Revenue of ¥46.3 billion yet net profit merely ¥490 million: Can Longcheer Technology, the world's largest mobile phone ODM manufacturer, break the deadlock with its IPO?

ZC Asia has learnt that Longcheer Technology recently passed the Hong Kong Stock Exchange listing hearing, with Citigroup, Haitong International and Guotai Junan International serving as joint sponsors.

According to Frost & Sullivan's report, Longcheer Technology was the world's largest smartphone ODM manufacturer in 2024, commanding a 32.6% market share. That same year, the company's revenue reached RMB 46.382 billion, representing a substantial year-on-year increase of 70.62%.

Revenue surges 70%, yet net profit declines

Longcheer Technology's business strategy unfolds under the framework of its ‘1+2+X’ approach. This strategy centres on smartphones as the cornerstone, with personal computing and automotive electronics as two key development directions, while expanding into diversified emerging businesses including tablet computers, smart wearables, and AI glasses.

The smart terminal business constitutes the company's absolute revenue pillar. In 2024, the smartphone business contributed RMB 36.133 billion in revenue, accounting for 77.9% of total revenue.

The company's client portfolio encompasses leading global consumer electronics brands including Xiaomi, Samsung Electronics, Lenovo, and Honor. Among these, Xiaomi Group stands as the largest single client, accounting for 37.2% of the company's revenue in 2024.

As the company accelerates its global expansion, the proportion of overseas business has significantly increased. In 2024, overseas sales revenue surged by 288.42% year-on-year, representing approximately 31.7% of total operating revenue.

However, financial data reveals that from 2022 to 2024, the company's revenue stood at RMB 29.343 billion, RMB 27.185 billion, and RMB 46.382 billion respectively, while net profit attributable to shareholders of the parent company was RMB 562 million, RMB 600 million, and RMB 493 million during the same period. Notably, net profit declined in 2024 despite substantial revenue growth. During the reporting period, the company's gross profit margins stood at 8.1%, 9.5% and 5.8% respectively, with a significant year-on-year decline of 3.7 percentage points in 2024.

Although the company is vigorously developing new businesses such as AIoT and automotive electronics, these high-margin ventures remain small in scale and are unlikely to alter the overall profit structure in the short term.

The expansion of the company's overseas operations has been particularly costly in terms of profitability. In 2024, the gross profit margin for overseas business stood at a mere 1.19%, significantly below that of domestic operations. This disparity primarily stems from the low-price strategy adopted to compete for overseas market share.

To break through its profitability ceiling, Longcheer Technology is placing heavy bets on two fronts: AI PCs and automotive electronics, aiming to establish a second growth curve.

In the AI PC sector, the company has launched proprietary new products and secured brand clients including Honor and Mechanical Revolution. Multiple products completed development and delivery in the first half of 2025, with scaled shipments anticipated by 2026.

Automotive electronics are positioned as a long-term strategic pillar. The company's products have entered the supply chains of over ten industry-leading clients including Xiaomi, JAC Motors, Seres, and NIO. Its collaboration with Xiaomi Automobile has materialised, supplying domain controllers and other products for intelligent cockpit systems.

The company spares no expense in investing new ventures. In December 2025, it announced plans to invest approximately RMB 1.5 billion in constructing an ‘AI+ Smart Terminal Digital Benchmark Factory’ project in Nanchang.

‘Lei Jun-affiliated’ entities cash out over RMB 1.4 billion, heavy reliance raises concerns

As capital linked to Lei Jun significantly reduces holdings, market apprehensions grow regarding the stability of Longqi Technology's collaborations with major clients.

As core ODM partners for Xiaomi's smart products, Tianjin Jinmi and Suzhou Shunwei – both affiliated with Lei Jun – were once major shareholders. However, since April 2025, both entities have engaged in intensive share reductions.

By 27 November 2025, Suzhou Shunwei had fully divested its holdings, while Tianjin Jinmi's stake had also substantially diminished. Cumulatively throughout the year, Lei Jun-affiliated capital realised over ¥1.4 billion through these reductions.

Although company management characterised the divestments as routine shareholder financial arrangements unaffected by strategic partnerships, market consensus suggests these moves may reflect concerns over the company's profit volatility and business transformation uncertainties.

The financial strain of aggressive expansion: ¥38 billion in guarantees and ¥40 billion in credit facilities

Behind the Hong Kong listing lies Longcheer Technology's urgent capital requirements to support global expansion and new business ventures.

Following its A-share IPO fundraising, the company is expanding its smart manufacturing bases in Huizhou and Nanchang, while ongoing investments are needed for overseas production facilities in Vietnam and India, alongside R&D in automotive electronics and AI PCs.

Recent funding arrangements reveal the financial strain underpinning these expansion ambitions. In December 2025, the board approved plans to provide subsidiaries with external guarantees totalling up to RMB 38 billion for 2026, alongside applications for comprehensive credit facilities exceeding RMB 40 billion from financial institutions.

Notably, most subsidiaries involved in these guarantees carry debt-to-asset ratios exceeding 70%. As of the announcement date, the outstanding external guarantees of the company and its subsidiaries accounted for 136.52% of the latest audited net assets.

With the growth of overseas operations, foreign exchange risks are also increasing. The company simultaneously announced plans to engage in foreign exchange derivative transactions in 2026, with the maximum contract value held on any single trading day not exceeding US$4 billion or its equivalent in foreign currency, to mitigate exchange rate fluctuation 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.