In-Depth Analysis Report on Guoxia Technology's 'Scale-Profit-Cash' Imbalance

Based on the obtained information, I now provide you with an in-depth analysis report on Guoxia Technology’s ‘scale-profit-cash’ imbalance and its impact on the industry.

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Guoxia Technology (Stock Code: 02655.HK) was founded in 2019, with its headquarters in Wuxi, Jiangsu. It is a leading Chinese provider of “AI+” energy storage renewable energy solutions and products. The company was officially listed on the main board of the Hong Kong Stock Exchange on December 16, 2025, with a share price surge of 117.9% on its first trading day[1][2].

The company’s business covers multiple application scenarios including large-scale power generation side, large power grid side, industrial and commercial, and residential sectors. It adopts a dual-brand operation strategy of “Guoxia Technology” and its overseas brand “HANCHU ESS”, with markets spanning China, Europe, and Africa[3]. According to an authoritative industry report, based on the 2024 global new installed capacity of multi-purpose energy storage systems, Guoxia Technology ranks as the 8th largest Chinese energy storage system provider globally[4].

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Guoxia Technology’s revenue growth can be described as “skyrocketing”. From 2022 to 2024, the company’s operating revenue surged from RMB 142 million to RMB 1.026 billion, with a compound annual growth rate of 168.9%[1][5]. In the first half of 2025, it achieved operating revenue of RMB 691 million, a year-on-year surge of approximately 663%, a growth rate leading the energy storage industry.

:

Time Period	Revenue Share from Chinese Market	Revenue Share from European Market	Business Focus
2022	27.9%	72.1%	Focused on residential energy storage
H1 2025	81.8%	9.1%	Focused on large-scale energy storage

The company’s drastic strategic shift from European residential energy storage to domestic large-scale energy storage is the core driver of its scale expansion[1][6]. The revenue share of large-scale energy storage systems surged from 12.2% in 2022 to 74.2% in H1 2025[6].

However, behind the steep growth curve is a sharp compression of profit margins:

Financial Indicator	2022	2023	2024	H1 2025
Gross Profit Margin	25.1%	26.7%	15.1%	12.5%
Net Profit Margin	17.1%	9.0%	4.8%	0.8%
Net Profit (RMB 100 million)	0.24	0.28	0.49	0.06

: It dropped from 25.1% in 2022 to 12.5% in H1 2025, approaching the break-even line[1][6]. : It shrank sharply from 17.1% in 2022 to 0.8% in H1 2025, compressing profit margins to an extremely narrow range[1][6].

The core reason for the profit decline lies in the business structure transformation. Due to fierce competition, the gross profit margin of large-scale energy storage systems is significantly lower than that of residential energy storage. When the company actively embraced this low-margin track to expand its scale, profit sacrifice became an inevitable result[6].

Guoxia Technology is facing severe cash flow pressure, which is the most dangerous aspect of the ‘scale-profit-cash’ imbalance:

:

Period	Operating Cash Flow (RMB 100 million)
2022	-0.30
2023	-0.72
2024	-0.52
H1 2025	-2.05

There has been a net outflow of operating cash flow for three and a half consecutive years, with the scale continuing to expand, showing a typical “cash bleeding” trend[1][6].

:

• Trade receivables and notes receivable: Surged from RMB 42 million at the end of 2022 to RMB 952 million at the end of June 2025, an increase of more than 22 times[1][6]
• Accounts receivable turnover days: Sharply increased from 56.7 days to 198 days, significantly slowing down the cash collection speed[6]

This rigid cycle of “scale expansion - capital occupation” is intensifying: the company needs to advance funds to secure projects, while the extended collection cycle further widens the cash flow gap[1].

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Most alarmingly, Guoxia Technology has adopted an extreme competitive practice of “providing loans to potential customers without binding purchase obligations”[1]. This strategy carries extremely high credit risk exposure:

• Credit expansion replaces product competition
  : Securing orders by providing funds rather than optimizing products, essentially using corporate credit as a competitive tool
• Advance capital intensifies industry risks
  : Lending funds on top of extended payment terms, forming “dual capital occupation”
• Securing orders at the cost of future risks
  : Current transactions are achieved at the cost of potential bad debts and liquidity crises

Guoxia Technology faces significant concerns over “major customer dependence”. In H1 2025, revenue from its largest customer, CALB Group, accounted for as high as 41.7%[6].

Complicating matters further,

: it is not only the company’s largest customer, but also an important supplier and shareholder. This deeply bundled related-party relationship raises multiple concerns:

1. Business independence risk
   : Excessive related-party transaction share may affect pricing fairness
2. Risk concentration
   : Fluctuations from a single customer may cause a major impact on the company
3. Regulatory attention
   : The Securities and Futures Commission of Hong Kong has paid special attention to this issue during the review process[6]

Based on industry data and trend analysis, the “scale-profit-cash” imbalance in the energy storage industry may trigger the following vicious cycle:

┌─────────────────────────────────────────────────────────────┐
│                      Vicious Cycle Chain                    │
├─────────────────────────────────────────────────────────────┤
│  Price War → Gross Profit Margin Decline → Profit Margin Compression │
│     ↓                                                        │
│  Continue to Cut Prices/Relax Credit to Maintain Scale → Surge in Accounts Receivable │
│     ↓                                                        │
│  Tight Cash Flow → Expanded Net Outflow of Operating Cash Flow │
│     ↓                                                        │
│  Capital Chain Pressure → Rising Bad Debt Risk/Default Incidents │
│     ↓                                                        │
│  Credit Risk Exposure → Deterioration of Industry Financing Environment │
│     ↓                                                        │
│  More Enterprises Fall into Difficulty → More Disordered Competition → Further Price Cuts │
└─────────────────────────────────────────────────────────────┘

that in 2024, the top 30 global large-scale energy storage enterprises accounted for over 90% of new installed capacity. Against the backdrop of increasing industry concentration, the involution pressure on small and medium-sized players will further intensify[1].

