With demand 2,154 times oversubscribed versus a debt-to-equity ratio of 162%, can Kailesi’s IPO break through the barriers?

ZC Asia has learnt that as of 19 March, the final day of the offering, Kaili (02729)—a leading logistics robotics company set to list next Tuesday—has received unprecedented market enthusiasm. The public offering portion has attracted subscriptions from over 100,000 investors, involving funds totalling HK$163.4 billion, with the offering being oversubscribed by 2,154 times.

Kaili Technology conducted its public offering from 16 to 19 March, proposing a global issuance of 36.798 million H-shares, with each lot comprising 200 shares and a maximum entry fee not exceeding HK$4,121.15. The company is expected to officially list on 24 March, with Guotai Junan International and CITIC Securities acting as joint sponsors.

The ‘Cash Drain’ Dilemma Amid a 162% Debt-to-Asset Ratio

As of the end of September 2025, Kailesi’s net debt stood at 1.196 billion yuan, with its debt-to-asset ratio climbing to a perilous 162%, indicating that the company has fallen into a state of technical insolvency. Furthermore, from 2022 through the first three quarters of 2025, Kailesi’s cash flow from operating activities remained consistently negative, with a cumulative net outflow exceeding 230 million yuan. During the same period, cash and cash equivalents plummeted from 194 million yuan at the end of 2022 to 94.52 million yuan, a decline of more than half.

The continuous rise in net debt is partly attributable to ‘repurchase obligations’ owed to early investors. The prospectus reveals that the increasing redemption liabilities arising from special rights granted to prior investors, combined with operating losses, have jointly driven up the scale of debt.

The income statement presents a similarly bleak picture. From 2022 to 2024, the company recorded a cumulative net loss of 629 million yuan, with a further loss of 134 million yuan in the first three quarters of 2025. Although the adjusted net loss has narrowed significantly to 13.8 million yuan, approaching the break-even point, the fact that the core business continues to bleed cash remains undeniable.

Compared with its peers, Kailes’ profitability is at a distinct disadvantage. Data shows that the leading AMR company, Geek+, had a gross margin of 34.75% in 2024, whilst Stand Robotics’ gross margin for the same period reached as high as 38.8%. Kailes’ overall gross margin, however, has consistently hovered at a low level of between 15.7% and 16.6%.

Structural flaws in the core business are the primary cause. The ‘multi-functional integrated systems’ business, which serves as the mainstay of revenue, accounted for as much as 79% of total revenue in 2024. However, its gross margin has declined steadily from 13.7% in 2022 to 10.8% in 2024; although it rebounded slightly to 12.1% in the first three quarters of 2025, it remains on the verge of minimal profitability. This business model involves bundling and integrating self-developed robots with third-party products to provide complete warehouse system solutions; the nature of this integration business makes it difficult to improve profit margins.

In contrast, the “single-function robot deployment” business, which is more profitable, achieved a gross margin of 30.3% in 2024, but accounted for only 18.4% of revenue, which is insufficient to drive overall profitability.

The Battle to Break Through in a Crowded Market

In the crowded field of intelligent logistics robots, Kaili ranks fifth in the industry with a 1.6% market share. Ahead lie competitors such as Geek+ and Huiro Innovation, who are also racing towards the capital markets, whilst behind are hundreds of homogeneous competitors. The top five players in the Chinese market hold a combined share of just 12.6%, with approximately 100 comprehensive players in the market, resulting in fierce homogeneous competition.

In its latest prospectus, the company explicitly states its intention to increase the proportion of high-margin after-sales services and single-function robot deployments, whilst strategically expanding into overseas markets. As of 31 December 2025, the company’s order backlog stood at 2.2 billion yuan, including 46 ongoing overseas projects with a corresponding contract value of 685 million yuan.

The customer structure is also showing signs of optimisation. The revenue share of the top five customers fell from 48.0% in 2022 to 27.4% in the first three quarters of 2025, whilst the revenue share of the largest single customer dropped from 14.7% to 6.0%, indicating a reduction in customer concentration risk.

Emerging Compliance Risks Among Management

The prospectus reveals that Chief Financial Officer Song Yao has previously been subject to regulatory sanctions. In 2019, during the ongoing supervision of Hongda Xingye Co., Ltd.’s 2019 convertible bond project, First Capital Securities Co., Ltd. was found to have failed to fulfil its due diligence obligations. As one of the lead underwriters responsible for the project at the time, Song Yao was issued a warning and fined 1.5 million yuan by the Jiangsu Securities Regulatory Bureau.

The actual controller, Gu Chunguang, also has a history of regulatory violations. In 2014, whilst Gu Chun Guang was employed at Jiuzhou Tong Pharmaceutical, his spouse, Yang Yan, sold shares using his account, thereby violating the provisions of the Securities Law regarding short-term trading and the 30-day pre-announcement blackout period.

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.