Okada Intelligence IPO Challenge: Concerns over Price Cuts and Revenue Uncertainty at Qiaofeng Intelligence, with Downward Price Trends and R&D Risks to be Addressed

Question for AI: What market logic lies behind Okada Intelligent’s price reduction for Qiao Feng Intelligent?

“Harbor Business Observation” by Xiao Xiuni

As a leading company in the core functional components of CNC machine tools, Okada Intelligent (Jiangsu) Co., Ltd. (hereinafter referred to as “Okada Intelligent”) is racing towards listing on the Shenzhen Stock Exchange main board, with Huatai United Securities as the sponsor.

On February 9, 2026, Okada Intelligent disclosed its response to the second round of review inquiries, addressing core issues such as continuous price decline, high policy dependence, and insufficient R&D investment. However, these responses still fail to mask the multiple challenges it faces on the path to capital market access. The company plans to raise 985 million yuan for expansion and R&D, and whether it can break through the growth bottleneck with industry dividends and its own advantages is a matter of significant market interest.

1

Bilateral Pressure in the Supply Chain, Price and Cost Risks Highlighted

Tianyancha shows that Okada Intelligent was established in 2013. The company focuses on the core functional components of CNC machine tools, with its main business concentrating on the R&D, production, and sales of tool magazines, spindles, and rotary tables, products widely used in metal-cutting CNC machine tools, covering various sectors including automotive, general machinery, electronic manufacturing, and aerospace.

According to data from Frost & Sullivan, the market size of China’s metal-cutting CNC machine tool core functional components industry is projected to be 31.44 billion yuan in 2024, of which the tool magazine product market size is 5.06 billion yuan, the spindle product market size is 10.47 billion yuan, and the rotary table product market size is 5.41 billion yuan; the domestic tool magazine and spindle industries exhibit a relatively fragmented competitive landscape, with Okada Intelligent’s tool magazine and spindle products holding a market share of 14.8% and 1%, ranking first and fifth in the industry, respectively.

From 2022 to 2024 and in the first half of 2025 (reporting period), the company’s operational performance has shown an overall growth trend, with revenues of 767 million yuan, 773 million yuan, 932 million yuan, and 564 million yuan, and net profits of 119 million yuan, 132 million yuan, 169 million yuan, and 110 million yuan, respectively.

During the reporting period, the company’s main business revenue primarily came from tool magazine products, accounting for about 80% of its income. The main business revenue during the reporting period was 759 million yuan, 765 million yuan, 922 million yuan, and 558 million yuan, respectively. Among these, the revenue from tool magazines was 642 million yuan, 629 million yuan, 746 million yuan, and 437 million yuan, accounting for 84.54%, 82.25%, 80.96%, and 78.26% of the main business revenue, respectively.

Okada Intelligent stated in its prospectus that the industry market sizes are expected to grow by 14.54% and 12.98% in 2024 and 2025, respectively. The performance growth is supported by policies such as the “Plan to Promote Large-Scale Equipment Renovation and Consumer Goods Replacement,” which is expected to be implemented until 2027.

From a development perspective, Okada Intelligent stands to benefit significantly from national support policies for the industrial mother machine industry. Core products such as tool magazines, spindles, and rotary tables have been included in the “Guidance Catalog for Industrial Structure Adjustment” as encouraged categories, combined with specific policies that drive market demand for equipment upgrades and reliability improvements. As a national-level specialized and innovative “little giant” enterprise, the company participates in major national scientific and technological projects, receiving multidimensional support in policies, markets, and technology, highlighting its development potential and growth certainty.

Independent economist, private equity investment expert, and financial commentator Wang Chikun pointed out that the long-term value of policy-driven growth in the current industry depends on the attributes of the industry track and the enterprise’s conversion capabilities. Policies provide demand support and technology trial-and-error windows in the 0 to 1 stage of the industry, while in the 1 to N stage, they activate stock through equipment upgrades and replacement, accelerating iterations, but this is only effective for industries that align with the direction of industrial upgrade and of limited significance for backward capacity.

He emphasized that the subsequent growth logic for enterprises hinges on transforming policy dividends into endogenous competitiveness: leveraging the policy window to scale up, refine products, and build barriers in technology, channels, and services, shifting from policy dependence to market-driven operations. Only by forming an independent operational capability that adapts to the market can a company survive and stand out during policy declines or industry iterations, achieving sustainable growth.

Despite the positive industry outlook, the dual pressures from the upstream and downstream of the supply chain that Okada Intelligent faces cannot be ignored.

From the downstream perspective, intensified competition in the CNC machine tool industry has led to a decline in customer product prices. The prospectus indicates that the selling prices of the company’s main products showed a downward trend during the reporting period. The selling price of tool magazines dropped from 15,900 yuan/unit in 2022 to 14,100 yuan/unit in the first half of 2025, spindle products dropped from 9,100 yuan/unit to 7,700 yuan/unit, and rotary table products dropped from 11,400 yuan/unit to 9,900 yuan/unit, with a consistent downward price trend throughout the reporting period.