The energy storage industry is facing a similar risk evolution path as the photovoltaic industry:

Comparison Dimension	Lessons from Photovoltaic Industry	Current Status of Energy Storage Industry
Expansion Model	Frenzied Capacity Expansion	Aggressive Revenue Growth
Competition Intensity	Fierce Price War	Sharp Decline in Gross Profit Margin
Cash Flow	Large Amount of Accounts Receivable	Sustained Outflow of Operating Cash Flow
Credit Risk	Frequent Bad Debts	Lending to Customers Without Binding Purchase Obligations
Industry Outcome	Multiple Shuffles, Mass Enterprise Failures	Repeating the Same Mistakes

As the analysis points out:

[1].

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Risk Dimension	Indicator Performance	Risk Level
Profitability	Net profit margin of 0.8% approaching break-even line	🔴 High Risk
Cash Flow	Sustained net outflow of operating cash flow	🔴 High Risk
Accounts Receivable	Turnover days of 198	🟠 Warning
Customer Concentration	41.7% share from largest customer	🟠 Warning
Leverage Level	Total Debt/Shareholders’ Equity of 128.8%	🟠 Warning
R&D Investment	2.4% of revenue, lower than industry median of 5.23%	🟡 Attention

The case of Guoxia Technology is not an isolated incident, but rather a

[1]. If its extreme competitive practices are emulated by the industry, it may trigger the following chain reactions:

1. Overall decline in credit standards
   : More enterprises are forced to offer similar terms to secure orders
2. Systemic capital chain tension
   : The overall cash flow situation of the industry deteriorates
3. Concentrated outbreak of bad debt risks
   : Concentrated collection pressure after extended payment terms
4. Deterioration of financing environment
   : Financial institutions reprice industry risks

Despite the company’s impressive share price performance on its first trading day (a 117.9% surge),

:

• Net profit in H1 2025 was only RMB 5.57 million, while market capitalization exceeded HK$20 billion
• The extremely low net profit margin means any operational fluctuation may lead to losses
• Sustained cash burn requires reliance on external financing to maintain operations

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1. A vicious cycle of “scale-profit-cash” imbalance has formed
   : To pursue scale expansion, Guoxia Technology actively embraced low-margin large-scale energy storage business, leading to continuous profit compression; at the same time, it relaxed credit terms to secure orders, resulting in a surge in accounts receivable and sustained net outflow of cash flow.
2. Extreme competitive practices pose industry-wide demonstration risks
   : If the practice of “providing loans to potential customers without binding purchase obligations” is emulated, it will lower the credit standards and competitive bottom line of the entire industry.
3. Systemic risks are accumulating
   : Three and a half years of sustained net outflow of operating cash flow, net profit margin approaching the break-even line, and extended payment terms constitute a typical “scale trap”.
4. High risk of vicious industry cycles
   : Against the backdrop of increasing industry concentration, the survival pressure on small and medium-sized players may lead to more intense disordered competition, which in turn triggers industry-wide credit risk exposure.

For Guoxia Technology and the industry as a whole,

[1].

:

• Reassess business structure to balance scale and profitability
• Tighten credit policies to improve accounts receivable turnover
• Increase R&D investment to build technological moats
• Reduce customer concentration to diversify risks

:

• Establish industry self-discipline conventions to curb credit wars
• Promote a competition order centered on technological innovation
• Strengthen information disclosure and risk early warning mechanisms

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[1] Sina Finance - “How Guoxia Technology is Involved in Energy Storage Involution?” (https://finance.sina.com.cn/roll/2026-01-11/doc-inhfxzzm7516520.shtml)

[2] Wuxi Municipal Government - “Guoxia Technology Listed on Main Board of Hong Kong Stock Exchange” (https://www.wuxi.gov.cn/doc/2025/12/17/4702177.shtml)

[3] Securities Times - “Guoxia Technology Listed on Hong Kong Stock Exchange Main Board to Deepen ‘AI+’ Energy Storage Track” (https://www.stcn.com/article/detail/3542359.html)

[4] Energy Storage Headlines - “Surge of 119%, Market Cap Exceeds HK$22.5 Billion, Another Energy Storage Company Listed!” (https://mchuneng.in-en.com/html/chunengy-50974.shtml)

[5] Guoxia Technology Financial Report Summary - Profit and Revenue Data (https://tool.stockstar.com/summary/caibao/02655)

[6] Sina Finance - “Guoxia Technology (02655.HK) Surges on First Trading Day, Why Has Gross Profit Margin Been Declining?” (https://cj.sina.cn/articles/view/7750929051/1cdfdca9b00101c774)

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: This report is compiled and analyzed based on public information, with data as of the first half of 2025 and the first trading day of listing. The company’s stock code 02655.HK is a main board stock listed on the Hong Kong Stock Exchange. Investment involves risks, so decisions should be made cautiously.