BYD accounts for 65.78% of its revenue.
When you plug your phone into a fast-charging cable and enjoy the convenience of a 50% battery recharge in half an hour; when you drive a BYD new energy vehicle through city streets, experiencing the stable range and rapid charging provided by its battery; or when a foldable phone flexes effortlessly while the screen remains clear and smooth—these scenarios all rely on the "material alchemy" happening in the microscopic world.
The key equipment that transforms micro-nano powders into high-performance materials and converts precise formulations into stable products often comes from Shenzhen Shangshui Intelligent Technology Co., Ltd. (referred to as Shangshui Intelligence).
Now, as a core supplier to industry leaders like BYD, this company, deeply entrenched in the core processes of material preparation, is formally knocking on the door for a创业板 (ChiNext) IPO, facing its major review before the listing committee on December 16.
It is noteworthy, however, that this is Shangshui Intelligence's second attempt at an IPO. After its previous attempt to list on the STAR Market was rejected, it has shifted its focus to the Shenzhen Stock Exchange's ChiNext board. The exchange has also issued pointed inquiries, directly questioning the nature of its relationship with the industry giant, BYD.
#01 BYD as Both Shareholder and Major Client, Inventory Balance Exceeds 10 Billion
In today's era, surrounded by smartphones, electric vehicles, and energy storage devices, almost everyone uses lithium battery products. Yet, few are aware that the performance and lifespan of these batteries largely depend on a critical process: the preparation and coating of electrode slurries.
Shangshui Intelligence's main products revolve around the initial stages of lithium battery manufacturing. Its primary business focuses on core process stages including micro-nano powder processing, precise powder-liquid metering, powder-liquid mixing and dispersion, and functional film preparation. Its products are widely applicable in industries such as new energy batteries, new materials, chemicals, food, pharmaceuticals, and semiconductors.
Currently, Shangshui Intelligence primarily serves the field of new energy battery electrode manufacturing and new material preparation. Many industry leaders in the new energy sector are its clients, such as BYD Company Limited (002594.SZ), Eve Energy Co., Ltd. (300014.SZ), Contemporary Amperex Technology Co., Limited (300750.SZ), CALB Co., Ltd. (03931.HK), REPT BATTERO Energy Co., Ltd. (00666.HK), Sunwoda Electronic Co., Ltd. (300207.SZ), and GAC Aion. Overseas clients include Samsung SDI, LG Energy Solution, Panasonic, and SK On.
Among these, the relationship with BYD is a key point of inquiry from the Shenzhen Stock Exchange.
According to Shangshui Intelligence's "Reply Letter," the company established a preliminary cooperative relationship with BYD in 2013 and began bulk supply in 2015. Their collaboration primarily centers on Shangshui Intelligence's core products: the recirculating high-efficiency slurry preparation system and lithium battery electrode equipment.
Nearly a decade into their partnership, BYD became a shareholder of Shangshui Intelligence. In September 2022, BYD acquired a 4% stake (valued at 18.4 million RMB, 13.14 RMB per registered capital) through a share transfer, becoming a shareholder. In October 2022, BYD increased its investment by 20 million RMB, subscribing to 1.4 million shares (14.29 RMB per registered capital). BYD's total shareholding reached 5.765 million shares, raising its stake to 7.69% and making it the fourth-largest shareholder of Shangshui Intelligence.
In November 2022, around the same time, five financial investors acquired part of the shares held by Shangshui Intelligence's actual controller at a price of 32.94 RMB per registered capital, which was 2.5 times the price BYD paid for its September investment.
Following BYD's investment, Shangshui Intelligence's revenue from BYD surged significantly. From 2020 to the first half of 2025, the company's sales revenue to BYD and its subsidiaries was 34.6972 million RMB, 85.7014 million RMB, 194 million RMB, 290 million RMB, 419 million RMB, and 144 million RMB respectively. These figures accounted for 31.73%, 56.48%, 49.04%, 48.39%, 65.78%, and 36.29% of its total revenue.
Furthermore, in March 2025, the two parties signed another lithium battery equipment procurement agreement worth 1.015 billion RMB, setting a new record for the scale of their cooperation.
The Shenzhen Stock Exchange inquired about this, requesting an explanation for the commercial rationality and necessity of BYD's shareholding, and the reasons and rationale behind the substantial increase in transaction volume during the reporting period.
In its "Reply Letter," Shangshui Intelligence acknowledged significant dependence on BYD. The company stated that for BYD, making strategic investments along the industrial chain is crucial for securing key resource supplies. For Shangshui Intelligence, bringing in BYD as an investor helps consolidate the relationship with a core client, allows for learning from and leveraging BYD's advanced management experience, and enables a better grasp of industry trends. On this basis, BYD acquired shares through transfer and capital increase, strengthening the synergistic effects across the industry chain's upstream and downstream.
