New Stock Preview | Lingcard Technology's Hong Kong IPO faces a big test, how to balance "expansion" and "difficult profitability"?

In 2025, the size of China's flexible employment market reached 1.765 trillion yuan, continuously expanding at a compound annual growth rate of 17.8% since 2020. In this trillion-level market, digital platforms are reshaping the matching model of labor. On June 25th, Lingcard Technology, a flexible employment platform from Hangzhou, Zhejiang, with the halo of "China's largest flexible employment platform", submitted its prospectus to the Hong Kong Stock Exchange for the first time, intending to list on the main board in Hong Kong, with CICC and Pu Yin International as joint sponsors. It is worth noting that, even though it occupies a leading position in the flexible employment track, the contradiction between "expansion of scale" and "difficulty in making money" constitutes the key proposition that Lingcard Technology must face in its listing in Hong Kong. While the scale is growing rapidly, profits are under sustained pressure. The prospectus shows that Lingcard Technology is committed to using technology-driven solutions to address the inherent challenges of the flexible employment industry. Its business consists of two main sectors: the one-stop flexible employment solution (Lingong Clock-in) and the Lingcard Technology recruitment platform (Sehuituan). The former provides a full-process service from recruitment, management to settlement for enterprise clients in the catering, retail, tea and coffee, and hotel industries through the Lingong Clock-in system; the latter is a technology-driven flexible employment recruitment platform connecting enterprise clients with flexible workers. In 2025, the company provided services to 319 enterprise clients through Lingong Clock-in, including five of the top ten enterprises in the Chinese catering industry, five of the top ten in the retail industry, and four of the top five in the global HK&S HOTELS group. This lineup of top clients, to a certain extent, confirms the platform's service capabilities and industry recognition. At the same time, the retention rate of key clients was maintained at 100.0% during this period, and the amount retention rate of key clients reached 180.5%, indicating that not only are existing clients retained, but they are also increasing their usage frequency of the platform. In 2025, the company served approximately 440,000 flexible workers, recording over 16.7 million clock-ins, providing an average annual income increase of nearly 5,000 yuan per flexible worker. Among them, 73.4% of flexible workers who clocked in five times or more, showing the platform's positive role in improving the income stability of flexible workers. Furthermore, according to data from Zhuoshi Consulting, based on 2025 revenue, the company operates Sehuaituan, the largest flexible employment recruitment platform in China. This platform is an important supplement to the company's one-stop flexible employment solution business. As of December 31, 2025, Sehuaituan had nearly 2 million registered enterprise clients and nearly 57 million registered users. From a financial perspective, the company achieved revenue of 2.435 billion yuan in 2025, a year-on-year increase of 102.8%, with a three-year compound annual growth rate as high as 129.2%. However, behind the rapid expansion of scale, the company's gross profit margin continued to decline from 18.8% in 2023 to 7.0% in 2025, with a net loss increasing from 110 million yuan to 269 million yuan over the year and showing a fluctuating trend. From the perspective of revenue structure, the one-stop flexible employment solution is the core growth engine for Lingcard Technology. From 2023 to 2025, the revenue of this sector surged from approximately 351 million yuan to 2.3 billion yuan, with a compound annual growth rate as high as 156.1%, and the proportion of total revenue increased from 75.7% to 94.5%. At the same time, the revenue share of the Lingcard Technology recruitment platform and other services shrunk from 24.3% to 5.5%. This change reflects the company's strategic focus shifting towards high-sticky, high-frequency one-stop solutions, but also indicates an increasing dependence on a single line of business. The continuous decline in gross profit margin is directly related to the rapid rise in the proportion of sales costs to revenue: from 81.2% in 2023 to 89.8% in 2024 and 93.0% in 2025. Sales costs mainly include costs related to flexible workers, employee welfare expenses, and server maintenance costs, with costs related to flexible workers being the largest component. As the platform's scale expands, these costs become more apparent, making it difficult to compress the income and incentives paid to flexible workers, resulting in the inability to effectively convert scale effects into profit margin improvement. In addition, cash flow is also one of the key points to pay attention to for the financial health of Lingcard Technology. From 2023 to 2025, the net cash flow from operating activities was -37.92 million yuan, -66.92 million yuan, and -79.44 million yuan respectively, with a continuously expanding net outflow scale. The prospectus explains that this is mainly due to the need for additional operating capital to support the high-speed growth of the business. At the end of 2025, the company held approximately 89 million yuan in cash and cash equivalents, but compared to the continued outflow of operating cash flow and rapidly rising operating costs, the safety margin of this cash reserve is not ample, which may be an important reason for its listing in Hong Kong to raise funds. The trend of flexible employment is evident, will Lingcard Technology break through with technology? From an industry perspective, the flexible employment track where Lingcard Technology is located is in a period of rapid expansion. Data from the Chinese National Bureau of Statistics shows that by 2025, the number of flexible workers in mainland China has exceeded 200 million, and flexible employment has become an important channel for Chinese workers to earn income. Therefore, the size of China's flexible employment market is expected to grow from 780.2 billion yuan in 2020 to 1.765 trillion yuan in 2025, and is expected to reach 3.8766 trillion yuan by 2030, with a compound annual growth rate of 17.0% from 2025 to 2030. Currently, with a market share of 17.2%, Lingcard Technology leads the pack in the track. There is still a huge increment potential brought about by the overall expansion of the industry. More importantly, with the continuous increase in the penetration rate of the gig economy and the growing demand for flexible employment solutions from enterprises, the trend of digital platforms replacing traditional labor intermediaries is accelerating. As the largest flexible employment platform in China, Lingcard Technology is expected to occupy a favorable position in this structural transformation. Based on the optimistic outlook for the future, the company has conducted multiple rounds of financing in the past, with shareholders including well-known institutions such as Ant Group. However, the growth dividend of the industry cannot resolve the company's financial difficulties. Currently, the competition in the flexible employment market is intense, technology iterates rapidly, and the cost of customer acquisition may increase significantly. In 2025, Lingcard Technology's top five clients contributed 67.5% of its revenue, with a high degree of customer concentration, and approximately 30% of its revenue came from its largest client during the same period, meaning that if core clients are lost or reduce their cooperation scale, the company's revenue will face the risk of decline. In addition, the company's revenue is mainly concentrated in the catering, retail, and hotel industries, downstream industries that are sensitive to economic fluctuations. If the macroeconomic downturn leads to a contraction in enterprise labor demand, the platform's business volume will be directly impacted. In this context, Lingcard Technology is trying to achieve differentiation through technology investment: from 2023 to 2025, the company's R&D expenses were 51 million yuan, 53 million yuan, and 62 million yuan respectively. In 2025, the company launched AI Agent Xiaoling, which can conduct AI evaluations, clock-ins, and assistant functions through multimodal interaction, intelligent generation of follow-up questions based on task requirements, user resumes, and real-time conversation contexts, improving matching efficiency. At the current point in time, AI technology will undoubtedly promote further iterations of Xiaoling, playing a greater role in improving matching efficiency and reducing labor costs. However, it should be noted that AI technology is still rapidly advancing, and competitors are also heavily investing in it. Whether Lingcard Technology's technological advantage can continuously a competitive barrier remains to be seen. Looking ahead, Lingcard Technology's fundraising plan for its IPO will mainly be used to upgrade its technological infrastructure, expand its service scope, enhance its brand awareness, and replenish operating capital. For investors, the long-term prospects of the flexible employment track are promising, but whether Lingcard Technology has the core competitive strength to translate its scale advantage into profitability remains to be tested by time and the market.