HithiumIPO

Xiamen Hithium Energy Storage Technology Co., Ltd. presented its second A1 Application Proof to the Hong Kong Stock Exchange on October 27, 2025, following its first, which was rejected in September 2025. In it, Hithium tells a supposedly straightforward supplier-led growth story in its global energy storage business model. However, a closer examination of its involvement in the Staythorpe Battery Energy Storage System project in the United Kingdom suggests something materially different. The filing omits key facts about the complex vendor financing arrangement Hithium is offering Elements Green, which significantly alters Hithium’s risk exposure, financial profile, and the substance of its reported revenue.

The Staythorpe project, developed by Elements Green in Nottinghamshire, was announced in February 2025 as a 360 MW project with 720 MWh of storage capacity. In July 2025, Elements Green disclosed that it had secured a £140 million debt facility arranged by Goldman Sachs Alternatives and confirmed that the project would use Hithium’s battery energy storage system containers. Hithium followed days later with its own press release announcing the supply agreement and targeting completion in 2027.

What Hithium did not disclose, in either its own press release or in its A1 Application Proof, is that it is not merely a BESS supplier to the project. It is also a financier. Subsequent confirmation by Elements Green’s legal counsel, White & Case LLP, made it abundantly clear that Hithium provided substantial vendor financing to support the project. This financing fundamentally changes the economic substance of the transaction and the risks borne by Hithium.

This lack of disclosure in the latest Application Proof which is currently under scrutiny by the Hong Kong Stock Exchange (HKEX), did not occur in isolation. It preceded the lapse of Hithium’s first A1 listing application with the HKEX in September 2025, and it occurred more than four months before Hithium submitted its second A1 filing. At the time of the July 2025 announcement, Hithium was already fully engaged in the IPO process. Its application materials had been drafted, internally reviewed, and submitted to regulatory scrutiny. The company was aware of HKEX Listing Rule requirements concerning material transactions, credit exposure, revenue quality, and risks that could reasonably influence an investor’s assessment.

Based on information from parties close to the project, Hithium extended a significant material vendor loan to an Elements Green holding entity. That holding company owns an intermediate financing vehicle that receives the Goldman Sachs debt facility, and in turn owns the project company holding the Staythorpe assets. Elements Green itself contributed only a nominal portion of total project costs, leaving the project heavily reliant on external financing.

Hithium’s vendor financing is said to cover approximately 30 to 35 percent of the BESS material cost, equivalent to roughly 12 to 15 percent of the project’s total capital expenditure. Furthermore, it is rumored that the funds lent by Hithium were used to make the first milestone payment owed to Hithium itself. For the first phase of the project, Hithium effectively financed what typically would be the customer’s first payment. While the second milestone payment is deferred for several months, and the repayment of the vendor loan does not begin until at least one year after the project becomes operational, well after 2028.

This payment structure is a far departure from standard industry practices. In the battery energy storage sector, suppliers typically require milestone payments at contract signing or before manufacturing begins. If a project is delayed, suspended, or cancelled, the supplier will bear all the technical and financial losses. In this case, Hithium is incurring all the upfront manufacturing, material, and logistics costs without receiving external cash inflows from either the developer or the senior lender.

Hithium’s risk exposure is further exacerbated by the project’s capital structure. Although described as a loan, the vendor financing is economically subordinated to the Goldman Sachs facility. The senior debt sits at the intermediate holding level that directly controls the project assets. In a default scenario, Goldman Sachs would be able to foreclose on the project company and seize control of the assets. Hithium, lending at the holding company level, would only be repaid if residual cash flows remain after senior debt obligations are fully satisfied.

Given the minimal equity contribution from Elements Green, the downside risk borne by Hithium closely resembles that of an equity investor rather than a supplier or conventional lender. Repayment is effectively contingent on the long-term success of the project, despite Hithium having no control rights over project execution, timing, or strategic decisions.

Despite these risks, Hithium’s A1 Application Proof with the Hong Kong Stock Exchange addresses the issue only indirectly. The filing refers to offering customers “more diversified settlement terms” and “flexible payment arrangements” as an explanation for rising trade receivables turnover days, while asserting that there is no material recoverability issue. These statements hide the reality that Hithium has transformed an ordinary trade receivable into a subordinated, project-contingent exposure with a risk profile closer to equity.

The financial implications are material. Hithium already operates with higher-than-average leverage and thin margins, when compared to competitors, with a reported debt ratio of approximately 75 percent and profitability that is wholly dependent on government subsidies. If the vendor financing was funded through additional borrowing, as it currently appears to be, it further strains an already leveraged balance sheet. The terms of the vendor loan, including any interest rate or economic return to Hithium, are not publicly disclosed. Irrespective of what compensation Hithium may be charging, the omission itself is telling. If the economics of this loan strengthened Hithium’s investment case, they would certainly have highlighted them in the A1 Application Proof or through public disclosures. Instead, Hithium has been radio silent. That choice itself strongly suggests an awareness that any reasonable investor would view a supplier‑provided, subordinated, project‑contingent loan of this nature as a material red flag rather than a point of strength.

Most importantly, none of these issues are meaningfully addressed in the risk factors section of the A1 filing with the Hong Kong Stock Exchange. Listing rules require disclosure of all material risks relevant to an investor’s assessment. Here, Hithium is exposed to project execution risk without control rights, structural subordination to senior lenders, balance sheet strain, and potential regulatory violations. Yet the filing frames the arrangement as ordinary trade credit (“Diversified terms”) with longer payment terms. This is certainly a red flag for the HKEX and its regulators.

The result is an Application Proof that materially understates the nature, scale, and severity of the risk embedded in Hithium’s overseas growth narrative. By omitting the details and consequences of its vendor financing at Staythorpe, and most likely other projects, Hithium presents revenue that appears organic while masking a structure dependent on self-financing, deferred, and uncertain repayments. This is not a technical disclosure gap but an intentional and strategic decision by Hithium to control its narrative. Failing to accurately represent Hithium’s business model, financial condition, and readiness for public markets.