In-Depth Analysis of Liqi Smart's Lithium Battery Equipment Inventory Turnover Days Reaching 788 Days

Based on public information and industry research data[1][2][3], Liqi Smart (Wuxi Liqi Smart Equipment Co., Ltd., stock code A25031.SZ) has an inventory turnover days of up to 788 days. This phenomenon requires systematic analysis combined with the company’s business model, industry characteristics, and operating strategies.

Inventory Turnover Days = 365 days ÷ Inventory Turnover Rate
= Average Inventory ÷ Operating Costs × 365

Liqi Smart’s inventory turnover days of up to 788 days means that its inventory takes an average of more than 2 years to complete a full cycle of “procurement → production → sales → payment collection”[1].

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According to the prospectus disclosure[1][3], Liqi Smart’s inventory composition has the following characteristics:

Inventory Type	Proportion	Amount (2024)
Goods in Transit	89.18%	RMB 2.548 billion
Finished Goods	4.52%	Approx. RMB 129 million
Work in Progress	3.85%	Approx. RMB 110 million
Raw Materials	2.45%	Approx. RMB 70 million

, which is the direct reason for the extremely high inventory turnover days.

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Liqi Smart’s main products are

, which have the following characteristics[1][2]:

• High customization: Needs to match interactive data with clients’ factory MES systems
• Non-standard design: Efficiently connects with clients’ upstream and downstream equipment
• Complex installation: Helps clients achieve full-line automation and unmanned operations

, which is much longer than that of standardized products[2].

According to corporate accounting standards[1][2]:

• The time interval from
  delivery to acceptance
  of the company’s products is relatively long
• Relevant products are recorded in the “Goods in Transit” account before acceptance
• Revenue can only be recognized and costs transferred after clients confirm qualified acceptance

This results in a large number of delivered products remaining in the “Goods in Transit” account for a long time, driving up inventory turnover days.

The installation and commissioning process of lithium battery equipment is complex[2]:

• After equipment arrives, it needs to be connected and commissioned with clients’ production lines
• Needs to conduct trial operation in coordination with clients’ production plans
• Some projects involve coordination of multiple batches and processes

.

Affected by industry cycles[2][3]:

• The capacity expansion pace of the lithium battery industry slowed down in 2024
• Some clients adjusted their capacity plans
• Clients extended delivery and acceptance cycles

Peers like Liyuanheng also saw their inventory turnover days extend from 120-180 days to 280-300 days in 2024[2], confirming a widespread industry phenomenon.

Liqi Smart’s overseas clients include[3]:

• Volkswagen Group (Europe)
• Ford Motor (USA)
• LG Energy Solution (South Korea)
• Envision Group (global multi-base)

Overseas projects face:

• Language communication and cultural differences
• Long cross-border logistics cycles
• High costs of dispatching personnel overseas
• International standard certification requirements

.

Liqi Smart’s compound annual growth rate (CAGR) of revenue from 2022 to 2024 reached as high as 87.45%[1]:

• 2022 revenue: RMB 619 million
• 2023 revenue: RMB 1.721 billion
• 2024 revenue: RMB 2.173 billion

Rapid business expansion leads to:

• A large backlog of delivered but unaccepted projects
• Continuous growth in the amount of goods in transit
• Temporary pressure on inventory turnover efficiency

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Company/Industry	Inventory Turnover Days	Remarks
Liqi Smart	788 days	Mainly customized equipment
Liyuanheng(2024)	280-300 days	Mainly power lithium battery equipment
Industry Average(2023Q1)	410 days	Affected by the pandemic
Liyuanheng(2023)	120-180 days	Normal year level

, mainly due to:

1. Business structure differences
   : Liqi Smart focuses on front-end pulping equipment with higher customization degree
2. Client structure characteristics
   : Leading clients have more strict and standardized acceptance processes
3. High proportion of overseas business
   : Overseas projects have longer cycles

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1. High Capital Occupancy Pressure
   • RMB 2.548 billion in goods in transit occupies a large amount of working capital
   • Affects cash flow and solvency

2. Inventory Impairment Risk
   • Long-unaccepted products may face technology iteration risks
   • Changes in client demand may lead to contract modifications

3. Gross Profit Margin Volatility
   • Extended installation and commissioning cycles increase costs
   • After excluding inventory valuation appreciation, the gross profit margin in 2024 was 35.97%, showing a downward trend[1]

1. Sufficient Backlog Orders Guarantee Revenue
   • The top five clients are all leading enterprises (CATL, BYD, Volkswagen Group, etc.)[3]
   • Order conversion is certain

2. High Client Stickiness
   • High replacement costs for customized equipment
   • Long-term cooperative relationships are formed after acceptance

3. First-Mover Advantage in Overseas Markets
   • Has entered the supply chains of international giants like Volkswagen and Ford
   • Overseas demand for lithium battery equipment is growing steadily[3]

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Based on industry trends and the company’s strategy[2][3]:

1. Recovery of Downstream Acceptance Pace
   • A new round of capacity expansion cycle in the lithium battery industry will start in 2025
   • The company’s average acceptance period has been shortened to within 13 months in the first 5 months

2. Internal Management Optimization
   • Strengthen supply chain management and project execution system construction
   • Improve the standardization degree of equipment

3. Product Structure Optimization
   • Promote modular design
   • Increase the proportion of standardized components

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1. Changes in Contract Liabilities
   : Reflect the conversion progress of backlog orders
2. Proportion of Goods in Transit/Inventory
   : Judge the inflection point of turnover efficiency
3. Cash Flow Status
   : Whether operating cash flow improves

1. Capacity expansion progress of downstream battery manufacturers falls short of expectations
2. Client acceptance pace continues to slow down
3. Intensified industry competition leads to gross profit margin decline
4. Geopolitical risks of overseas projects

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Liqi Smart’s inventory turnover days reach as high as 788 days,

. The inventory structure, where goods in transit account for 89.18%, essentially reflects a temporary mismatch between the company’s rapid business expansion and the slowed acceptance pace of downstream clients.

From an industry perspective, although 788 days is at a relatively high level, it conforms to the business logic of the lithium battery equipment industry. As the industry’s capacity expansion cycle restarts in 2025 and client acceptance pace accelerates, inventory turnover efficiency is expected to gradually improve. With the company tied to leading clients like CATL and Volkswagen Group, and sufficient backlog orders, it still has a solid foundation for long-term growth[1][2][3].

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[1] Wuxi Liqi Smart Equipment Co., Ltd. Prospectus for Initial Public Offering and Listing on the Growth Enterprise Market (Draft Submission) (https://www.fxbaogao.com/detail/4920872)

[2] Lithium Battery Equipment Industry Research Report: Lithium Battery Leaders Resume Capacity Expansion + Solid-State Battery Industrialization Accelerates (https://pdf.dfcfw.com/pdf/H3_AP202509081740309387_1.pdf)

[3] Wuxi Liqi Smart Equipment Co., Ltd. Response to Audit Inquiry Letter (https://qxb-pdf-osscache.qixin.com/AnBaseinfo/7f8586eee40025c63f51bf82e22ca8e4.pdf)

[4] Looking at Lithium Battery Equipment Recovery from the Prospectuses of Honggong, Liqi, and Shangshui (https://pdf.dfcfw.com/pdf/H301_AP202508041721384818_1.pdf)