Majie Electronics to IPO in Hong Kong: Mysterious Seychelles Distributor Supports 30% of Revenue

According to the Hong Kong Exchanges and Clearing Limited (HKEX) website, Kunshan Majing Electronic Co., Ltd. (hereinafter referred to as “Majing Electronic”) filed its listing application documents for a Main Board listing with HKEX on March 31, with Ping An Securities (Hong Kong) serving as its sole sponsor.

As a supplier focused on providing advanced process chip power inductor solutions for the consumer electronics, automotive electronics, and high-performance computing sectors, Majing Electronic disclosed in its prospectus that, based on revenue from power inductor solutions for advanced process chips in 2024, the company ranked first among suppliers headquartered in mainland China.

After reviewing Majing Electronic’s prospectus, a reporter from The Economic Daily News found that the company’s fundamentals have multiple objective features that are worth attention. For example, more than 30% of Majing Electronic’s revenue comes from an overseas distributor registered in the African country of Seychelles, and several companies that appear in both the company’s top five supplier and top customer camps overlap in identity.

In addition, the company’s subcontracted processing costs have risen sharply over the past three years, and in 2025 the proportion already exceeded 30%. In terms of compliance and financial health, over the past three years the company has accumulated more than RMB 34 million in unpaid social insurance and housing provident fund contributions; more than 80% of the leased production premises have not been registered for record; and it had previously been in a state of high net value of current liabilities in 2023 and 2024.

Multiple suppliers are “customers and suppliers” to each other

In building its sales network and supply chain system, Majing Electronic has shown a highly concentrated dependence on customers as well as complex cross-transaction characteristics.

The prospectus shows that Majing Electronic’s revenue relies to a large extent on its top five customers. In 2023, 2024, and 2025 (hereinafter referred to as the reporting period), the revenues from the company’s top five customers were RMB 285 million, RMB 342 million, and RMB 331 million, accounting for 78.7%, 78.4%, and 70.2%, respectively.

Among them, Customer A, ranked first, holds an absolute dominant position. According to information, Customer A was incorporated and registered in Seychelles, with registered capital of USD 5 million, and is mainly engaged in the distribution business of electronic components and electronic products. During the reporting period, Majing Electronic’s sales revenue to this customer was RMB 123 million, RMB 151 million, and RMB 153 million, accounting for 34.1%, 34.7%, and 32.5% of the company’s total revenue for the respective years.

Majing Electronic candidly stated that any material delays, changes, cancellations, or reductions in purchase orders from such customers, or any changes in purchasing models (which may stem from changes in their respective customers’ needs and purchasing models), could have a material adverse impact on the company’s business, financial position, and operating performance.

In addition to the high concentration of customers, Majing Electronic also has complex “dual-identity” transactions with several core suppliers. The prospectus discloses that during the reporting period, several companies among the company’s top five suppliers were also the company’s customers. Taking major supplier B as an example, during the reporting period Majing Electronic’s purchase amounts from supplier B were RMB 27.4774 million, RMB 38.2045 million, and RMB 41.442 million, accounting for 12%, 14%, and 15.1% of the company’s total purchases for the respective years.

Meanwhile, Supplier B is also one of Majing Electronic’s customers. During the reporting period, Majing Electronic sold supplier B equipment and products with values of RMB 2.7822 million, RMB 0.4207 million, and RMB 0.4769 million, respectively. The prospectus explains that the company sold certain equipment to supplier B, and then supplier B, in its capacity as a contract manufacturer, used the equipment to manufacture power inductors on behalf of others. After that, Majing Electronic repurchased those power inductors.

A similar identity overlap and cross-transaction phenomenon also occurs with supplier D and supplier F. For example, in 2024 and 2025, Majing Electronic purchased products worth RMB 15.1563 million and RMB 22.1003 million from supplier F, respectively, and meanwhile sold to it power inductors worth RMB 0.044 million and RMB 1.2852 million, respectively. The prospectus also shows that as of the submission date, Dongguan Qinhe, a Series B financing investor of Majing Electronic, holds about 9.87% equity in supplier F.

Subcontracted processing cost proportion exceeds 30%

In describing its business model, Majing Electronic emphasized that one of its competitive advantages is that it has a “vertically integrated R&D platform,” which can “provide end-to-end power inductor solutions.” However, reporters noticed that in actual production and manufacturing, the company is outsourcing processes at a relatively fast pace.

