New Stock Preview | Despite a sharp increase in revenue of 281%, why has Heng Intelligence been incurring losses for three consecutive years? What will Heng Intelligence use to break through the Hong Kong stock market?

In the historical process of global energy structure transitioning towards clean and low-carbon transformation, lithium-ion battery energy storage systems, as the core cornerstone of flexible scheduling in the power system, are experiencing unprecedented explosive growth. Recently, the provider of intelligent chemical industrial energy storage solutions, Heng Intelligent Technology, has officially submitted its prospectus to the Hong Kong Stock Exchange, planning to embark on a new development stage in the Hong Kong capital market. As one of the first new forces in energy storage to successfully enter overseas markets in China, Heng Intelligent has established its position in the highly decentralized and fiercely competitive industrial and commercial energy storage field based on its deep academic genes and the technological logic of "software-defined hardware". However, behind the impressive data of significant revenue leaps and improvement in gross profit margin, continuous operating losses, tight cash flow performance, and the escalating "internal circulation" price war within the industry are still severe challenges that this young company must face in the secondary market. Strategic business model adjustment: Shifting focus from source-side to high-margin industrial and commercial energy storage Currently, Heng Intelligent is undergoing a clear strategic transformation period. In terms of revenue structure, by 2023, nearly six-tenths of the company's revenue was contributed by source-side energy storage solutions, mainly targeting large-scale wind-solar hybrid power stations and other centralized projects, which typically have the characteristics of large individual amounts, long cycles, but relatively low profit margins. After 2024 and 2025, the company will shift its focus to the industrial and commercial energy storage sector with higher profit margins and more flexible application scenarios. By the end of the first nine months of 2025, the revenue contribution of the industrial and commercial energy storage sector had risen significantly from 33.3% in 2023 to 69.4%, and the gross profit margin had also increased from 8.3% in 2023 to 19.1%. This structural adjustment, to some extent, offset the devaluation pressure caused by the decline in raw material prices and supported the explosive growth of overall revenue by 281.5% year-on-year for the first nine months of 2025. It is understood that, unlike traditional integrators who simply assemble systems by purchasing battery cells and inverters, Heng Intelligence has autonomous development capabilities in power electronic conversion systems (PCS), battery management systems (BMS), and energy management systems (EMS). Especially in the industrial and commercial scenarios, due to the severe load fluctuations and complex power consumption structures, Heng Intelligent uses its self-developed WHES OS and WHES VPP virtual power plant platform to achieve millisecond response and optimization of charging and discharging strategies through AI algorithms analyzing real-time electricity prices, weather forecasts, and load characteristics. This digital means not only significantly reduces energy costs for overseas customers (such as projects in the Netherlands and Germany) but also paves the way for its transformation from a single equipment provider to an "Energy-as-a-Service (EaaS)" provider. However, despite having efficient technological routes and rapid growth in scale, Heng Intelligent's path to profitability still appears heavy and uncertain. The company has been in a continuous state of losses in the past few years: recording annual/period losses of RMB 154 million, RMB 205 million, and RMB 40 million in 2023, 2024, and the first nine months of 2025, respectively. Although the loss in 2025 has narrowed, this improvement is largely due to the reduction in stock-based payment expenses, not a complete reversal at the operational level. Meanwhile, the company's investment in research and development remains at a high level, with significant cumulative R&D expenses in the past, and sales and administrative expenses remain high as the global market expands. Against the backdrop of tight global liquidity, this high growth accompanied by an intense "burning cash" model is facing pressure to transition from "scale-oriented" to "self-sustaining." Global service network layout: Seeking overseas growth in the face of "internal circulation" competition In the current intense competition in the domestic energy storage market, going overseas has become an inevitable path for Chinese energy storage companies. Currently, Heng Intelligent adopts a "domestic + overseas" dual-engine strategy, not only as a safe haven against regulatory risks in a single market but also as an accelerator to capture global dividends. It is understood that in the construction of the global service network, Heng Intelligent did not adopt a light-asset agency model but established a global service system through setting up 11 service centers and 6 regional offices overseas, integrating software and hardware. This layout not only enhances the after-sales premium capability but also locks in customer stickiness through long-term operation and maintenance services (O&M), enabling the transition from a single equipment vendor to an energy service provider. According to the company's latest business progress, Heng Intelligent has signed energy resource aggregation agreements with customers in Shanghai, Jiangsu, Zhejiang, and other regions, with the WHES VPP platform having established approximately 24MWh of aggregable energy capacity, marking the company's entry into the virtual power plant operation track and aiming to initiate a second growth curve based on energy data. However, amid the macro-level rapid progress, the drastic fluctuations in raw material prices remain the primary variable faced by system integrators. According to Frost & Sullivan forecasts, the price of lithium carbonate is expected to decrease from 0.5 yuan/Wh in 2023 to 0.3 yuan/Wh by 2030. While this trend may help reduce sales costs in the long term, in the short term, it could pose a risk of inventory write-downs, testing the company's inventory management capabilities. Moreover, over 40% of Heng Intelligent's current revenue comes from overseas, and the company is actively entering the high-profit potential North American market. However, compliance access in different jurisdictions, such as North American UL certification, German VDE certification, labor regulations, trade protectionism measures, and volatile foreign exchange risks, may all have irreversible negative impacts on the business. In conclusion, in the globally intertwined energy landscape with smart electricity, Heng Intelligent has demonstrated its rare value as a new force in the Hong Kong-listed energy storage sector with its deep digital foundation and clear global anchor points. However, as the lithium battery energy storage industry enters the latter half of the game of survival of the fittest and price clearing, Heng Intelligent must prove its ability to achieve profitability and positive cash flow without relying on continuous external "transfusions."