Nuanwa Technology Makes Another Push for a Hong Kong Listing: With Annual Revenue of 1 Billion and a Loss of 270 Million, What Lies Behind the Three Consecutive Years of Adjusted Net Profit Growth?

ZC Asia has learnt that insurance technology firm Nuanwa Technology recently filed its prospectus, with JPMorgan and HSBC acting as joint sponsors. The company had previously filed its initial application in September 2025.

Founded in October 2018, the company positions itself as an “insurance AI technology enterprise with risk control at its core”, leveraging fully digital risk control and AI technology to cover the entire process from underwriting to claims settlement. The prospectus reveals that Nuowa Technology’s revenue reached 1.024 billion yuan in 2025, yet the company recorded a loss of 269 million yuan during the same period. What has drawn even greater market attention is the stark ‘scissors gap’ between its persistent reported losses and its adjusted net profit, which has remained positive for three consecutive years.

With revenue rising year on year, why are losses widening?

From a revenue perspective, Nuanwa Technology has maintained a growth trajectory over the past three years: from 2023 to 2025, revenue stood at 655 million yuan, 944 million yuan and 1.024 billion yuan respectively. Gross profit increased from 382 million yuan to 483 million yuan, but the gross profit margin has shown a downward trend year on year, standing at 58.3%, 49.8% and 47.2% respectively.

In terms of revenue structure, underwriting solutions are the primary source, contributing 706 million yuan in 2025, accounting for 69% of the total. Of this, user operations revenue amounted to 436 million yuan, whilst underwriting risk management revenue stood at 235 million yuan. Claims solutions generated revenue of 317 million yuan, accounting for 31%, primarily derived from claims review and investigation services.

However, profit performance did not match revenue growth. In 2023, 2024 and 2025, Nuowa Technology recorded losses of 240 million yuan, 155 million yuan and 270 million yuan respectively, with cumulative losses exceeding 660 million yuan over the three-year period. The loss in 2025 widened significantly compared to the previous year.

However, a key non-IFRS metric paints a starkly different picture: adjusted net profit for the same periods was 18.52 million yuan, 57.50 million yuan and 60.55 million yuan respectively, with the company achieving profitability and steady growth for three consecutive years.

The root cause of the losses: changes in the fair value of preference shares, not operational issues

The stark contrast between the reported losses and the adjusted profits lies primarily in changes to the fair value of convertible and redeemable preference shares.

The prospectus explains that Nuowa Technology has historically issued convertible and redeemable preference shares to investors. Under International Financial Reporting Standards (IFRS), such instruments are recognised as financial liabilities, and changes in their fair value must be recognised in profit or loss for the period. As the company’s valuation rises, the fair value of the preference shares increases, leading to a rise in the carrying amount of the liability and consequently creating a ‘loss’ on the balance sheet; however, this does not represent an actual cash outflow arising from operations.

Nuanwa Technology has explicitly stated that such losses do not result in actual cash outflows and do not affect day-to-day operations. Following the listing, the preference shares will automatically convert into ordinary shares and be reclassified from liabilities to equity; at that point, such fair value loss will no longer arise.

In other words, adjusted net profit, which excludes the aforementioned non-cash items, better reflects the company’s actual profitability at the operational level. Judging by the three-year trend from 18.52 million yuan to 60.55 million yuan, ZA Technology has indeed achieved year-on-year improvement in its operations.

ZhongAn Online: Both the Largest Shareholder and the Largest Customer and Supplier

In terms of shareholding structure, ZhongAn Online, through ZA Technology and Absolute Capital, holds a combined 31.65% stake, making it the largest institutional shareholder. Founder Lu Min, through entities such as Nova Flower and Nova Seed, controls a combined 28.76% of the shares and is the company’s actual controller.

It is worth noting that ZhongAn Online is not only a major shareholder but has also been Nuowa Technology’s largest client over the past three years. From 2023 to 2025, Nuowa Technology’s revenue from ZhongAn Online stood at 404 million yuan, 427 million yuan and 443 million yuan respectively, accounting for 61.8%, 45.2% and 43.3% of total revenue in each period. Although the proportion has declined year on year, it remains at a relatively high level.

At the same time, Nuowa Technology also procures telecommunications and technical services from ZhongAn Online. This triple relationship as ‘shareholder, client and supplier’ has raised external concerns regarding the company’s operational independence.

In its prospectus, Nuowa Technology responded that the two parties cooperate on the basis of market and commercial principles, rather than a relationship of mutual dependence. The company is not ZhongAn Online’s sole service provider, and the proportion of revenue derived from ZhongAn has been steadily declining. Furthermore, the company has served multiple insurance companies and possesses the capability to acquire customers independently.

High Customer Concentration and Intensifying Market Competition

In terms of customer structure, Nuowa Technology’s reliance on major clients remains pronounced. In 2023, 2024 and 2025, the top five clients accounted for 82.9%, 78.9% and 60.3% of revenue respectively. The company acknowledges that, for the foreseeable future, it is likely to continue relying on a small number of clients for a significant portion of its revenue.

In terms of market competition, according to a Frost & Sullivan report, Nuowa Technology was the largest independent AI technology company in China’s insurance sector in terms of the number of insurance claims processed in 2024; in terms of revenue for 2024, it was the largest independent AI technology company in China’s health insurance sector with full-stack risk analysis capabilities. However, ranked by revenue in 2024, it occupies only seventh place in China’s insurance AI technology market, with a market share of 2.2%, amidst a market comprising approximately 50 participants.

Furthermore, internet giants such as Tencent and Alibaba are accelerating their expansion into the insurance technology sector, whilst major insurers including Ping An of China and China Life are strengthening their in-house technological capabilities to reduce reliance on third-party suppliers.

Cash Reserves and Listing Prospects

As of 31 December 2025, Nuwa Technology held cash and cash equivalents of 247 million yuan. Faced with accounting pressures arising from ongoing changes in the fair value of its preference shares, as well as short-term debt repayment requirements, an IPO in Hong Kong has become a key pathway for the company to alleviate financial structural pressures and achieve clarity in its equity structure.

Following the listing, the preference shares will be converted into ordinary shares, and Nuwa Technology’s net asset position is expected to improve significantly. However, whether the company can successfully pass the Hong Kong Stock Exchange’s listing requirements, and how it will reduce its reliance on ZhongAn Online, expand its diversified customer base, and compete with internet giants and insurance companies building their own technology platforms after listing, remain the focus of market attention.

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.