Hope Sea makes a second attempt to list on the Hong Kong Stock Exchange, facing cash flow pressure, with a large dividend of 700 million before IPO flowing to the board's family.

Ask AI · What is the impact of large pre-IPO dividends on governance structure?

(Image source: Visual China)

Blue Whale News, March 16 — On March 15, the Hong Kong Stock Exchange website showed that Hope Sea Inc. (hereinafter referred to as “Hope Sea”) submitted a prospectus, planning to list on the Main Board of Hong Kong, with CMB International acting as the sole sponsor for this IPO. The company first submitted a prospectus to the HKEX on June 16, 2023. After six months, the filing expired, and the company submitted a second application.

Hope Sea is a Shenzhen Qianhai-Hong Kong cooperation zone-based cross-border electronic component supply chain service provider, focusing on providing cross-border supply chain solutions for electronic products. Its core businesses include import solutions, export solutions, and logistics warehousing services, covering over 40 vertical industries such as IoT communications, semiconductors, smart robotics, and new energy.

According to Frost & Sullivan data, based on GMV, the company ranked fourth in China’s cross-border comprehensive supply chain solutions market for electronic products in 2024, with a market share of about 0.64%. Although the industry is highly fragmented, with the top five players accounting for only 5.21% combined, the company has developed certain specialization advantages in high value-added products like integrated circuits.

Performance growth relies on non-recurring gains, with cash flow under pressure

The prospectus and public financial reports show that from 2023 to 2025 (the “Reporting Period”), Hope Sea’s performance has steadily increased. Main business revenue grew from 220 million yuan in 2023 to 268 million yuan in 2025, with a CAGR of 10.6%. Revenue for 2023, 2024, and 2025 was 220 million, 235 million, and 268 million yuan respectively, with net profits of 84 million, 86 million, and 108 million yuan, showing year-over-year growth rates of -3.89%, 2.30%, and 26.71%.

Notably, the significant increase in net profit in 2025 was mainly due to a net gain of 43.1 million yuan from the disposal of Hong Kong investment properties, accounting for 39.77% of that year’s net profit. Excluding this non-recurring gain, the company’s core business net profit margin is approximately 24.4%, significantly lower than the 40.5% margin during the reporting period.

Currently, the company’s net profit growth heavily depends on non-recurring gains and cross-border capital arrangement businesses. If in the future the company cannot secure favorable bank exchange rates or suitable trade settlement products, its profitability will be significantly impacted. After excluding non-recurring gains, core business profitability declines markedly. Therefore, the company needs to further clarify the sustainability of its core business profitability.

In terms of revenue composition, the company’s income mainly comes from supply chain solutions and net gains from cross-border capital arrangements. Supply chain solutions revenue increased from 116 million yuan in 2023 to 157 million yuan in 2025. Net gains from cross-border capital arrangements remained stable between 104 million and 112 million yuan, accounting for 41.4%–47.6% of main business revenue, serving as an important profit source. Among supply chain solutions, logistics and warehousing services grew rapidly, with a three-year CAGR of 45.3%, accounting for 49% in 2025. The international logistics revenue increased from zero in 2023 to 35 million yuan in 2025.

Regarding cash flow, from 2023 to 2025, the net cash flow from operating activities sharply declined from 203 million yuan to 19.6 million yuan, a 90.4% decrease over three years. This was mainly due to structured trade settlement business, which requires the company to deposit amounts greater than the receivables as collateral, putting significant short-term cash flow pressure. As of December 31, 2025, the company’s cash and cash equivalents totaled 687 million yuan.

High ownership concentration, large dividends before IPO flow to family on the board

Despite steady growth and certain industry competitiveness, from an operational perspective, customer and supplier concentration levels are rising, increasing business stability risks.

From 2023 to 2025, the top five customers contributed 28.8%, 28.5%, and 32.9% of main business revenue respectively. The procurement share from the top five suppliers increased from 32.8% to 41.0%, with the largest supplier’s procurement share rising from 7.7% to 14.9%.

Meanwhile, the company’s ownership is highly concentrated. Feng Sujun, Yang Chunkui, and their daughter Feng Yang control 100% of the company through family trusts, forming a typical family-controlled structure. The board is dominated by family members, with two executive directors—Feng Yang and her spouse Zhang Chenkang—and Feng Sujun serving as non-executive director and chairman. This ownership structure may lead to decision-making lacking effective checks and balances, posing governance risks.

It is noteworthy that Hope Sea declared dividends of approximately 211 million yuan, 314 million yuan, and 143 million yuan in fiscal years 2023, 2024, and 2025, respectively, all paid out on August 1, 2024; June 17, 2025; and June 30, 2025. Feng Sujun’s family controls 100% of Hope Sea, meaning the family received dividends totaling 668 million yuan over three years.

Additionally, the company faces declining current ratios and shrinking net asset values. The current ratio decreased from 1.1 in 2023 to 1.0 in 2025. Net current assets fell from 955 million yuan to 658 million yuan, and net assets declined from 995 million yuan to 724 million yuan, mainly due to large dividends paid before listing. From 2023 to 2025, total dividends paid amounted to 668 million yuan, all flowing to the Feng family.

Regarding the use of funds raised in this IPO, the prospectus states that the proceeds will be mainly used for four purposes: first, expanding service scale and capacity to further improve the supply chain service system; second, upgrading the unified IT system through hardware and software upgrades and hiring IT personnel to optimize the EAS system and improve operational efficiency; third, expanding internationally by recruiting local sales and marketing teams, increasing office and warehouse capacity to grow in Singapore; and fourth, supplementing working capital and general corporate purposes to ensure stable daily operations.