BOE-Backed Yuanli Optics Heads to IPO Review

Produced by | Chuangye Zui Qianxian (Frontline of Entrepreneurship)

Author | Xingkong

Editor | Wang Yajing

Art Editor | Xing Jing

Review | Song Wen

On August 20, Dongguan Yuanli Optoelectronics Co., Ltd. ("Yuanli Optoelectronics"), a "little giant" enterprise specializing in niche sectors, faces a major test in its IPO process — the listing review committee meeting.

After more than a decade of development, Yuanli Optoelectronics holds a 10.97% market share in automotive light guide plates. Revenue exceeded 400 million yuan in 2025, while net profit nearly doubled.

Sustained growth, stable orders from leading panel makers such as BOE, and products ultimately used by well-known brands including BYD, Li Auto, Huawei and Samsung form the core highlights of the company's IPO push.

But behind these strengths, Yuanli Optoelectronics is mired in difficulties: family-dominated governance, frequent internal control issues, a narrow product mix and prominent risks from technological substitution.

This listing review meeting will be a tough test of Yuanli Optoelectronics by the market.

1. A freelancer's rise, with strong hallmarks of a family business

Zhang Yuanli's entrepreneurial story is a classic grassroots success tale.

Zhang Yuanli, born in 1970 with a technical secondary school education, worked as a freelancer for 13 years, from July 1988 to October 2001.

After that, Zhang Yuanli ran a fats and oils business for nearly 10 years before crossing industries in 2010 to found Yuanli Electronics (the predecessor of Yuanli Optoelectronics), diving straight into light guide plate manufacturing.

Riding the wave of the downstream LCD display industry's shift to China, Yuanli Optoelectronics built a product lineup spanning light guide plates and Mini-LEDoptics products, mainly used in automotive displays, tablet computers and notebook computers.

(Image / Prospectus)

With these products, Yuanli Optoelectronics gradually entered the supply chains of leading panel makers such as BOE and Guoxian Technology, taking 14 years to reach the IPO stage of the Beijing Stock Exchange.

The company built by Zhang Yuanli carries a strong family imprint.

The prospectus reveals that Zhang Yuanli, his daughter Zhang Jiayi and his nephew Ruan Xuhong signed a concerted action agreement. Together, the three hold up to 84.30% of the company's shares directly and indirectly and control 80.15% of the voting rights, giving them absolute control.

Zhang Yuanli serves as chairman, Ruan Xuhong as director and manager, and Zhang Jiayi as procurement director. The three fully command Yuanli Optoelectronics' operations, forming a tightly interlocked family control chain spanning decision-making, execution and procurement.

When a company's decision-making power is concentrated in the hands of the controlling family, it often brings hidden governance risks. Safeguards for minority shareholders and the effectiveness of internal oversight will both be called into question.

Such risks can be glimpsed in Yuanli Optoelectronics' past record.

In 2023, the proportion of dispatched workers at the company peaked at 28.45%, far exceeding the regulatory cap of 10%. A large number of auxiliary production-line roles were filled by dispatched personnel, and the issue was only rectified later by switching to labor outsourcing and hiring more direct employees.

(Chart / Prospectus)

Yuanli Optoelectronics has also been involved in non-compliant practices, including providing interest-free fund loans to its board secretary and failing to pay required social insurance and housing provident fund contributions.

From September to October 2025, the company had two consecutive disclosure failures: first, after filing for pre-IPO tutoring, it failed to promptly disclose the tutoring arrangement for a public offering on the Beijing Stock Exchange. It later made a supplementary disclosure and received a verbal warning as a self-regulatory measure from the Beijing Stock Exchange's Listed Company Management Department I;

second, after listing, it did not publicly disclose its approved information disclosure management system, revealing gaps in disclosure management, and received a regulatory attention letter from the Guangdong Securities Regulatory Bureau.

In addition, the spouse of actual controller Zhang Yuanli, Cheng Danjie, is also expanding into the real estate business, further raising market concerns about related-party fund flows and resource segregation.

