Aotu Technology Co., Ltd. (Aotu Tech) responded to the second round of inquiries from the STAR Market on August 14. The company's IPO application was accepted by the Shanghai Stock Exchange in March 2025, making it the first company to receive a "ticket" to the STAR Market that year. The company's history reveals a complex web of equity changes, including a decade-long shareholding nominee arrangement spanning from 2007 to 2024, involving 10 shareholders. The individuals whose shares were held on their behalf included the actual controller and key directors, with nominee relationships involving mothers and sons, friends, and business partners. Notably, the actual controller, Chen Sining, received a self-regulatory supervision letter from the National Equities Exchange and Quotations (NEEQ) for abnormal bidding behavior during the company's listing on the New Third Board.

Financially, the company's gross profit margin on its main business was exceptionally high, reaching 74.23%, 72.52%, and 75.64% in the reported periods, roughly double the industry average of around 30% to 37%. The gross margin for its core product, medium and large PLCs, consistently remained above 80%. This "sky-high" profit level has been repeatedly questioned by the Shanghai Stock Exchange in multiple rounds of inquiries. Simultaneously, the company's accounts receivable balance surged from 75.8859 million yuan to 214 million yuan, with its proportion of revenue rising from 38.53% to 67.3%, far exceeding the industry average. Net operating cash flow, however, declined year by year to 53.8916 million yuan, causing the net cash-to-profit ratio to plummet from 1.21 to 0.5. Remarkably, the construction progress of the automation industrial park, the company's main project under construction, stalled at a critical 98.23% point for six months. In the market, the company's revenue bucked the industry's downward trend, surging by 31%, while its order backlog fell by 18.19%.

Entangled with Nominee Arrangements, Actual Controller Once Faced Regulatory Penalties

The predecessor of Aotu Tech can be traced back to October 2008, when Chen Sining resigned as R&D Director of the Automatic Control Research Institute of Guowang Nanjing Automation Research Institute and co-founded the company with his brother, Chen Yuyan, focusing on the R&D of programmable logic controllers (PLCs). The company was listed on the New Third Board in December 2015 (stock code: 834876) but delisted in March 2020, about four years later. Approximately three years after delisting, Aotu Tech initiated its A-share IPO tutoring in December 2023 with Huatai United Securities as its sponsor. On March 11, 2025, its STAR Market IPO application was accepted, becoming the first IPO accepted by the Shanghai Stock Exchange in 2025. From the company's inception to January 2015, the actual controllers were siblings Chen Sining and Chen Yuyan, who together directly and indirectly controlled 42.73% of the equity. Between January and June 2015, Chen Yuyan transferred all of his directly and indirectly held shares to Chen Sining, changing the company's control from joint control to sole control by Chen Sining. As of the filing date, Chen Sining controlled a total of 43.26% of the voting rights and served as the company's chairman and general manager, making him the actual controller. A notable issue involves the company's shareholding nominee arrangements. According to disclosures, from 2007 to 2024, 10 direct or indirect natural person shareholders had nominee arrangements, with the parties whose shares were held on their behalf including core personnel such as actual controller Chen Sining and company director Wang Shanyong. The nominee relationships involved mothers and sons, friends, and business partners. Additionally, during the company's listing on the New Third Board in 2018, Chen Sining received a self-regulatory supervision letter from the NEEQ for submitting a price that deviated significantly from the latest traded price and executing a trade. Regarding related-party relationships, Beijing Nanda Softech Information Technology Co., Ltd., controlled by actual controller Chen Sining, is related to Aotu Tech, and several directors and core technical personnel hold shares in that company. Chen Sining holds 53.27%, Wang Shanyong holds 12.73%, and Zhang Bo holds 5.66%. Chen Sining also indirectly controls some related companies through Nanjing Softech Technology Co., Ltd.

Construction at a Standstill, Net Cash-to-Profit Ratio Plummets to 0.5

Aotu Tech focuses on the R&D, production, and sales of medium and large PLCs, with products widely used in fields such as water conservancy, hydropower, petroleum, petrochemicals, shipbuilding, rail transit, national defense, municipal administration, and metallurgy. The company has developed two main product series: the NA general-purpose series and the NJ independently controllable series, with the NJ series achieving a localization rate of up to 100%. The company's business is highly concentrated in the single category of medium and large PLCs, with the revenue share of this business rising from 70.59% to 84.67% during the reported period. The company's order backlog at the end of 2024 was 39.5344 million yuan, a decline of 18.19% from 48.3221 million yuan at the end of 2023, showing a divergence between the shrinking order book and revenue growth. The Shanghai Stock Exchange has already demanded in the second round of inquiries that the company explain the reasonableness of its revenue growth from the perspectives of contract signing dates and revenue recognition timing. From 2023 to 2025, Aotu Tech's revenue grew from 197 million yuan to 318 million yuan, and its net profit increased from 53.2819 million yuan to 118 million yuan, with a three-year compound revenue growth rate of 31.03%. However, this growth trajectory deviates from the industry trend. From 2022 to 2024, the scale of China's medium and large PLC market shrank from 10.42 billion yuan to 7.936 billion yuan, while Aotu Tech's revenue from medium and large PLCs grew from 92.0808 million yuan to 186.1134 million yuan, significantly outpacing the overall market. In comparison to peers, Inovance Technology's 2024 revenue was 37.041 billion yuan, Zhejiang Supcon Technology Co., Ltd.'s was 9.139 billion yuan, Xinje Electric's was 1.708 billion yuan, and Hechuan Technology's was 811 million yuan. With revenue just exceeding 200 million yuan, Aotu Tech is the smallest among comparable companies. The company's market share in the medium and large PLC segment was less than 1.5% in 2023. The most striking financial feature of Aotu Tech is its gross profit margin, which far exceeds that of its peers. During the reported period, the company's gross profit margin on its main business was 74.23%, 72.52%, and 75.64%, and the gross margin for its core product, medium and large PLCs, has remained above 80% for a long time. In contrast, the average gross profit margin of comparable companies in the same industry was only 37.55%, 36.25%, and 30.98%, meaning Aotu Tech's margin is more than double that of its peers. The Shanghai Stock Exchange has repeatedly questioned the reasonableness of this high gross profit margin in multiple rounds of inquiries. In terms of accounts receivable, the company's balance was 75.8859 million yuan, 146 million yuan, and 214 million yuan at the end of each reporting period, with its proportion of current revenue climbing from 38.53% to 67.3%. This ratio far exceeds the industry average of about 45%. In contrast to the surge in accounts receivable, the company's operating cash flow has continued to deteriorate. From 2023 to 2025, the net cash generated from operating activities was 64.6609 million yuan, 60.9056 million yuan, and 53.8916 million yuan, showing a year-on-year decline. The net cash-to-profit ratio (net operating cash flow/net profit) fell from 1.21 in 2023 to 0.5 in 2025. The accounts receivable turnover ratio was 3.14, 3.01, 2.19, and 1.39 in 2022, 2023, 2024, and the first half of 2025, respectively, nearly halving over the four years. The turnover ratio in the first half of 2025 was only a little over 40% of the 2022 level, and it has consistently remained well below the industry average. The automation industrial park, the company's main construction-in-progress project, was 86.19% complete at the end of 2023, progressed to 98.23% by the end of 2024, but only increased slightly to 99.5% by the end of the first half of 2025. The construction progress slowed remarkably at this critical stage near completion. Regarding the fund-raising projects, the company plans to raise 779 million yuan, of which 525 million yuan will be used for the production and R&D integration center, 94.41 million yuan for the localized technical service center, and 160 million yuan for supplementary working capital.