Majie Electronics to IPO in Hong Kong: Mysterious Seychelles Distributor Supports 30% of Revenue

According to the HKEX official website, Kunshan Majing Electronic Co., Ltd. (hereinafter referred to as “Majing Electronic”) submitted its listing application documents to the Hong Kong Stock Exchange on March 31 for a Main Board listing, with Ping An Securities (Hong Kong) serving as the sole sponsor.

As a supplier focusing on advanced process chip power inductor solutions for the consumer electronics, automotive electronics, and high-performance computing sectors, Majing Electronic disclosed in its prospectus that, based on revenue from power inductor solutions for advanced process chips in 2024, the company ranks first among suppliers headquartered on the Chinese mainland.

After reviewing Majing Electronic’s prospectus, a reporter from the “Economic Daily News” found that the company’s fundamentals have multiple objective characteristics that are worth attention. For example, more than 30% of Majing Electronic’s revenue comes from an overseas distributor registered in the African country of Seychelles, and several entities overlap in identity between the company’s top five suppliers and the customer lineup.

In addition, the company’s contract manufacturing and processing costs have risen sharply over the past three years, and in 2025 the proportion has already exceeded 30%. In terms of compliance and financial health, over the past three years the company has accumulated over RMB 34 million in unpaid social insurance and housing provident fund contributions; more than 80% of leased production premises have not completed备案; and the company was also in a state of high net value of current liabilities in 2023 and 2024.

Multiple suppliers are “also customers, also suppliers”

In building its sales network and supply chain system, Majing Electronic has demonstrated a highly concentrated customer dependency and complex cross-transaction characteristics.

The prospectus shows that Majing Electronic’s revenue largely depends on its top five customers. In 2023, 2024, and 2025 (hereinafter referred to as the reporting period), the revenue from the company’s top five customers was RMB 285 million, RMB 342 million, and RMB 331 million, accounting for 78.7%, 78.4%, and 70.2%, respectively.

Among them, the top customer, Customer A, holds an absolute dominant position. According to information, Customer A was incorporated in Seychelles, with a registered capital of USD 5 million, and mainly engages in the distribution business of electronic components and electronic products. During the reporting period, Majing Electronic’s sales revenue to this customer was RMB 123 million, RMB 151 million, and RMB 153 million, respectively, representing 34.1%, 34.7%, and 32.5% of the company’s total revenue in the corresponding years.

Majing Electronic admitted that any material delays, changes, cancellations, or reductions in such customers’ purchase orders, or any changes in purchasing models (which may result from changes in the customers’ own needs and purchasing models), could have a material adverse impact on the company’s business, financial position, and operating performance.

Besides the high concentration of customers, Majing Electronic also has complex “dual identity” transactions with several core suppliers. The prospectus discloses that during the reporting period, among the company’s top five suppliers, multiple companies are also the company’s customers. Taking major supplier B as an example, during the reporting period, Majing Electronic’s purchase amounts from supplier B were RMB 27.4774 million, RMB 38.2045 million, and RMB 41.44M, respectively, accounting for 12%, 14%, and 15.1% of the company’s total purchases in the corresponding years, respectively.

At the same time, supplier B is also one of Majing Electronic’s customers. During the reporting period, Majing Electronic sold supplier B equipment and products worth RMB 2.7822 million, RMB 0.4207 million, and RMB 0.4769 million, respectively. The prospectus explains that the company sold certain equipment to supplier B, and supplier B, as a contract manufacturer, used that equipment to manufacture power inductors on its behalf; afterward, Majing Electronic repurchased those power inductors.

Similarly, identity overlap and cross-transaction phenomena also occurred with supplier D and supplier F. For example, in 2024 and 2025, Majing Electronic purchased products worth RMB 15.1563 million and RMB 22.1003 million from supplier F, respectively, and in the same period it also sold power inductors worth RMB 4.4k and RMB 1.2852 million to supplier F, respectively. The prospectus also shows that as of the submission date, the B-round financing investor, Dongguan QinhE, holds about 9.87% of supplier F’s equity.

Outsourced processing costs account for more than 30%

In describing its business model, Majing Electronic emphasized that one of its competitive advantages is having a “vertically integrated R&D platform,” which can “provide end-to-end power inductor solutions.” However, reporters noted that in actual production and manufacturing processes, the company is outsourcing its operations at a relatively fast pace.

