Caviar industry leader Sturgeon Technology, after four failed IPO attempts, pivots to Hong Kong listing, seeking fresh funds for working capital following hundreds of millions in dividends

$Hangzhou Qiandaohu Xunlong Sci-tech Co., Ltd. (810959.HK)$

In high-end consumption settings such as Western restaurants, premium supermarkets, and five-star hotels, caviar—dubbed "black gold"—symbolizes luxury and top-tier ingredients. Hangzhou Qiandao Lake Sturgeon Technology Co., Ltd. (hereinafter referred to as Sturgeon Technology) is a global leader specializing in sturgeon farming and caviar production.

Sturgeon Technology previously encountered setbacks in four consecutive IPO attempts. After its prospectus lapsed in April 2026, the company updated its filing in May of the same year and shifted its listing plan to Hong Kong, resuming its capital markets journey with joint sponsors CITIC Securities (Hong Kong) and CSCI International.

Although the company claimed in its prospectus that it has comprehensively rectified legacy issues such as historical related-party transactions, biological asset valuation, and financial compliance, core risks—including a highly concentrated business structure, heavy reliance on overseas revenue, substantial biological assets, and significant valuation volatility—remain unresolved. Consequently, significant uncertainty still surrounds whether its fifth IPO attempt will succeed.

Highly concentrated revenue structure with heavy dependence on overseas markets

According to the prospectus and Tianyancha, Sturgeon Technology was founded in 2003 and is headquartered in Hangzhou, Zhejiang Province. Leveraging core aquaculture bases in Qiandao Lake and Quzhou, the company has built a fully integrated industrial chain covering sturgeon breeding, large-scale farming, caviar processing, global sales, and brand operations.

Per data from CIC Consulting, the top five global caviar producers account for approximately 57.7% of total market volume. Since 2015, Sturgeon Technology has ranked first globally in caviar sales volume for 11 consecutive years, capturing a 36.1% global market share in 2025—more than four times that of the second-largest producer.

However, behind this impressive industry position lies growing external concern over an overly narrow product portfolio. During the reporting period (2023–2025), the company’s caviar product revenue amounted to RMB 523 million, RMB 614 million, and RMB 698 million, respectively, accounting for 90.6%, 91.8%, and 90.8% of total revenue—demonstrating heavy reliance on a single product. Remaining revenue came from other businesses such as sturgeon-based products and live sturgeon sales, which contributed minimally.

Breaking down caviar revenue by type, Russian sturgeon caviar and hybrid sturgeon caviar are the primary sources. During the reporting period, Russian sturgeon caviar generated revenue of RMB 273 million, RMB 339 million, and RMB 413 million, representing 47.2%, 50.6%, and 53.7% of total revenue, respectively. Hybrid sturgeon caviar contributed RMB 160 million, RMB 192 million, and RMB 218 million, or 27.7%, 28.7%, and 28.4% of total revenue, respectively.

Benefiting from steady expansion in the caviar market, the company recorded total revenue of RMB 577 million, RMB 669 million, and RMB 769 million during the reporting period, with net profits of RMB 273 million, RMB 324 million, and RMB 365 million, respectively. Net profit margins stood at 47.3%, 48.4%, and 47.5%.

Notably, the company’s market focus is heavily concentrated overseas, and this reliance has continued to increase. Overseas sales revenue during the reporting period amounted to RMB 443 million, RMB 536 million, and RMB 644 million, representing 76.7%, 80.1%, and 83.8% of total revenue, respectively. Domestic sales revenue totaled RMB 135 million, RMB 133 million, and RMB 125 million, accounting for 23.3%, 19.9%, and 16.2% of total revenue, respectively.

“From a product perspective, caviar accounts for over 90% of the company’s revenue. As a luxury good, its demand is highly correlated with market cycles. During periods of weak consumer spending, performance can experience significant volatility, and the lack of diversified businesses limits the company’s ability to hedge against such risks.

