Lain Precision: High-Margin Major Customer Equity Stake with Over 600 Million Yuan in Transaction Volume Over Multiple Years; Related Parties of Two Main Suppliers Now Have Same-Name Personnel

Does AI vendor personnel with the same name imply procurement risks?

“Jinzhengyan” Southern Capital Center Wangshan/Author Xizhou Senglian Yingwei/Risk Control

As of December 30, 2025, Suzhou Laien Precision Alloy Co., Ltd. (hereinafter referred to as “Laien Precision”) applied to suspend review due to supplementary audit matters for its application to the Beijing Stock Exchange. As of the query date March 17, 2026, Laien Precision’s review status remains suspended. Behind the listing, from January to September 2025, Laien Precision’s revenue increased by 1.48% year-over-year, and net profit decreased by 18.33% year-over-year.

Looking at the longer timeline, from 2020 to 2024, Laien Precision’s revenue and net profit growth rates have been rollercoasters. In 2019, Laien Precision’s major client, Japanese company PiCa Corporation (hereinafter “PiCa”), invested in Laien Precision. Since that year, PiCa’s total transactions with Laien Precision exceeded 600 million yuan. As PiCa’s exclusive domestic supplier of climbing equipment, Laien Precision’s sales gross profit margin to PiCa has been higher than to other two major clients in recent years. Moreover, Laien Precision’s subsidiaries and branches, some of which have been deregistered or share addresses with PiCa’s subsidiaries, are involved. On the other hand, the “relationship network” behind Laien Precision’s two separately disclosed major suppliers involves personnel with the same names. Calculations show that during the reporting period, purchases from these two major suppliers accounted for over 40% of Laien Precision’s total procurement.

1. Using major client PiCa’s technology to sell to third parties requires paying technology licensing fees. High-margin sales are driven by PiCa’s investment in Laien Precision.

During the listing process, from 2020 to 2024 and January-September 2025, Laien Precision’s revenue and net profit growth rates have been volatile. In 2019, PiCa invested in Laien Precision. From 2019 to 2024, Laien Precision’s gross profit margin on sales to PiCa was higher than to other two major clients. Additionally, as PiCa’s technology licensor, Laien Precision is required to pay licensing fees for products produced using PiCa’s patents and technologies. Furthermore, Laien Precision’s subsidiaries and branches, some of which have been deregistered or share addresses with PiCa’s subsidiaries.

1.1 The revenue and net profit growth rates have been rollercoasters over the past five years, starting with PiCa’s investment in 2019.

According to Laien Precision’s review reports for January-September 2025, the prospectus signed on June 11, 2025 (“2025 June 11 Beijing Stock Exchange Prospectus”) and the IPO draft signed on April 11, 2022 (“2022 April 11 Growth Enterprise Market Prospectus”), from 2019 to 2024 and January-September 2025, Laien Precision’s operating income was 877 million yuan, 1.012 billion yuan, 1.164 billion yuan, 1.003 billion yuan, 849 million yuan, 1.159 billion yuan, and 877 million yuan respectively.

The year-over-year growth rates of revenue from 2020 to 2024 and January-September 2025 were 15.34%, 14.97%, -13.84%, -15.36%, 36.55%, and 1.48%.

Net profits for these periods were 77.2 million yuan, 83.1 million yuan, 80.2 million yuan, 99.7 million yuan, 56.4 million yuan, 94.9 million yuan, and 52.7 million yuan.

The year-over-year growth rates of net profit were 7.62%, -3.41%, 24.29%, -43.48%, 68.4%, and -18.33%.

Clearly, from 2020 to 2024 and January-September 2025, Laien Precision’s revenue and net profit growth rates have been highly volatile. In 2024, both turned positive, but in the first nine months of 2025, net profit decreased by 18.33%.

Behind the 2024 performance growth, Laien Precision’s cooperation with major clients warrants attention.

According to Laien Precision’s reply to the inquiry letter dated December 17, 2025 (“2025 December 17 Beijing Stock Exchange First Round Inquiry Reply”), Laien Precision’s climbing equipment and components are produced under OEM and ODM models depending on customer orders. From 2022 to June 2025, sales in OEM mode accounted for 18.47%, 22.07%, 13.41%, and 14.97%, respectively; in ODM mode, sales accounted for 81.53%, 77.93%, 86.59%, and 85.03%.

During the same period, Laien Precision’s climbing equipment products in OEM mode mainly relied on PiCa’s orders, while in ODM mode, orders from American company Tricam Industries Inc. (“Tricam”) and Werner Co. and its affiliates (“Werner”) were dominant.

