Huaming Equipment Files with HKEX: Accounts Receivable of RMB 1.256 Billion, Overseas Sales Revenue Accounts for Nearly 20%

Recently, Huaming Power Equipment Co., Ltd. (002270.SZ, hereafter “Huaming Equipment”) submitted an application for listing on the Hong Kong Stock Exchange. J.P. Morgan Securities (Far East) Limited and Haitong International Capital Limited serve as joint sponsors, aiming to build an “A+H” dual-capital platform to accelerate the implementation of its globalization strategy.

Public information shows that Huaming Equipment was established in 1995. The company is headquartered in Putuo District, Shanghai, and is a leading global manufacturer of transformer tap changers.

The prospectus cites data from Frost & Sullivan indicating that the global market entry barriers for tap changers are high, resulting in market share concentration among a few major players. By revenue, the top three global transformer tap changer manufacturers in 2024 will account for approximately 82.5% of the global market. Among them, Huaming Equipment holds a 17.9% market share, ranking second worldwide and first in China.

Overseas sales account for nearly 20%

The prospectus shows that in recent years, countries worldwide have successively announced decarbonization targets, accelerating the energy transition from fossil fuels to clean electricity, which has driven continuous growth in global electricity demand. Meanwhile, global power infrastructure is entering a renewal cycle, creating stable market demand for core electrical components.

In the domestic market, during the “14th Five-Year Plan” (2026-2030), investment in power infrastructure will significantly increase. State Grid’s fixed asset investment is expected to reach 4 trillion yuan, a roughly 40% increase compared to the “13th Five-Year Plan,” fully promoting upgrades in transmission, distribution, and energy storage systems.

The prospectus indicates that Huaming Equipment’s business is mainly divided into three segments: power equipment, CNC equipment, and electrical engineering. Its products are widely used in power plants, transmission and distribution networks, industrial sectors (including chemical and metallurgical industries), rail transit systems, energy storage systems, and AI data centers.

For Huaming Equipment, the power equipment segment is its core revenue source, accounting for 86.6% of revenue by 2025. Its key products are on-load tap changers and no-excitation tap changers, functioning similarly to “water faucet valves,” mainly used to regulate transformer output voltage. According to the prospectus, transformers are core equipment for transmission and distribution, and tap changers are critical components of transformers. As the only mechanical dynamic component, they perform regulation during load fluctuations. Without effective tap switching and voltage regulation, grid voltage instability could increase the risk of equipment failure and outages.

Relying on the niche field of tap changers, the prospectus shows that Huaming Equipment’s revenue is projected to grow from 1.946 billion yuan in 2023 to 2.412 billion yuan in 2025, with a compound annual growth rate of 11.3%. In 2025, the company’s overall gross profit margin will reach 53.9%, and net profit margin will be 29.8%.

Overseas business is a major growth driver for Huaming Equipment. The company mentions in the prospectus that from 2023 to 2025, overseas sales revenue will grow from 274 million yuan to 479 million yuan, with a compound annual growth rate of 32.1%. The proportion of overseas revenue will also increase from 14.1% to 19.9%.

Huaming Equipment states that global deployment has always been an important part of its business strategy. Currently, its products are available in over 120 countries and regions worldwide through various channels, and the company will continue to expand its overseas market coverage.

However, the company also admits in the prospectus that uncertain geopolitical situations, including potential changes in international trade policies and trade barriers, could adversely affect its global expansion process.

Accounts receivable of 1.256 billion yuan

Looking at its capital history, its predecessor was Shandong Fain CNC Machinery Co., Ltd. It was listed on the Shenzhen Stock Exchange (stock code: 002270) starting September 2008. After a major asset restructuring completed in December 2015, it officially changed its name to Huaming Power Equipment Co., Ltd. in July 2016.

Regarding ownership structure, as of the final practical date of the prospectus, the company’s executive director and chairman Xiao Yi, along with his brother Xiao Shen and father Xiao Riming, held a total of 390.130835 million A-shares through Huaming Group, representing 43.54% of the voting rights of the shareholders’ meeting (excluding 24,620,900 shares of treasury stock), making them the actual controlling shareholders.

Huaming Equipment also faces credit risk related to accounts receivable. As of December 31, 2025, the company’s trade receivables and notes receivable amounted to 1.256 billion yuan, accounting for 24.1% of total assets. The company explains that this is mainly due to increased business volume; among these, the shift in customer settlement methods to bank acceptance bills has led to an increase in notes receivable, while trade receivables have decreased accordingly.

Huaming Equipment states that it has established strict receivables management mechanisms, regularly assesses recoverability, and makes provisions for impairment, but cannot completely eliminate the risk of overdue or uncollectible receivables.

As of the end of 2025, the company held cash and cash equivalents of 1.1656 billion yuan.

For this Hong Kong IPO, Huaming Equipment has clarified five main uses of the raised funds: first, to enhance core R&D capabilities; second, to expand global sales and service networks, strengthen marketing and brand building; third, to improve overseas supply chain networks; fourth, to upgrade digital, intelligent, and automated manufacturing capabilities, expand production capacity, and promote new materials and processes; fifth, to supplement working capital and for general corporate purposes.