Yinlun Share's "Transformation": Continuous Expansion Amid High Accounts Receivable, Financial Pressure Mounting, Acquisition Target's Net Profit Declining for Three Consecutive Years

Listing: Sina Finance Listed Company Research Institute

Author: Hao Xian

On March 16, Yinlun Co., Ltd. announced the latest progress in acquiring Shenlan Co., Ltd. As of March 13, 2026, the original shareholders, including Hong Xuxuan and 19 others, transferred their shares of Shenlan to the company. Currently, Yinlun holds 43.22% of Shenlan’s shares.

Yinlun’s core business heavily depends on the automotive industry. As the growth rate of new energy vehicles slows and industry competition intensifies, the growth of traditional businesses has slowed. The company is now viewing liquid cooling as its third growth curve. The main purpose of this acquisition is to enhance its liquid cooling segment.

However, Shenlan’s net profit has experienced three consecutive declines and faces high accounts receivable ratios. After continuous expansion, Yinlun also faces high accounts receivable and significant capital pressure. Will this acquisition achieve the expected results?

Target’s Net Profit Declined Three Consecutively, Accounts Receivable Remains High

The acquisition began on November 27, 2025, when Yinlun’s board approved an external investment proposal to acquire over 55% of Shenzhen Shenlan Electronics Co., Ltd. (hereinafter “Shenlan”). Yinlun used its own funds of 132.57 million yuan for this purchase.

After the acquisition, Yinlun’s shareholding in Shenlan reached 43.22%. Further steps, such as additional share issuance, will be promoted to achieve absolute control.

In terms of business, Yinlun mainly focuses on heat exchangers, automotive air conditioning, and other thermal management products, as well as post-treatment exhaust systems, with core operations in new energy vehicles, fuel vehicles, and non-road machinery. Shenlan mainly develops and produces HVAC controllers and variable frequency drives for industrial, communication, and energy storage fields. According to brokerage reports, Shenlan has released liquid cooling system solutions for data centers, including cold plate and immersion systems, and is expected to expand its data center liquid cooling business.

With the development of AI industry, the global liquid cooling market is expanding rapidly. IDC data shows that in 2024, China’s liquid cooling server market reached $2.37 billion, a 67% year-over-year increase. The compound annual growth rate from 2024 to 2029 is projected at 46.8%, reaching over $16.2 billion by 2029.

This fast-growing sector has attracted many players, including established liquid cooling companies like Invenic, Shengling Environment, and Gulan Co., as well as Yinlun, which entered the liquid cooling field from thermal management. For Yinlun, acquiring Shenlan is part of its plan to improve its liquid cooling segment, but the risks behind the acquisition should not be overlooked.

Shenlan is a company listed on the New Third Board, with relatively small revenue. In 2024, its revenue was 71.52 million yuan, with a net profit attributable to shareholders of 17.76 million yuan. Since 2023, Shenlan’s net profit has declined three consecutive times, mainly due to industry cycle downturns, sluggish revenue growth, rising costs, and a decline in non-recurring gains.

Shenlan also faces issues of high customer concentration and high accounts receivable. In the first half of 2025, the top five customers accounted for 31.85% of revenue. Accounts receivable reached 15.15 million yuan, representing 49% of revenue, with a cash collection rate of only 80%. The days sales outstanding (DSO) increased from 63.86 days to 91.21 days year-over-year.

Notably, this acquisition did not include performance commitments. As of June 30, 2025, Shenlan’s total equity value was assessed at 193 million yuan, with an increase of 112 million yuan, a valuation uplift of 139.21%. If Shenlan’s future performance falls short of expectations, impairment risks are significant.

Continued Expansion Leads to High Accounts Receivable and Inventory

In recent years, Yinlun has been expanding aggressively. Since 2020, the company has planned overseas factories, establishing R&D centers and production bases in Mexico, the US, Sweden, Poland, India, and Malaysia, while domestic expansion continues.

In August 2025, Yinlun announced a capital increase of 150 million yuan in Shanghai Yinlun Investment, mainly for establishing a wholly-owned subsidiary in Thailand. In November 2025, it announced the acquisition of Shenlan. In December 2025, Yinlun announced a capital increase of 378.15 million yuan in Sichuan Yinlun New Energy Thermal Management System Co., Ltd., mainly for the construction of the Southwest Intelligent Manufacturing Base. It also increased investment of about 268.85 million yuan in Shanghai Yinlun Investment Co., Ltd., ultimately funding a new subsidiary in Mexico.

This ongoing expansion has driven revenue growth but also increased accounts receivable and debt levels. As of the end of Q3 2025, Yinlun’s total accounts receivable reached 5.655 billion yuan, accounting for 51% of revenue. The high proportion is mainly due to the dominant position of automakers, especially longer payment terms for new energy vehicle companies. Additionally, overseas revenue from Yinlun’s automotive business continues to grow, further increasing receivables.

In the first three quarters of 2025, Yinlun’s credit impairment losses amounted to 45.88 million yuan. Meanwhile, inventory levels also rose sharply, reaching 2.574 billion yuan by the end of Q3 2025, with impairment risks not to be ignored.

Cash flow analysis shows that in the first three quarters of 2025, net cash from operating activities was only 700 million yuan, with a cash collection rate of 76.69%. The company’s cash on hand was 2.209 billion yuan, but short-term interest-bearing debt was as high as 2.89 billion yuan, with cash less than short-term debt. Even including trading financial assets, the cash balance only matches short-term liabilities. The company faces significant capital pressure amid ongoing expansion.

Yinlun’s core business remains highly dependent on the automotive industry, with passenger and commercial/non-road vehicle segments accounting for 87.32% in the first half of 2025. Over recent years, performance has grown rapidly with increased domestic new energy vehicle penetration. However, as growth in the new energy vehicle sector slows and competition intensifies, traditional business growth has decelerated. In 2024, revenue from commercial and non-road vehicles declined by 7.52%, and in the first half of 2025, it only increased by 3.89%. Passenger vehicle business has become the main growth driver, but its gross margin is much lower than that of commercial vehicles.

In this context, Yinlun has begun to diversify into digital energy sectors, including data center liquid cooling, energy storage, charging and swapping stations, and low-altitude economy applications.

For Yinlun, ongoing expansion has somewhat boosted its stock price, which has increased over 130% since 2025. Executives and senior management have also reduced holdings during this period. However, the revenue scale of the digital and energy sectors remains small, with only 6.92 billion yuan in the first half of 2025, accounting for about 9.66%. Whether the company’s large investments will translate into sustained performance remains to be seen.