Profitability is deteriorating, and Motherson Tech is heavily dependent on major client Chery.

Mosen Tech, seeking to list on the Beijing Stock Exchange, is under significant pressure. As the complete vehicle manufacturers continue to exert pressure, this parts supplier, deeply bound to a single customer, faces ongoing challenges to its growth potential and risk resistance.

Earnings warning signals have begun to emerge. Mosen Tech expects its net profit attributable to the parent company to decline by 9.55% to 14.85% in 2025, while the company has completed cash dividends totaling as much as 248 million yuan before going public.

Reporters from Jiemian News noticed that despite holding over 300 million yuan in cash, Mosen Tech still plans to supplement its liquidity. What considerations lie behind this?

High Dependence on “Chery”

Mosen Tech’s customer base is extremely concentrated. During the reporting period, sales to its top five customers accounted for 93.91%, 84.14%, 87.26%, and 89.29%, consistently maintaining an absolute high level. More critically, sales to its largest customer and related party, Chery Holding, accounted for 65.75%, 62.67%, 66.85%, and 62.14%.

Mosen Tech’s “intelligent panoramic sunroofs and window lifters are adapted for multiple new energy models from mainstream automakers such as Chery and Changan.” This deep binding initially provided a relatively stable business foundation but also exposed the company’s severe limitations in bargaining power when facing the strict cost control requirements of downstream vehicle manufacturers.

The direct consequence of weak bargaining power is reflected in the continuous decline in the average price of core products and a downward trend in overall profitability metrics. In recent years, due to intensified competition in the automotive industry, suppliers typically offer two forms of commercial discounts to customers: annual price reductions and rebates. Affected by this policy intervention, the average sales price of Mosen Tech’s automotive sunroofs and other products has declined over time, leading the company’s comprehensive gross profit margin to fall to a low range of 18.23%.

The squeeze on profits has already been transmitted to operational indicators, revealing Mosen Tech’s vulnerability in responding to risks. The company expects revenue in 2025 to be approximately 1.9 billion to 1.98 billion yuan, with a year-on-year change of -2.85% to 1.25%; the expected decline in net profit attributable to the parent company is 9.55% to 14.85%.

In the face of declining prices for core products, Mosen Tech is attempting to break through by expanding into new businesses such as intelligent electric sliding doors. The exchange’s review inquiry letter requires it to provide detailed justification, “combining vehicle value, penetration rate, etc., to explain the reasons for selecting intelligent electric sliding doors as a new product and its competitive advantages and disadvantages.”

Expanding into new businesses not only faces technical validation hurdles but also requires significant upfront investment in R&D and trial-and-error costs. Market participants are also concerned that, at a time when the company’s main business’s cash-generating ability is fluctuating, the added R&D expenses could further exacerbate financial pressures.

First Dividends Then Fundraising

Against the backdrop of an overall decline in profit expectations, Mosen Tech’s previous dividend operations and current fundraising requests create a strong logical conflict.

Mosen Tech has previously issued multiple cash dividends totaling approximately 248 million yuan. At the same time, this public offering plan aims to raise 580 million yuan, which includes a 50 million yuan project for supplemental liquidity.

Regulatory authorities have keenly captured the contradictions behind this unusual financial arrangement. The exchange’s review inquiry letter clearly requires the sponsoring institution to explain in detail, “combining cash dividends during the reporting period, current cash balances, etc., to analyze the necessity and reasonableness of the scale of the supplemental liquidity project.”

As of the end of June 2025, Mosen Tech’s cash balance exceeded 300 million yuan, and the large dividends not only weakened its safety margin but also increased the explanatory costs for external financing.

From a deeper perspective of equity governance, there exists an inseparable historical connection between Mosen Tech and Chery Automobile. The original intention of establishing Mosen Tech was “to provide equipment for China’s independent brand automobiles for Chery Automobile.” In terms of equity evolution, in November 2017, Chery Automobile’s subsidiary Chery Technology “transferred 45% of its shares in Mosen Tech to Wuhu Investment Control through an agreement transfer.” As of now, Chery Technology holds 10.84% of the issuer’s equity.

In terms of personnel structure, Chery Technology has appointed one director to Mosen Tech. Currently, Mosen Tech has seven executives, three of whom—Cheng Yonghai, Wang Yiwen, and Li Qing—have previously worked for Chery Automobile. This deep embedding of personnel and equity arrangements with a single major customer raises compliance considerations regarding operational independence and the fairness of related transactions.

Realization of Friction and Industry Game

Currently, Mosen Tech’s revenue settlement method with customers “is mainly a consignment settlement model.” That is, the goods sent by the company are stored in customers’ warehouses and third-party warehouses, but the inventory has not yet been accepted by customers. From 2022 to the first half of 2025, the book balance of such goods sent was 22.8212 million yuan, 30.4496 million yuan, 53.0436 million yuan, and 37.6062 million yuan, showing a continuous increase.

This means that Mosen Tech’s cash conversion cycle has been extended.

In comparison with hard metrics and peers, Mosen Tech’s issues with operational efficiency and sales defenses have been further scrutinized by regulatory authorities. The inquiry letter clearly points out that during the reporting period, Mosen Tech’s sales expense ratio and management expense ratio were both below the average of comparable companies.

In the automotive parts industry, a low sales expense ratio often indicates that a company lacks sufficient market development investment when trying to break away from reliance on a single major customer and horizontally expand its customer base. In the context of peers investing resources to seize diversified market share, this high dependence on a single giant effectively restricts the long-term expansion flexibility of Mosen Tech’s operating cash flow.

Some brokerage research reports suggest that, under the tightening expectations of monthly sales declines for traditional fuel vehicles across the industry, large automakers’ brutal price-cutting behavior toward upstream small and medium-sized parts suppliers will become the norm. When the price pressure in the end market is transmitted to the midstream supply chain, companies lacking absolute technological premiums and with a single customer structure are often the first to encounter the impacts of a downward pricing system.

Under the pressure of price cuts, attempting to rely solely on external equity infusion to cope with fluctuations in internal cash-generating capabilities is filled with uncertainty. Therefore, Mosen Tech not only needs to address issues such as dependence on major customers and financial efficiency but also must genuinely achieve independent decision-making aimed at the market while striving for an independent market position.