Upcoming IPO Insights | Changzhou Xingyu Automotive Lighting Systems (601799.SH): The surge in smart lighting cannot conceal the divergence in volume and price, as the dual growth logic faces scrutiny.

Driven by the strong wave of intelligence in the new energy vehicle sector, the automotive lighting arena is undergoing an unprecedented reevaluation of its value. On July 29, Changzhou Xingyu Automotive Lighting Systems (601799.SH), known as the "big brother of car lights," submitted another listing application to the Hong Kong Stock Exchange's main board, with Huatai International serving as the exclusive sponsor. Despite Changzhou Xingyu Automotive Lighting Systems holding a leading position in the Chinese automotive lighting market and ranking seventh globally due to its deep technical foundation, and reaching the top of both the global and Chinese markets in the high-growth segment of intelligent automotive lighting, the company is facing multiple fundamental concerns behind its impressive market share. Financially, while revenue and net profit are expected to maintain double-digit growth in 2025, the growth rate has noticeably declined compared to 2024, with revenue growth in the first quarter of 2026 further dropping to 10.8%. Meanwhile, the automotive industry's annual decline continues to exert pressure, and the overseas business faces a "increase in revenue without an increase in profit" predicament during its capacity ramp-up period, putting strain on the company's overall gross profit margin. Additionally, the lengthening turnover days of accounts receivable presents a severe test for the company's cash flow and profit quality. Diminishing Revenue Growth High R&D Investment and Cost Mismatch Squeeze Profit Flexibility In recent years, the financial data of Changzhou Xingyu Automotive Lighting Systems has shown a typical characteristic of simultaneous revenue expansion and efficiency pressure. Observing from the revenue side, the company's total operating income for 2023 was 10.248 billion yuan, growing to 13.253 billion yuan in 2024 and further rising to 15.257 billion yuan in 2025, with annual year-on-year growth rates of 29.3% and 15.1%, respectively, marking a clear downward shift in the growth medium. Revenue for the first quarter of 2026 was 3.430 billion yuan, continuing the established trajectory of slowing growth. This gradual decline in growth cannot be fully explained by a simple base effectwhile the year-on-year growth rate for domestic automobile production and sales in 2024 was approximately 4.5%, the 15.1% growth of Changzhou Xingyu Automotive Lighting Systems still significantly outpaced the industry. However, as the growth rate of core clients' own sales has receded from high levels and the production and sales of joint venture brand models continue to be under pressure, the company's revenue growth has gradually transitioned from a model driven by both volume and price increases to a single-driver model primarily focused on improving the value per vehicle. As revenue growth slows, the correlation between sales cost and revenue has further amplified this structural contradiction. In 2023, the sales cost accounted for 79.5% of revenue, slightly increasing to 80.9% in 2024. Although it fell slightly to 80.4% in 2025, it rebounded again to 80.7% in the first quarter of 2026, with corresponding gross profit margins oscillating narrowly between 20.5%, 19.1%, 19.6%, and 19.3%, consistently failing to effectively break through the 20% mark. More importantly, while revenue grew by 15.1% in 2025, sales costs soared by 19.4%, with cost growth outpacing revenue growth by 4.3 percentage points. This divergence indicates that under the backdrop of product structure upgrading towards intelligence and high gross margins, the company did not simultaneously benefit from the economies of scale that would dilute unit costs; instead, the initial phases of new project productions have led to a persistent erosion of the incremental revenue contribution from the revenue side. Under the pressure of costs, the sharp rise in R&D investment within the period expenses has become another prominent structural change in the income statement. In 2023, R&D expenses were 610 million yuan, accounting for 6.0% of revenue; in 2024, although R&D expenses increased to 655 million yuan due to rapid revenue growth, the proportion fell to 4.9%; however, R&D expenses jumped to 884 million yuan in 2025, up 34.96% year-on-year, significantly higher than the 15.1% revenue growth, with the proportion expanding back to 5.8%. This "decrease in growth while increasing investment" pattern directly reflects the company's intensified focus on technology development during the period of diminishing revenue growth momentumthis can be interpreted as a strategic layout aimed at mid- to long-term competitiveness. In summary, Changzhou Xingyu Automotive Lighting Systems is not facing stagnated growth but rather the growing pains of a transformation in growth models: the natural decline in revenue growth juxtaposed with the artificial increase in R&D spending has created a mismatch, with the cost side losing flexibility due to globalization of capacity layout and concentrated mass production of new projects, both squeezing the space for profit release. While the strategy of enhancing unit value through high-end product positioning is traceable, variables such as the capitalization rate of R&D, ramp-up cycle efficiency for overseas factories, and clients' annual decline schedules will continue to dominate fluctuations in the income statement for the foreseeable future. Declining Sales and Surging Average Prices Sustainability Queries for the "Price-for-Volume" Growth Logic According to observations, Changzhou Xingyu Automotive Lighting Systems has seen its product sales continuously shrink in recent years, while revenue has paradoxically expanded. From 2023 to 2025, the total sales of automotive lighting products decreased from approximately 70.046 million units to 60.871 million units, a cumulative decline of 13.1%; during the same