New stock outlook | Second impact on IPO, can Feisu innovation transfer to Hong Kong stocks to fulfill the dream?

Since the beginning of this year, the Hong Kong stock market has clearly shown a profitable effect on new listings, attracting investors' increasing attention to new stocks. According to the Hong Kong Stock Exchange, recently, Feisu Innovation has submitted a listing application to the main board of the Hong Kong Stock Exchange, with CICC, China Securities Co.,Ltd. International, and CMSC International as its joint sponsors. Feisu Innovation is an enterprise-level network solution provider. The company had previously attempted to list on the Shenzhen Stock Exchange main board in 2023, but shortly after entering the inquiry stage, the company withdrew the relevant application documents and the IPO was terminated. Now, with its second attempt to list in Hong Kong, does Feisu Innovation have any new highlights in its fundamentals? Behind the revenue growth, high debt levels may pose hidden risks. The prospectus shows that Feisu Innovation is a company that provides enterprise-level network solutions. The company is committed to helping global enterprises achieve rapid digital transformation through a range of enterprise-level network solutions. The company's products and services include high-performance network equipment, scalable network operating systems, and cloud network management platforms, providing scalable, affordable, comprehensive, one-stop network solutions through online DTC business model. During the reporting period, the company's performance showed a steady growth trend, but a decrease in profit in 2024. In 2022, 2023, and 2024, Feisu Innovation achieved revenues of approximately RMB 1.988 billion, RMB 2.213 billion, and RMB 2.612 billion respectively; during the same period, the annual total comprehensive income was approximately RMB 371 million, RMB 459 million, and RMB 397 million. In 2022, 2023, and 2024, the company's gross profit margin was 45.4%, 49.4%, and 50.0% respectively. By product segment, the company's products can be divided into high-performance network solutions and basic performance network solutions. The revenue composition of high-performance network solutions increased from 23.8% in 2022 to 31.9% in 2024, while the revenue composition of basic performance network solutions decreased from 64.9% to 57.3%. According to the prospectus, high-performance network products are suitable for bandwidth-intensive environments, with high throughput, low latency, and scalability; basic performance network products provide secure and reliable connections and simplified deployment and maintenance to meet daily operational needs. It is understood that Feisu Innovation's business mainly comes from overseas. In 2022, 2023, and 2024, the company's overseas sales revenue accounted for 99.3%, 99.1%, and 99.3% of total annual revenue, with revenue from the United States accounting for over 46%, nearly half. As of the last practicable date, the company has established 7 global delivery centers with a total area of over 68,000 square meters in China, the United States, Germany, Australia, Singapore, the United Kingdom, and Japan, enabling intelligent and efficient dispatch. During the reporting period, the company's customer base has grown, and the average revenue per customer has also increased. In 2022, 2023, and 2024, approximately 74,000, 76,600, and 82,500 customers placed orders through the company's online sales platform, with the average revenue per customer in the respective year being approximately RMB 26,900, RMB 28,900, and RMB 31,700. As of May 19, 2025, the company has served over 450,000 customers from over 200 countries and regions, covering about 60% of the Fortune 500 companies, including various industries such as information technology, financial services, healthcare, education, automotive, and electronics. Furthermore, in 2023 and 2024, the company recorded net income retention rates of 94.4% and 102.1%, indicating increasing customer stickiness. It is worth noting that the debt level has significantly increased, leading to a rapid growth in the company's interest expenses. From 2022 to 2024, the company's liabilities amounted to approximately RMB 621 million, RMB 721 million, and RMB 1.15 billion; the corresponding financial costs increased from 4.511 million to 18.544 million. Optical module manufacturer or cross-border e-commerce? From Feisu Innovation's products and services, the company's main business is in optical communications and cross-border e-commerce. The prospectus shows that the company's own brand offers over 120,000 SKUs of products, covering optical modules, high-speed cables, optical fibers, switches, optical transmission equipment, fiber optic cabling management products, and copper cable system products; at the same time, the company has built its own online DTC e-commerce platform, providing one-stop purchasing services such as online inquiries, technical consultations, solution design, and self-ordering. The investment boom in the optical module industry started in 2023, benefiting from the AI big model boom, the demand for high-performance AI server clusters continued to grow rapidly, driving a significant increase in the prosperity of the optical module industry. Not only did many "optical module concept stocks" achieve impressive gains in the secondary market, but many listed companies also actively expanded into the optical module industry through acquisitions, such as Yangtze Optical Fibre And Cable Joint Stock's successful acquisition of Broadex Technologies in 2022, Guangdong Aofei Data Technology's acquisition of 70% equity of HuaTuo Optical Communication in 2024, and Hui Lyu Ecological Technology Group's acquisition of 30% equity in Wuhan Junheng Technology Co., Ltd. for 9.5 billion yuan. As of 2025, the heat in the optical module industry remains high. Recently, a leading player in the high-speed optical module sector, Cig Shanghai, submitted a listing application to the Hong Kong Stock Exchange. It is reported that the company has achieved bulk shipments of 800G optical module products and completed the development of the first generation 1.6T module prototype, with the possibility of sending samples of multiple 1.6T optical module products to customers in 2025. However, unlike traditional manufacturing companies, Feisu Innovation's self-branded products adopt a third-party supplier OEM production model. The company also has an e-commerce platform and provides corresponding order management, customer service, and other services, so its business nature, rather than being a communication equipment manufacturing company, is actually...More inclined towards a cross-border e-commerce company.According to the information available, in terms of various expenses and personnel arrangements, the sales expenses of Feisu Innovation are much higher than the research and development expenses, and the sales team has significantly more members than the research and development team. In 2022, 2023, and 2024, the company's sales and distribution expenses were 270 million yuan, 339 million yuan, and 488 million yuan, respectively, accounting for 13.6%, 15.3%, and 18.7% of the total income during the same period. There is a continuous upward trend, with advertising and promotion expenses alone exceeding 100 million yuan in 2024. In contrast, the level of research and development investment is lower and remains stable. In 2022, 2023, and 2024, the company's research and development expenses were 99.824 million yuan, 110 million yuan, and 144 million yuan, accounting for 5.0%, 5.0%, and 5.5% of the total income during the same period. As of December 31, 2024, sales and marketing personnel accounted for more than 50% of the nearly 2,400 employees of the company, while research and development personnel accounted for only 24.3%. Comparing Feisu Innovation with Cig Shanghai, a manufacturer of optical modules and communication equipment that recently went public in Hong Kong, the business sizes of the two are at the same level (Cig Shanghai's revenue in 2024 was 3.65 billion yuan, and Feisu Innovation's was 2.612 billion yuan). However, Cig Shanghai's research and development expenditure in 2024 was 409 million yuan, accounting for 11.19% of the revenue, significantly higher than that of Feisu Innovation. Furthermore, despite a significant increase in overall performance in the optical module industry in 2024, Feisu Innovation's profit decreased by 13.5% year-on-year, indicating potential profitability concerns for the company. According to media statistics, due to the rapid growth in demand for AI computing power, the overall revenue of the 15 listed optical module companies in 2024 increased by 48%, with a 122% year-on-year increase in net profit attributable to shareholders, in sharp contrast to Feisu Innovation's performance. Overall, although Feisu Innovation is associated with the popular concept of optical modules, its actual business nature leans more towards cross-border e-commerce, and its high debt level may bring considerable cash flow pressure to the company. In addition, the company has a high dependence on its business in the United States, and future risks from trade disputes and exchange rate fluctuations should not be overlooked.