Okada Intelligence IPO Challenge: Price Cuts and Revenue Concerns for Qiao Feng Intelligence, Pricing Decline and R&D Worries Need Resolution

What is the market logic behind AI Okada Intelligence’s price reduction for Qiaofeng Intelligence?

Port Harbor Business Observation Xiao Xiuni

As a leading company in the core functional components of CNC machine tools, Okada Intelligence (Jiangsu) Co., Ltd. (hereinafter referred to as “Okada Intelligence”) is rushing to list on the main board of the Shenzhen Stock Exchange, with Huatai United Securities as the sponsor.

On February 9, 2026, Okada Intelligence disclosed a reply letter to the second round of inquiry, addressing core issues such as continuous decline in product prices, high policy dependence, and insufficient R&D investment. These responses still cannot hide the multiple challenges it faces in the capital market. The company plans to raise 985 million yuan for expansion and R&D, and whether it can break through growth bottlenecks relying on industry dividends and its own advantages has attracted market attention.

1

Bidirectional pressure in the industrial chain, highlighting price and cost risks

Tianyancha shows that Okada Intelligence was established in 2013. The company focuses on the core functional components of CNC machine tools, mainly engaged in the research, development, production, and sales of tool magazines, spindles, and rotary tables. Its products are widely used in metal cutting CNC machine tools, covering automotive, general machinery, electronics manufacturing, aerospace, and other fields.

According to Frost & Sullivan research data, in 2024, China’s market size for core functional components of metal cutting CNC machine tools will be 31.44 billion yuan, with tool magazine products accounting for 5.06 billion yuan, spindle products for 10.47 billion yuan, and rotary table products for 5.41 billion yuan. The domestic tool magazine and spindle industries are relatively fragmented, with Okada Intelligence’s tool magazine and spindle products holding 14.8% and 1% of the market share, respectively, ranking first and fifth in the industry.

From 2022 to 2024 and January-June 2025 (reporting period), the company’s operating performance generally showed growth, with revenues of 767 million yuan, 773 million yuan, 932 million yuan, and 564 million yuan, and net profits of 119 million yuan, 132 million yuan, 169 million yuan, and 110 million yuan.

During the reporting period, the main business revenue mainly came from tool magazine products, accounting for about 80%. The company’s main business revenues were 759 million yuan, 765 million yuan, 922 million yuan, and 558 million yuan, with tool magazine sales at 642 million yuan, 629 million yuan, 746 million yuan, and 437 million yuan, respectively, accounting for 84.54%, 82.25%, 80.96%, and 78.26% of main business revenue.

Okada Intelligence stated in its prospectus that the industry market size is expected to grow by 14.54% and 12.98% in 2024-2025, supported by policies such as the “Promotion of Large-Scale Equipment Upgrades and Consumer Goods Replacement Action Plan,” which will be implemented until 2027.

Looking at the development prospects, Okada Intelligence benefits deeply from national policies supporting the industrial mother machine industry. Core products like tool magazines, spindles, and rotary tables are included in the encouraged category of the “Guidance Catalog for Industrial Structure Adjustment,” combined with policies promoting equipment renewal and reliability improvements, which stimulate market demand. As a national-level specialized and innovative “Little Giant” enterprise, the company participates in major national science and technology projects, receiving multi-dimensional support from policies, markets, and technology, with significant development potential and growth certainty.

Independent economist, equity investment expert, and financial commentator Wang Chikun pointed out that the long-term value of industry-supported policy-driven growth depends on the industry track attributes and the company’s transformation ability. Policies provide demand guarantees and technological trial-and-error windows during the initial stage of industry development, and activate existing capacity through equipment updates and replacement in later stages, but these are only effective for industries aligned with industrial upgrading; they have limited significance for backward capacity.

He emphasized that the company’s subsequent growth logic hinges on transforming policy dividends into endogenous competitiveness: leveraging policy windows to scale up, refine products, build technological, channel, and service barriers, shifting from policy dependence to market-driven growth. Only by establishing independent market-adaptive operational capabilities can the company survive and stand out when policies decline or industry iteration occurs, achieving sustainable growth.

Despite the positive industry outlook, Okada Intelligence faces dual pressures along the upstream and downstream of the industrial chain.

