New Stock Preview | Zhi Da Technology: Over 300 million accumulated losses in 3 years, debt ratio of 900%, leading in home charging piles "Three Delivery Statement"

The global new energy vehicles continue to grow rapidly. According to a report by Frost & Sullivan, global electric vehicle sales are expected to reach 17.9 million units by 2024 and are projected to increase to 54.9 million units by 2030, with a compound annual growth rate of 20.2%. The development of new energy vehicles relies on the support of charging infrastructure, and the market for charging piles, considered a standard accessory, is also rapidly expanding. From 2020 to 2024, the total revenue of family electric vehicle charging solutions worldwide increased from 1.5 billion Yuan to 14.2 billion Yuan, with a compound annual growth rate of 75.3%. However, despite the rapid growth of the industry, charging pile companies still face profitability challenges and urgently need financing to seek breakthroughs. According to the Hong Kong Stock Exchange disclosure on July 18th, Shanghai Zhida Technology Development Co., Ltd. (referred to as "Zhida Technology") submitted an application for listing on the main board of the Hong Kong Stock Exchange, with Shenwan Hongyuan Group Hong Kong as the sole sponsor. Zhida Technology had previously submitted applications to the Hong Kong Stock Exchange on February 29, 2024 and November 28, 2024. Household electric vehicle charging piles lead the global sales According to the prospectus, Zhida Technology was founded in November 2010 as Shanghai Zhida Technology Development Co., Ltd, and converted to a joint-stock limited company in September 2022. The company focuses on the development and manufacturing of smart household electric vehicle charging piles and has built a "trinity" solution for family electric vehicle charging, consisting of products, services, and a digital platform. On the product side, Zhida Technology focuses on the research and development of household charging pile hardware, later expanding to innovative categories such as charging Siasun Robot & Automation, and EMS energy management systems. On the service side, according to the Frost & Sullivan report, Zhida Technology has established China's largest electric vehicle charging pile service network, offering home installation and after-sales service, covering over 360 cities nationwide as of March 31, 2025. In terms of digitalization, Zhida Technology has built a digital platform to manage the installation and after-sales network digitally, support the company's shared charging service, and strengthen the company's future "vehicle to home" (V2H) and "vehicle energy interaction" (V2E) capabilities. During the performance period (2022, 2023, 2024, and the first three months of 2025), Zhida Technology's income mainly came from the sale of charging pile products and providing installation and after-sales services. In the first quarter of 2025, revenue from product sales accounted for 67% and revenue from service provision accounted for 33%. On the product sales front, during the performance period, Zhida Technology accumulated shipments of 1.3 million and 1.2 million household electric vehicle charging piles globally and in China, respectively. In 2020, Zhida Technology launched its own retail brand "Zhida" and reached retail users through multiple channels domestically and internationally, with products and services covering 22 countries. They operate online stores on platforms such as Amazon, Tmall, Douyin, and YOUZAN and cooperate with distributors in 137 cities in China. In the B-side market, Zhida Technology provides smart household electric vehicle charging piles, accessories, and/or services to seven of the top ten car manufacturers in China based on 2024 electric vehicle sales volume. According to the Frost & Sullivan report, the global sales volume of electric vehicle charging piles was approximately 19.2 million units during the performance period, with the sales volume of global household electric vehicle charging piles accounting for about 77.3%. Among the top five providers of family electric vehicle charging solutions worldwide, approximately 33.7% are accounted for, with Zhida Technology ranking first, capturing a market share of 9.0%. In terms of sales value of global household electric vehicle charging piles during the performance period, the company ranked fourth, with a market share of approximately 5.7%. In terms of sales volume and sales value of household electric vehicle charging piles in China during the performance period, the company ranked first, with market shares of approximately 13.6% and 10.3%, respectively. Product pricing pressure, three years of accumulated losses exceeding 300 million Despite achieving significant results in business layout and market coverage, Zhida Technology is in a leading position in the industry. However, facing intense market competition, turning this leading edge into sustained profitability remains an important challenge for the company. According to the prospectus, Zhida Technology reported revenues of approximately 697 million Yuan, 671 million Yuan, 593 million Yuan, and 217 million Yuan in 2022, 2023, 2024, and the first quarter of 2025, respectively. During the same periods, the company recorded losses of about 25.147 million Yuan, 58.116 million Yuan, approximately 236 million Yuan, and 17.078 million Yuan, respectively, accumulating losses of around 336 million Yuan since 2022. The gross profit margins for the same periods were 20.4%, 20.5%, 14.9%, and 