According to the 2025 June 11 Beijing Stock Exchange Prospectus and the 2025 semi-annual report, from 2022 to June 2025, PiCa remained Laien Precision’s third-largest customer. During this period, sales to PiCa were 91 million yuan, 107 million yuan, 106 million yuan, and 46 million yuan, accounting for 9.24%, 12.9%, 9.4%, and 9.76% of Laien Precision’s main business revenue, respectively.

It is noteworthy that PiCa is an indirect shareholder of Laien Precision.

According to the 2025 June 11 prospectus, as of signing date, PiCa indirectly held 0.65% of Laien Precision through its shareholder Suzhou Benzhou Enterprise Management Partnership (Limited Partnership) (“Suzhou Benzhou”).

According to the December 17, 2025 inquiry reply, in 2019, PiCa acquired 0.667% of Laien Precision from Suzhou Benzhou at a transfer price of 13.33 yuan/share. The consideration paid by PiCa was 293,300 yuan less than the fair value of the transferred equity at that time. Laien Precision explained that the purchase price was fair and close to the fair value of the transferred equity.

In this context, Laien Precision reports its gross profit margin on sales to PiCa higher than to other major clients.

1.2 As PiCa’s exclusive domestic supplier of climbing equipment, Laien Precision’s gross profit margin on sales to PiCa has been higher than to major clients Tricam and Werner in recent years.

According to the December 17, 2025 inquiry reply, PiCa has cooperated with Laien Precision since 2002, making it Laien Precision’s first major international client, with over 20 years of partnership as of December 17, 2025. The cooperation mode is direct sales on a buyout basis. Laien Precision is PiCa’s exclusive domestic manufacturer.

In this context, Laien Precision’s gross profit margin on sales to PiCa has been higher than to Tricam and Werner.

As previously mentioned, in ODM mode, Laien Precision’s main clients are Tricam and Werner.

According to the 2025 June 11 prospectus and the 2025 semi-annual report, from 2022 to June 2025, Tricam was the largest customer and Werner the second largest.

According to the 2022 April 11 inquiry reply, in analyzing the price and gross profit margin differences for climbing equipment products sold to Tricam, Werner, and PiCa, Laien Precision disclosed that from 2019 to 2021, PiCa’s gross profit margin was relatively higher than other clients, mainly due to product structure, product features, and supplier pricing power, resulting in higher overall OEM gross profit margins compared to ODM.

Furthermore, the December 17, 2025 inquiry reply states that from 2022 to 2024, gross profit margins on sales to PiCa exceeded those to Tricam and Werner.

Laien Precision explained that when costs are similar, products sold to PiCa are more complex in structure and process, contain higher design and manufacturing technical content, and have higher added value. Coupled with the fact that PiCa’s products are lighter, these factors lead to higher unit gross profit margins.

Additionally, the 2022 April 11 inquiry reply indicates that from 2019 to 2021, Laien Precision’s cooperation with the three major clients PiCa, Tricam, and Werner involved no specific return or exchange terms or product quality guarantees with PiCa.

It is noteworthy that Werner, a major client, may have a relationship with PiCa.

1.3 Under the technology licensing agreement, if Laien Precision sells products made using PiCa’s patents and technologies to third parties, it must pay PiCa a licensing fee.

Public information shows that the domain “pica-corp.jp” (hereinafter “PiCa official website”) is registered by PiCa, registered on February 28, 2007, with an expiration date of February 28, 2027.

Archive.org shows that on July 7, 2013, PiCa’s website included cooperation with Werner.

As of the query date March 17, 2026, PiCa’s overseas partners include Werner.

It appears that PiCa’s cooperation with Werner dates back to at least 2013.

According to the December 17, 2025 inquiry reply, from 2022 to June 2025, Laien Precision’s sales to Werner were 219 million yuan, 140 million yuan, 263 million yuan, and 101 million yuan, respectively, accounting for 22.11%, 16.8%, 23.37%, and 21.32% of Laien Precision’s main business revenue.

It is noteworthy that Laien Precision’s subsidiary signed a technology transfer agreement with PiCa and has requirements for external sales.

According to the December 17, 2025 inquiry reply, in OEM mode, Laien Precision accepts patent licensing from customers. From 2022 to June 2025, Laien Precision only had technology licensing agreements with major OEM clients PiCa and Little Giant Ladder System, LLC.

Per the agreement, if Laien Precision sells products developed by PiCa to third parties outside PiCa’s scope, it must pay a licensing fee of 1% or 1.5% of sales, depending on product type.

