Xinde Technology Files for Listing on the Hong Kong Stock Exchange: 2024 Revenue and Profit "Both Decline"

According to information released on the Hong Kong Stock Exchange official website, Shandong Xinde Technology Co., Ltd. (hereinafter referred to as Xinde Technology) recently submitted its IPO (Initial Public Offering) application documents to the Hong Kong Stock Exchange for the first time. Industrial and Commercial Bank of China International and Zhongtai International are joint sponsors. According to the prospectus (draft version), Xinde Technology plans to use the funds raised from this Hong Kong IPO for research and development, expanding its product portfolio, increasing production capacity, expanding overseas markets, as well as working capital and other general corporate purposes.

“Daily Economic News” reporters noted that although Xinde Technology claims to be a leading player in China’s animal health market, the industry faces fierce competition, and customers’ bargaining power in the procurement of veterinary biological products and medicines is increasing, which may impact its profitability. Additionally, in 2024, Xinde Technology experienced a “double decline” in revenue and profit due to a decrease in the average selling price of antibody products.

It is worth mentioning that after its Series C financing, Xinde Technology’s valuation was approximately 1.8 billion yuan, down nearly 40% from the approximately 2.878 billion yuan valuation after its Series B financing and the share transfer in August 2022.

Mainly Sold Domestically

Founded in 1999, Xinde Technology is a Chinese animal health company primarily engaged in the research, production, and sales of a full range of animal health and supporting products. Its products include veterinary biological products (such as vaccines, antibodies, transfer factors, etc.), traditional Chinese veterinary medicines, chemical drug formulations, animal feed, and feed additives, aimed at preventing, diagnosing, treating, and controlling diseases in poultry, livestock, aquatic animals, and pets.

The prospectus cites data from Zhuoshi Consulting, indicating that in 2024, Xinde Technology ranks ninth among domestic brands in China’s animal health market and is among the top three in China’s poultry veterinary biological products market. Although it ranks high domestically, Zhuoshi Consulting’s data shows that there are over 1,500 veterinary drug manufacturers in China, and the animal health industry faces intense competition.

Xinde Technology admits, “Our customers’ bargaining power in the procurement of veterinary biological products and medicines is increasing. Therefore, our customers may negotiate for less favorable terms, which could reduce our profitability. Factors beyond our control may lead to declines in our revenue or profitability.”

“Daily Economic News” reporters observed that by the end of Q3 2025, Xinde Technology operated four manufacturing bases with 34 GMP-certified production lines for veterinary drugs. The company’s business model focuses on two core drivers: providing precise prevention and control solutions for customers and delivering high-quality, cost-effective products through innovation and manufacturing.

By product category, in 2023, 2024, and the first three quarters of 2025 (hereinafter referred to as the reporting period), revenue mainly came from veterinary biological products (including vaccines, antibodies, and transfer factors), accounting for 63.6%, 64.2%, and 69.1%, respectively.

According to the prospectus, Xinde Technology’s products are mainly sold within China. During the reporting period, revenue from mainland China accounted for 98.8%, 97.1%, and 94.7%, respectively. Its overseas revenue mainly comes from Pakistan, Egypt, and Vietnam. The company primarily adopts a direct sales model, with direct sales channels contributing 70.2%, 69.6%, and 67.9% of total revenue during the reporting period.

Risks of Liquidity Shortage

In terms of performance, during the reporting period, Xinde Technology achieved revenues of 985 million yuan, 982 million yuan, and 877 million yuan, respectively. Its profits were 34.76 million yuan, 28.12 million yuan, and 55.67 million yuan in the same periods. Notably, in 2024, both revenue and profit declined (“double decline”), with profit decreasing by approximately 19% compared to 2023. Additionally, overall gross profit margin dropped from 46.3% in 2023 to 46% in 2024. The prospectus discloses that the decline in gross margin reflects a decrease in the average selling price of antibody products amid intensified market competition.

“Daily Economic News” reporters noted that in 2024, government subsidies received by Xinde Technology amounted to about 28.7 million yuan, which exceeds the company’s profit of 28.12 million yuan for that year. Furthermore, the company’s financial costs remained high, with 36.56 million yuan and 36.28 million yuan in 2023 and 2024, respectively, both exceeding annual profits.

Additionally, during the reporting period, Xinde Technology’s net current liabilities were approximately 210 million yuan, 150 million yuan, and 55 million yuan, respectively. Although these figures are decreasing year by year, the company still faces liquidity risks. If it cannot generate sufficient operating cash flow or secure external financing in the future, its working capital could be affected.

The reporters also noted that regarding the growth of trade receivables and notes in the first three quarters of 2025, the company stated: “This is mainly due to increased revenue during the same period, coupled with government procurement orders typically concentrated at the end of each fiscal year, resulting in higher balances at the end of the third quarter.”

The Xinde Technology prospectus also explicitly mentions that the “2026 No. 10 Announcement” issued on January 30, 2026, no longer clarifies whether biological products can continue to apply the simplified 3% tax method. “If the simplified tax method is no longer applicable, the tax-inclusive prices of our products may increase, or if we are unable to successfully pass on the tax burden to customers, our financial performance could be affected.”

Valuation Decreased After Series C Financing

Xinde Technology’s history dates back to April 1999, when its predecessor, Shandong Xinde, was founded by Executive Director, President, Chairman, and Controlling Shareholder Li Chaoyang. In September 2007, Shandong Xinde completed a share reform and changed its name. Over the years, the company has undergone multiple equity transfers, capital injections, and acquisitions, aiming to (among other things) raise funds for business development, enhance manufacturing capacity, diversify its product portfolio, and broaden its shareholder base.

The prospectus shows that after completing Series C financing in October 2025, the post-investment valuation (average estimate) was about 1.8 billion yuan, representing approximately a 168.4% increase from the post-Series A valuation of about 671 million yuan. However, it declined by about 37.5% from the approximately 2.878 billion yuan valuation after Series B and the share transfer in August 2022. The company explained that the valuation decrease “reflects the estimates made by various parties during the relevant period.”

The reporters noted that Li Chaoyang directly holds about 34.27 million shares. Through Inter International (a company incorporated in the British Virgin Islands and wholly owned by Hong Kong Xinde, which in turn is wholly owned by Li Chaoyang), he holds about 25.2 million shares, collectively exercising approximately 45.08% of voting rights in Xinde Technology. Therefore, Li Chaoyang, Inter International, and Hong Kong Xinde constitute a group of controlling shareholders.

Li Chaoyang was appointed as an external mentor at the Graduate School of the Chinese Academy of Agricultural Sciences in September 2020 for a three-year term and currently serves as Vice President of the Chinese Veterinary Drug Association. Additionally, starting November 2025, he will serve as Vice President of the First Council of Qingdao Agricultural University Alumni Association and was appointed as a professor at Qingdao Agricultural University in December 2025.

The prospectus also discloses that during the reporting period, the company did not fully pay social insurance and housing provident funds for several employees in accordance with Chinese laws and regulations. The total unpaid amounts during the period were approximately 18.6 million yuan, 20.3 million yuan, and 16.1 million yuan, totaling about 55 million yuan. The company admits it may face requirements for back payments, late fees, and fines.

Regarding recent trends in accounts receivable and notes, as well as the valuation decline after Series C, on the morning of February 24, 2026, “Daily Economic News” reporters sent interview questions via email to Xinde Technology’s official website. As of the time of publication, no response has been received.