The Beijing Stock Exchange is positioned to serve innovative small and medium-sized enterprises, but innovation must be built on compliance. The family-business character exposed in Yuanli Optoelectronics' governance is the first hurdle it must clear on its IPO path.

2. Performance surges against the trend; the "quality" of its high growth faces two rounds of scrutiny

Over the past three years, Yuanli Optoelectronics has delivered a notably strong performance.

From 2023 to 2025, the company's revenue rose from RMB 234 million to RMB 408 million, while net profit attributable to shareholders of the parent company climbed from RMB 24.8 million to RMB 62.43 million. In 2025, revenue grew 41.97% year on year, and net profit attributable to shareholders of the parent company more than doubled.

(Chart / prospectus)

Compared with its peers, Yuanli Optoelectronics' growth rate stands out clearly.

In 2024 and 2025, comparable peer Hanbo High-Tech posted revenue growth of 8.49% and 39.64%, respectively, but remained unprofitable, with a net loss attributable to shareholders of the parent company of RMB 96.8 million in 2025. Tianlu Technology recorded revenue growth of 9.67% and -11.14%.

Yuanli Optoelectronics' counter-trend growth has also drawn the attention of regulators. In two rounds of inquiries, the Beijing Stock Exchange asked the company to explain the reasonableness of its earnings growth and the reasons for its divergence from peers.

(Image / response to inquiry letter)

Yuanli Optoelectronics attributes this to a divergence in market focus: Tianlu Technology concentrates on large-size light guide plates for desktop monitors and LCD TVs, where competition is fierce, and has deliberately slowed capacity expansion.

Regarding Hanbo High-Tech, which is both a peer and a top-five customer, Yuanli Optoelectronics explained that its component output covers multiple product categories and is not purely light guide plate data, so the figures are not directly comparable. Its losses stem from intensified competition in its own backlight module business and rising depreciation, and are unrelated to light guide plate demand.

Yuanli Optoelectronics itself focuses on the mid-size segment for automotive displays and notebook computers, riding the wave of smart cockpit adoption and the AI PC replacement cycle, with capacity utilization jumping from 73% to 95%.

Still, with major downstream customers under pressure while supplier Yuanli Optoelectronics remains profitable, this contrast requires in-depth verification. The Beijing Stock Exchange has taken a cautious stance and asked the company to explain the background and use of Hanbo High-Tech's purchases.

Despite surging revenue and profit, Yuanli Optoelectronics' operating cash flow continues to raise concerns.

In 2025, the company posted net profit of 62.43 million yuan, but net cash flow from operating activities was only 24.87 million yuan, leaving a gap of about 37.56 million yuan between profit and operating cash flow.

In the first half of 2026, the tension intensified: net profit rose 51.04% year on year to 41.2312 million yuan, while net cash flow from operating activities was just 17.2441 million yuan, an increase of less than 8% year on year.

(Image / Prospectus)

The gap between profit and net operating cash flow widened from about 11.2801 million yuan in the same period last year to 23.9871 million yuan, an increase of more than 110%.

The root of the problem lies in the high level of accounts receivable. 2023 to 2025, at the end of each year, Yuanli Optoelectronics' accounts receivable carrying values were 121 million yuan, 150 million yuan, and 189 million yuan, accounting for 59.01%, 65.51%, and 60.16% of current assets, respectively, remaining consistently around 60%.

In 2025, the accounts receivable turnover ratio was 2.28 times per year, significantly below the industry peer average of 3.10 times per year.

A comparison with peers also shows divergence: Tianlu Technology's 2025 revenue fell 11% year on year, yet net operating cash flow reached 111 million yuan, turning positive from negative as it stepped up collections and repaired cash-flow quality.

Yuanli Optoelectronics, by contrast, posted revenue growth without matching cash generation, with profits largely tied up in receivables — a fragile link in its high-growth narrative.

