Youle Sai Shared is set to list on the Hong Kong Stock Exchange, with an oversubscription of 4,124 times failing to mask its declining performance.

ZC Asia has learnt that Chinese circular packaging service provider U-Lace Shared (02649.HK) completed its public offering between 27 February and 4 March 2026. The offering attracted HK$117.5 billion in margin financing subscriptions, representing 4,124 times oversubscription based on the HK$284.8 million raised through the public sale portion.

Under the offering arrangements, Ulesai Shared proposed a global offering of 20.336 million H-shares, comprising a 10% Hong Kong public offering and a 90% international placement, with a 15% over-allotment option. The final issue price was set at the lower end of the indicative price range of HK$11 per share, raising net proceeds of approximately HK$205 million. Notably, no cornerstone investors were engaged for this IPO. The company's shares are expected to commence trading on the Main Board of the Hong Kong Stock Exchange on 9 March, with CITIC Securities International acting as sole sponsor.

U-Logistics primarily focuses on serving automotive component manufacturers and original equipment manufacturers (OEMs) within the automotive industry. Its business model centres on ‘shared operations’, managing reusable packaging such as pallets, crates or containers for clients across the entire service chain, including storage, distribution, collection, cleaning and maintenance.

Regarding industry standing, according to Frost & Sullivan data, U-Logistics ranked as China's second-largest reusable packaging service provider by revenue in 2024, holding a 1.5% market share. It also stands as the largest provider in China's automotive shared operations services market, commanding an 8.2% market share. In 2024, reusable packaging services, shared operations services, and car-sharing operations services accounted for 6.4%, 2.4%, and 1.0% respectively of China's overall logistics packaging solutions market.

Regarding equity structure, the company's founder and Chairman Sun Yanan holds 56.3% of shares, the state-owned Suzhou Equity Investment Fund Management holds 7.81%, and Executive Director Wang Yue (Sun Yanan's nephew) holds 7.03%.

Revenue Continues to Grow, Yet Profits Take a Rollercoaster Ride

Financial data disclosed in the prospectus reveals that in recent years, U-Logic has exhibited a pronounced pattern of ‘revenue growth without profit growth’.

Revenue: For the years 2022, 2023, 2024, and the eight months ended 31 August 2025, the company achieved revenues of approximately RMB 648 million, RMB 794 million, RMB 838 million, and RMB 533 million respectively, maintaining a sustained growth trajectory. However, the revenue growth rate has slowed considerably, declining from 22.6% in 2023 to 5.5% in 2024.

Profit performance: During the same periods, the Company recorded profits of approximately RMB 31.201 million, RMB 64.149 million, RMB 50.741 million, and RMB 26.892 million respectively. Net profit for 2024 declined by approximately 20.9% year-on-year, while the first eight months of 2025 saw a 7.8% year-on-year decrease. Additionally, under non-IFRS calculations, adjusted net profit for 2024 decreased by 2.3% year-on-year to RMB 62.83 million.

Gross profit margin performance: The company's gross profit margin increased from 19.7% in 2022 to 22% in 2024, but fell back to 20.8% in the first eight months of 2025.

Notably, the company's accounts receivable and notes receivable remain persistently high. During the reporting period, their carrying values stood at RMB 311 million, RMB 361 million, RMB 382 million, and RMB 325 million respectively. In the first eight months of 2025, accounts receivable exceeded 60% of revenue. Accounts receivable and notes receivable turnover days consistently hovered around 160 days, reaching 167.8 days in the first eight months of 2025.

Extending credit terms to fuel revenue growth

The prospectus reveals that to sustain revenue expansion, Youlesai adopted a strategy of extending credit terms for major clients. Taking its largest client, ‘Client A’ (which has been the top client since 2023), as an example: its credit period gradually expanded from 30 days in 2022 to 30–90 days in the first eight months of 2025, while payment methods shifted from bank transfers to accepted bills. Another top-five client, ‘Client C,’ saw its credit period extend from 30–60 days to 30–90 days over the same period.

The company candidly acknowledges in its prospectus that over 99% of its revenue relies on automotive component manufacturers and OEM clients. Financial pressures among downstream customers may lead to delayed payments, adversely impacting the company's liquidity. During the reporting period, the company's impairment losses on accounts receivable amounted to RMB 11 million, RMB 13 million, RMB 14 million, and RMB 14 million respectively, showing a year-on-year increase.

Industry Competitive Landscape and Market Potential

The reusable packaging sector has entered a phase of competition for existing market share. According to disclosures by peer company RuiZe Technology, reusable carriers now account for over 80% of automotive component transport, indicating significantly diminished growth potential. The annual report of fellow company Xiyue Zhixing also reveals that its revenue from automotive manufacturing applications has declined for two consecutive years, falling to RMB 219 million in 2024. The company explicitly attributes this to ‘intensified market competition and pressure on product pricing’.

The entire reusable packaging market remains highly fragmented, with the top five players collectively holding just 6.3% market share amidst competition from over 400 enterprises. Although Youlesai ranks second in the industry with a 1.5% market share, the value of this ‘segment champion’ title is being diluted under pressure from price wars.

More notably, the company's claimed ‘capital and equipment barriers’ diverge from its actual operational model. By August 2025, 53 of its 78 operational warehouses (68%) relied on third-party partnerships, up from 56% in 2022. This ‘light-asset operation’ model casts doubt on the effectiveness of its network barriers.

Disclosure Inconsistencies and Compliance Concerns

Multiple discrepancies in Youle Sai's prospectus disclosures have raised market concerns regarding corporate governance transparency.

