Jiefeng Power IPO: Dependence on Major Shareholders and Financial Risks Exposed

Chinese auto parts manufacturer Jiefeng Automotive Power System (hereafter Jiefeng Power) has applied for an initial public offering (IPO) on the Beijing Stock Exchange, aiming to issue up to 10.47 million shares. While its revenue and profits appear to be growing steadily on the surface, the company faces severe structural risks beneath, including extreme customer concentration, conflicts of interest with major shareholders, and financial vulnerabilities. These issues are likely to be major points of contention during the IPO review process.

This article analyzes Jiefeng Power’s business model and financial condition based on detailed public information obtained by Publicity.

Heavy Dependence on a Few Customers

Jiefeng Power specializes in the research, development, production, and sales of core automotive components such as exhaust systems and powertrains. Its primary customers include domestic and international automakers, to whom it supplies products as a tier-one supplier.

During the reporting period from 2023 to 2025, the company’s operating revenue grew steadily from 1.707 billion yuan (approximately 34 billion yen) in 2023 to 2.1 billion yuan (approximately 42 billion yen) in 2024, and 2.373 billion yuan (approximately 47.5 billion yen) in 2025. Net profits also increased from 130.72 million yuan to 145.09 million yuan and 146.7 million yuan over the same period. However, this growth masks a significant vulnerability: extreme customer concentration.

During the reporting period, sales to the company’s top five customers amounted to 1.619 billion yuan, 2.022 billion yuan, and 2.248 billion yuan, accounting for 94.85%, 96.26%, and 94.74% of total revenue, respectively. This means that at least 90% of annual revenue consistently comes from just five customers. Such a level of concentration is highly unusual even within the auto parts industry.

The Dual Role of Major Shareholder and

Largest Customer

More concerning is Jiefeng Power’s relationship with its second-largest shareholder, Chery Automobile (Chery). Chery’s affiliate, Chery Technology, directly holds a 15.34% stake in Jiefeng Power. Moreover, Chery has been Jiefeng Power’s largest customer for years. During the reporting period, sales to Chery amounted to 1.223 billion yuan, 1.509 billion yuan, and 1.561 billion yuan, representing 71.65%, 71.83%, and 65.8% of total revenue, respectively.

In other words, approximately 70% of Jiefeng Power’s revenue is generated from transactions with its major shareholder, Chery. This structure—where a major shareholder is also the company’s primary customer—raises fundamental questions about the independence of Jiefeng Power’s business. If Chery were to change its parts supplier or tighten its procurement conditions, Jiefeng Power’s revenue base could collapse virtually overnight.

Jiefeng Power itself acknowledges the risk in its public disclosures, stating that “if the business performance of major customers like Chery Automobile deteriorates significantly, it could have a substantial adverse impact on the company’s financial condition.” However, while acknowledging this risk, the company’s dependency on a “safe customer” like Chery could be seen as a missed opportunity to enhance its competitiveness in the broader market.

Liquidity Crisis

A closer look at Jiefeng Power’s financial indicators reveals underlying vulnerabilities. Between the end of 2023 and 2025, the company’s current assets were 1.555 billion yuan, 1.135 billion yuan, and 1.297 billion yuan, while its current liabilities were 1.655 billion yuan, 1.223 billion yuan, and 1.388 billion yuan. For three consecutive years, current liabilities exceeded current assets, with funding shortfalls of 100 million yuan, 88 million yuan, and 91 million yuan, respectively.

As a result, the company’s short-term debt repayment indicators are at concerning levels. The current ratio consistently fell below 1, at 0.94, 0.93, and 0.93, significantly lower than the industry average of around 1.5. Similarly, the quick ratio was 0.84, 0.77, and 0.77, well below the industry average of 1.2–1.29.

The debt-to-equity ratio was also troubling. During the reporting period, the company’s ratio was 77.66%, 67.55%, and 66.4%, consistently exceeding the industry average of about 42% by more than 20 percentage points. For a business model based on light assets, this high level of indebtedness is highly unusual.

