Xintao Intelligent Control Strives for Listing on the Beijing Stock Exchange: Despite Two Consecutive Years of Declining Performance, Still Generous with Dividends, This Business Suffers from "Big Client Dependency"

Zhejiang Xintao Intelligent Control Technology Co., Ltd. (hereinafter referred to as “Xintao Intelligent Control”) is rushing toward a listing on the Beijing Stock Exchange.

This company, which started with traditional gas appliance components, has successfully entered the hot field of precision temperature control, but the transformation journey has not been smooth.

In the first three quarters of 2025, the company’s net profit increased, but in 2023 and 2024, Xintao Intelligent Control experienced consecutive declines in both revenue and net profit. On one hand, due to sluggish downstream markets, orders for traditional gas appliance control components decreased; on the other hand, the gross margin of the company’s emerging precision temperature control business gradually declined, heavily relying on major client Vitec. Changes in Vitec’s procurement strategy in 2023 directly led to a drop in revenue from this business.

Moreover, in 2023, Xintao Intelligent Control paid out a large dividend of 58 million yuan, exceeding the company’s net profit attributable to shareholders of 40.13 million yuan that year. Part of these dividends flowed directly to related parties controlled by the actual controller. Recently, the Beijing Stock Exchange issued an inquiry letter regarding issues such as the company’s equity structure and customer concentration.

Industry-leading investors withdrew in 2023

Founded in 2003, Xintao Intelligent Control has a strong family influence: Yu Jin, Gan Yuying, and their daughter Yu Hengjun hold a combined 70.71% of the company’s shares through direct and indirect means. The three have signed an “Agreement on Concerted Actions,” firmly controlling the company’s decision-making.

Image source: Xintao Intelligent Control IPO Prospectus

Additionally, Yu Jin’s mother, Chen Zhisan, holds 1.20% of the shares, and another shareholder, He Minghui (whose mother-in-law is Gan Yuying’s sister, Gan Yumei), holds 2.25%. However, the company has not recognized these two as concerted parties controlling the company.

Image source: Xintao Intelligent Control IPO Prospectus

Recently, the Beijing Stock Exchange inquired about why these two shareholders were not recognized as actual controllers’ concerted parties.

Besides family holdings, Xintao Intelligent Control has also introduced external institutions. As early as 2017 and 2020, Yu Jin signed multiple risk-reward agreements with external investors such as Puru Investment and Sanhua Group, which included share repurchase clauses: if the company failed to go public or be acquired by the end of 2021 or 2023, investors could require Yu Jin to buy back shares.

However, the company’s listing process has faced many twists and turns. In January 2023, the company submitted a counseling filing for listing on the Growth Enterprise Market. Over two years later, in June 2025, due to strategic adjustments, the company changed its listing target to the Beijing Stock Exchange and submitted an application by the end of December that year.

The listing progress did not meet expectations, and the share repurchase clauses were triggered one after another. To fulfill these obligations, Xintao Intelligent Control reduced capital in 2019 to buy back shares, and Yu Jin personally repurchased shares from Puru Investment, Sanhua Group, and other institutions multiple times between 2019 and 2023.

Image source: Xintao Intelligent Control IPO Prospectus

Interestingly, Sanhua Group, which once held 6% of the shares, is the controlling shareholder of Sanhua Intelligent Controls, a peer and industry leader. As an industry veteran with deep industry insight, Sanhua Group chose to exit completely by the end of 2023.

Image source: Xintao Intelligent Control IPO Prospectus

Large dividends amid declining performance

The withdrawal of institutions is closely related to Xintao Intelligent Control’s recent performance. From 2022 to 2024, revenue declined from 405 million yuan to 352 million yuan, and net profit attributable to shareholders decreased from 51.89 million yuan to 32.40 million yuan, marking two consecutive years of decline. Although there was a rebound in the first three quarters of 2025, the downward trend over the past three years is clear.

In response, Xintao Intelligent Control explained that the decline was due to sluggish downstream kitchen appliance and real estate markets, leading to reduced orders for traditional gas appliance control components.

To reverse the situation, the company has vigorously developed its precision temperature control business, mainly producing fully enclosed refrigerant pumps. This business has now become a new profit pillar, with gross profit contribution rising to about 60% by the end of the reporting period (2022-2024 and the first half of 2025).