In response, the Shenzhen Stock Exchange required Okada Intelligent to explain the expected price trends of its main products in conjunction with market competition for CNC machine tool functional components, the price transmission mechanism of downstream CNC machine tool products, the issuer’s product pricing adjustment mechanisms, and changes in prices and sales volumes after the reporting period, quantifying the impact of the sustained price decline on the issuer’s future performance stability and related countermeasures.

Okada Intelligent stated that the company typically negotiates with customers 1-2 times a year, agreeing on new prices based on market competition and its own cost conditions. During the reporting period, influenced by market competition and a decline in upstream raw material prices, the overall sales prices of the company’s products showed a downward trend.

At the same time, the company disclosed the changes in prices and sales volumes after the reporting period and the expected price trends for its main products. Okada Intelligent indicated that from July to December 2025, the selling prices of its main products are expected to remain stable, and sales volumes are generally expected to show a growth trend, with no significant risk of a sharp decline in future selling prices.

The continuous decline in product prices may transmit operating cost pressures upstream. For the upstream, during the reporting period, Okada Intelligent’s operating costs were 531 million yuan, 530 million yuan, 627 million yuan, and 378 million yuan, with main business costs of 530 million yuan, 529 million yuan, 625 million yuan, and 376 million yuan, respectively. Among them, the direct material costs were 407 million yuan, 392 million yuan, 460 million yuan, and 283 million yuan, accounting for 76.71%, 74.14%, 73.53%, and 75.18% of the main business costs, respectively.

Okada Intelligent’s raw materials include processed steel parts, castings, motors, etc. Although the overall prices of raw materials showed a downward trend during the reporting period, providing some cost buffer for the company, the steel price index dropped from 122.78 to 93.38 from 2022 to 2024, and pig iron prices fell from 3.77 yuan/kg to 2.75 yuan/kg. However, the company admitted that if the price pressure from downstream customers continues to transmit, and raw material costs cannot decline simultaneously, or if product structure optimization falls short of expectations, it is estimated that if the sales price declines by 5%, the non-net profit attributable to the parent company in each period will decrease by 23.15%-28.65%.

In terms of operating costs, the Shenzhen Stock Exchange required the company to explain the unit transportation costs and their fairness during the reporting period in conjunction with shipping frequency, amounts, transportation radii in various regions, transportation volumes, and methods.

The prospectus indicates that the company’s freight expenses during the reporting period were 10.5511 million yuan, 11.22 million yuan, 13.261 million yuan, and 8.0898 million yuan, accounting for 1.39%-1.47% of the main business revenue. Although the current proportion of freight expenses is relatively controllable, any future changes in transportation methods, extended distances, or price increases in the logistics industry will directly increase the company’s operating costs, thereby eroding profitability, especially in the context of declining product prices, where fluctuations on the cost side will have a more sensitive impact on profits.

Okada Intelligent disclosed relevant information in its response letter, stating that during the reporting period, there were no significant differences in the quotes from different logistics suppliers in various regions, and the actual incurred unit freight in different regions was within the range of logistics suppliers’ quotes, indicating that the company’s freight pricing is fair and there are no apparent anomalies.

2

High Customer Concentration, Questions about Qiao Feng Intelligent’s Price Reduction and Revenue

The customer structure and market layout are core foundations of enterprise operations, becoming an area of significant attention in Okada Intelligent’s IPO process. The Shenzhen Stock Exchange pointed out in its review inquiry letter that during the reporting period, the company’s dependence on major customers showed a continuous upward trend, with sales revenue from the top ten customers reaching 285 million yuan, 318 million yuan, 397 million yuan, and 233 million yuan, with the proportion of each period’s main business revenue gradually increasing from 37.5% to 41.79%.

In the context of intensified competition in the CNC machine tool industry and adjustments in the operating strategies of downstream customers, if major customers reduce procurement or even terminate cooperation due to changes in the market environment or business transformations, it will have a significant impact on the stability of the company’s performance, highlighting the urgency of optimizing the customer structure.

At the same time, the CNC machine tool functional components industry generally displays characteristics of small batch, multiple varieties, and multiple batches in orders. During the reporting period, Okada Intelligent executed a total of 37,600 production orders, covering up to 3,361 product specifications and models, posing high demands on the company’s flexible production and customized service capabilities. Notably, the customization rate for chain tool magazines is as high as 76.62%, requiring the company to have technical reserves and production scheduling capabilities to respond rapidly to differentiated customer needs.

If the company fails to keep pace with market changes in production process optimization and capacity allocation efficiency, leading to an inability to meet customized demands or insufficient utilization of new capacity, it could affect the timeliness of order deliveries and may squeeze profit margins due to declining production efficiency and rising unit costs, thereby hindering overall profitability.

Focusing on a single customer, the collaboration between the company and its core customer, Qiao Feng Intelligent (301603.SZ), has also exposed potential disputes regarding pricing and operational data. As the supplier of tool magazines for Qiao Feng Intelligent, Okada Intelligent has continuously reduced the sales price of its tool magazine products from 13,400 yuan/set in 2020 to 9,500 yuan/set, with a cumulative decline of 25.2% from 2021 to 2023, a price significantly lower than the overall average sales price of the company’s tool magazine products.

