promised reforms after being exposed, in August of the same year, its app was still named by the National Cybersecurity Notification Center for illegally collecting and using personal information.

The issue did not end with an apology. IPO Reference noted that on the Black Cat Complaints platform, the total number of complaints against RenRen Rental has exceeded 17,000. The complaints are densely focused on issues such as 'disguised usury,' 'violent debt collection,' 'mismatched goods,' and 'failure to lift supervision locks after buyout.' Some users reported that the rented phones were 'supervised devices' with remote locks; other users found their phones still under surveillance months after buyout, with no way to remove the lock.

Industry insiders analyzed that RenRen Rental's business model heavily relies on credit assessments and installment payments, essentially touching the core of financial activities, yet the company holds no financial licenses. If deemed as 'disguised lending,' RenRen Rental could face significant rectification risks.

The 'wealth creation' journey on the eve of the IPO

RenRen Rental's story is also a typical internet entrepreneurship tale.

In 2015, Hong Guozhi, who worked at Rongjie Group, sensed the intersection of the sharing economy and rental services. After resigning, he founded Guangzhou Research Fun, the parent company of RenRen Rental.

It was reported that RenRen Rental initially had only three shareholders: Hong Guozhi, He Zelin, and Zhang Yuxin, and their office space was no larger than a shipping container. However, it quickly gained capital’s favor with its vision of 'everything can be rented.' Starting from its angel round in 2016, RenRen Rental received investments from notable institutions like Ant Group and Mingyu Ventures. Investors were drawn to its blueprint for a new rental economy where 'everything is rentable,' as well as its vast network effect as a platform connecting numerous merchants and consumers.

With capital backing, RenRen Rental expanded rapidly. By early 2024, the company claimed its services covered over 250 cities nationwide, serving more than 45 million users. Hong Guozhi went from being an entrepreneur in a shipping container to becoming a businessman operating out of a skyscraper in Guangzhou's Tianhe district.

However, alongside this business expansion came the rapid monetization of the founding team. RenRen Rental's prospectus revealed that by the eve of its IPO, the company incurred share-based compensation expenses of up to 25.1 million yuan through its 'employee incentive plan.'

Between 2023 and 2025, RenRen Rental distributed dividends three times, accumulating to 42 million yuan. The company's actual controllers—Hong Guozhi, He Zelin, and Zhang Yuxin—collectively held 51.22% of shares. Coupled with substantial equity incentives, RenRen Rental had already allowed the founding team to 'make a small fortune' before the IPO.

This practice of 'distributing' company profits to the founding team and core employees via high salaries and equity incentives prior to listing, though common, inevitably raises external doubts. Is RenRen Rental's rush to 'create wealth' somewhat premature given its hefty marketing expenditures, serious compliance challenges, and public trust crisis?

Now, with its skyrocketing financial data, Rent-For-All is knocking on the doors of the Hong Kong Stock Exchange. However, it has also brought allegations of usury and a mountain of complaints into the spotlight. As the founding team has quietly amassed wealth just before the IPO, this glossy rental narrative faces scrutiny over whether it can genuinely champion the cause of a circular economy. IPO Reference will continue to monitor the situation.

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