Insta360 Plans RMB 110 Million Optical Component Purchase from Related Party

Insta360 recently announced plans to purchase molds, accessories and other production materials from related party Dongguan Rongguang Optics Co., Ltd. ("Rongguang Optics"), adding RMB 81 million in new routine related-party transactions for 2026 and bringing the estimated full-year total to RMB 110 million (excluding tax).

The transaction falls under the category of purchases of goods from related parties. The company said it is intended to meet the needs of daily operations and new business development, follows market-based pricing principles, and is priced fairly and reasonably. It also stated that the deal will not harm the interests of the company or its minority shareholders, will not affect the company's independence, and will not create dependence on the related party.

Rongguang Optics is mainly engaged in the R&D and production of optical lenses, molds and precision accessories. Like Insta360, it is based in the heart of the Guangdong-Hong Kong-Macao Greater Bay Area's optical manufacturing cluster, and their geographic proximity naturally brings advantages in supply chain responsiveness and logistics costs. However, precisely because of the relationship between the two parties, the sharp jump in this purchase amount has naturally become a focus of market scrutiny.

In terms of business substance, Insta360 has accelerated its push into AI imaging, professional-grade VR cameras and action sports scenarios in recent years, driving a sharp rise in demand for customized optical modules as new products iterate. The company's 2025 annual report showed that inventory turnover days increased year over year, which may be related to proactive stockpiling for the mass production of flagship new products in the second half of the year. However, this needs to be assessed in light of end-market sell-through rates, since the change in this metric may reflect either proactive expansion of inventory or shifts in the sell-through pace of some older models.

That said, given that the company's overall shipment scale is expanding, the additional purchase amount is most likely directly tied to materials for the mass production of flagship new products in the second half of the year and has clear business support.

Looking back, Insta360 faced regulatory questions over the fairness of its related-party transactions during its IPO, and at the time the company proactively reduced the scale of transactions with related parties such as Rongguang Optics to address market concerns. Now, however, the related-party purchase quota has not only returned to a high level but has also jumped significantly compared with actual amounts in previous periods. The RMB 110 million projected for 2026 already far exceeds the actual figure for similar related-party transactions in the full year of 2024.

Judging from the wording of the announcement, the company deliberately stressed "market-based pricing" and "no dependency," clearly aiming to reassure investors. Based on the company's total 2025 procurement (using "cash paid for goods and services received" in the cash flow statement as a rough reference), the related-party purchase accounts for a share of total procurement that remains within a reasonable range.

In terms of disclosure obligations, the amount exceeds RMB 3 million and is expected to represent more than 0.5% of net assets, requiring board review and an announcement. As for shareholder meeting approval, because the amount exceeds RMB 30 million and is expected to represent more than 1% of net assets, it must be submitted to the shareholders' meeting for deliberation. At the same time, the ratio remains well below the 30% empirical threshold that regulators typically use to assess whether a "material dependency" exists, so the company's independence is not at risk in the near term.

In fact, the related-party transactions between Insta360 and Rongguang Optics are not an isolated case. The optics industry is highly segmented and characterized by customized collaboration, and many leading optics companies develop deeply integrated joint R&D relationships with downstream device makers. Such partnerships are often tied by equity links or long-term exclusive supply agreements, making related-party transactions far from rare in the industry.

Purely "unrelated" outside sourcing may actually be detrimental to protecting core processes and to joint R&D. Related-party transactions are not inherently a sin; what matters is whether they have genuine commercial logic and whether the pricing can withstand third-party price comparisons. Notably, Insta360 has also been actively building a network of non-related optics suppliers in recent years to create checks and balances. The "no dependency" statement in this announcement can, to some extent, be seen as an indirect declaration of its supply chain diversification strategy.

In terms of financial health, as of the end of the first quarter of 2026, Insta360 had more than RMB 3 billion in cash and trading financial assets on its books, giving it ample payment capacity and ruling out any suggestion that it was forced to accept high-priced related-party purchases due to funding pressure. This RMB 110 million related-party purchase looks more like a rigid investment driven by capacity expansion, while also serving as a litmus test of the company's supply chain governance.

As of press time, Insta360 had not provided further clarification on whether the transaction involves core modules for its next-generation AI cameras. The company expects to convene a board meeting and a shareholders' meeting in the near term to deliberate on the proposal, at which the independent directors and the supervisory board will also issue special opinions.

OFweek Optics will continue to follow the transaction's subsequent review procedures and the verification opinion of the independent financial adviser, in order to present a more complete picture of the deal.