From a market standpoint, overseas revenue exceeds 80%, exposing the company deeply to multiple risks including trade barriers, geopolitical tensions, and foreign exchange fluctuations. Additionally, its reliance on an OEM business model limits pricing power at the retail level. Without sufficient expansion in the domestic market, any disruption overseas would leave the company with little effective buffer. This constrains its long-term growth potential and indicates relatively weak risk resilience. Overall, the inherent characteristics of the industry have already embedded numerous structural drawbacks.”

"However, from another perspective, this drawback also serves as a barrier—one that can protect against competitors. So, in a sense, how a company addresses this disadvantage while simultaneously raising the barrier could become an advantage or strategic condition. It ultimately depends on how the company positions itself," said Zhang Yi, CEO and Chief Analyst at iiMedia Research, in an interview with Harbor Business Observer.

Impairment risk of biological assets and continuously rising accounts payable

During the reporting periods, the company's biological assets continued to grow, with carrying values of RMB 1.389 billion, RMB 1.554 billion, and RMB 1.749 billion, respectively, corresponding to sturgeon biomass of 11,502.6 metric tons, 12,460.7 metric tons, and 14,326.9 metric tons.

In July 2024, the company was affected by extreme rainfall associated with floods and typhoons, as well as upstream flood discharge in the Yalu River basin. Despite implementing preventive measures, the company still lost approximately 2,000 sturgeons, representing about 0.18% of its total sturgeon inventory at the time.

Although the company holds a substantial volume of sturgeon biological assets, its gross profit performance has been highly volatile due to the exceptionally long farming cycle of sturgeon, which ranges from 7 to 15 years.

During the reporting periods, the company’s gross profit before adjusting for changes in the fair value of biological assets was RMB 405 million, RMB 444 million, and RMB 521 million, with gross margins of 70.1%, 66.3%, and 67.7%, respectively. However, after accounting for fair value adjustments of biological assets, profitability declined significantly, with gross margins dropping to just 1.3%, -2.9%, and 1.1% over the same periods. In 2024, the company even reported a gross loss, reflecting poor earnings stability.

The company disclosed in its prospectus that its biological assets are subsequently measured using the fair value less costs to sell model. As there is no active trading market for different sturgeon varieties and observable market prices or interest rate parameters are unavailable, the fair value of biological assets falls under Level 3 of the fair value hierarchy. The valuation employs a discounted cash flow method incorporating significant unobservable inputs. Changes in fair value are recognized in the statement of comprehensive income and separately presented as a line item for changes in the fair value of biological assets.

Zhang Yi pointed out that the sturgeon’s extended farming cycle ties up capital for an exceptionally long period and results in slow cash conversion. Continuous investment is required throughout the entire farming cycle in areas such as feed, labor, and aquaculture facilities. This prolonged commitment of working capital significantly increases financial leverage and financing pressure. Strategically, if capacity adjustments lag substantially behind market shifts, the company will struggle to respond flexibly to price volatility. Moreover, the large scale of biological assets makes them highly vulnerable to natural disasters, disease outbreaks, and other uncontrollable external factors.

Furthermore, fluctuations in fair value directly undermine the reliability of reported profits, and the difficulty of auditing these valuations has become a core concern for capital markets.

In addition to the earnings volatility stemming from biological assets, Sturgeon Tech’s inventory and accounts payable have also risen in tandem during the reporting periods.

During the reporting periods, the company's inventory amounted to RMB 50.8 million, RMB 43.9 million, and RMB 58.9 million, respectively, with inventory turnover days of 32.3 days, 25.1 days, and 24.7 days, respectively. Inventory turnover days have declined year-over-year and remained generally stable.

Meanwhile, the company's trade receivables were RMB 49.0 million, RMB 57.4 million, and RMB 33.9 million, respectively, with trade receivables turnover days of 26.7 days, 29 days, and 21.7 days, respectively.

Additionally, as of the end of each reporting period, Sturgeon Tech’s trade payables and bills payable amounted to RMB 89.5 million, RMB 108 million, and RMB 133 million, respectively.

