Hairuo Innovation Strives for Hong Kong Stocks: What Step Is Still Needed for Top Students to Reach Profitability

Article | Xiao Fang

Source | BoWang Finance

Recently, Autonomous Case-Handling Robotics (ACR) company Hailu Innovation submitted its IPO prospectus, preparing to list on the Hong Kong Stock Exchange. The prospectus cites data from Zhuoshi Consulting, stating that due to the continuous rise in demand for high-throughput and high-density warehouse operations, the global ACR solution market is expanding rapidly.

According to Zhuoshi Consulting, the global ACR solution market is expected to reach 91 billion RMB by 2030, with a compound annual growth rate (CAGR) of 65.7% from 2024 to 2030. However, Hailu Innovation, which is leading in the sector, has yet to turn a profit. Despite rapid revenue growth and continuous improvement in gross margin, the company still reported a loss of 589 million RMB over the nine months ending September 30, 2025.

01

Top-tier Player Still Operating at a Loss

According to the prospectus citing Zhuoshi Consulting, in 2024, Hailu Innovation was the largest ACR solution provider globally, with a market share exceeding 30% based on revenue and shipment volume. As of September 30, 2025, the company had signed contracts with over 800 customers (including direct clients and channel partners), covering more than 40 countries and regions. Revenue from logistics applications has risen to 83.2%, with over 50% of total orders coming from markets outside mainland China. Data from the prospectus shows that Hailu Innovation has established a solid commercialization foundation, with expanding business scope, key customer orders, and repeat purchase rates.

The proportion of revenue from logistics applications has increased to 83.2%, indicating that current income is more concentrated in logistics scenarios. Considering the distribution across e-commerce retail, third-party logistics, food and beverage, and other end industries, this suggests that revenue is heavily reliant on logistics applications. The health of these industries, project acceptance pace, and customer expansion will have a more direct impact on performance fluctuations.

In terms of customer relationships, the prospectus shows that customer repeat purchase rate increased from 68% in 2023 to 80% in 2024. The contribution from key customers’ orders rose from 60.0% in 2023 to 75.8% over the nine months ending September 30, 2025. The prospectus states, “During the historical period, most of our revenue came from one-time delivery and initial deployment fees for specific projects. After project deployment, we generate recurring revenue through comprehensive support and services, including after-sales maintenance packages, software, and operational and technical support.”

Image source: Hailu Innovation IPO prospectus

However, data also reveals a reality for Hailu Innovation. The prospectus shows that in 2023, revenue was 807 million RMB, with a net loss of 1.009 billion RMB; in 2024, revenue increased to 1.36 billion RMB, with a net loss of 1.256 billion RMB; over the nine months ending September 30, 2025, revenue was 1.263 billion RMB, with a loss of 589 million RMB.

Image source: Hailu Innovation IPO prospectus

Comparing 2023 and the nine months ending September 30, 2025, gross margin improved from 16.0% to 28.9%, while sales and marketing expenses ratio decreased from 52.7% to 30.5%, R&D expenses ratio from 38.3% to 20.4%, and administrative expenses ratio from 23.7% to 12.3%. Yet, over the same period, the net loss rate remained high at 46.6%. This suggests that the scale expansion and cost reduction efforts have not yet been sufficient to turn the profit and loss statement around.

There are two possible reasons. First, operational investments remain substantial. As of September 30, 2025, Hailu Innovation employed 516 R&D personnel, accounting for nearly 36% of total staff. This high R&D headcount reflects ongoing investment in product development and solution iteration. Second, the profit and loss statement is still affected by several financing and fair value-related items. For example, interest on redeemed debt accounted for 26.2%, 17.6%, and 16.7% of revenue in 2023, 2024, and the nine months ending September 30, 2025, respectively; fair value changes in derivative liabilities caused losses only in 2024 and the nine months ending September 30, 2024, accounting for 24.5% and 35.8% of revenue, but this item was not recorded in the nine months ending September 30, 2025.

Hailu Innovation’s push for a Hong Kong listing draws attention to its market share, customer coverage, repeat purchase performance, and service extension potential—all of which have a foundation. However, narrowing losses still requires ongoing operational efforts. How far away it is from profitability remains to be seen.

02

Gross Margin Improvement Not Just About Average Effort

From the prospectus data, Hailu Innovation’s gross margin improvement mainly results from increased revenue contribution from markets outside mainland China and a higher proportion of high-margin projects and markets.

A key data point is regional variation. In 2023, revenue from markets outside mainland China accounted for 24.2%, rising to 38.1% in 2024, and reaching 39.6% over the nine months ending September 30, 2025.

Image source: Hailu Innovation IPO prospectus

Correspondingly, gross margins in markets outside mainland China were 45.7%, 41.4%, and 43.9% in 2023, 2024, and the nine months ending September 30, 2025, respectively. Meanwhile, gross margin in mainland China was 20.0% over the same period, with outside markets maintaining significantly higher margins. The data indicates that the recent gross margin improvements are aligned with increased revenue share from outside mainland China.