period, overall product prices gradually increased. The deep divergence of shrinking volume and rising prices constitutes the core logic of the company's current business growthdriving average price increases through systematic upgrades in product structure and using growth in unit value to compensate for the decline in matching quantities. However, when the rate of decline in sales continues to outpace the increase in average price, the sustainability of this model becomes a critical issue to be examined. The sustained bloodletting in sales first tolls a warning bell for the sustainability of this growth logic. In 2024, total sales were 68.36 million units, a decrease of about 2.4% from 2023, which was still a moderate decline; but in 2025, sales plummeted to 60.871 million units, with a year-on-year decrease expanding to 10.9%, nearly five times the prior year's decline. Entering the first quarter of 2026, total sales were 12.877 million units, down about 18.0% from 15.708 million units in the same period last year, with the decline further escalating. Observing by category, the previously only segment with positive sales growth, front car lights, also experienced a year-on-year decline of about 4.7% in the first quarter of 2026, indicating that all main categories have entered a volume contraction phase. A deeper issue is that even though "price-for-volume" has temporarily maintained positive revenue growth, its efficiency in translating to profit is also simultaneously declining, raising questions about the sustainability of this logic. The overall gross profit margin in 2025 was only 19.6%, down 0.9 percentage points from 20.5% in 2023, indicating that the increase in average price has not effectively translated into proportional growth in unit profit. While high-priced products like intelligent lighting have pushed up nominal revenue, their unit manufacturing costs are significantly higher than traditional products, and the substantial upfront investments in R&D amortization, mold costs, etc., mean that higher prices do not necessarily correspond to higher unit gross margins. At the same time, the drastic shrinkage in sales has led to a decrease in capacity utilization, elevating the fixed costs allocated per unit product, further eroding the gross profit increment brought by price increases. Mass Production Realization Incremental Dividend Period for Intelligent Lighting The intelligent automotive lighting sector is transitioning from the concept validation stage to a critical turning point for scaled production. According to Frost & Sullivan data, the global market size for intelligent automotive lighting is expected to grow from 28.5 billion yuan in 2025 to 201.9 billion yuan by 2030, with a compound annual growth rate (CAGR) as high as 48.0%; the Chinese market size will expand from 10.2 billion yuan to 86.5 billion yuan, with a CAGR of 53.2%. This significantly outpaces the industry average rate, indicating that intelligent lighting is becoming the most explosive segment in the automotive lighting field. By 2025 sales figures, Changzhou Xingyu Automotive Lighting Systems ranks first in the global intelligent automotive lighting market with a 10.2% share and leads the Chinese market with a 28.4% share, with its leading position offering considerable first-mover advantages during the expansion period. In terms of technological implementation pace, the company has achieved mass production of DLP million-pixel projection headlights, supplying high-end models such as the Wuling M9, M8, and the Zeekr 9X; the revenue contribution from intelligent automotive lighting has surged from 0.3% in 2023 to 19.6% in the first quarter of 2026, indicating that the commercialization path has been preliminarily validated. More notably, the company is accelerating the layout of the next-generation technology through industry chain synergy in January 2026, Changzhou Xingyu Automotive Lighting Systems, along with Chipone Integrated Circuits and Jiufeng Mountain Laboratory, jointly funded the establishment of "Wuhan Xingxi Guangke Co., Ltd.," intending to invest 3 billion yuan in constructing Micro-LED smart light technology R&D and manufacturing projects, focusing on the industrialization of Micro-LED automotive lighting, optical communication, AI display and other cutting-edge technologies. This initiative is set to include key links of the Micro-LED industry chain into its own system, which is expected to gain an advantage in next-generation pixel-level lighting technology competition. From a customer structure perspective, the company has established deep ties with leading new energy brands like Hongmeng Zhixing, Li Auto, NIO, and Zeekr, with revenue contributions from new energy models reaching 46.1% in 2025, significantly up from 16.4% in 2023. The differentiated demand from new energy automakers for intelligent lighting interactive functions continues to drive the penetration rate of the companys high value-added products. Additionally, the optical design, precision manufacturing, and AI control capabilities rooted in intelligent lighting technology are extending to the field of embodied intelligence such as Siasun Robot & Automation the company has completed the development of core components like head modules and joint modules, with the first batch of embodied intelligent interactive modules expected to be delivered in 2026. This cross-field layout opens up additional avenues for mid- to long-term growth. In summary, Changzhou Xingyu Automotive Lighting Systems is at a critical juncture of transitioning growth models. The upgrade in product structure and the scaling up of intelligent lighting have opened clear market space. However, the ongoing divergence between declining sales and rising average prices, the erosion of profits due to high R&D investment, and the drag from ramping up overseas capacity together create uncertainties regarding the near-term fundamental recovery. Whether a new balance between volume and price can be established will require ongoing verification through subsequent financial statements.