Ullion Technology's Hong Kong IPO: How to Overcome Three Consecutive Margin Declines Amid Scale Expansion?

ZC Asia has learnt that following its listing on the ChiNext board of the Shenzhen Stock Exchange in July 2024, Shenzhen Green Union Technology Co., Ltd. (stock code: 301606) has recently submitted an application to the Hong Kong Stock Exchange for a listing on the Main Board. Huatai International is acting as the sole sponsor. Upon successful listing, Green Union Technology will achieve a dual-listing strategy across both the A-share and H-share markets.

The prospectus indicates that the proceeds from this offering will be allocated towards R&D investment, brand development, sales channel expansion, intelligent upgrading of business processes, and supplementing working capital.

Sustained Performance Growth with Outstanding Global Market Presence

According to a Frost & Sullivan report, based on 2025 shipment volume, Green Union ranks first globally in the pan-expansion technology consumer electronics sector, second in the charging products market, and first in the consumer NAS (Network Attached Storage) market.

Financial data indicates the company has maintained robust revenue growth in recent years: revenue reached RMB 4.801 billion, RMB 6.166 billion, and RMB 6.361 billion in 2023, 2024, and the first three quarters of 2025 respectively, representing year-on-year growth of 19.3%, 28.4%, and 47.8%. Net profit for the corresponding periods stood at RMB 394 million, RMB 461 million, and RMB 467 million.

The company's operations now span over 180 countries and regions worldwide, with overseas revenue accounting for 59.6% of total income in the first three quarters of 2025, demonstrating robust international operational capabilities. UGREEN Technology operates under its proprietary brand ‘UGREEN’, offering products across four major categories: innovative charging solutions, smart office equipment, smart audio-visual devices, and smart storage systems.

Rapid Expansion in New Business Segments: Smart Storage Revenue Surges

In terms of revenue composition, the share of traditional core categories—Charging Innovations and Smart Office—has declined, while Smart Storage has experienced explosive growth. During the first three quarters of 2025, Smart Storage products generated revenue of RMB 726 million, a 315% year-on-year increase, raising its share of total revenue to 11.4%. NAS products alone contributed RMB 545 million, with market share on domestic e-commerce platforms rising to 40.6% during the same period, establishing the company as the leading consumer-grade NAS brand.

Charging accessories remain the company's revenue pillar, generating ¥2.954 billion in the first three quarters of 2025, accounting for 46.4% of total revenue. Following the implementation of new regulations in the power bank sector during 2025, the company effectively captured market share vacated by exiting brands through rapid supply chain adjustments and the launch of trade-in programmes.

Profitability Metrics Under Pressure; Inventory and Cash Flow Draw Attention

Despite sustained revenue growth, the company's profitability faces challenges. Gross profit margins for 2023 and the first three quarters of 2025 stood at 36.9%, 36.8% and 36.5% respectively, showing a gradual downward trend. By business segment, gross profit margins for smart storage products and innovative charging products in the first three quarters of 2025 were 28.1% and 35.5% respectively, both below the company's overall gross profit margin.

Net profit margins also declined, registering 8.2%, 7.5% and 7.3% respectively over the same period. Rising period expense ratios further compressed profit margins.

Notably, the company's inventory levels have grown rapidly. As of 30 September 2025, inventory book value reached RMB 1.816 billion, an 82.4% increase from the end of 2023, accounting for 43.4% of current assets. Concurrently, cash flow from operating activities exhibited pronounced volatility, registering merely RMB 59 million for the first three quarters of 2025 – a substantial 89.2% year-on-year decline – primarily attributable to increases in inventory, prepayments, and accounts receivable.

Shareholders Repeatedly Reduce Holdings, Realising Significant Cash

Recently, major shareholders have consecutively reduced their holdings. According to announcements, the controlling shareholder Shenzhen Green Union Management Consulting Partnership and its concerted party Shun No. 4 collectively sold approximately 6.2236 million shares between November 2025 and January 2026, realising approximately RMB 389 million. Additionally, Zhuhai Xiheng Investment Partnership, an external major shareholder under Hillhouse Capital, has also reduced holdings multiple times in recent months, cumulatively cashing out approximately RMB 900 million and reducing its stake to 5.97%.

As of 30 September 2025, Zhang Qingsen, the company's actual controller, held a direct stake of 45.27%, indicating a relatively concentrated equity structure.

Having originated in Huaqiangbei, U-Link Technology has progressively evolved into a global consumer electronics brand. Its Hong Kong IPO is regarded as a significant step towards deepening its globalisation and expanding financing channels. The challenges it will face post-listing include enhancing profitability while scaling operations, navigating industry competition, and managing supply chain risks.

Disclaimer: The content herein is for reference only and does not constitute any form of investment advice. Should any information contained herein prove inaccurate, incomplete, or potentially misleading, please refer to the company's official announcements. Market risks exist; investment requires caution.