Image source: Hailu Innovation IPO prospectus

This suggests that the current margin gains are largely driven by higher contributions from overseas markets. The prospectus states, “The gross margin structure in markets outside mainland China is inherently higher. These markets typically involve larger project sizes, more complex systems, and higher value-added services, supporting stronger pricing power and profitability.”

Looking at sales channels, direct sales revenue increased from 63.7% in 2023 to 74.1% over the nine months ending September 30, 2025, while channel partner sales declined to 25.9%. The prospectus notes that the company adopts a direct sales model for customers with specific needs (especially strategic and key clients). Many direct customer projects involve larger warehouses, higher throughput requirements, and longer implementation cycles, requiring close coordination among engineering, implementation, and on-site support teams.

Image source: Hailu Innovation IPO prospectus

Customer concentration shows that in 2023, 2024, and the nine months ending September 30, 2025, the top five customers contributed 32.1%, 36.7%, and 48.2% of total revenue, respectively. The largest single customer accounted for 15.6%, 12.7%, and 30.4% of revenue in those periods. With key customer orders contributing 75.8%, order resources are increasingly concentrated among top clients, and large customers and projects are becoming more significant in the business.

Ongoing orders from major clients indicate recognition of product and delivery capabilities. However, this also introduces risks: if a single customer’s share exceeds a certain threshold, revenue volatility becomes more sensitive to project acceptance, warehouse investment cycles, and regional expansion speed. Notably, the largest customer’s revenue share has already reached 30.4%, so any delays in project approval, acceptance, or procurement could impact revenue and profit.

In terms of supplier procurement, the top five suppliers accounted for 21.8% of procurement over the nine months ending September 30, 2025, with the largest supplier at 8.3%. The supply side remains relatively dispersed, while demand is increasingly concentrated on key clients. This suggests that the main concern is less about upstream supplier risks and more about potential fluctuations in downstream key projects.

Furthermore, the decline in channel partner sales and the rise in direct sales benefit deeper project involvement and stronger relationships with major clients. However, this also means that Hailu Innovation must bear more upfront costs for customer acquisition, project execution, on-site delivery, and after-sales support.

As high-margin projects increase, the associated investments may have less dilutive effect on profit margins; when large projects slow down, front-end customer acquisition, delivery, and service costs will have a more pronounced impact on profitability. Therefore, current profit improvements may not simply be a matter of scale but rather a process of selecting quality customers, regions, and projects. The more precise the selection, the faster the profit improvement; if the screening is insufficient, project fluctuations could pressure margins.

03

Several Challenges Still Need to Be Addressed

For Hailu Innovation to succeed in the public market, it must overcome several key hurdles. These are no longer about product technology leadership but about financial stability, sustained investment, competitive response, and ongoing improvement.

First, cash flow. The prospectus shows that net cash flow from operating activities has been negative in 2023, 2024, and the nine months ending September 30, 2025. The cash conversion cycle was negative 40 days, negative 85 days, and negative 103 days, respectively. The prospectus states, “A negative cash conversion cycle is generally considered a positive indicator, as it suggests the company can effectively convert inventory investments into cash.” However, the continued negative cash flow indicates that business expansion, delivery costs, and expenses are still consuming cash. This means that while Hailu Innovation has order acquisition capability, order expansion has not yet translated into positive operating cash flow, and cash recovery needs further improvement.

Image source: Hailu Innovation IPO prospectus

Second, maintaining strong R&D investment without slowing profit improvement. Hailu Innovation cannot easily cut R&D spending. As of September 30, 2025, it employed 516 R&D personnel, nearly 36% of total staff, making it one of the largest R&D teams in the global ACR market.

Product-wise, the company launched HaiPickClimb in 2025, supporting storage heights up to 15 meters in new or renovated warehouses. Besides HaiPickClimb, it offers HaiPickSystem2, HaiPickSystem3, and integrated solutions for electronics manufacturing scenarios, covering high-density storage, order staging and merging, full-container handling, and multi-robot collaboration. Whether R&D investments can be converted into faster commercial returns remains a key variable in profit improvement.

Third, whether profit recovery can be sustained. In the first nine months of 2025, losses decreased to 46.6%, with reductions in sales, R&D, and administrative expense ratios. However, it’s noteworthy that the derivative liability fair value loss recorded in 2024 and the first nine months of 2024 was not repeated in the same period of 2025. Continued profit improvement depends on whether operational contributions can be maintained.

Overall, Hailu Innovation has a solid foundation in market share, customer coverage, product updates, and overseas expansion. The challenge now is whether these advantages can be sustained in terms of profitability and cash flow. For a company aiming for a Hong Kong listing, scale, ranking, and coverage are important, but stable operational results, continuous profit growth, and steady cash recovery are crucial to its future development.