From 2022 to June 2025, Laien Precision regularly settled and paid licensing fees to PiCa based on the “Technology Transfer Agreement” for products produced by its subsidiary Suzhou Feihua Aluminum Industrial Co., Ltd. (“Suzhou Feihua”) using PiCa’s patents and technologies. The products are mainly “Class A” products, such as standard PiCa products or slightly modified versions, with a fee rate of 1%. Sales mainly involved products like foot platforms, steps, two-way ladders, folding ladders, etc., with customers including KUEMCHANG Industry Co., Ltd., Handke Tool Trading (Shanghai) Co., Ltd., etc.

Further, Laien Precision’s subsidiaries and branches, some of which have been deregistered or share addresses, are involved.

1.4 The branch of Laien Precision’s subsidiary, Suzhou Feihua Branch, shared an address with PiCa’s deregistered subsidiary Feike Trading, which was canceled in 2021.

According to the 2022 April 11 IPO prospectus, from 2019 to 2021, Laien Precision’s transactions with PiCa included PiCa and its subsidiary Suzhou Feike Trading Co., Ltd. (“Feike Trading”).

Market supervision data shows Feike Trading was established on July 16, 2010, and deregistered on December 23, 2021. During its operation, Feike Trading was a wholly owned subsidiary of PiCa, with ownership percentages of 97.5% from October 25, 2017, to January 8, 2020. Its address from 2017 to 2020 was No. 188 Jixiang Road, Wuzhong District, Suzhou.

This indicates Feike Trading was a controlled subsidiary of PiCa during its existence.

According to supervision data and the June 11, 2025 Beijing Stock Exchange prospectus, Laien Precision’s subsidiary Suzhou Feihua’s branch, Suzhou Feihua Aluminum Industrial Co., Ltd. Jixiang Road Branch (“Suzhou Feihua Branch”), was established on April 28, 2018, and its main business is manufacturing and sales of aluminum ladders, steps, platforms, gardening supplies, and other metal products.

From April 28, 2018, to the query date March 17, 2026, the business location of Suzhou Feihua Branch has been at No. 188 Jixiang Road, Wuzhong District, Suzhou.

It is evident that, at least from April 2018 to January 2020, Laien Precision’s subsidiary’s branch, Suzhou Feihua Branch, shared the same address as PiCa’s subsidiary Feike Trading.

In summary, from 2020 to 2024 and January-September 2025, Laien Precision’s revenue and net profit growth rates have been highly volatile. In 2024, both turned positive, but in the first nine months of 2025, net profit decreased by 18.33%. PiCa, an indirect shareholder and major client, invested in Laien Precision in 2019. During 2019-2024, Laien Precision’s gross profit margin on sales to PiCa was higher than to other major clients. As PiCa is the licensor of technology, Laien Precision must pay licensing fees when selling products made using PiCa’s patents and technologies to third parties. Additionally, Laien Precision’s subsidiary’s branch, Suzhou Feihua, shared an address with PiCa’s deregistered subsidiary Feike Trading.

Furthermore, during the previous listing application on the Growth Enterprise Market, Laien Precision was found to have unmerged procurement amounts under common control, which was later corrected. In this application to the Beijing Stock Exchange, from 2022 to June 2025, Hoxin Aluminum and Xinfai Aluminum, two major suppliers, are among Laien Precision’s top five suppliers. It was also found that the second shareholder of Hoxin Aluminum, Zhang Tao, and the shareholder of Xinfai Group, which controls Xinfai Aluminum, have the same name as the general manager of Xinfai Gas, a wholly owned subsidiary of Xinfai Group. Similarly, Zhang Gang, a director of Xinfai Aluminum, shares a name with the director of Meiji Hai Trading, a company involved in Laien Precision’s transactions. During this period, procurement from these two suppliers accounted for over 40% of Laien Precision’s total procurement.

3. Conclusion

Overall, from 2020 to 2024 and January-September 2025, Laien Precision’s revenue and net profit growth rates have been highly volatile. PiCa, an indirect shareholder and major customer, invested in Laien Precision in 2019. Laien Precision’s gross profit margin on sales to PiCa has been higher than to other major clients during 2019-2024. PiCa, as the licensor, requires Laien Precision to pay licensing fees when selling products made using PiCa’s patents and technologies to third parties. Additionally, Laien Precision’s subsidiary’s branch, Suzhou Feihua, shared an address with PiCa’s deregistered subsidiary Feike Trading. Previously, Laien Precision was also found to have unmerged procurement amounts under common control, which was later corrected. Procurement from Hoxin Aluminum and Xinfai Aluminum accounted for over 40% of total procurement during 2022-2025.

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