During the crucial period of its Hong Kong IPO, Xingyu Co., Ltd. is embroiled in a controversy surrounding layoffs of recent graduates.

Just as Xingyu Co., Ltd.'s Hong Kong IPO was progressing to a critical juncture, it was suddenly embroiled in a controversy over the termination of contracts with recent graduates.

On August 25, the Changzhou Municipal Human Resources and Social Security Bureau announced that Xingyu Co., Ltd. had recruited 440 college graduates from the class of 2026, and subsequently terminated the labor contracts of 107 of them. The announcement stated that the company's negotiation process was "simple and rigid, lacking sufficient and effective communication."

On August 27, Xingyu Co., Ltd. issued an apology statement, stating that it would provide corresponding compensation to 107 recent graduates whose labor contracts were terminated.

It is worth noting that this incident occurred precisely during a sensitive period for Xingyu Co., Ltd.'s IPO in Hong Kong. On August 15, the company had just received the filing notice from the China Securities Regulatory Commission regarding its overseas issuance and listing, marking another step forward in its Hong Kong listing process.

Filing a record does not mean that the listing has been approved; Xingyu Co., Ltd. still needs to complete procedures such as the Hong Kong Stock Exchange hearing. The fact that it is embroiled in a large-scale controversy over the termination of contracts by recent graduates at this time is drawing attention, raising concerns about whether it will increase the costs of explanation during the listing process.

Xinfeng noted that Xingyu Co., Ltd.'s past government subsidies also included projects related to employment support. From 2023 to 2025, the company received government subsidies of RMB 118 million, RMB 175 million and RMB 158 million respectively, totaling RMB 451 million over the three years.

Xingyu Co., Ltd. focuses on automotive lighting products and related electronic components. In 2025, it achieved revenue of RMB 15.257 billion and net profit attributable to the parent company of RMB 1.624 billion, representing year-on-year growth of 15.12% and 15.32%, respectively.

Based on 2025 sales revenue, Xingyu Lighting is China's largest automotive lighting product provider and the world's seventh largest automotive lighting company.

However, in addition to the billions in revenue, pressure from the cash collection side has already become apparent.

As of the end of June 2026, Xingyu Co., Ltd.'s total trade receivables and notes receivable amounted to RMB 6.503 billion, accounting for more than 90% of its revenue in the current period.

The prospectus shows that competition among downstream vehicle manufacturers has intensified, and payment cycles have generally lengthened.

This means that, against the backdrop of continued price competition in the automotive industry, Xingyu Co., Ltd. not only faces price pressure from OEMs, but also has to bear the capital tied up due to extended payment terms.

In the first half of 2026, Xingyu Co., Ltd.'s revenue increased by only 1.87% year-on-year, while its net profit attributable to the parent company decreased by 5.26% and its net operating cash flow decreased by 17.3% year-on-year.

This wave of terminations of contracts with recent graduates may impact Xingyu Co., Ltd.'s employer brand, subsequent campus recruitment, and ability to attract technical talent. It may also lead potential investors to pay closer attention to its employment management, ESG, and internal governance.

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