The cost structure breakdown in Majing Electronic’s prospectus shows that in 2023, the company’s outsourced processing costs were RMB 28.77 million, accounting for 9.6% of total cost of sales; in 2024, outsourced processing costs increased to RMB 77.74M, and the proportion jumped to 22%; in 2025, outsourced processing costs further rose to RMB 114 million, accounting for 30.8%. During the reporting period, the absolute amount of outsourced processing and manufacturing costs increased by nearly three times.

In response to the sharp changes in outsourced processing costs, Majing Electronic explained that, in order to optimize cost efficiency and address high capacity utilization rates, it outsourced some standardized and labor-intensive processes to outsourced service suppliers.

However, the capacity utilization rate data disclosed in the prospectus shows that during the reporting period, the overall production bases’ capacity utilization rates were 76.1%, 80.0%, and 86.1%, respectively. This means that even in 2025, the year with the highest business volume, nearly 14% of the company’s idle capacity was still not activated.

In the consumer electronics field, which is heavily outsourced, that area is precisely Majing Electronic’s absolute revenue pillar. During the reporting period, the consumer electronics segment contributed revenue of RMB 230 million, RMB 291 million, and RMB 318 million, respectively, with its share consistently staying in the high range of 63.4% to 67.5%.

The reporter noted that the industry cycle in which reliance on external contract manufacturers is deepening coincides with the period when its core products are facing pricing pressure. The prospectus shows that the overall average selling price of Majing Electronic’s power inductor components declined from RMB 0.37 per unit in 2023 to RMB 0.35 in 2024, and further to RMB 0.34 in 2025. Against the backdrop of continuously increasing market pressure on terminal product prices, the sustained growth in outsourced processing cost data puts Majing Electronic’s claim of a “vertically integrated R&D platform that provides end-to-end power inductor solutions” under real data scrutiny.

Unpaid social insurance and provident fund contributions

In addition, Majing Electronic has also exposed shortcomings in terms of internal compliance on foundational matters and the health of its financial structure.

The prospectus discloses that during the reporting period, Majing Electronic failed to pay social insurance and housing provident fund contributions in full for some employees within mainland China as required. Specifically, during the reporting period, the funding shortfalls for social insurance and housing provident fund contributions reached RMB 11.70 million, RMB 10.80 million, and RMB 11.90 million, respectively. That means that during the reporting period the company accumulated RMB 34.40 million in compliance arrears for social insurance and housing provident fund contributions.

Data show that as of the end of February 2026, Majing Electronic’s recorded cash and cash equivalents were approximately RMB 72.06M. If the above accumulated arrears are treated as implicit liabilities that may be settled at any time, the amount is already close to half of the company’s available cash reserves as of the end of February 2026.

In terms of compliant use of production and office premises, Majing Electronic also has widespread non-compliance. As of the submission of the application, the company leased 21 properties within China, but as many as 18 of them had not registered the lease agreements with the relevant authorities, resulting in an unregistered proportion of 85.7%. According to relevant regulations, the relevant government authorities may impose a fine ranging from RMB 1,000 to RMB 10,000 for each lease agreement that has not been filed; therefore, the company’s maximum total fine could be RMB 180k.

Beyond compliance defects, in 2023 and 2024, Majing Electronic’s balance sheets show that the company’s net liabilities were RMB 115 million and RMB 137 million, respectively. At the same time, the company’s net value of current liabilities in these two years was RMB 336 million and RMB 327 million, respectively, which the company attributed to the impact of redeeming liabilities.

The prospectus shows that these financing arrangements with a derivative bet nature resulted in heavy interest expenses. During the reporting period, Majing Electronic paid RMB 180k, RMB 14.5M, and RMB 15.11M, respectively, for interest on redeeming liabilities alone. Until the end of 2025, these redeemable liabilities were only derecognized and converted into equity, resulting in the company recording RMB 13.04M of net current assets and RMB 228 million of net assets on the eve of the application.

Against the background of pressure to make back payments of more than RMB 34 million for social insurance and housing provident fund, as well as a large proportion of leased properties not registered, Majing Electronic’s upcoming IPO in Hong Kong, its compliance and financial soundness will face further scrutiny by the capital market.

Regarding the multiple issues described in the article, on the afternoon of April 1, the reporter obtained the contact email address disclosed in the company’s 2025 annual report through Tianyancha, and sent the company interview questions (the company’s official website indicated “server error”). As of the time of publication, the reporter had not received a reply from the company.

(Editor: Zhang Yang HN080)

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