Major Customers Become Major Shareholders, Sustainability of Langxin Electric's Performance Becomes Key

Ask AI · Major Customer Becomes Controlling Shareholder: How Is Company Independence Protected?

Performance Growth: High First, Then Slowing Down.

Investor.com Zhang Wei

According to official news, in March, Jiangsu Langxin Electric Co., Ltd. (hereinafter referred to as “Langxin Electric” or “the Company”) was listed on the Beijing Stock Exchange (IPO) and successfully approved.

Before the listing meeting, Langxin Electric underwent two rounds of review inquiries, involving issues such as company independence, sustained performance, and the necessity of fundraising projects. During both rounds, the Beijing Stock Exchange focused on the sustainability of Langxin Electric’s performance growth.

Langxin Electric is the largest domestic supplier of automotive electronic fans. According to Gaogong Intelligent Vehicles data, in 2024, the company’s electronic fan products ranked first in China’s passenger vehicle thermal management system market, with a market share of about 21%. Whether Langxin Electric can continue to strengthen its industry position through the construction of fundraising projects remains to be seen over time.

Major Customer Turns Into Major Shareholder

The development history of Langxin Electric reflects how domestic auto parts companies have achieved rapid growth by leveraging industry dividends. From a small private factory founded in 2009 to becoming a leader in the domestic passenger car electronic fan market in recent years, Langxin Electric has experienced over a decade of development, with continuous expansion of business scale and increasingly complex shareholder structure.

It is reported that Langxin Electric was founded by Lu Yaoping, Wu Zhongbo, Yao Xiaojun, and Ding Yanchuang. The founding team has over 20 years of industry experience and is among China’s first teams engaged in domestic replacement of automotive motors.

In 2018, YINLUN Co., Ltd. (002126.SZ), a listed company on the A-share market, acquired a 55% stake in Langxin Electric through capital increase and share transfer, with the founding team holding the remaining 45%. Before controlling the company, Langxin Electric was already a supplier to YINLUN.

As of the signing date of the Prospectus, YINLUN held a total of 46.01% of Langxin Electric’s shares, and the actual controller of Langxin Electric is Xu Xiaomin, Chairman of YINLUN.

Meanwhile, YINLUN Group, an affiliated party of YINLUN Co., Ltd., is also Langxin Electric’s largest customer. From 2022 to the first half of 2025 (hereinafter referred to as “the reporting period”), YINLUN Group’s sales contribution rate to Langxin Electric exceeded 26%, significantly higher than other major customers.

In response, the Beijing Stock Exchange required Langxin Electric to clarify whether “dependence on YINLUN Group would affect the company’s independence.” Based on revenue proportion during the reporting period, Langxin Electric’s dependence on its controlling shareholder is currently difficult to change.

Additionally, Langxin Electric’s competitors include Shanghai YINLUN and TDI, subsidiaries of YINLUN Co., Ltd., which face industry competition; and there are overlaps in suppliers and customers with YINLUN Co., Ltd. and its affiliates. The exchange asked Langxin Electric to clarify whether “the controlling shareholder, actual controller, and other enterprises controlled by their relatives have competitive relationships with the company.”

Langxin Electric stated that, from the perspective of supply chain positioning, YINLUN Group mainly produces modules and systems, serving as a module supplier, while the company’s main products are components, making it a parts supplier. Additionally, the similar businesses of Shanghai YINLUN and TDI are limited to North American new energy vehicle enterprises, with no transfer of assets or personnel between them, and no situations that harm interests.

Wind data shows that YINLUN Co., Ltd. is a leader in China’s automotive heat exchange field, mainly producing automotive heat exchangers and air conditioning systems. In 2024, the company’s revenue reached 12.7 billion yuan, with a net profit close to 800 million yuan.

Inquiry on Performance Sustainability

As a company planning to list on the Beijing Stock Exchange, performance is one of its core competitiveness. With the rise of China’s new energy vehicle industry, the importance of thermal management systems is increasingly recognized. Langxin Electric has seized industry opportunities, gradually transforming into the field of new energy vehicle thermal management, with sustained high growth during the reporting period.

