New Stock Outlook | Crown and Shackles: Leading Market Share, Numerous Hidden Risks of New Rui Li, Hard to Support Industry Internet Valuation.

Domestic commercial vehicle service market leader Zhejiang Xinxin Ruili Auto Parts Co., Ltd. (hereinafter referred to as Xinxin Ruili) has recently embarked on a new journey to list in Hong Kong. On June 26, Xinxin Ruili submitted its listing application to the main board of the Hong Kong Stock Exchange, with CCB International as its exclusive sponsor. According to data from Torch Insight, based on its revenue in 2025 and the number of operating stores as of December 31, 2025, Xinxin Ruili ranks first in the Chinese commercial vehicle service market. In terms of performance, from 2023 to 2025, Xinxin Ruili's revenue was 2.676 billion, 2.715 billion, and 2.504 billion yuan, showing some fluctuations; while its net profit during the same period was 0.871 million, 42.513 million, and 70.182 million yuan, indicating an accelerating trend. Despite Xinxin Ruili's leading position in the aftermarket for commercial vehicles and seemingly rapid profit growth, there are hidden concerns behind the financial data, and the company's business operations actually face significant challenges. Emerging from the Ruili Group, leading the domestic market with 15.6 billion in revenue Speaking of Xinxin Ruili, it is inseparable from the Ruili Group. Its development history can be traced back to 1987 when the Ruili Group started with car electrical appliances, and in 1993 successfully entered the FAW Jiefang Group's supporting system, opening the door to the commercial vehicle supply chain, and at the same time deepening its product line into the field of commercial vehicle pneumatic brake valves. After renaming itself Zhejiang Ruili Industrial Group in 1995, its innovative "host matching, maintenance parts, foreign markets" market strategy drove the company into a period of rapid growth. In July 2004, the Ruili Group jumped on the trend of Chinese concept stocks listing in the US and listed on the Nasdaq OTCBB, becoming Wenzhou's first overseas-listed private enterprise, and transferred to the main board in 2006 (code: SORL). However, the long-standing undervaluation dilemma in the US stock market prompted the Zhang Xiaoping family to decisively privatize the Ruili Group and delist in May 2020, ending a 14-year career in the US stock market. Subsequently, the Ruili Group embarked on a sophisticated capital restructuring: divesting manufacturing assets and successfully listing Guangzhou Ruili Kormee Automotive Electronic (001285.SH) on the Shenzhen Stock Exchange in September 2025, while integrating the distribution business into the Xinxin Ruili system established in 2016, aiming to tell a story of a "commercial vehicle aftermarket industrial internet platform" in the Hong Kong stock market. As a distribution platform spun off from the Ruili Group, Xinxin Ruili, before its IPO, was firmly controlled by the Zhang Xiaoping family through the Ruili Group and its concerted action parties, with a total shareholding of 89.21%. Leveraging this strong industrial foundation, the company has built a diversified product matrix and woven a wide-ranging sales network. According to the prospectus, Xinxin Ruili offers over 326,000 SKUs in domestic and international markets, supporting a wide range of commercial vehicle models and applications. These SKUs are mainly divided into six categories: chassis system components, general components, transmission components, electrical and electronic components, engine components, and body and accessories. In 2025, these six categories accounted for 61.9%, 18%, 10.3%, 6.7%, 2.2%, and 0.9% of the revenue, respectively. Thus, chassis system components are the core products of Xinxin Ruili, accounting for over 60% of revenue. In terms of sales network, Xinxin Ruili has 265 direct-operated stores in the domestic market, covering services in 30 provincial-level administrative regions across the country. The company has innovatively adopted a "state-owned enterprise joint venture" model, establishing 63 joint ventures to deeply integrate the operational efficiency of private enterprises with the regional resources of state-owned enterprises to achieve deep market penetration. In the international market, Xinxin Ruili's business spans approximately 100 countries and regions around the world. Through a synergistic model of "centralized procurement + local partners," the company efficiently expands its international presence, balancing supply chain efficiency with localized services. By 2025, Xinxin Ruili's revenue from the domestic market accounted for 65%, while revenue from overseas markets reached 35%, achieving dual-drive development in the domestic and international markets. With over 326,000 SKUs and a wide-ranging sales network covering domestic and international markets, Xinxin Ruili has served over 220,000 end customers, including domestic car repair shops, car parts stores, joint ventures, fleet operators, OEMs, distributors, and