Yan Jinghui, a member of the China Automobile Dealers Association Expert Committee, pointed out that cross-investments and shareholding between upstream and downstream companies in the new energy industry chain diversify their respective businesses. This allows companies to conduct earlier and deeper considerations regarding operational conditions and strategic development based on practical circumstances.
Besides BYD, other major clients include Eve Energy, CATL, and GAC Group. From 2022 to 2024, sales to Shangshui Intelligence's top five clients accounted for 91.48%, 91.76%, and 89.79% of its operating revenue for the respective periods.
This high client concentration has also led to a substantial inventory balance for Shangshui Intelligence. In the first half of 2025, its inventory balance reached a high of 1.037 billion RMB, constituting 63.42% of its current assets. Within this, 68.26% was "goods shipped," meaning equipment delivered but not yet accepted by clients. This indicates that 753 million RMB in payments are pending. Should any client encounter issues preventing timely acceptance and payment, it could directly trigger a significant inventory impairment.
The company explicitly stated in the special risk提示 (risk提示) section of its prospectus that, as business scale continues to expand, inventory levels are expected to grow further.
Notably, the prospectus also reveals that, at the end of each reporting period, accounts receivable aged over three years accounted for 12.66% of the total. This means not only are profits tied up in inventory and warehoused goods, but the collection cycle is also prolonged. Shangshui Intelligence attributes this primarily to rapid revenue growth coupled with relatively long settlement cycles from downstream clients, leading to a slowdown in capital recovery.
However, bolstered by its major clients, Shangshui Intelligence's revenue has been on a steady rise. From 2022 to the first half of 2025, the company achieved operating revenues of approximately 397 million RMB, 601 million RMB, 637 million RMB, and 398 million RMB respectively, with a compound annual growth rate of 26.7%. Net profits were 98 million RMB, 234 million RMB, 153 million RMB, and 94 million RMB respectively.
In 2024, net profit decreased by 34.9% compared to 2023, mainly due to factors such as changes in value-added tax refunds for software enterprises (VAT即征即退) and fluctuations in product gross profit margins. During the reporting period, the total tax benefits enjoyed by Shangshui Intelligence were 10.9668 million RMB, 82.6287 million RMB, 27.2018 million RMB, and 12.6925 million RMB, accounting for 9.82%, 30.53%, 15.86%, and 11.42% of total profits for the respective periods.
#02 After Failing Two Rounds of Performance Betting, Two Founders Cash Out and Exit
In 2012, Jin Xudong, Yan Yongjun, and Zhang Shubo jointly founded Shenzhen Shangshui Intelligent Equipment Co., Ltd. (the predecessor of Shangshui Intelligence). From 2012 to 2020, the trio built Shangshui Intelligence into an emerging enterprise with annual revenue exceeding 100 million RMB and a net profit of 8.8861 million RMB.
During this period, Shangshui Intelligence also attracted some investment institutions and entered into two rounds of performance-based agreements (对赌协议). The prospectus shows that in December 2016, Hunan Honggao, Hunan Gaoke, and Zhuzhou Wufeng collectively invested 22 million RMB to subscribe to 1.1111 million RMB of newly increased registered capital in Shangshui Intelligence.
Shangshui Intelligence承诺 (committed) that the sum of its audited non-GAAP net profits for 2016-2018 would not be less than 85 million RMB. If the figure fell below 90% of 85 million RMB (i.e., 76.5 million RMB), Jin Xudong/Zeng Dandan, Yan Yongjun, and Zhang Shubo would transfer corresponding shares they held to Hunan Honggao, Hunan Gaoke, and Zhuzhou Wufeng without compensation.
In December 2017, Hunan Honggao, Hunan Gaoke, and AVIC Fund invested 35 million RMB to subscribe to 836,300 RMB of newly increased registered capital.
Shangshui Intelligence再次承诺 (committed again) that its audited non-GAAP net profits for 2017, 2018, and 2019 would be no less than 30 million RMB, 50 million RMB, and 60 million RMB respectively. If the actual profits for 2017 and 2018 combined were below 90% of the承诺 amount for those two years (i.e., 72 million RMB), or if the 2019 profit was below 90% of its承诺 (i.e., 54 million RMB), then Jin Xudong, Yan Yongjun, and Zhang Shubo would transfer corresponding shares they held without compensation as compensation for failing to meet the performance targets.