Qiao Feng Intelligent previously explained the reason for the price reduction as a continuous increase in procurement amounts; however, actual data shows that its procurement amount remained around 30 million yuan in both 2022 and 2023, with no significant growth, while the procurement unit price in 2023 decreased by 20.2% year-on-year, even lower than the prices of similar products from competitors like Desu CNC.

What is more concerning is that in the IPO review document disclosed by Qiao Feng Intelligent on April 16, 2024, titled “Reply to the Second Round Review Inquiry Letter (2023 Annual Report Update Version),” it stated that Okada Intelligent’s annual operating scale is approximately 1.2 billion yuan, while Okada Intelligent’s actual operating revenue for 2023 was only 773 million yuan, revealing a significant data discrepancy; meanwhile, with the largest customer of Qiao Feng Intelligent, Neway CNC, having a larger procurement scale, it did not experience similar significant price reductions, raising market doubts about the supporting logic behind the average price of Okada Intelligent’s products, which may have potential impacts on the company’s market reputation and cooperation stability.

3

R&D Investment Far Below Peers, Dividends from One Hand and Fundraising from the Other

The risk of Okada Intelligent’s R&D investment has also become a focal point of regulatory inquiries. The prospectus shows that the company’s R&D levels are significantly below the industry average of comparable companies. During the reporting period, the R&D expenses were 38.0088 million yuan, 36.3957 million yuan, 44.644 million yuan, and 23.5162 million yuan, with R&D expense ratios of 4.96%, 4.71%, 4.79%, and 4.17%, while the industry average for comparable companies was 8.83%, 8.17%, 7.61%, and 7.91%.

Although the company holds 198 authorized patents, including 92 invention patents, there is a significant gap compared to leading competitor Haozhi Electromechanical, whose number of patents is 413, with Okada Intelligent’s patent quantity being only 48% of Haozhi Electromechanical’s, and its 92 invention patents comprising only 45% of Haozhi Electromechanical’s 206.

Currently, the CNC machine tool industry is rapidly evolving towards high speed, high precision, intelligence, and complexity. If future R&D investments cannot match the technical upgrade demands of the industry, it may impact the company’s technological innovation and product upgrade capabilities, posing a risk of weakening core technological advantages.

Wang Chikun provided a professional interpretation to “Harbor Business Observation”: “The machine tool industry exhibits the typical characteristic of ‘high investment and low conversion.’ Due to technical bottlenecks, the lengthy R&D cycles of improved innovation projects often struggle to align with the current accounting standards for R&D expenses. This directly leads to a significant amount of R&D-related expenditures being forced to be categorized under other cost items, ultimately causing a distorted low-level phenomenon in the proportion of R&D expenses for enterprises. This accounting treatment misalignment with industry characteristics effectively masks the actual intensity of the company’s R&D investment.”

Regarding compliance, issues related to the construction quality of the third phase factory have drawn market attention. The prospectus indicates that in 2024, the company fully accrued a provision for impairment of 4.98 million yuan for the construction quality problems of the third phase factory under construction. Although the company emphasizes that the issues stem from the responsibilities of the construction unit and that it has properly handled the situation through impairment accrual and legal actions, it is rare for a company planning to list on the main board to fully accrue impairment for core infrastructure projects due to quality issues, exposing internal control loopholes in project initiation, supplier qualification audits, and supervision during construction among the capital expenditure management processes, which also becomes an important focus for subsequent regulatory reviews.

In addition, compliance risks are also reflected in tax and administrative penalties. The prospectus shows that in 2022 and 2023, the company’s non-operating expenses included late fees of 6.9613 million yuan and 60,900 yuan, with the 2022 late fees mainly stemming from the overdue payment of corporate income tax by its subsidiary, Changzhou Okada; in November 2022, the subsidiary Daoshikawa Intelligent was fined 500 yuan for failing to file tax returns on time, reflecting that there is still room for improvement in the company’s tax compliance management.

In terms of shareholding structure, the prospectus shows that the actual controllers, Chen Liang and Cai Lijuan, together control 91.74% of the company’s shares through direct and seven holding platforms, indicating a high degree of share concentration. In the historical context, the actual controllers have repeatedly entrusted their shares to relatives such as their father, father-in-law, and mother-in-law during the company’s establishment, with shares changing hands as many as six times in the past decade.

The prospectus indicates that Okada Intelligent distributed dividends of 120 million yuan in 2022, with Chen Liang and his wife receiving over 100 million yuan in dividends. In this IPO fundraising plan, Okada Intelligent plans to raise 985 million yuan, of which 661 million yuan is intended for the expansion of production lines for CNC machine tool tool magazines, spindles, and rotary tables, 148 million yuan for R&D and information technology upgrades, 56.327 million yuan for building a marketing technology service network, and 120 million yuan for replenishing working capital.

Notably, the amount for replenishing working capital is consistent with the cash dividend amount for 2022, and whether this arrangement is reasonable has also sparked market discussions, requiring further explanation to investors regarding the necessity and reasonableness of the fund usage in the future. (Produced by Harbor Finance)