public transport companies. By 2025, these customers contributed to domestic revenue at percentages of 26.3%, 27.2%, 14.9%, 13.7%, 11.4%, 3.3%, and 3.3%. Overseas customers mainly cover distributors and OEMs, serving as the main driver of the company's overseas revenue. According to data from Torch Insight, based on the 2025 commercial vehicle service revenue, Xinxin Ruili leads the industry with a scale of 15.6 billion yuan and holds the largest market share. Although the second place closely follows with 1.2 billion Hong Kong dollars, there is still a gap between the two, while the third to fifth places in the industry show a significant disparity, distancing themselves from Xinxin Ruili. Cost-cutting accelerates profit release, multiple hidden concerns suppress valuation If leading market share is seen as a "bonus point" for Xinxin Ruili's IPO this time, then the "apparent prosperity" of the profit end is the biggest concern - profit acceleration in the context of stagnant revenue seems more like a "throttling" financial optimization, rather than a true reflection of organic growth. According to the prospectus, Xinxin Ruili's revenue from 2023 to 2025 was 2.676 billion, 2.715 billion, and 2.504 billion yuan. The 1.5% increase in revenue in 2024 was mainly due to the company's expansion of joint operations with local state-owned public transport enterprises, which led to increased penetration in the domestic market. The decline in revenue by approximately 7.8% in 2025 was mainly due to weak global market demand leading to an 8% decrease in revenue from overseas markets. At the same time as revenue fluctuations, Xinxin Ruili's gross profit continues to be under pressure. From 2023 to 2025, the company's gross profit decreased from 442 million to 396 million yuan. This downward trend is mainly attributed to the "three consecutive declines" in gross profit margins - with margins of 16.5%, 16.0%, and 15.8% during the period. The root cause lies in the continued shrinking share of high-margin overseas business revenue, directly lowering the overall gross profit margin level. While gross profit continues to decline, Xinxin Ruili's profit end has unexpectedly achieved accelerated release. From 2023 to 2025, Xinxin Ruili's net profits were 871,000, 42,513,000, and 70,182,000 yuan. However, behind this impressive trend lies mainly the reduction in operating expenses. From 2023 to 2025, Xinxin Ruili's three expense ratio (sales expenses + administrative expenses + R & D expenses) as a percentage of total revenue for the period were 16.00%, 14.70%, and 12.60%, showing a continuous downward trend. Among them, sales expenses saw the most significant decrease, dropping from 11.2% in 2023 to 7.8% in 2025. The sharp contraction in expenses reflects that Xinxin Ruili is going through a clear period of strategic contraction. Data from the prospectus further confirms this trend: the total number of stores decreased from 321 at the end of 2023 to 265 at the end of 2025, a net decrease of 56 stores over two years. This indicates that the company's current profit release is largely due to "tightening belts" cost reductions rather than scalability effects from business expansion. Behind the business strategy contraction, there are actually two layers of hidden concerns. The superficial concern is the industry's beta "late spring chill". Although the commercial vehicle aftermarket has a large base of 35 million vehicles, the sentiment has long since faded - freight rates remain low, fleet and driver maintenance budgets are delayed as much as possible, coupled with the competition from OEM platforms such as Jiefang and Dongfeng in the aftermarket, the overall survival space for third-party independent distributors is being squeezed from both sides. The deeper concern is the company's alpha "misalignment". 64% of Xinxin Ruili's procurement volume is still tied to the Ruili Group's fuel brake/chassis parts, the supply of new energy is weak, and the proportion of electrical and electronic products has only increased from 5.9% to 6.7% over three years, hardly tapping into the incremental dividends of the new energy aftermarket. When industry containers silently shift from "fuel chassis" to "three-electric maintenance", Xinxin Ruili's shelves have yet to catch up - this mismatch between container structure and industry transition is a more challenging concern than a mere downsizing. Therefore, with multiple hidden concerns including profit reliance on cost-cutting, continuous store shrinkage, and containers still entrenched in the fuel era, Xinxin Ruili, solely relying on its "number one market share", is finding it difficult to sustain the valuation imagination of a "platform company". If these structural issues remain unresolved, even if beautifying financial reports through closures and conversions, the capital market is likely to anchor it as a traditional "distributor" at a discount, rather than generously assigning the premium that an "industrial internet" should deserve.