16.5%, respectively. It can be seen that one of the main reasons for Zhida Technology's performance losses is the pressure on sales gross profit margins. The company stated in the prospectus that in the face of fierce market competition, they are strategically reducing prices to expand their market share and maintain their leading position. This has led to price decreases and increased sales volume, affecting the company's total revenue. As a significant player in the market, the company's primary goal at this stage is to maintain resilience, fend off competitors, and capture a larger market share. Once the competitive landscape stabilizes, the company will focus on increasing gross profit margins. It is worth noting that Zhida Technology's average selling price per charging pile decreased from 791.4 Yuan per unit in 2023 to 780.3 Yuan per unit in the first quarter of 2025. Additionally, product pricing and sales volume are negatively correlated overall. For example, in 2022, the product price was 790.5 Yuan per unit, with sales of 484,800 units; in 2023, the product price increased to 791.4 Yuan per unit, with a 35.4% year-on-year decrease in sales to 313,300 units. In the first quarter of 2025, the product price decreased to 780.3 Yuan per unit, with sales reaching 183,000 units, a 128.9% year-on-year increase. Despite Zhida Technology's strategy of "price for volume," it has not resulted in a net inflow of operating cash. From 2022 to the first quarter of 2025, the company's net cash used in operating activities amounted to approximately 344 million Yuan. During the same period, the amount of loans in the company's current liabilities increased from 253 million Yuan to 422 million Yuan. As of December 31, 2022, Zhida Technology's asset-liability ratio was 82.2%, while as of March 31, 2025, the company's asset-liability ratio had risen to 900.3%. Industry is expected to grow rapidly, anchoring core competitiveness is crucial From the disclosed use of proceeds in the prospectus, Zhida Technology plans to use the raised funds for overseas expansion, including establishing production bases overseas, expanding sales networks, investing in research and development, continuing to innovate products, and enhancing technological competitiveness. Funds may also be used for M&A activities to integrate industry chain resources. This means that Zhida Technology hopes to strengthen core competitiveness from multiple levels and alleviate financial pressure. According to a Frost & Sullivan report, driven by the growth of electric vehicle sales, the sales of household electric vehicle charging piles are expected to increase from 400,000 units in 2020 to 5.7 million units in 2024, with a compound annual growth rate of 93.2%. The growth of the electric vehicle industry is expected to drive the rapid growth of household electric vehicle charging piles. By 2029, the global sales of household electric vehicle charging piles are expected to reach 14.4 million units, with a compound annual growth rate of 20.3% from 2024 to 2029. During the same period, the sales of household electric vehicle charging piles in China, Europe, North America, South America, the Middle East, and Southeast Asia are expected to grow at compound annual growth rates of 15.1%, 15%, 14.5%, 51.6%, 52.3%, and 64.9%, respectively. From Zhida Technology's perspective, product innovation is key. The prospectus shows that research and development expenses accounted for 9.4% of revenue in 2024, and as of March 31, 2025, the company owned 179 patents and patent applications, including 145 owned patents and 34 patent applications. Zhida Technology has launched new products such as the electric vehicle charging Siasun Robot & Automation and EMS solutions. For example, in 2025, they introduced a new generation of intelligent charging Siasun Robot & Automation called "SmartLink." If high-margin products can achieve a large sales volume, it is possible to improve the profitability structure. The company also needs to optimize the cost structure, strictly control costs at various stages such as raw material procurement and production operations, and improve operational efficiency. In terms of market expansion, they will continue to promote their globalization strategy, expand their overseas market share, and reduce reliance on the domestic market. The proportion of overseas revenue has increased from 1.9% in 2022 to 12.1% in 2024, with room for further growth in the future. In summary, Zhida Technology's three applications to the Hong Kong Stock Exchange reflect the dilemma of the household charging pile track being "highly prosperous, low in profitability." With their first-mover advantage and scale barriers, the company has secured the top sales position globally and in China but has yet to break free from the cycle of "price for volume" and bleeding expansion. The key to whether they can convert market share into profits in the future depends on three paths: firstly, whether high-margin innovative products can quickly achieve high sales volume; secondly, whether high-growth overseas markets can replicate the domestic strategy and tap into revenue ceilings; and thirdly, whether utilizing IPO financing to optimize the debt structure for technology, production capacity, and M&A activities. As the penetration rate of new energy vehicles continues to increase, the final outcome for charging piles is still uncertain, and Zhida Technology can only find a balance point between scale and profitability to truly grow from a "leader" to a "winner."