The Paradox of High Deposits and High Borrowing

As of the end of 2025, Jiefeng Power held 230 million yuan in cash and deposits, while its short-term borrowings totaled 253 million yuan. Not only was the cash on its books insufficient to fully cover its short-term debt, but the company also exhibited a “high deposits and high borrowings” situation.

Typically, companies borrow large amounts to fund working capital or capital investments. However, holding over 200 million yuan in cash deposits while carrying a similar amount in debt suggests inefficient use of funds. Maintaining high-interest debt while keeping cash in low-interest deposits raises questions about the company’s financial management.

Large Dividends Amid High Debt

The most contradictory aspect of Jiefeng Power’s behavior is its dividend policy amid its financial struggles. In 2024, the company paid cash dividends totaling 59.436 million yuan, followed by 34.671 million yuan in 2025, amounting to a cumulative 94.107 million yuan (approx. 1.88 billion yen) over two years.

Why prioritize shareholder returns in a situation of liquidity crunch and a debt-to-equity ratio significantly higher than the industry average? Notably, Chery, as a major shareholder, was the primary beneficiary of these dividends. This raises concerns that the interests of minority shareholders may have been sidelined in favor of the major shareholder. The company needs to provide a detailed explanation of the rationale behind its dividend decisions.

Can Independence Be Achieved?

In its public filings, Jiefeng Power states, “If the effectiveness of our internal controls and corporate governance standards are insufficient in the future, or if we fail to effectively follow procedures for decision-making on related-party transactions, there is a risk that such transactions could harm the company and its shareholders.”

While this acknowledgment of risk is accurate, the question is whether this understanding is reflected in the company’s actions. With Chery accounting for over 70% of its revenue, it remains doubtful whether Jiefeng Power can make truly independent business decisions. If its relationship with Chery continues to dominate post-IPO, investing in Jiefeng Power may carry risks similar to investing directly in a Chery subsidiary.

In China’s auto parts industry, close relationships with automakers can often be an advantage. However, when dependency on a single customer becomes excessive, it should be regarded as a vulnerability rather than a strength. How Jiefeng Power plans to resolve this dilemma will be a focal point of discussion during the IPO review process.

Editorial Opinion

Short-term Impact: Jiefeng Power’s IPO is expected to face rigorous scrutiny during the Beijing Stock Exchange review, particularly due to its heavy reliance on Chery and its dividend policy amid high debt. Even if the IPO is approved, gaining trust from institutional investors will be difficult, and the initial stock price performance may be lackluster. As the auto industry reevaluates supply chains, suppliers heavily dependent on a single company may face high volatility in their stock prices.

Long-term Perspective: The Chinese auto industry is undergoing rapid shifts toward new energy vehicles (NEVs) and supply chain reorganization. Chery itself is strengthening its electric vehicle strategy, directly influencing Jiefeng Power’s performance. Should Chery pursue in-house production or nurture alternative suppliers, Jiefeng Power’s revenue base could collapse overnight. Over the next 1–3 years, the company faces two critical challenges: diversifying its customer base and improving its financial structure. Failure to address these challenges could result in significant risks. This case also highlights broader governance issues, particularly regarding maintaining the independence of publicly listed companies.

Editorial Question: The case of Jiefeng Power offers valuable insights into the risks associated with companies heavily reliant on specific major shareholders or customers. To what extent do readers consider customer concentration acceptable? Moreover, what information should publicly listed companies disclose about related-party transactions to demonstrate their independence? These are universal governance issues that also resonate with corporate reform efforts in countries like Japan.

References

• 钛媒体, “Jiefeng Power: Major Shareholder Chery Also Its Largest Customer, High Debts and Large Dividends Amid ‘High Deposits and High Borrowing’ | IPO Review,” published June 3, 2026.
• Beijing Stock Exchange Public Documents (Jiefeng Power Prospectus).