Downstream, increased competition in the CNC machine tool industry has led to falling customer product prices. The prospectus shows that during the reporting period, the prices of the company’s main products generally declined. Tool magazine prices dropped from 15,900 yuan/unit in 2022 to 14,100 yuan/unit in the first half of 2025; spindle prices fell from 9,100 yuan/unit to 7,700 yuan/unit; rotary table prices decreased from 11,400 yuan/unit to 9,900 yuan/unit. The downward trend persisted throughout the period.

In response, the Shenzhen Stock Exchange required Okada Intelligence to analyze the competition in the CNC functional component market, the price transmission mechanism of downstream CNC machine tools, the company’s product pricing adjustment mechanism, and the changes in prices and sales volume after the reporting period. The company should explain the expected price trend of main products, quantify the impact of continuous price declines on future performance stability, and outline relevant countermeasures.

Okada Intelligence stated that the company usually negotiates prices with customers 1-2 times a year, adjusting prices based on market competition and its own cost situation. During the period, influenced by market competition and declining upstream raw material prices, the overall sales prices of products declined.

The company also disclosed post-reporting period price and sales volume changes, with main products expected to maintain stable sales prices and increasing sales volume in the second half of 2025. The company believes that future sales prices of main products are unlikely to experience significant drops.

The continuous decline in product prices may transmit cost pressures upstream. Upstream, during the reporting period, Okada Intelligence’s operating costs were 531 million yuan, 530 million yuan, 627 million yuan, and 378 million yuan; main business costs were 530 million yuan, 529 million yuan, 625 million yuan, and 376 million yuan. Direct material costs accounted for 76.71%, 74.14%, 73.53%, and 75.18% of main business costs, respectively.

Raw materials include steel parts, castings, motors, etc. Although overall raw material prices declined during the period—steel price index from 122.78 to 93.38, pig iron from 3.77 yuan/kg to 2.75 yuan/kg—cost buffers are limited if downstream customer price pressures persist and raw material costs cannot decrease proportionally, or if product structure optimization falls short. Calculations show that a 5% decrease in sales price could reduce net profit attributable to parent by 23.15%-28.65%.

Operational costs also warrant attention. The Shenzhen Stock Exchange required the company to explain unit transportation costs and their fairness, considering delivery frequency, amount, regional transport radius, volume, and mode, and how these match with delivery volume and distance.

The prospectus shows that transportation expenses during the period were 10.55 million yuan, 11.22 million yuan, 13.26 million yuan, and 8.09 million yuan, accounting for 1.39%-1.47% of main business revenue. Although transportation costs are currently manageable, future changes such as mode adjustments, longer distances, or rising logistics prices could increase costs and erode profitability, especially under declining product prices. Cost fluctuations are more sensitive to profit margins.

Okada Intelligence disclosed that during the period, quotes from different regions and logistics providers showed no significant differences; actual unit transportation costs were within the providers’ quoted ranges, indicating fair and normal transportation costs.

2

High customer concentration raises doubts about price cuts and revenue stability of Qiaofeng Intelligence

Customer structure and market layout are core foundations of corporate operation. The Shenzhen Stock Exchange’s inquiry pointed out that during the reporting period, the company’s dependence on major customers continued to rise, with sales to the top ten customers reaching 285 million yuan, 318 million yuan, 397 million yuan, and 233 million yuan, respectively, with the proportion of main business revenue increasing from 37.5% to 41.79%.

In the context of intensified competition in the CNC machine tool industry and downstream customer strategy adjustments, if major customers reduce procurement or terminate cooperation due to market changes or business transformation, it will significantly impact the company’s performance stability, highlighting the urgency of optimizing customer structure.

Meanwhile, orders in the CNC functional component industry are generally small-batch, multi-variety, and multi-cycle. During the period, Okada Intelligence executed 37,600 production orders covering up to 3,361 product specifications, demanding high flexibility and customization capabilities. The chain-type tool magazine’s customization rate reached 76.62%, requiring rapid response to diverse customer needs with strong technical and production scheduling capabilities.

If the company fails to keep up with market changes in process optimization and capacity utilization, or if new capacity utilization is insufficient, it could affect timely delivery, increase unit costs, and squeeze profit margins, restricting overall profitability.

