Produced by | Frontline of Entrepreneurship

Art Editor | Xing Jing

Reviewed by | Song Wen

Recently, Anhui Hongyi Automotive Technology Co., Ltd. (hereinafter referred to as 'Hongyi') successfully navigated the IPO review process for listing on the Beijing Stock Exchange.

As a key supplier of automotive components and tooling equipment, Hongyi's relationship with Chery Automobile is multifaceted. Chery is not only a shareholder but also a major customer and supplier for Hongyi. During the reporting period, approximately 66% of Hongyi's revenue stemmed from Chery, with related-party procurement increasing annually.

Additionally, Hongyi encountered setbacks with Hozon Auto, facing risks in recovering over RMB 10 million in accounts receivable.

Looking ahead, Hongyi must urgently address how to diversify its customer base, reduce reliance on related parties, and foster new growth engines.

1. Founded with Chery's Support, Later Led by Wuhu State-Owned Assets

Hongyi's core business encompasses the design, R&D, production, and sales of automotive stamping and welding parts, passive safety components, and tooling equipment, catering to passenger vehicles, commercial vehicles, and new energy vehicles.

Revenue from automotive components accounts for over 85% of the company's main business income, primarily comprising body parts and chassis components.

(Image / Hongyi's prospectus)

Body parts mainly include instrument panel crossmember assemblies, front floor assemblies, A/B pillar assemblies, and C/D pillar assemblies; chassis components primarily consist of front subframe assemblies, rear subframe assemblies, and brake pedal assemblies.

Key products in automotive passive safety components include airbags, seatbelts, and steering wheels.

(Image / Hongyi's product diagrams (Source: Prospectus))

Additionally, Hongyi's tooling equipment products mainly include cutting tools and fixtures for machining production lines, meeting the demands of mold manufacturing and process equipment businesses.

(Image / Hongyi's prospectus)

From 2022 to 2024, Hongyi's national market share for automotive instrument panel crossmembers increased sequentially from 6.43% to 10.24% and then to 13.94%, rising from third to second place nationally in the industry.

During the same period, the company's national market share for automotive (outer) cover panel (stamping) mold castings in the segmented industry stood at 18%, 15%, and 16%, respectively, consistently ranking first nationally.

Since its inception, Hongyi has been closely tied to Chery, a major automotive player.

In June 2007, Hongyi's predecessor, Wuhu Ruili Tools Co., Ltd. (hereinafter referred to as 'Ruili Tools'), was established, focusing on tool manufacturing, grinding, tool processing solutions, and technical services. At the time, Ruili Tools was funded by Chery Automobile and Wuhu Ruichuang Investment Co., Ltd.

In December 2007, Chery Automobile acquired all equity in Wuhu Ruichuang Investment, gaining 100% ownership of Ruili Tools.

(Image / Hongyi's NEEQ public transfer Instruction Manual)

In September 2015, the company's registered capital increased from RMB 6 million to RMB 150 million, with Chery Automobile's wholly-owned subsidiary, Wuhu Chery Technology Co., Ltd. (hereinafter referred to as 'Chery Technology'), and Wuhu Aike Automotive Technology Co., Ltd. (now known as 'Wuhu Ruizhi Lianneng Technology Co., Ltd.,' 100% owned by Chery Automobile) as the capital-increasing shareholders. Concurrently, the company transitioned into a joint-stock company.

(Image / Hongyi's NEEQ public transfer Instruction Manual)

In November 2017, Hongyi announced that Wuhu Construction Investment had acquired a 60% stake in Hongyi through a share transfer, becoming the controlling shareholder. The original controlling shareholder, Chery Technology, saw its stake reduced to 39%. The Wuhu Municipal SASAC achieved equity control over Hongyi.

As of the prospectus signing date, Wuhu Investment Holdings directly held a 58.05% stake in the company, serving as Hongyi's controlling shareholder. The Wuhu Municipal SASAC directly held a 95.59% stake in Wuhu Investment Holdings and indirectly controlled 58.05% of Hongyi's shares through Wuhu Investment Holdings, acting as the de facto controller.

Furthermore, Chery Technology is Hongyi's second-largest shareholder, holding a 37.73% stake in the company.

(Image / Hongyi's prospectus)

It is evident that Hongyi has been deeply intertwined with Chery Automobile since its inception. Despite transitioning to Wuhu state-owned asset control through equity changes, Chery Automobile's system retains a significant shareholder position, with both parties maintaining a long-term equity relationship.

2. 60% of Revenue from Chery, Yet 'High Selling Price, Low Profit'

Backed by Chery Automobile, Hongyi's performance has shown rapid growth in recent years.

From 2023 to 2025 (hereinafter referred to as the 'reporting period'), Hongyi's operating revenue reached RMB 1.792 billion, RMB 2.888 billion, and RMB 3.544 billion, respectively, with year-on-year growth rates of 37.07%, 61.13%, and 22.72%.

During the same period, the company's net profit attributable to shareholders amounted to RMB 129 million, RMB 243 million, and RMB 300 million, respectively, with year-on-year growth rates of 81.25%, 89.35%, and 23.24%.

(Image / Wind (Unit: RMB 100 million))

Hongyi's major downstream customers include automotive OEMs and auto parts enterprises such as Chery Automobile, Geely Group, BYD, Leapmotor, Raytheon Mould, and Huayu Automotive.

Among them, Chery Automobile, as a significant shareholder, contributes the most to the company's performance.