In terms of solvency, as of the end of each reporting period, the company's asset-liability ratios were 26%, 22%, and 31%, respectively; its current ratios were 6.3, 7.5, and 5.7, respectively; and its quick ratios were 6.1, 7.4, and 5.6, respectively.

Regarding cash flow and liquidity reserves, as of the end of each reporting period, the company's net cash flow from operating activities amounted to RMB 260 million, RMB 253 million, and RMB 270 million, respectively; cash and cash equivalents totaled RMB 208 million, RMB 304 million, and RMB 784 million, respectively, indicating ample cash on hand.

Proposing to raise funds for working capital after substantial dividend payouts—a 15-year arduous path to IPO

In this IPO, Sturgeon Tech plans to allocate the proceeds toward five key areas: capacity expansion and technological upgrades, brand and channel development, R&D and digital transformation investments, strategic industry acquisitions, and supplementing working capital.

Despite appearing comprehensive, the fundraising plan raises clear logical concerns. The company maintains ample cash reserves and shows no evident funding gap. Moreover, it has distributed substantial dividends during the reporting periods, declaring total dividends of RMB 217 million. Breaking this down by year: RMB 81.6 million in 2023, zero in 2024, and RMB 135 million in 2025. The simultaneous distribution of large dividends to shareholders and the proposal to raise IPO funds to replenish working capital inevitably prompt investor skepticism regarding the rationale behind the IPO fundraising.

Additionally, the prospectus discloses that the company’s shareholders approved a dividend payment of RMB 139 million to existing shareholders at the general meeting held on April 7, 2026. As of the latest practicable date, this dividend has not yet been paid.

From an ownership structure perspective, controlling shareholder Wang Bin holds voting rights over 34.64% of the company’s issued share capital. This includes his direct holding of 6.36% of shares and indirect control of 28.28% through three controlled entities: Chun’an Karuga, Hangzhou Karuga, and Hangzhou Sturgeon.

Regarding internal controls, according to the prospectus disclosure, during the historical record period, certain customers of the company settled payments through third-party accounts not designated as contracting parties in their sales agreements. In 2023, 2024, and 2025, the number of such customers was 101, 157, and 135, respectively, with total settlement amounts under these arrangements amounting to RMB 30.4 million, RMB 43 million, and RMB 24.4 million, representing approximately 5.3%, 6.4%, and 3.2% of total revenue for the respective periods. As of the latest practicable date, the company stated that it had terminated substantially all such arrangements and that all outstanding payments under terminated arrangements had been fully settled, though the transparency of historical fund flows remains questionable.

More alarmingly, the company previously attempted to access capital markets four times, each attempt ending in failure—all accompanied by compliance-related issues.

In October 2011, the company made its first attempt to list on the ChiNext board of the Shenzhen Stock Exchange (SZSE). Its initial public offering (IPO) application was accepted by SZSE, with Cinda Securities acting as sponsor, but the application was ultimately rejected due to concerns over historical related-party transactions.

Undeterred, the company pursued another listing attempt in September 2014, again targeting the ChiNext board but switching its sponsor to Guotai Junan Securities. However, this attempt was derailed amid allegations from shareholders questioning the accuracy of aquaculture inventory data, disputes over the valuation of biological assets, and doubts about the authenticity of overseas sales.

In 2022, Sturgeon Technology again sought an A-share listing, this time aiming for the main board of the Shenzhen Stock Exchange. The company appointed China International Capital Corporation (CICC) as its new sponsor, but the application was never accepted for review, hindered by a combination of past compliance issues, significant challenges in verifying biological assets, and heavy concentration of overseas revenue.

In March 2024, the company listed on the New Third Board (NEEQ), with CICC serving as sponsor. However, in line with its overall strategic development plan, the company voluntarily delisted in August 2025. On October 31, 2025, Sturgeon Technology submitted its first listing application to the Hong Kong Stock Exchange, which subsequently lapsed after failing to secure a hearing within six months. (Produced by Harbour Financial)

Harbor Business Observer, by Zhang Ranqi

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