Focusing on a single customer, cooperation with core client Qiaofeng Intelligence (301603.SZ) reveals potential disputes over prices and operational data. As a supplier of tool magazines to Qiaofeng, from 2020 to 2023, Okada Intelligence’s sales unit price for tool magazines dropped from 13,400 yuan/set to 9,500 yuan/set, a 25.2% decrease, significantly below the company’s overall average sales price.

Qiaofeng explained the price reduction by increasing procurement volume, but data shows that procurement amounts in 2022-2023 remained around 30 million yuan, with no significant growth, and the unit price still fell 20.2% year-on-year in 2023, even lower than competitor Desu CNC’s similar products.

More notably, in its April 16, 2024, reply to the second inquiry, Shenzhen Stock Exchange’s IPO review document states that Okada Intelligence’s annual operating scale is about 1.2 billion yuan, but its actual 2023 revenue was only 773 million yuan; this discrepancy raises questions. Meanwhile, its largest customer with similar demand, Newway CNC, had larger procurement scale but did not show similar large price reductions, casting doubt on the pricing logic supporting Okada’s product average price, potentially affecting market reputation and cooperation stability.

3

R&D investment far below peers, left hand dividends, right hand fundraising

Okada Intelligence’s R&D investment risk is also a focus of regulatory inquiry. The prospectus shows that the company’s R&D level is significantly below the industry comparable average. During the period, R&D expenses were 38.01 million yuan, 36.39 million yuan, 44.64 million yuan, and 23.52 million yuan, with R&D expense ratios of 4.96%, 4.71%, 4.79%, and 4.17%, respectively, while the industry averages are 8.83%, 8.17%, 7.61%, and 7.91%.

Although the company holds 198 authorized patents, including 92 invention patents, the gap with leading competitors like Haizhi Electromechanical is evident. Okada’s patent count is only 48% of Haizhi’s 413 patents, and its 92 invention patents are only 45% of Haizhi’s 206.

Currently, the CNC machine tool industry is rapidly evolving toward high speed, high precision, intelligence, and complexity. If future R&D investments cannot match technological upgrade needs, the company’s innovation and product upgrade capabilities may weaken, risking core technological advantages.

Wang Chikun provided an expert analysis: “The machine tool industry exhibits typical characteristics of high input and low conversion. Due to technical bottlenecks, long R&D cycles for improved innovations often do not meet accounting standards for R&D expenses, leading to a large portion of R&D costs being classified as other expenses, resulting in a distorted low R&D expense ratio. This mismatch between accounting treatment and industry nature masks the true R&D intensity.”

On compliance, the company’s third-phase factory construction quality issues drew attention. The prospectus shows that in 2024, the company fully impaired 4.98 million yuan for the third-phase factory under construction due to quality issues. Although the company emphasizes that the problems stem from the construction contractor and has handled it through impairment and litigation, such full impairment of core infrastructure projects is rare among listed companies, revealing internal control gaps in project approval, supplier qualification review, and supervision, which are key regulatory concerns.

Additionally, compliance risks include tax and administrative penalties. The prospectus shows that in 2022 and 2023, the company’s non-operating expenses included late payment fines of 6.96 million yuan and 60,900 yuan, mainly due to back taxes paid by Changzhou Okada for previous years. In November 2022, its subsidiary Oshima Chuan Intelligent was fined 500 yuan for late tax declaration, indicating room for improvement in tax compliance management.

Shareholding structure-wise, the prospectus shows that the actual controllers, Chen Liang and Cai Lijuan, control 91.74% of the shares through direct holdings and seven holding platforms, with high concentration. Historically, Chen Liang and Cai Lijuan transferred their shares multiple times to relatives such as their fathers, fathers-in-law, and mothers-in-law, with six transfers over the past decade.

The prospectus states that in 2022, Okada Intelligence paid dividends of 120 million yuan, with Chen Liang and Cai Lijuan receiving over 100 million yuan. The planned fundraising of 985 million yuan includes 661 million yuan for CNC machine tool tool magazine, spindle, and rotary table production line expansion; 148 million yuan for R&D and IT upgrades; 56.33 million yuan for marketing and technical service network construction; and 120 million yuan for working capital.

Notably, the working capital supplement matches the 2022 cash dividend payout, raising questions about the reasonableness of this arrangement. Further explanation on the necessity and appropriateness of fund use is needed. (Produced by Port Harbor Finance)