Latest financial reports show that in 2025, Langxin Electric achieved revenue of 1.41 billion yuan, an increase of 8.5%; net profit was 130 million yuan, up 12.8%. Compared to previous years, the company’s performance growth has significantly slowed.

From 2022 to 2024, the company’s revenue was 668 million yuan, 1.031 billion yuan, and 1.3 billion yuan, respectively, with net profits of 45.31 million yuan, 81.24 million yuan, and 116 million yuan.

Market analysis attributes the slowdown in performance growth to changes in the industry environment affecting the growth pace of Langxin Electric’s core product, electronic fans. Currently, domestic new energy vehicle penetration approaches 50%, and after industry dividends shift from incremental to stock competition, this is a common challenge faced by auto parts companies.

In addition to industry pressures, Langxin Electric’s main customers are also developing their own capabilities. For example, as BYD expands, its internal supply system (Fudi Technology) begins to encroach on external suppliers like Langxin Electric. Coupled with competition from other suppliers, this further squeezes Langxin Electric’s market space.

The Beijing Stock Exchange has paid close attention to Langxin Electric’s performance. In the first inquiry, it asked the company to explain “the reasonableness of performance growth and stability of customer cooperation.” In the second, it continued to request clarification on “performance sustainability and stability of customer relationships.”

Langxin Electric believes that, as of 2024, its market share in passenger vehicle electronic fans has reached the top domestically. However, if the company cannot maintain cost advantages or other competitive edges in future vehicle model projects, it may face risks of losing market share to other suppliers.

Currently, Langxin Electric’s main vehicle customers include BYD, Chery Automobile, Changan Group, North American new energy vehicle companies, and NIO.

IPO Fundraising Reduced by 30%

In this IPO, Langxin Electric plans to raise 350 million yuan. Of this, 250 million yuan will be used for the Wuhu new energy vehicle thermal management system components project (Phase I), and 100 million yuan for the new energy thermal management system components R&D and manufacturing base.

Between the two review rounds, Langxin Electric made significant adjustments to its IPO fundraising plan.

Initially, the company planned to raise 500 million yuan, with 250 million yuan for the Wuhu new energy vehicle thermal management system components project (Phase I), 180 million yuan for expanding production of thermal management electric drive components, 30 million yuan for R&D center construction, and 40 million yuan for working capital.

Additionally, the implementation entities of the thermal management electric drive components expansion project and the investment entities were inconsistent.

In the first inquiry, the Beijing Stock Exchange asked Langxin Electric to explain the necessity of the fundraising projects, capacity utilization risks, and alignment with its capabilities. The second inquiry required explanations on the reasonableness, necessity, and compliance of changing the project implementation entities.

Ultimately, Langxin Electric voluntarily reduced its fundraising scale. The expansion project for thermal management electric drive components was cut by 110 million yuan, and working capital was canceled, reducing total fundraising by 150 million yuan, a 30% decrease from the initial plan.

Regarding the change in the project’s main entity, Langxin Electric explained that the future implementation of the project’s injection molding, precision stamping, and other processes will be handled by Langxin Components and Langxin Precision. Although these were included as project entities in the Prospectus, the legal entities in the investment record are still Langxin Electric, leading to the change in main entities.

The company also stated that if it becomes necessary to add Langxin Components and Langxin Precision as project entities in the future, it will follow relevant Beijing Stock Exchange regulations and disclose the information promptly.

Public information shows that during the era of fuel vehicles, the domestic automotive electronic fan market was mainly dominated by foreign brands such as Denso, Bosch, Behr, and Valeo. After 2020, driven by the development of China’s new energy vehicles and the rise of domestic brands, companies like Langxin Electric have faced historic development opportunities.

Langxin Electric’s brushless electronic fans, with their excellent performance, stable quality, quick response, and cost advantages, have gradually supplied most domestic automakers and become mainstream suppliers. After listing, whether Langxin Electric can further consolidate its leading position in the industry remains a point of investor attention. (Produced by Siwei Finance)