A detailed breakdown of Majing Electronic’s cost structure in its prospectus shows that in 2023, the company’s subcontracted processing costs were RMB 28.77 million, accounting for 9.6% of total cost of sales; in 2024, subcontracted processing costs increased to RMB 77.743 million, and the proportion jumped to 22%; in 2025, subcontracted processing costs further increased to RMB 114 million, accounting for 30.8%. Over the reporting period, the absolute amount of subcontracted processing costs rose by nearly three times.

Regarding the sharp fluctuations in subcontracted processing costs, Majing Electronic explained that it was to optimize cost-effectiveness and respond to higher capacity utilization, and to outsource some standardized and labor-intensive processes to subcontracted service suppliers.

However, the capacity utilization rates disclosed in the prospectus show that during the reporting period, the overall capacity utilization rates of the company’s production bases were 76.1%, 80.0%, and 86.1%, respectively. This means that even in 2025, when business volume was the highest, there was still close to 14% of idle capacity that had not been activated within the company.

The consumer electronics sector that has been heavily outsourced is precisely Majing Electronic’s absolute revenue pillar. During the reporting period, the consumer electronics segment contributed revenue of RMB 230 million, RMB 291 million, and RMB 318 million, respectively, with its share consistently maintained at a high level of 63.4% to 67.5%.

Reporters noted that this deepening reliance on external contract manufacturers coincides with an industry cycle in which its core products are under pressure to cut prices. The prospectus shows that the overall average selling price of Majing Electronic’s power inductor components fell from RMB 0.37 per piece in 2023 to RMB 0.35 in 2024, and further to RMB 0.34 in 2025. Against the backdrop of continuous market squeeze on terminal product prices, the steadily rising subcontracted processing cost data subjects the company’s “vertically integrated R&D platform, providing end-to-end power inductor solutions” to real data scrutiny.

Unpaid social insurance and housing provident fund

In addition, Majing Electronic has also exposed weaknesses in basic internal compliance and financial structure health.

The prospectus discloses that during the reporting period, Majing Electronic failed to pay social insurance and housing provident fund contributions in full as required for some employees in mainland China. Specifically, the company’s shortfall in social insurance and housing provident fund contributions during the reporting period reached RMB 11.70 million, RMB 10.80 million, and RMB 11.90 million, respectively. That is to say, during the reporting period the company accumulated RMB 34.40 million in compliance arrears for social insurance and housing provident fund contributions.

Data show that as of the end of February 2026, Majing Electronic’s cash and cash equivalents on its books were approximately RMB 72.064 million. If the accumulated arrears above are treated as implicit liabilities that could be settled at any time, the amount is already close to half of the company’s available cash reserves as of the end of February 2026.

On the compliant use of production and office premises, Majing Electronic also has widespread nonstandard situations. As of the time of submission, the company leases 21 properties within China; however, as many as 18 of them have not registered the lease agreement with relevant authorities, resulting in an unregistered rate of 85.7%. According to relevant regulations, the relevant government authorities may impose a fine of between RMB 1,000 and RMB 10,000 for each unfiled lease agreement. Therefore, the company’s maximum total fine could be RMB 180,000.

Beyond compliance deficiencies, in 2023 and 2024, Majing Electronic’s balance sheet shows that the company’s net liabilities were RMB 115 million and RMB 137 million, respectively. Meanwhile, the company’s net value of current liabilities in these two years reached RMB 336 million and RMB 327 million, respectively, which the company attributes to the impact of redeeming liabilities.

The prospectus shows that these financing arrangements with a bet-against-the-fate nature have brought heavy interest expenses. During the reporting period, Majing Electronic paid interest on redeemed liabilities alone of RMB 14.496 million, RMB 15.114 million, and RMB 13.036 million, respectively. It was not until the end of 2025 that these redeemed liabilities were terminated from recognition and converted into equity, enabling the company to record RMB 39.358 million of net current asset value and RMB 228 million of net asset value shortly before the submission of its listing application.

Against the backdrop of pressure to make up more than RMB 34 million in social insurance and housing provident fund contributions, as well as a large proportion of leased properties not registered for record, Majing Electronic’s IPO in Hong Kong (initial public offering), its compliance and financial soundness will face further scrutiny from the capital markets.

Regarding the multiple issues described in the article, on the afternoon of April 1, the reporter obtained the contact email disclosed in the company’s 2025 annual report through Tianyancha, and sent the interview questions to the company (the company’s official website prompt said “server error”). As of the time of publication, the reporter had not received a reply from the company.

(Editor-in-charge: Zhang Yang HN080)

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