HithiumIPO

Xiamen Hithium’s decision to refile its A1 listing application with the Hong Kong Stock Exchange (HKEX) is a clear sign of desperation and a red flag. What the company tries to present as forward progress is, in reality, a repeat of the same strategic omission and the same financial fragilities which have plagued Xiamen Hithium Energy Storage in their past IPO attempts.

The second A1 filing, dated October 2025, comes a month after its original A1 listing application expired in September without a public explanation. This alone should have been an opportunity for reflection, restructuring, remediation and public assurance. Instead, the new filing recycles the same structural issues, offers no credible plan for margin expansion, adds new liabilities that, and purposely omits critical aspects that affect Hithium’s business.

Trade receivables turnover days. For the six months ended June 30, 2025. 227.9 (Taken from Hithium’s A1 Filing p. 56)

For example, Hithium now reports their receivables turnover at a 227.9-day cycle for H1 2025 (taken from p. 56 of their A1 Application). That’s nearly 7.5 months to collect cash from customers, coming from 185.7 days in 2024 and 78.6 days in 2023. Xiamen Hithium tries to justify this by claiming it offers “diversified settlement terms” to overseas buyers but fails to disclose what this “diversified settlement terms” are, how they work or how the impact they have on their business. At the end of the day the day, it’s apparent that Hithium is doing their best to inflate its sales and revenue on paper even if it means offering “diversified settlement terms” which are detrimental to their actual operational capacity.

Trade and bills payables turnover days. For the six months ended June 30, 2025. 226.1 (Taken from Hithium’s A1 Filing p. 347)

Further exacerbating their operational and financial capability are their accounts payable turnover. Which mirrors their receivables at 226.1 days (taken from p. 347 of their A1 Application). This clearly shows that Hithium is purposely delaying payments to suppliers to keep operations afloat. Inventory has doubled from RMB 2.1 billion in FY2024 to RMB 4.3 billion in H1 2025 (as shown on p. 335 of their A1 Application), while inventory turnover stretched from 64.9 days to 100.7 (taken from p. 340 of their A1 Application). The liquidity pressure is unmistakable: sales are slower, goods are piling up, and suppliers are being strung along to finance the gap.

Meanwhile, its profitability continues to bleed. The company’s gross margin fell from 17.9% in FY2024 to 13.1% in H1 2025 (as shown on p. 314 of their A1 Application). This contraction reflects Hithium’s failure to manage price pressures and inadequate management. Overseas margins are in free fall. In regions outside the U.S., gross margin collapsed from 34.2% to 18.1%. In the U.S., it dropped from 43.0% to 36.5%.

This erosion of profit would be devastating on its own, but Hithium manages to compound it by leaning ever more heavily on government grants. The Xiamen Hithium has received RMB 334 million in subsidies in just the first half of 2025 (as shown on p. 69 of their A1 Application). That figure nearly matches the RMB 414 million it received in all of 2024. More troubling is the ratio: those H1 2025 subsidies represent more than twice the company’s pre-tax profit for the same period. Hithium is not generating profit.

Most damning, however, is the company’s silence on strategic missteps. The Texas facility—touted repeatedly as a tariff-avoidance solution—has been rendered commercially useless by new U.S. legislation (SB 17, OBBBA) and regulatory shifts that bar Hithium and its customers from receiving key tax credits. These setbacks are not acknowledged in the updated prospectus, which still refers to the site as a “production base” capable of offsetting tariffs.

The Texas Senate Bill 17 (SB 17), which became effective on September 1, 2025 in Texas, prohibits the acquisition of interests in real property in Texas for companies with ties to certain foreign states, like China, directly undermining Hithium’s ability to expand its assembly plant in Texas. The OBBBA (One Big Beautiful Bill Act), which is a U.S. federal law that became effective on July 4, 2025, before Hithium filed the current Application Proof, bars companies classified as “foreign entities of concern” from participating in U.S. federal tax credit schemes for battery storage and clean energy infrastructure. Hithium, as a PRC-linked firm, is included in this designation. That means any product assembled or sold by Hithium in the United States is disqualified from receiving the 30% federal tax credits, making their offering significantly more expensive and commercially uncompetitive. The result is a facility that cannot deliver either the regulatory or financial arbitrage the company had promised, while still representing a significant sunk cost.

To call this filing a refinement of the original is a mischaracterization. It is the same disclosure, now with worse numbers and bigger risks. The financial condition has deteriorated, and the foundational problems—thin margins, subsidy reliance, stretched credit—remain unaddressed.

The question that regulators and investors should be asking themselves is not whether Hithium is ready for an IPO, but whether it has ever been forthcoming in its disclosures. Hithium’s repeated failure to acknowledge critical risks, explain how it is addressing them, or demonstrate any form of fiscal responsibility constitutes a breach of its fiduciary obligations. It is a clear example of regulatory evasion, strategic omissions and half-truths dressed up as transparency. If the Hong Kong Stock Exchange allows Hithium to proceed with this IPO, it must do so knowing it is endorsing a company that has demonstrated an active intent to obscure its weaknesses and trick investors, customers, and suppliers.