High Growth, Low Profit: The Energy Storage Predicament of Guoxia Technology

Fruit Down Technology hopes to establish differentiation in the industry with its AI energy management platform, but the surge in accounts receivable and decline in gross margin have plunged the company into a dilemma of increasing revenue without increasing profit.

Key Points:

• The company's revenue increased from 142 million yuan in 2022 to 1.026 billion yuan in 2024.
• Trade accounts receivable rose from 41.59 million yuan in 2022 to 952 million yuan in the first half of this year.

Li Shida

Can equipping a battery pack with a brain change a company's fate? Fruit Down Technology Co., Ltd. is trying to find the answer. The company focuses on "AI-driven energy storage integration systems" and has recently submitted a listing application to the Hong Kong Stock Exchange, hoping to seize the rising trend in China's grid and industrial and commercial energy storage sectors.

In the past five years, the focus of China's new energy industry has gradually shifted from photovoltaic power generation to energy storage. As the penetration rates of solar and wind energy increase, issues such as grid fluctuations and supply-demand mismatches have become increasingly prominent, driving "photovoltaics + energy storage" to become the new generation of energy solutions. According to data from ZhiShi Consulting, China's newly added energy storage capacity is expected to reach 31 GWh in 2024 and grow to 424 GWh by 2030, with an average annual growth rate of 54.6%.

In the face of this wave, many companies originally focused on photovoltaics or inverters have begun to transform: Sungrow Power Supply (300274.SZ), GoodWe (688390.SH), and others have launched their own energy storage systems, while Pylon Technologies (688063.SH) focuses on battery cells and modules. Emerging company Fruit Down Technology aims to enter the market with its "AI platform."

Founded in 2019, Fruit Down Technology positions itself between equipment manufacturers and energy service providers. It offers large-scale energy storage systems, industrial and commercial energy storage, and household energy storage battery modules, with the core being its two self-developed energy management platforms—Safe ESS (Safe Energy Storage System) and Hanchu iESS (Hanchu Intelligent Energy Storage System).

The two platforms act like the "cloud brain" of the battery, with the cloud responsible for computation and decision-making, edge devices for immediate response, and terminal batteries for execution. When the grid load changes or electricity prices fluctuate, the system can automatically adjust charging and discharging strategies, serving as the "cloud command center" for large power stations or the "smart housekeeper" for household energy.

Difficult to Make Money

This "soft and hard combination" strategy seems to resonate well with the market. The application documents show that Fruit Down Technology's revenue has rapidly surged over three years, from 142 million yuan in 2022 to 1.026 billion yuan in 2024 (144 million USD), with a compound annual growth rate of 168.91%. By the first half of 2025, it had reached 691 million yuan.

During the same period, net profits were 24.28 million yuan, 28.13 million yuan, and 49.12 million yuan, with notable attention to the fact that in the first half of this year, Fruit Down Technology achieved a net profit of 5.575 million yuan, while it incurred a loss of 25.59 million yuan in the same period last year. Although it successfully turned a profit, the net profit margin was only 0.8% The gross profit margin has been continuously declining, halving from 25.1% in 2022 to 12.5% in the first half of 2025.

The decline in gross profit margin is mainly due to industry cycles and product structure adjustments, as well as the drop in prices of lithium battery raw materials and battery cells, which has worsened the company's profitability.

At the same time, the company's cash flow has fluctuated significantly over the past three years, with operating cash flow net outflows of 30.321 million and 72.908 million yuan in 2022 and 2023, respectively; a brief positive turnaround to 3.73 million yuan in 2024, and a return to a net outflow of 205 million yuan in the first half of 2025. The ending cash was only 46.687 million yuan, with short-term loans of 331 million yuan, resulting in a cash-to-short-debt ratio of 0.14 times, indicating significant repayment pressure.

High Accounts Receivable Risk

Worse still, the company's accounts receivable risk is rapidly increasing, soaring from 41.59 million yuan in 2022 to 952 million yuan in the first half of this year, with the proportion of revenue rising from 29.32% to 137.8%, indicating that a large amount of revenue is merely on paper. The turnover days have also increased from 56.7 days in 2022 to 198 days in the first half of this year, placing considerable operational pressure on the company.

In fact, this is the second submission by Guoxia Technology since its first submission failure in April this year, but prior to this submission, it had received a filing notice from the China Securities Regulatory Commission.

The company has previously completed multiple rounds of financing, notably two capital increases in March and April of this year, with Kaibo Hongcheng and Shenzhen Ninggan increasing their investments by 70 million yuan and 30 million yuan, respectively, raising the post-financing valuation from 1.6 billion yuan to 6 billion yuan. Among them, the parent company of Kaibo Hongcheng is CALB Group (3931.HK), a supplier of power batteries and energy storage systems.

Documents disclosed that Guoxia Technology signed a strategic cooperation agreement with CALB Group in 2024. CALB Group is a supplier of battery cells for Guoxia Technology and a customer for large-scale energy storage systems. In 2023, revenue from CALB Group accounted for about 22% of total revenue.

Since the beginning of this year, China's energy storage sector has significantly rebounded. CALB Group's stock price has soared over 168% this year, with a price-to-earnings ratio exceeding 90 times; CATL (3750.HK) maintains a high valuation, while A-share Sungrow Power Supply and Goodwe have also risen by about 50% and 30%, respectively, reflecting the market's renewed optimism about the prospects of new energy and energy storage