For stock investors, professional analyst research provides authoritative, timely and comprehensive insight to uncover potential thematic opportunities. Recently, Shenzhen Shichuangyi Electronics Co., Ltd. (hereafter "Shichuangyi") updated its draft prospectus and application, continuing its push toward a ChiNext IPO. The company plans to raise RMB 1.84 billion, with CITIC Securities serving as sponsor. During the reporting period, Shichuangyi's revenue doubled, and its net profit turned from loss to profit and grew dozens of times over, closely tied to the super-cycle in the memory storage industry.
Behind the strong earnings growth, Shichuangyi has a deeply intertwined binding relationship with the Xiaomi ecosystem that spans three roles: shareholder, customer and creditor. Shichuangyi's downstream customer list explicitly includes Xiaomi; at the same time, the Xiaomi ecosystem provides funding to Shichuangyi through supply chain finance, inserting itself into the company's operations as a creditor. Interestingly, about a month before the prospectus was formally disclosed, Xiaomi Intelligent Manufacturing transferred a large block of Shichuangyi shares to recover its cost, bringing its stake precisely below the 5% disclosure threshold. The deep binding between Shichuangyi and the Xiaomi ecosystem may raise a series of questions: How independent is the company's operations? Are related-party transactions fair? Is there any tunneling of benefits?
It is also worth noting that Chen Weitong, a former deputy general manager of Shichuangyi, was sentenced to prison for suspected smuggling of ordinary goods, and several companies actually controlled by Chen Weitong had long served as Shichuangyi customers during the reporting period, with relatively large transaction amounts. Curiously, after cutting ties in 2026 with the customers controlled by Chen Weitong, Shichuangyi began generating huge transactions with Xiaomi ecosystem customers. Why is the "handoff" between these two groups of customers so coincidental? Moreover, the products sold to both sets of customers are identical.
The Higher the Net Profit, the More Cash It Bleeds
The prospectus shows that Shichuangyi is mainly engaged in the R&D, packaging and testing, production and sales of semiconductor memory, with main products divided into two major categories: embedded memory chips and memory modules. The main application areas of its products include AI intelligent terminals, intelligent robots, intelligent vehicles, industrial and medical equipment, among others.
In 2025, demand for AI computing power erupted across the board, and the global memory chip market entered an unprecedented "super-cycle." In 2023-2025 and the first half of 2026, Shichuangyi's revenue was RMB 1.977 billion, RMB 2.218 billion, RMB 4.271 billion and RMB 4.754 billion, respectively, already achieving doubled growth, and revenue in the first half of 2026 alone exceeded the full year of 2025. In 2023, Shichuangyi was still loss-making, with net profit attributable to the parent of -RMB 24 million; in 2024 it turned a profit, recording net profit of RMB 30 million. In 2025, the company's net profit attributable to the parent surged directly to RMB 577 million, a year-on-year increase of as much as 18 times. In the first half of 2026, Shichuangyi's net profit attributable to the parent reached RMB 1.809 billion, three times the full-year figure for 2025.
Behind Shichuangyi's dazzling income statement is a less attractive cash flow statement. In 2023-2025, the company's net cash flow from operating activities was -RMB 599 million, -RMB 174 million and -RMB 132 million, respectively, with cumulative net outflow exceeding RMB 900 million over three years. In 2025, the company's net profit reached RMB 577 million, while operating cash flow remained negative, with the gap between the two exceeding RMB 700 million. In the first half of 2026, although the company's net profit already exceeded RMB 1.8 billion, net cash flow from operating activities was actually -RMB 1.699 billion. In other words, the higher the company's net profit, the more cash it bleeds from operations.
Shichuangyi stated that the negative net cash flow from operating activities during the reporting period was mainly due to strategic procurement of key raw materials such as memory wafers as industry prosperity fluctuated upward, resulting in relatively high cash expenditures for raw material purchases during the reporting period. At the end of each period in 2023-2025 and the first half of 2026, the book value of Shichuangyi's inventory was RMB 1.067 billion, RMB 1.169 billion, RMB 2.358 billion and RMB 5.591 billion, respectively, accounting for 57.28%, 50.39%, 58.09% and 72.92% of total assets in the same periods. With more than half of assets tied up in inventory, in an industry like memory chips where prices fluctuate sharply, this is a double-edged sword. During an upswing in industry prosperity, actively stocking up can certainly lock in costs and ensure supply, but once the industry cycle turns, high-priced inventory will face enormous risk of price declines.
Shichuangyi stated that the relatively large inventory scale occupies part of the company's working capital to a certain extent and may lead to certain operating risks. The company has made full provisions for inventory write-downs, but because market prices in the memory industry change rapidly, if the market declines sharply in the future, it cannot be ruled out that the company may further make write-down provisions, thereby affecting overall performance.
The "Xiaomi Ecosystem" Plays the Triangle of Customer, Shareholder and Creditor
In Shichuangyi's IPO process, Xiaomi's role is the most noteworthy. In November 2023, Xiaomi Intelligent Manufacturing and related party Dongli Future jointly contributed RMB 162.5 million to subscribe to RMB 7.010354 million of Shichuangyi's newly added registered capital (about RMB 23.18 per unit of registered capital), while also paying RMB 97.5 million to acquire RMB 6.074767 million of registered capital held by Li Mufei (about RMB 16.05 per unit of registered capital). On a combined basis, these two shareholders invested about RMB 260 million in total, of which Xiaomi Intelligent Manufacturing actually contributed about RMB 240 million.