However, the combined net profits for 2017 and 2018 were less than 48 million RMB, causing Shangshui Intelligence to fail both performance commitments and triggering the share compensation clauses stipulated in the "Series A Capital Increase Supplementary Agreement" and "Series B Capital Increase Supplementary Agreement."
On December 9, 2019, Jin Xudong, Yan Yongjun, and Zhang Shubo collectively transferred a total of 2.08% of Shangshui Intelligence's shares to Hunan Honggao, Hunan Gaoke, and Zhuzhou Wufeng without compensation. On the same day, the trio also transferred a total of 3% of Shangshui Intelligence's shares to Hunan Honggao, Hunan Gaoke, and AVIC Fund without compensation.
In other words, due to the failure of the two rounds of performance betting, Shangshui Intelligence's founders had to transfer a cumulative 5.08% of the company's shares to the new investment institutions without compensation.
After the two failed bets, on September 27, 2020, Yan Yongjun and Zhang Shubo signed a "Share Transfer Agreement." They exited in October 2020. Shangshui Intelligence stated the reason for their departure was that they "were not optimistic about the company's development."
Yan Yongjun's exit was particularly thorough. Xie Pingbo, a former shareholder and supervisor of Shangshui Intelligence who was acquainted with Yan Yongjun, relayed an interview invitation from the underwriter regarding IPO matters to Yan. However, Yan Yongjun indicated that he had completely exited Shangshui Intelligence and was unwilling to involve himself in any matters related to the issuer, hence declining the interview.
#03 Twice Attempting an IPO, Actual Controller Receives Targeted Dividend Before IPO
After the two founders left, in August 2022, Wu Juan, then a director and general manager of Shangshui Intelligence, chose to resign. She had previously held more than 5% of the company's shares.
On the eve of its first attempt at a STAR Market IPO, two-thirds of the founders had departed, leaving only the current actual controller, Jin Xudong.
Under Jin Xudong's leadership, Shangshui Intelligence welcomed BYD as a major shareholder. Notably, Shangshui Intelligence and BYD also entered into a performance-based agreement.
The "Reply Letter" indicates that on September 26, 2022, Shangshui Limited, BYD, Chuangqi Kaiying, Shangshui Business, Jin Xudong, Jiangsu Bozhong, Guangzhou Zhengxuan, Suzhou Tengxin, Wang Haiquan, Lin Xiaofan, Zha Yayu, Xie Pingbo, and Yang Xiangqun signed a "Capital Increase Agreement." Following common private equity practices, they also signed related agreements containing performance-based clauses.
Before the IPO application, all such performance-based agreements had been terminated.
However, the agreements stipulated that if Shangshui Intelligence's IPO application submitted to the CSRC or any other stock exchange was rejected, became invalid for other reasons, or if the issuer voluntarily withdrew the listing documents, the corresponding special rights clauses would automatically regain effect from the day after such rejection, invalidation, or withdrawal.
It is also noteworthy that before the IPO, to address a capital occupation issue, Shangshui Intelligence conducted a "targeted dividend distribution" in September 2022, distributing 4.0571 million RMB (pre-tax) specifically to the actual controller, Jin Xudong.
The prospectus shows that in 2022, Shangshui Intelligence had a fund transfer out to the actual controller, Jin Xudong, amounting to 4.2353 million RMB, including 53,400 RMB in interest. By the reporting period, 4.4106 million RMB had been repaid.
In essence, Jin Xudong first used company funds, then received a dividend from the company, and subsequently repaid the company, completing a "closed loop." Shangshui Intelligence stated, "After obtaining the post-tax dividend payment, Jin Xudong used the funds obtained to repay Shangshui Limited."
After resolving these related issues, Shangshui Intelligence submitted its prospectus to the STAR Market on June 30, 2023, but withdrew it after one round of inquiries. Two years later, in June 2025, Shangshui Intelligence once again embarked on its IPO journey.
Shangshui Intelligence's IPO path resembles its core process—it is experiencing a critical "mixing and dispersion" moment within the dual containers of capital and technology.
This company, which previously failed two rounds of performance betting and experienced founder departures, has now found its survival strategy in the new energy wave through its deep ties with BYD. However, issues like over-reliance on a single client, high inventory levels, and profit volatility persist like particles difficult to fully disperse in a slurry, still suspended along its development path.
Transitioning from the STAR Market to the ChiNext board, and from three founders to a single leader, Shangshui Intelligence's capital market journey has been full of adjustments and reshaping. Now, with the issuance of the Shenzhen Stock Exchange's review inquiry letter, this lithium battery equipment manufacturer is undergoing a strict "quality inspection" by the capital markets.
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