During the reporting period, sales revenue from Hongyi's top five customers accounted for 76.47%, 83.05%, and 83.66% of the concurrent operating revenue, respectively. Among them, sales revenue from related party Chery Automobile accounted for 57.44%, 66.71%, and 66.25% of the concurrent operating revenue, indicating a heavy reliance on Chery Automobile.

Notably, Hongyi's gross profit margin from sales to Chery Automobile is significantly lower than that from non-related parties.

During the reporting period, Hongyi's gross profit margin from sales to related parties was 17.58%, 18.15%, and 15.38%, respectively; while the gross profit margin from sales to non-related parties was 22.09%, 20.75%, and 21.65%, respectively.

Taking the company's core product, automotive stamping and welding parts, in 2025 as an example, Hongyi's gross profit margin from sales to non-related parties was 21.70%, whereas it was only 15.38% for sales to related parties, a difference of 6.32 percentage points.

(Image / Hongyi's inquiry response)

For body parts, which account for the largest revenue share, during the reporting period, the average selling price to related parties was RMB 16.97/unit, RMB 19.56/unit, and RMB 26.13/unit, respectively, with gross profit margins of 20.50%, 19.81%, and 15.51%.

The average selling price to non-related parties was RMB 11.60/unit, RMB 14.61/unit, and RMB 17.37/unit, respectively, with gross profit margins of 23.27%, 20.90%, and 21.81%.

(Image / Hongyi's inquiry response)

In other words, even though Hongyi sells body parts to Chery Automobile at a significantly higher unit price than to non-related parties, the gross profit margin remains much lower than that from other customers.

Behind this contrast of 'high selling price, low profit,' the fairness of the pricing in related-party transactions warrants further scrutiny. This also impacts the company's overall gross profit margin level.

During each period of the reporting period, Hongyi's gross profit margin from its main business was 19.10%, 18.68%, and 16.92%, respectively, showing a year-on-year decline. The gross profit margin for automotive components was 18.53%, 18.22%, and 16.39%, respectively.

As an important related customer of Hongyi, Chery Automobile's relatively low gross profit margin level implies that the contribution of related sales to the company's overall profit quality may be limited.

(Image / Hongyi's prospectus)

In response, the Beijing Stock Exchange also requested in its inquiry letter that Hongyi explain the fairness of the pricing in related sales and whether there are any instances of benefit transfer.

Hongyi stated that for both related and non-related customers, the company bases its quotes on product costs, taking into account the customer's target price, estimated purchase quantity, component technical specifications, and market competition. Transaction prices are primarily determined through commercial bidding, ensuring reasonableness.

'Frontline of Entrepreneurship' noted that Hongyi also makes purchases from Chery Automobile.

During each period of the reporting period, the company's related procurement amounts were RMB 30.8861 million, RMB 112 million, and RMB 173 million, respectively, accounting for 2.04%, 4.97%, and 5.68% of the company's total procurement amount during the respective periods.

Among them, the largest related procurement item was the purchase of stamping parts, sub-assemblies, and steel from Chery Automobile, with procurement amounts during each period of the reporting period being RMB 2.2353 million, RMB 88.4639 million, and RMB 145 million, respectively, showing a rapid growth trend.

(Image / Hongyi's inquiry response)

At Hongyi, Chery Automobile plays three crucial roles as a shareholder, key customer, and supplier, with multiple interests intertwined. The fairness of pricing in related-party transactions and the company's operational independence have become focal points of ongoing regulatory and market attention.

3. Setback with Hozon Auto, Growth Momentum Slows Down

Hongyi, deeply tied to the 'Chery ecosystem,' has its future growth closely linked to Chery Automobile's development.

Data shows that during the reporting period, Chery Automobile's sales volumes were 1.881 million units, 2.6039 million units, and 2.803 million units, respectively, with year-on-year growth rates of 52.60%, 38.40%, and 7.7%, indicating a continuous decline in growth momentum.

(Image / Hongyi's inquiry response)

In 2025, China's total passenger vehicle sales grew by 9.20% year-on-year, with Chery Automobile's 7.7% growth rate lagging behind the industry.

Furthermore, judging from Chery Automobile's latest financial data, its performance has shown signs of weakness. In the first half of 2026, Chery Automobile achieved revenue of RMB 143.280 billion, up 1.2% year-on-year; however, its profit for the period was RMB 9.016 billion, down 9% year-on-year.

(Figure/Response to Hongyi's Inquiry Letter)

It is worth noting that Hongyi previously encountered a significant setback with Hozon Auto.

According to reports, in order to recover a substantial amount of accounts receivable from Hozon Auto, Hongyi filed a lawsuit in October 2024. The two parties subsequently reached a settlement agreement two months later.

However, this settlement agreement ultimately proved to be ineffective. In June 2025, Hozon Auto was accepted for bankruptcy reorganization by the Jiaxing Municipal Intermediate People's Court. Hongyi declared its bankruptcy claims in July of the same year, with the currently recognized claim amounting to RMB 10.4626 million. The ultimate amount that Hongyi will recover remains uncertain.

Fortunately, Hongyi is not currently facing a cash shortage. According to the prospectus, as of the end of 2025, the company held RMB 620 million in monetary funds, while its short-term borrowings amounted to only RMB 67.5377 million.

(Figure/Hongyi's Prospectus)

Nevertheless, this does not imply that there are no concerns. Hongyi's deep integration with Chery and its inability to establish a significant second growth curve both present challenges to its operations.

Looking ahead, whether Hongyi can successfully launch its Initial Public Offering (IPO) on the Beijing Stock Exchange will continue to be closely watched by "Entrepreneurial Frontline."

*Note: The featured image in the article is sourced from the official website of Hongyi.