Ningbo Shunyu Zhixing Technology Co., Ltd. has resubmitted its main board listing application to the Hong Kong Stock Exchange on August 31, 2026, with China International Capital Corporation and CITIC Securities serving as joint sponsors. The automotive optics giant, spun off from Sunny Optical Technology, carries the title of world's largest vehicle camera supplier by shipment volume, yet its latest prospectus reveals several concerning trends—four consecutive years of declining gross margins, sharply slower net profit growth, and a controlling shareholder who also serves as its largest supplier.

Revenue is growing, but profits are not keeping pace. According to the prospectus, from 2023 to 2025, Shunyu Zhixing's revenue increased from RMB 5.262 billion to RMB 7.189 billion, representing a two-year compound growth rate of 16.7%. In the first half of 2026, the company generated RMB 3.702 billion in revenue, a 10.4% year-over-year increase. However, this revenue growth has not translated into proportional profit gains. Net profit for the first half of 2026 reached RMB 665 million, a modest 2.3% increase from RMB 650 million in the same period last year. Over a longer horizon, the slowdown becomes more evident—net profit grew 11.5% in 2024 but dropped sharply to just 0.7% in 2025. The widening gap between revenue growth and profit growth highlights an increasingly pronounced trend of rising sales without corresponding profit improvement.

The persistent decline in gross margin lies at the core of weakening profitability. From 2023 to the first half of 2026, the company's overall gross margins were 35.7%, 35.5%, 32.4%, and 30.4%, respectively, marking four consecutive years of decline. Gross margins for perception products fell from 37.7% in 2023 to 31.4% in the first half of 2026. Other automotive optical products experienced even more volatile margin compression, dropping from 36.2% in 2024 to just 15.4% in the first half of 2026—a decline of over 20 percentage points within two years. The direct driver of this gross margin collapse is the continuous decline in average selling prices. The average price for perception products fell from RMB 76 in 2024 to RMB 68 in 2025, and further to RMB 62 in the first half of 2026. Cockpit product prices declined from RMB 35 to RMB 31, and then to RMB 28. In the prospectus, the company acknowledges adopting more competitive pricing strategies in response to intensifying market competition. Downstream automakers continue to exert pricing pressure on suppliers, while new entrants keep flooding the market, fueling an ongoing price war.

More concerning than the margin erosion is a structural governance issue. The prospectus reveals that SUNNY OPTICAL directly or indirectly controls 96.5% of Shunyu Zhixing's equity. Following the completion of the listing, SUNNY OPTICAL will maintain its controlling position. Meanwhile, the SUNNY OPTICAL group has consistently ranked among Shunyu Zhixing's top five suppliers and became the largest supplier in 2024 and the first three quarters of 2025. Frequent related-party transactions exist between the two entities, with the parent company serving both as a client and as one of the top five suppliers. This structure—where the controlling shareholder is also the largest supplier—has drawn regulatory attention. In April 2026, Shunyu Zhixing was required to supplement materials for its overseas listing filing, including details on whether pricing in procurement transactions with the parent company involves any benefit transfer. The dual role of the controlling shareholder as the largest supplier makes the fairness of related-party transactions an unavoidable question for investors—does the parent company have incentives to adjust pricing to influence the subsidiary's profit levels? This concern becomes especially sensitive against the backdrop of declining gross margins.

The prospectus also discloses remarkable dividend figures. From October to December 2025, the company's subsidiaries distributed dividends totaling RMB 2.444 billion, approximately three times the total dividends paid over the previous two years, and representing 251.31% of consolidated net profit for the first three quarters of 2025. During the reporting period, total dividends from subsidiaries reached RMB 3.285 billion, accounting for 97.06% of total consolidated net profit. This concentrated dividend payout directly halved the company's working capital, with cash and cash equivalents plummeting by 70%. Net current assets dropped from RMB 3.39 billion at the end of 2024 to RMB 1.585 billion by the end of 2025, a decline of over 50%. After distributing most of its profits in a concentrated manner, the company is now turning to the IPO market to raise working capital. This pattern of paying out dividends with one hand while raising funds with the other inevitably raises questions about the underlying logic of its capital operations. As of June 30, 2026, the company held RMB 800 million in cash and cash equivalents. Inventory stood at RMB 940 million, with an inventory turnover period of approximately 67.9 days in the first half of the year.

When a company's controlling shareholder is simultaneously its largest supplier, the fairness of related-party transactions becomes an unavoidable concern. When a company distributes 97% of its profits as dividends before listing, the true motivation behind raising funds through an IPO warrants careful consideration. Shunyu Zhixing must demonstrate to the market not only its number-one global market position but also its ability to sustain profitability independently of its parent company and maintain governance transparency.