Changcheng Precision Returns to IPO With Shrinking Margins and an Ambitious Expansion Bet

Changcheng Precision’s Second Shot at the Market

Suzhou-based Changcheng Precision Technology has refiled for a domestic listing, this time targeting the Shenzhen ChiNext board a year after withdrawing its main-board application. The bearing maker arrives with a shelf full of medals—number one in ultra‑precision bearing output, top‑selling machine‑tool spindle bearings, and the biggest supplier of bearings to elevator traction machines and chemical‑fibre spinning equipment—but its financials are under strain.

Revenue grew as downstream sectors such as machine tools, new energy and robotics expanded, yet net profit excluding non‑recurring items slid from RMB 109 million to RMB 89.8 million. Gross margins have declined for three consecutive years. Management blames the drag on its overseas subsidiaries being in an “early‑stage development” phase, but product‑mix data point to a deeper competitive shift.

The company intends to raise roughly RMB 4.65 billion, with 57 % earmarked for two capacity‑expansion projects: one for robotics and new‑energy‑vehicle bearings, the other for precision bearings used in industrial‑machine tools and semiconductors. The filing reveals, however, that overall bearing capacity utilisation hovered around 88 % during the reporting period—below full saturation—and raises the question of how a business built on 5,000‑plus small‑batch, multi‑variety SKUs will absorb a sudden leap in scale.

Why the Bearing Champion’s Numbers Don’t Quite Add Up

Product Mix Shift Erodes Margins

Changcheng’s highest‑margin segment—machine‑tool bearings, which carried a 57 % gross margin in 2023—saw revenue decline in 2024, while low‑margin automotive bearings (just 11.44 % in 2025) grew rapidly. This mix change is not a one‑off blip; it suggests the company is losing ground in its most valuable lines and is being pushed toward commoditised, price‑sensitive markets just to sustain top‑line growth. Because automotive bearings already account for 14 % of revenue, profitability is likely to remain under pressure even if volumes keep expanding.

The Capacity Puzzle

Adding capacity when machines are not fully utilised is already a red flag, but the tension runs deeper. Changcheng designs and produces more than 5,000 bearing variants, forcing frequent line changeovers that make economies of scale difficult to achieve. A scaled‑up factory designed for high‑volume orders could end up running at even lower utilisation if the promised demand for NEV drivetrain and robot reducer bearings fails to materialise—and fixed‑asset depreciation from the new plant would then directly erode what remains of its thinning profits.

Overseas Losses Add Weight

Only one of Changcheng’s five foreign subsidiaries—CSC Bearing Europe GmbH—was profitable in 2025, earning a modest RMB 4.85 million. The other four, including operations in Thailand and North America, swallowed a combined loss of nearly RMB 20 million. North America alone lost RMB 12.55 million, suggesting that the “early‑stage” overseas push is not a near‑term fix but a significant cash drain.

R&D Gap Threatens Long‑Term Competitiveness

Despite its market‑leading positions, Changcheng spent only RMB 37.1 million on R&D in 2025, a ratio of just 4.26 % that has declined every year since 2023. By comparison, domestic peer Sinomach Precision (Guoji Jinggong) devotes 8.48 % of sales to R&D; Nanfang Precision, a direct competitor in the robotics‑bearing race, invests 6.85 %. In a technology segment where material science and precision grinding require continuous iteration, running at half the research intensity of rivals weakens the company’s ability to break into the NEV and robotics supply chains now dominated by SKF, NSK and NTN.

Can Niche Dominance Translate to New Growth Arenas?

Changcheng’s track record in elevator and chemical‑fibre bearings is built on long‑standing, relatively stable industrial relationships. NEV electric‑drive and robot RV‑reducer bearings are far more demanding and are controlled by global giants and by earlier‑mover domestic players such as Nanfang Precision, which already hold deeper customer ties. The company has yet to enter the core supply chain of any leading carmaker or robotics manufacturer, and its starting point—RMB 121 million in automotive revenue and just RMB 34 million from robotics in 2025—leaves a vast gap to the multi‑billion‑yuan capacity it is planning. High growth rates from a low base cannot guarantee the volume needed to fill a new factory.

What Potential Investors Should Demand Answers To

For potential IPO investors, the filing forces a set of concrete questions that need clear answers before any valuation can be trusted:

• Clarify the gross‑margin trajectory for machine‑tool bearings and ask whether the decline in that segment is demand‑driven or the result of competitive losses to domestic or foreign rivals.
• Demand a detailed order pipeline for NEV and robotics bearings, including which OEMs are currently testing or qualifying samples; a generic “growing demand” narrative without named customers is insufficient.
• Require a breakdown of the new capacity project by product family and a sensitivity analysis showing what utilisation and contribution margins are needed for the expansion to be earnings‑accretive rather than dilutive, given current 88 % utilisation and the small‑batch production model.
• Press management on the turn‑around plan for North American and Thai subsidiaries, including the timeline to break‑even and whether further capital injections will be needed post‑IPO.
• Compare the planned post‑IPO R&D spend as a percentage of revenue with that of Sinomach Precision and Nanfang Precision, and ask how the gap will be closed when the new factory will simultaneously add depreciation charges.