Nazen Technology Submits Second Application to Hong Kong Stock Exchange: AI Computing Power Drives Soaring Performance, Persistent Losses in Optical Chip Business Pose Hidden Risks

ZC Asia has learnt that optical communication and connectivity solutions provider Nazeon Technology has recently resubmitted its listing application to the Main Board of the Hong Kong Stock Exchange. This marks its renewed attempt following the lapse of its initial application in August 2025, with Citigroup and CITIC Securities acting as joint sponsors.

According to the prospectus, the company's revenue for 2023 to 2025 is projected at RMB4.239 billion, RMB5.087 billion and RMB8.355 billion respectively, with net profit for the year at RMB216 million, RMB89 million and RMB873 million. The data trajectory reveals a performance trough in 2024, with net profit declining by 58.5% year-on-year. However, the company swiftly recovered ground in 2025, achieving a 64.2% year-on-year revenue increase and a remarkable 8.8-fold surge in profit growth.

The driving force behind this turnaround was the global surge in AI computing power. The prospectus reveals that Nazeon Technology's optical module business revenue soared from RMB 2.737 billion in 2023 to RMB 6.535 billion in 2025, with its share of total revenue climbing from 64.6% to 78.2%. Particularly noteworthy is the performance of data communication optical modules for AI data centres, where revenue surged from RMB 1.056 billion to RMB 5.469 billion – more than quadrupling over three years.

According to Frost & Sullivan data, based on 2024 revenue, Nanjin Technology ranks fifth among global professional optical module manufacturers with a 2.9% market share. Within the Chinese market, it holds a commanding third position with a 7.2% share. This enhanced market standing largely stems from the company's early strategic positioning in high-speed products—Nanjin Technology has become one of China's first manufacturers to achieve mass production of 800G optical modules and deliver 1.6T optical module samples for customer validation.

‘Chip Ambitions’ Confront Reality's Embarrassment: Persistently Negative Gross Margins

In stark contrast to the booming optical module business, Navitas's once-proud optical chip division faces unprecedented difficulties. Despite being one of the few companies with independent R&D and mass production capabilities for both optical modules and chips, revenue from its optical chip business plummeted from RMB 112 million in 2023 to RMB 28.93 million in 2025, shrinking to just 0.3% of total revenue.

More concerning is its profitability. The prospectus reveals that the optical chip business's gross profit margin stood at -157.4% in 2024 and -121.0% in 2025, indicating severe losses. While the company did not elaborate on the reasons for these losses in the prospectus, industry analysts suggest this may stem from intensifying competition in the domestic optical chip market, persistent price wars, and slower-than-expected product iteration.

This situation challenges Nazeon Technology's much-touted vertical integration model of ‘optical chips + optical modules’. While peers are expanding upstream, the company's core competitive barriers appear to be weakening.

Operational pitfalls: overlapping customer-supplier relationships, simultaneous dividend payouts and fundraising

The prospectus reveals that some customers also function as suppliers – purchasing optical modules from Nazeon while supplying it with core components. In 2023, 2024, and 2025, revenue from these overlapping clients accounted for 49.5%, 44.9%, and 48.9% of total income respectively, representing nearly half of the total. This ‘both friend and foe’ collaborative relationship may offer supply chain synergies but also harbours risks of potential conflicts of interest or weakened bargaining power.

In the period leading up to its 2023–2025 listing applications, Nazehen Technology cumulatively declared dividends totalling approximately RMB 434 million. This dividend distribution pattern presents a subtle contrast to the company's IPO financing requirements—if ample funds exist for profit distribution, why seek capital from secondary markets? This discrepancy may become a focal point for regulatory scrutiny.

Within the 2025 profit of RMB 873 million lies a one-off gain of RMB 353 million from the disposal of a joint venture. Excluding this non-recurring item, the company's core business profitability would be significantly diminished.

Hisense Group's Sixth Listed Entity Draws Near

Regarding equity structure, Nazeon Technologies bears a strong ‘Hisense Group’ imprint. The prospectus reveals that Hisense Group holds a combined 48.61% stake in the company through direct and indirect holdings, making it the controlling shareholder. Should this IPO succeed, Nazhen Technology will become the sixth listed entity under Hisense Group.

Additionally, prominent private equity firm Primavera Capital holds a 16.48% stake, introducing a market-oriented dimension to the company's governance structure at the capital level.

For an enterprise needing to demonstrate its value to the market, the key to this IPO's success will lie in effectively communicating a dual narrative: the sustained release of AI dividends and the chip business's emergence from difficulties.

After all, within the optical communications sector, capitalising on a wave of technological dividends is not difficult. The real challenge lies in maintaining steady progress after the tide recedes.

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.