3. Nearly 90% of revenue tied to a single product, with pronounced technology iteration risk

Beyond financial risks, Yuanli Optoelectronics also faces the risk of a narrow product mix.

In 2025, Yuanli Optoelectronics' light guide plate business accounted for as much as 98.41% of its main business revenue, while MiniLED optical products contributed just 1.57%. The company's entire livelihood is almost wholly tied to the light guide plate business line.

(Image / Prospectus)

The light guide plate is a core component of LCD backlight modules, converting point light sources into uniform area light sources. But it faces an inescapable fate: technologies such as OLED, MiniLED and Micro-LED do not require light guide plates.

This means that once downstream end products accelerate their shift to OLED, MiniLED, Micro-LED and other technology routes, market demand for light guide plates will shrink directly, exposing the company to the systemic risk of technological disruption. The Beijing Stock Exchange's inquiry focused on this risk.

Yuanli Optoelectronics disclosed in its inquiry response document that LCDs currently retain market shares of 97.3%, 92.0% and 95.8% in automotive displays, notebook computers and tablets respectively, maintaining a significant position.

(Image / Yuanli Optoelectronics review inquiry letter response document)

Yuanli Optoelectronics said LCDs still dominate the company's main application areas, and the risk of rapid, full-scale replacement by technologies such as OLED in the short to medium term is low.

But OLED penetration is quietly accelerating. In notebook computers, for example, OLED penetration has risen from 1.9% in 2023 to 4.8% in 2025.

Yuanli Optoelectronics also acknowledged that as OLED production costs fall and technology advances, OLED penetration in some high-end products may continue to rise, leaving the company exposed to long-term technology iteration risks. If the company fails to maintain a high level of R&D investment in Mini-LED displays, its existing product technology could become obsolete and be replaced, adversely affecting its performance.

Despite these potential technology substitution risks, Yuanli Optoelectronics' growth in R&D spending failed to keep pace with its revenue growth.

From 2023 to 2025, the company's R&D expenses rose from RMB 15.0285 million to RMB 18.6060 million, a modest increase, but the R&D expense ratio kept falling, from 6.42% to 4.55%. By 2025, the ratio had dropped below the peer average of 5.04%.

(Chart / Prospectus)

In response to regulators' questions over the rationale of its fund-raising projects, Yuanli Optoelectronics also cut the R&D-related portion of the proceeds, reducing the amount earmarked for the R&D center construction project from RMB 51.3965 million to RMB 32.3189 million.

The gap between Yuanli Optoelectronics' patent portfolio and those of its peers is plain to see: as of the end of 2025, Yuanli Optoelectronics held 18 invention patents and 54 utility model patents, 72 patents in total; by comparison, Hanbo High-Tech held 434 patents in total, while Tianlu Technology held 110.

(Image / prospectus)

In fact, Yuanli Optoelectronics has already been building out its MiniLED optical product business, but the category currently accounts for less than 2% of revenue and has yet to reach meaningful scale.

The MiniLED arena is fiercely competitive, with domestic optical component makers piling in. Yuanli Optoelectronics started late, has a weak patent portfolio and no large-scale landed orders, so it is unlikely to become the company's second growth curve in the near term.

Zhang Yuanli crossed industries to start his business, seized the window of the domestic display industry's shift, and built Yuanli Optoelectronics into a "little giant" specialized and innovative enterprise in the niche automotive light guide plate market. He caught the opportunity of the times, but operational shortcomings remain an inescapable shadow.

Against these three challenges - governance risks stemming from absolute family control, doubts over growth that diverges from industry peers, and the substitution risk a single product faces amid technological waves - it remains to be seen whether Yuanli Photonics can pass the review. Frontier of Entrepreneurship will continue to follow the story.

*Note: The lead image in this article is AI-generated.

       Original title : Backed by BOE! Yuanli Photonics Faces IPO Review Test, with Zhang Yuanli's Family Holding All the Power