Reversed supplier tenure: Wuxi Fengsu Logistics Co., Ltd., a principal supplier for both 2024 and the first eight months of 2025, was disclosed as having a three-year partnership in the 2024 section of the prospectus. Yet, in the first eight months of 2025 section, its tenure was stated as two years – paradoxically shortening as the timeline progressed. Another major supplier, Changzhou Suyue Logistics Co., Ltd., was listed as having a six-year partnership duration for both 2022 and 2023, yet this changed to seven years for 2024.

Discrepancies in executive profiles: Executive Director Wang Yue, niece of actual controller Sun Yanan, is stated in the prospectus overview to have joined the company in December 2016. However, her detailed CV indicates she served at Suzhou Sci-Tech Enterprise Equity Service Co., Ltd. from May 2016 to September 2017, only assuming the role of Director of the Business Department at a Youlesai subsidiary in October 2017.

Patent compliance concerns: On 28 April 2019, Youlesai simultaneously applied for both invention and utility model patents for ‘A Terminal Door Containment Structure and Foldable Container’. Under Article 9 of the Patent Law, a single invention may only be granted one patent. However, the National Intellectual Property Administration website indicates that the invention patent (authorisation announcement number CN 111846649 B) was granted in March 2025, while records show no evidence that the company voluntarily abandoned the earlier-granted utility model patent. The coexistence of both authorised patents raises compliance concerns.

Mixed business registration information: The contact telephone number listed in the 2024 annual report of subsidiary Qingdao Asco Supply Chain Management Co., Ltd. is identical to that of Qingdao Fulade Logistics Technology Co., Ltd., with the latter's supervisor sharing the same name as the former's business liaison officer. Fuzhou Asco Supply Chain Management Co., Ltd. also shares a contact telephone number with Fuzhou Xinxinxin Industrial Co., Ltd.

For this new share offering, oversubscribed by 4,124 times, the market's fervent pursuit stands in stark contrast to deep-seated concerns over its fundamentals. When the halo of being a ‘niche champion’ collides with the reality of stalled growth, what Youlesai truly needs to demonstrate to investors is whether it can reconstruct a sustainable profit model and weather cyclical challenges amid peak industry penetration rates and intensifying price wars.

Industry Competitive Landscape and Market Potential

The reusable packaging sector has entered a phase of competition for existing market share. According to disclosures by peer company RuiZe Technology, reusable carriers now account for over 80% of automotive component transport, indicating significantly diminished growth potential. The annual report of fellow company Xiyue Zhixing also reveals that its revenue from automotive manufacturing applications has declined for two consecutive years, falling to RMB 219 million in 2024. The company explicitly attributes this to ‘intensified market competition and pressure on product pricing’.

The entire reusable packaging market remains highly fragmented, with the top five players collectively holding just 6.3% market share amidst competition from over 400 enterprises. Although Youlesai ranks second in the industry with a 1.5% market share, the value of this ‘segment champion’ title is being diluted under pressure from price wars.

More notably, the company's claimed ‘capital and equipment barriers’ diverge from its actual operational model. By August 2025, 53 of its 78 operational warehouses (68%) relied on third-party partnerships, up from 56% in 2022. This ‘light-asset operation’ model casts doubt on the effectiveness of its network barriers.

Disclosure Inconsistencies and Compliance Concerns

Multiple discrepancies in Youle Sai's prospectus disclosures have raised market concerns regarding corporate governance transparency.

Reversed supplier tenure: Wuxi Fengsu Logistics Co., Ltd., a principal supplier for both 2024 and the first eight months of 2025, was disclosed as having a three-year partnership in the 2024 section of the prospectus. Yet, in the first eight months of 2025 section, its tenure was stated as two years – paradoxically shortening as the timeline progressed. Another major supplier, Changzhou Suyue Logistics Co., Ltd., was listed as having a six-year partnership duration for both 2022 and 2023, yet this changed to seven years for 2024.

Discrepancies in executive profiles: Executive Director Wang Yue, niece of actual controller Sun Yanan, is stated in the prospectus overview to have joined the company in December 2016. However, her detailed CV indicates she served at Suzhou Sci-Tech Enterprise Equity Service Co., Ltd. from May 2016 to September 2017, only assuming the role of Director of the Business Department at a Youlesai subsidiary in October 2017.

Patent compliance concerns: On 28 April 2019, Youlesai simultaneously applied for both invention and utility model patents for ‘A Terminal Door Containment Structure and Foldable Container’. Under Article 9 of the Patent Law, a single invention may only be granted one patent. However, the National Intellectual Property Administration website indicates that the invention patent (authorisation announcement number CN 111846649 B) was granted in March 2025, while records show no evidence that the company voluntarily abandoned the earlier-granted utility model patent. The coexistence of both authorised patents raises compliance concerns.

Mixed business registration information: The contact telephone number listed in the 2024 annual report of subsidiary Qingdao Asco Supply Chain Management Co., Ltd. is identical to that of Qingdao Fulade Logistics Technology Co., Ltd., with the latter's supervisor sharing the same name as the former's business liaison officer. Fuzhou Asco Supply Chain Management Co., Ltd. also shares a contact telephone number with Fuzhou Xinxinxin Industrial Co., Ltd.

For this new share offering, oversubscribed by 4,124 times, the market's fervent pursuit stands in stark contrast to deep-seated concerns over its fundamentals. When the halo of being a ‘niche champion’ collides with the reality of stalled growth, what Youlesai truly needs to demonstrate to investors is whether it can reconstruct a sustainable profit model and weather cyclical challenges amid peak industry penetration rates and intensifying price wars.

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.