AI-Driven Energy Storage Firm Eyes IPO After Six Years of Rapid Growth and 15-Fold Valuation Increase

Established just six years ago, Guoxia Technology is making headlines as it aims for an IPO while experiencing a staggering 15-fold increase in valuation. Is this “AI + Energy Storage” venture ripe for success?

As the concept of AI was still floating in the air, this young company successfully combined it with energy storage and initiated its journey towards listing on the Hong Kong Stock Exchange. Recently, Guoxia Technology submitted its prospectus, planning to list on the main board. The raised funds will primarily be directed towards enhancing R&D capabilities and building an overseas operational and service network.

Founded in 2019, Guoxia Technology focuses on “AI + Energy Storage,” providing renewable energy storage system solutions and products driven by platform technology and artificial intelligence. Their offerings span various scenarios, including power generation, grid management, commercial applications, and residential use.

According to data from ZR Consulting, Guoxia Technology ranks as the eighth largest energy storage system provider in China based on the new installed capacity of multi-purpose energy storage systems in 2024, and the tenth largest for household energy storage system shipments.

Perhaps due to the buzz surrounding both AI and energy storage, Guoxia Technology has attracted considerable attention from investors, having completed three rounds of financing to date, with two rounds completed just before the IPO application. The company’s latest valuation stands at approximately 6 billion RMB, a remarkable increase from 400 million RMB before the emergency financing.

Clearly, achieving a successful IPO is what investors are eagerly anticipating for substantial returns. However, the question remains: Has this “fruit” of Guoxia Technology truly ripened?

Core Focus on Energy Storage Systems with an Emphasis on AI

The core team of Guoxia Technology is relatively young, with an average age below 40. The chairman, Feng Lizheng, is 35; general manager, Zhang Xi, is 36; and executive president, Liu Zi’ye, is 37. All three graduated from Jiangnan University and collectively hold 58.54% of the company’s shares. Another significant shareholder is Chen Junde, who invested 5 million RMB at the company’s inception and has since increased his stake to 15.49%.

Chen is also the chairman of Run Da Photovoltaic, a company listed on the New Third Board, and serves as chairman and general manager of Wuxi Special Steel. His investment in Guoxia Technology stems from a close relationship with Feng Lizheng, who previously worked as the chairman’s secretary at Wuxi Special Steel.

Guoxia Technology’s business consists of three parts: intelligent energy storage system solutions, EPC services, and other operations. Intelligent energy storage system solutions have consistently accounted for over 90% of revenue in the past three years, reaching 97.8% in 2024. Within this segment, large-scale energy storage systems dominate, contributing 76.6% of the revenue in 2024, while household energy storage systems generated 20.3% and commercial energy storage systems contributed 0.9%.

The EPC services primarily support commercial energy storage projects and photovoltaic power station development, generating 30.33 million RMB in revenue in 2023, making it the second-largest business segment. However, in 2024, EPC service revenues fell to 19.51 million RMB, accounting for only 1.9% of total revenue.

Guoxia Technology’s miscellaneous sales include forklifts, testing equipment, and discarded battery cells, but these currently have a minimal impact on overall performance. From the business structure, it is evident that Guoxia Technology primarily focuses on energy storage systems, with AI being emphasized as a core concept.

The company claims to be the first in the industry to develop an IoT platform specifically for the energy storage sector and the first to create an industrial model for seamless energy storage based on AI technology. Their intelligent systems, such as Safe ESS and Han Chu ESS, utilize AI optimization algorithms for real-time energy management, predictive maintenance, and decision-making analysis, providing customized energy storage strategies for clients.

While the growth of the company’s business may not be directly linked to AI, the concept certainly aids in fundraising. Feng Lizheng recently stated at a public event that “AI-driven energy technology will reshape the future.” As a practitioner of deep integration between energy storage and AI, he envisions that the next decade’s industrial engine will revolve around “energy reconfiguration + smart leap.”

Rapid Revenue Growth but Struggling Profitability

In recent years, Guoxia Technology’s revenue growth has been described as “explosive.” The prospectus shows revenues of 142 million RMB, 314 million RMB, and 1.026 billion RMB for 2022 to 2024, marking an increase of over sevenfold and a compound annual growth rate of 168.9%.

However, the company faces challenges as profit growth lags behind revenue growth. For the same period, net profits were 24.28 million RMB, 28.15 million RMB, and 49.12 million RMB, indicating a slower growth rate than revenue. Additionally, both gross and net profit margins are on a downward trend, with gross margins dropping from 25.1% to 15.1% and net profit margins decreasing from 17.1% to 4.8%.

Guoxia Technology attributes the decline in net profit margin to increased non-operational costs due to business expansion. However, the prospectus indicates that materials and parts costs are substantial, with costs of 100 million RMB, 199 million RMB, and 819 million RMB from 2022 to 2024, constituting 94.4%, 86.3%, and 94.1% of total sales costs, respectively.

It is worth noting that Guoxia Technology currently operates only one production base located in Wuxi, Jiangsu, with a total area of 28,156 square meters, covering both delivery and supply chains. In 2022, the production capacity was merely 72.8 MWh, increasing to 2,363.9 MWh by 2024, with a remarkably high capacity utilization rate of 108.1% in 2024.

Guoxia Technology plans to invest 53.3 million HKD to establish three production lines and six testing systems, aimed at producing 1.5 GWh of large-scale energy storage systems and 60,000 units of household energy storage systems. Construction and upgrades are expected to be completed by the end of 2025, with production commencing in the second half of 2026.

In addition to profitability not keeping pace with revenue growth, Guoxia Technology faces considerable financial pressure. Data indicates that out of the 1.026 billion RMB in revenue for 2024, 514 million RMB comes from trade receivables, accounting for over 50%, which not only indicates that half of the payments from clients are outstanding but also puts immense pressure on cash flow.

It is crucial to note that the current environment in the energy storage industry is extremely competitive, with a process of elimination already underway. According to ZR Consulting, over 300 energy storage system suppliers are expected globally in 2024, with the top 30 accounting for more than 90% of the newly installed capacity in the market. As competition intensifies, even industry giants cannot remain unaffected, and emerging companies like Guoxia Technology face significant pressures.

Therefore, a successful listing on the Hong Kong Stock Exchange is of great significance for Guoxia Technology. If they can enter the capital market, their ability to withstand risks will greatly strengthen. The ability to seize this opportunity will depend on the performance of the company’s young executive team.