New Stock Preview | Cash Plummets by 47% but Still Gamble to Expand Production, Will Daheng Science and Technology Shoulder the Digestion of a Capacity of 290,000?

With the rise of global health consciousness and the deepening of environmental protection concepts, the cycling movement is causing a new wave of consumption and capital fever. Among them, folding bicycles, with their unique portability advantages, are highly favored by urban commuters and outdoor sports enthusiasts. Against this backdrop, "global folding bike leader" Dahon Technology (Shenzhen) Co., Ltd. (referred to as "Dahon Technology") is accelerating its Hong Kong IPO. On July 17, 2025, Dahon Technology passed the approval notice from the China Securities Regulatory Commission, and subsequently updated its prospectus on July 22, filing with the Hong Kong Stock Exchange for the second time, officially entering the IPO sprint stage. According to data from Intellisia Consulting, based on retail sales volume in 2024, the company holds a prominent position in the folding bicycle industry in mainland China, with a market share of 26.3%, and based on retail sales in 2024, it also leads the folding bicycle industry in mainland China with a market share of 36.5%. Folding Bike Leader Annual sales volume of 230,000 units Public information shows that Dahon Technology was founded by Dr. Han Deway, the "father of modern folding bikes," in 1982. With classic models such as the P8, the company has developed into an absolute leader in the Chinese folding bicycle industry. Currently, the company's product line has expanded from folding bicycles to road bikes, mountain bikes, children's bikes, and electric assist bicycles, offering over 70 models covering various scenarios such as urban commuting and outdoor adventures. The company's sales volume increased from 148,956 units in 2022 to 156,877 units in 2023, and further increased to 229,525 units in 2024, with a compound annual growth rate of 24.1%. In addition, sales volume increased from 63,758 units in the four months ended April 30, 2024, to 93,398 units in the four months ended April 30, 2025, with a growth rate of 46.5%. Financially, during the reporting periods in 2022, 2023, 2024, and the four months ended April 30, 2025, the company achieved revenues of approximately RMB 254 million, RMB 300 million, RMB 451 million, and RMB 185 million respectively; during the same periods, annual profits and total comprehensive income were RMB 31.434 million, RMB 34.85 million, RMB 52.299 million, and RMB 21.528 million respectively. Despite impressive performance growth, Dahon Technology's business model hides hidden risks. On the sales side, the company relies heavily on distribution channels, with distributor contributions to income accounting for 61.3%, 70.5%, 68.2%, and 69.5% for the four months before 2025, respectively, close to seventy percent. However, this channel has the lowest gross margin, reaching only 26.9% in the first four months of 2025, far below the level of online direct sales. On the production side, the company's production capacity at its Huizhou factory is only 90,000 units per year, with 56.8% of the 2024 sales of 229,525 units relying on OEM contract manufacturing; this proportion increased to 65.5% in the first four months of 2025, with outsourced production costs accounting for 47.1% of sales costs. Dahon Technology is also facing internal and external pressures. The proportion of overseas sales decreased from 22.1% in 2022 to 5.6% in the four months ended 2025, with weak market expansion in Europe and the United States. Furthermore, as folding bicycles are a niche market, global retail sales accounted for only 5.3% of the overall bicycle market in 2024, with the market size in China reaching only RMB 1.4 billion in 2023. The proceeds from this IPO are intended to be used to expand production capacity (with plans to add 200,000 units and start production in 2027), strengthen distribution networks, and research and development. However, the market questions its "capital expansion for production after dividend cashing out" after all, the company's existing cash and cash equivalents decreased from RMB 108 million at the end of 2024 to RMB 59.02 million in April 2025, while the new factory's production capacity will reach 290,000 units, posing a significant challenge. Increasing investment in the middle and high-end sectors, seizing the pace of industry development From a global perspective, mainland China, the United States, and Europe are the three major sales regions for the global folding bike industry, accounting for 25.2%, 9%, and 8.6% of global demand respectively. Among them, mainland China is undoubtedly the most important market for folding bicycles, leading global retail sales in 2023 with a compound annual growth rate of 19.1% from 2018 to 2023. For Dahon Technology, which was born and raised in China, it naturally has an advantage. In fact, during the years of rapid expansion of the folding bicycle industry in mainland China, Dahon Technology also seized the opportunity for development. Looking at the market segmentation, the strong growth in the Chinese market is the key to Dahon Technology's financial performance improvement. In the first nine months of 2024, the company generated revenue of RMB 329 million from domestic sales, accounting for 93.4% of total revenue, with a scale increasing by nearly sixty percent year-on-year, significantly higher than the 44.4% growth in overseas sales during the same period. As a comparison, in 2022, Dahon Technology's sales revenue from the domestic market for the whole year was RMB 198 million, accounting for 77.9%, meaning that the share of revenue from the domestic market in the first three quarters of last year exceeded that of 2022 by a full 15.5 percentage points. If a favorable industry environment has brought the "east wind" to Dahon Technology, then the company's high-end route and pricing strategy may have provided a key drive for its rapid development. It is understood that in recent years, more and more Chinese people are choosing specialized bicycles and mid- to high-end bicycles, driving the production volume of bicycles priced at 1,000 yuan and above. The compound annual growth rate of bicycles in the 1,000 yuan and above price range from 2018 to 2023 was 7.7%, and it is expected to increase to double digits in the coming years. As a leading company in the folding bicycle industry, Dahon Technology quickly responded to the above trends and increased its investment in mid- to high-end products in response to changes in customer demand. According to calculations, the weight of Dahon Technology's mid- to high-end products increased from 44.9% in 2022 to 60.9% the following year. In the industry as a whole, folding bicycles are just a relatively "mini" branch of the billion-dollar bicycle market. According to industry data, the global bicycle industry had a market size of RMB 374 billion in 2023, while the market size for folding bicycles during the same period was RMB 16.8 billion, accounting for less than 5%. Additionally, as mentioned earlier, mainland China is the largest retail market for folding bicycles, accounting for a quarter of global demand. In a sense, those who dominate the Chinese mainland market for folding bicycles can be said to dominate the world. In fact, in 2023, Dahon Technology sold approximately 149,000 folding bicycles in mainland China, with a market share of 21.1%, while the sales of the industry's second player in this market during the same period was only 97,000 units, showing that Dahon Technology had a significant lead. However, looking at the global market, Dahon Technology sold 157,000 units in 2023, still ranking first, but the sales gap with the second place was less than 70,000 units. After comparing these two sets of data, it is easy to see that when it comes to markets outside mainland China, Dahon Technology does not have a clear advantage over top competitors. Although the mainland China market is growing faster, the market size of a single market is still limited. Considering that Dahon Technology's market share in the domestic market has already exceeded 20%, for a top company like Dahon Technology, the next step in its business, if it wants to further advance, is to achieve global breakthroughs. In conclusion, Dahon Technology has achieved high growth due to its leading position in the domestic folding bike market and the consumer upgrade dividend, but it faces significant risks such as over-reliance on distributors and OEM production models, shrinking overseas markets, and the ceiling of a niche market. The success of the IPO expansion will depend on the continued realization of its high-end strategy and the ability to achieve global breakthroughs.