The Hong Kong Stock Exchange disclosed on September 30 that Boche Holding Limited (Cayman) (hereinafter referred to as "Boche Network") has submitted its main board listing application again, with CITIC Securities and Fosun International Capital serving as joint sponsors. Notably, this marks Boche Network's second attempt at a Hong Kong IPO this year, following its initial prospectus submission on February 21. As a leading player in China's accident vehicle auction industry, Boche Network has attracted widespread market attention with its unique business model and market share. However, its persistent losses and potential industry risks add uncertainty to this IPO attempt.

**Profitability Struggles Behind Market Leadership**

According to a report by CIC, Boche Network is China's largest accident vehicle auction platform, commanding a 31.4% market share by transaction volume in 2024, firmly holding the industry's top position. The company is also China's third-largest B2B used car auction platform, with approximately 12.0% market share. This dual identity highlights Boche Network's pivotal position in the automotive aftermarket value chain.

The company's core business involves connecting upstream vehicle suppliers with downstream buyers through an integrated online and offline auction platform. In the accident vehicle segment, upstream participants are primarily insurance companies, while downstream buyers include certified repair shops and licensed auto dismantling facilities. In the used car segment, the company serves various vehicle suppliers and automotive dealers.

With China's vehicle ownership reaching 350 million units by 2024, making it the world's largest automotive market, Boche Network enjoys vast development opportunities.

Despite its market leadership, Boche Network faces significant profitability challenges. Financial data shows revenues of RMB 388 million, RMB 518 million, and RMB 526 million for 2022, 2023, and 2024, respectively. Behind the apparent growth trajectory lies a concerning trend—the impressive 33.5% year-over-year revenue growth in 2023 dramatically slowed to just 1.5% in 2024. This cliff-like deceleration clearly reflects the company's growth bottlenecks.

Deeper analysis reveals that Boche Network's core business—accident vehicle auctions and related services (accounting for 52.5% of 2024 revenues)—exhibits a typical "volume up, price down" phenomenon. Accident vehicle auction volume reached 117,000 units in 2024, up 72% from 68,000 units in 2022, but average unit prices dropped from RMB 42,700 to RMB 37,600, further declining to RMB 37,300 in the first seven months of 2025. This trend suggests the company may be using price reduction strategies to maintain market share, raising questions about sustainability.

Boche Network's profitability presents contradictory aspects. During the reporting period, the company recorded losses of RMB 180 million, RMB 122 million, RMB 36 million, and RMB 56 million respectively, with cumulative losses over three years and seven months totaling RMB 394 million. Notably, losses in the first seven months of 2025 already exceeded the entire 2024 figure, showing renewed expansion that raises concerns.

The company attributes these losses primarily to non-cash factors such as changes in financial instrument fair values and intangible asset amortization from acquisitions, emphasizing that its "adjusted net profit" performance was positive at RMB 11 million, RMB 42 million, RMB 51 million, and RMB 27 million respectively during the reporting period.

Another concerning indicator is the volatile decline in gross margins. During the reporting period, gross margins were 44.4%, 49.9%, 46.4%, and 39.2% respectively, showing a clear downward trend. The decline to 39.2% in the first seven months of 2025 represents a drop of over 10 percentage points from the 2023 peak.

Boche Network's balance sheet also exposes multiple risks. As of July 31, 2025, the company had net current liabilities of RMB 1.721 billion, up from RMB 1.646 billion in 2022. Behind this abnormal figure are financial instruments issued to preferred shareholders that are classified as liabilities, with a book value of RMB 1.663 billion as of end-July 2025. This financial structure makes the IPO success crucial for survival—successful listing would convert these liabilities to equity, while failure could trigger redemption obligations and serious liquidity crises. This "succeed or perish" capital structure adds significant uncertainty to investment decisions.

While the company has established a leading market position in accident vehicle auctions, this position has not effectively translated into sustainable profitability and healthy financial conditions. The interplay of slowing growth, profitability difficulties, and liquidity pressures makes this IPO appear more like a "survival path" rather than a "development path."

**Market Scale Benefits and Growth Challenges in the Billion-Dollar Track**

Against the backdrop of China's rapid automotive industry development, the accident vehicle auction niche is demonstrating enormous market potential. According to industry data, China's accident vehicle auction volume grew from approximately 206,000 units in 2019 to 345,000 units in 2023, representing a compound annual growth rate of 13.8%.

However, compared to the US market, America's 2023 accident vehicle auction volume approached 7 million units, roughly 20 times China's volume, despite similar vehicle ownership levels (approximately 290 million each). This significant gap reveals tremendous growth potential for China's accident vehicle auction industry. The total volume is projected to reach 867,000 units by 2028, with a compound annual growth rate of 20.2% from 2023 to 2028.

In this rapidly growing market, Boche Network, as the industry leader, occupies a leading position with its unique competitive barriers while facing multiple challenges.

China's accident vehicle auction industry shows a clear tiered competitive landscape. In 2023, the largest single participant held over 30% market share, the top five participants collectively owned about 56% market share, while other individual participants had less than 2% market share each. This structure resembles the US market, which is dominated by two giants, Copart and IAA, collectively holding approximately 70% market share.

As the industry leader, Boche Network held first place with a 31.3% market share in 2023. This leading position provides significant first-mover advantages, but achieving high-quality growth while maintaining market share becomes the company's core challenge.

Additionally, the rapid adoption of new energy vehicles brings profound changes to the accident vehicle auction industry. New energy vehicles have significantly different accident rates, repair costs, and residual value assessments compared to traditional fuel vehicles, requiring platforms to quickly adapt and build specialized capabilities. The professional technical thresholds for battery safety and motor repair require platforms to invest substantial resources in capability building. While Boche Network has begun positioning itself in this area, whether it can keep pace with technological changes remains uncertain.

From our perspective, Boche Network faces the dilemma of increasing revenue without increasing profits. Although transaction volumes continue growing, per-vehicle revenue shows a declining trend, reflecting that the company has not yet found the optimal balance between scale expansion and profit improvement.

From an investment standpoint, Boche Network operates in a track with clear growth prospects, and as the industry leader, the company enjoys significant competitive advantages. With projected industry compound growth rates of 20.2% from 2023 to 2028, the company is well-positioned to benefit from industry dividends and achieve sustained growth.

However, investors must also clearly recognize the challenges the company faces, including intensifying competition, new energy transition pressures, and profitability concerns. Particularly in the current capital market environment, investors are increasingly focused on corporate profitability and sustainable development capabilities. Whether Boche Network can convert its market position into sustained profitability will directly impact its capital market performance.