Notably, at a time when the company urgently needs funds for R&D and expansion to cultivate new growth points, Xintao Intelligent Control made a generous dividend decision.

In 2023, despite a net profit attributable to shareholders of only 40.13 million yuan, the company paid dividends twice in April and September, totaling 58 million yuan in cash. This means the total dividends for 2023 exceeded the annual net profit.

In May 2025, the company paid an additional 3 million yuan in dividends. The total dividends during the reporting period reached 61 million yuan.

During the reporting period, the company’s equity structure changed, including a share repurchase at the end of 2023 and investments from multiple institutions and individual investors within 12 months before the IPO application. However, the controlling family’s shareholding remains at 70.71%, and these dividends likely flowed into the pockets of Yu Jin, Gan Yuying, and Yu Hengjun.

Where was the money used? The inquiry letter from the Beijing Stock Exchange shows that two other companies controlled by the actual controller, Xintao Huayu Holding Group Co., Ltd. and Zhejiang Fuxi Le Smart Home Co., Ltd., have combined liabilities of up to 327 million yuan, including bank loans of 289 million yuan.

Image source: Beijing Stock Exchange Inquiry Letter

Yu Jin and his wife not only provided guarantees for these related-party loans but also used part of the dividends received from Xintao Intelligent Control and funds raised through new shareholders to repay these debts.

This raises questions about the reasonableness of the dividends—whether “siphoning” dividends sacrificed the company’s future development. If the related companies’ funding chains break, does the actual controller face liquidity risks? The Beijing Stock Exchange has asked the company to quantify the repayment capacity of related parties and explain whether there is a risk of control rights changing due to debt.

Dependence on Vitec: a single point of failure

As the current profit pillar, the gross margins of Xintao Intelligent Control’s precision temperature control products during the reporting period were 69.11%, 65.76%, 66.09%, and 63.42%, showing a general downward trend.

Xintao Intelligent Control explained that this was a comprehensive result of adopting moderate pricing support to empower customers, a strategic move to respond to market changes, deepen cooperation, optimize product structure, and incentivize customer procurement.

The core risk is that this new business’s fate is almost entirely dependent on a single customer. During the reporting period, the main clients for the precision temperature control business were Vitec and Aite Net. Vitec contributed the majority of the revenue.

From 2022 to 2024, the revenue from this business was 73.98 million yuan, 52.17 million yuan, and 68.58 million yuan, respectively. Regarding the revenue decline in 2023, the company explained it was due to Vitec (especially in North America) adjusting its procurement strategy, with some orders moved forward to the end of 2022.

Changes in the procurement rhythm of a single customer can cause fluctuations in the company’s core business revenue. The company also admits to a significant dependence on Vitec. The Beijing Stock Exchange pointed out that over 90% of the refrigerant pump products are sold to Vitec, requiring the company to explain key commercial terms in the cooperation agreement, analyze whether the company is at a disadvantage, and assess the risk of future substitution.

Image source: Xintao Intelligent Control IPO Prospectus

In fact, the risk of customer concentration has been seen before. Another major client, Aite Net, was acquired by Hei Mudan, a listed company, in 2019 for 1.05 billion yuan for 75% of the shares. However, this was short-lived. In 2021, Aite Net engaged in electromechanical EPC business and received a commercial acceptance bill of 1.216 billion yuan from client Zhongpeng Cloud. Later, due to delayed financing, the bill could not be paid upon maturity, directly causing Aite Net’s performance to collapse.

To avoid dragging down the listed company’s performance, Hei Mudan sold its 75% stake in Aite Net to a local state-owned enterprise at a price of only 1.028 billion yuan at the end of 2022, and Aite Net was delisted. As of the end of 2022, Xintao Intelligent Control’s accounts receivable from Aite Net still totaled 10.05 million yuan, but during the reporting period, Aite Net no longer appeared among the company’s top five customers.

Regarding Xintao Intelligent Control’s listing on the Beijing Stock Exchange, a reporter from Daily Economic News called the company and sent an interview email on March 5, 2026, but had not received a reply as of the publication deadline.