Just two and a half years later, in May 2026, about a month before the prospectus was formally disclosed, Xiaomi Intelligent Manufacturing transferred its 13.12858 million shares to Guotong Zhaoxin at RMB 18.31 per share, for a total transfer price of about RMB 240 million, exactly recovering its principal. After the above reduction was completed, Xiaomi Intelligent Manufacturing's shareholding ratio fell to 4.9944% (as of the signing date of the prospectus), precisely "parked" below the 5% disclosure threshold. The prospectus explained the reduction as Xiaomi "based on its own funding needs," but the operation of "cashing out before the IPO" is highly sensitive: is the Pre-IPO shareholder pessimistic about the company's post-listing valuation, or does it have concerns about corporate governance or business prospects?
The relationship between Shichuangyi and Xiaomi goes far beyond equity investment. Xiaomi Finance (Hong Kong) Co., Ltd. entered into a supply chain financing arrangement with Shichuangyi for the procurement of raw materials. In 2023-2025 and the first half of 2026, the period-end balances of funds raised by Shichuangyi through "Xiaomi ecosystem" supply chain channels were RMB 129 million, RMB 37 million, RMB 153 million and RMB 322 million, respectively. In 2023-2025, Shichuangyi had a small amount of related-party sales transactions with Xiaomi ecosystem customers. By the first half of 2026, Shichuangyi's sales amount to Xiaomi H.K. Limited soared to RMB 44.3536 million. The Xiaomi ecosystem simultaneously deeply intervenes in Shichuangyi's operating capital turnover through the triple roles of shareholder, customer and creditor, which is reasonable from a business logic perspective. But from the perspective of IPO review, this deeply bound relationship may raise a series of doubts: How is the company's operational independence guaranteed? Is the pricing of related-party transactions fair? Is there a risk of tunneling benefits? These questions all await further disclosure.
Former Deputy General Manager Was Also a Major Customer During the Reporting Period After His Crime; the "Xiaomi Ecosystem" Conveniently Took Over After the Cut
The prospectus shows that in July 2024, Chen Weitong stepped down as deputy general manager of Shichuangyi. In August 2024, Chen Weitong was criminally detained on suspicion of smuggling ordinary goods; in March 2026, the Shenzhen Intermediate People's Court issued a first-instance judgment, and in July 2026, the Guangdong Provincial High People's Court issued a second-instance ruling, rejecting the appeal and upholding the original judgment, which then took effect. In December 2025, Shichuangyi terminated its labor relationship with Chen Weitong.
Companies actually controlled by Chen Weitong include Kumi (Hong Kong) Industrial Co., Ltd., Shenzhen Kumi Industrial Co., Ltd., and Shenzhen Qiejin Industrial Co., Ltd. (three customers controlled by Chen Weitong), which had long served as distributor customers of Shichuangyi during the reporting period. In 2023 and 2024, Shichuangyi's total sales to these three companies were RMB 63.7896 million and RMB 54.4853 million, respectively.
The dual identity of "former executive concurrently serving as distributor" is a highly sensitive matter in IPO review. Is Shichuangyi's sales pricing to the three related-party customers controlled by Chen Weitong fair? Is there any situation of inflating revenue or recognizing revenue early through related parties? Did Chen Weitong's smuggling conduct take advantage of his position as a Shichuangyi executive? These questions all await answers from the company.
From the timeline, Chen Weitong's departure and arrest occurred almost simultaneously. Does this mean the company already knew of the relevant risks before his arrest? Did the company notice his smuggling conduct during his tenure? These doubts concern the effectiveness of the company's internal control system.
Quite interestingly, after completely cutting ties in 2026 with the customers controlled by Chen Weitong, Shichuangyi began generating huge transactions with the Xiaomi ecosystem. Why is the "handoff" between these two groups of customers so coincidental? As mentioned above, in 2023-2025, Shichuangyi had only a small amount of transactions with Xiaomi ecosystem customers. By the first half of 2026, Shichuangyi's sales amount to Xiaomi H.K. Limited soared to RMB 44.3536 million, a figure close to the amount of the three customers controlled by Chen Weitong. Moreover, the products sold to the three customers controlled by Chen Weitong and to the "Xiaomi ecosystem" customers are identical, all embedded memory chips and memory modules.
Publicly available information does not show any direct equity relationship between the three customers controlled by Chen Weitong and the "Xiaomi ecosystem" entities. The indirect connection between the two is Shichuangyi itself as the hub. Xiaomi Finance (Hong Kong) Co., Ltd. provides wafer procurement financing to Shichuangyi, while Shichuangyi sells products to overseas markets through Kumi (Hong Kong). In this chain, Xiaomi is both the provider of funds and the end customer of the products (through Xiaomi H.K. Limited), while also being a shareholder of Shichuangyi.
The relationship between Shichuangyi's actual controller Ni Huangzhong and Xiaomi is likewise noteworthy. During the reporting period, Shichuangyi engaged in no small amount of related-party fund borrowing and lending with actual controller Ni Huangzhong and Shunshi Investment, which he controls. As of the end of 2024, the company still owed Ni Huangzhong and Shunshi Investment about RMB 149 million. The above loans were fully repaid by the end of June 2025.
More noteworthy is that Shunshi Investment, controlled by Ni Huangzhong, is registered in Hong Kong, and Xiaomi Finance (Hong Kong) likewise conducts supply chain financing business in Hong Kong. Is there a deeper fund arrangement between Ni Huangzhong and Xiaomi? Is the ultimate source of the loan funds provided by Shunshi Investment to Shichuangyi related to Xiaomi? These questions await answers from the company.