Having capitalized on three years of shipbuilding cycle prosperity, Han Sheng (Shanghai) Marine Equipment Technology Co., Ltd. (Stock Code: 837291, hereinafter "Han Sheng Marine") now stands at the doorstep of the Beijing Stock Exchange, scheduled for review by its listing committee on September 10. The company's impressive financial performance, characterized by consecutive years of doubling growth, has drawn intense regulatory scrutiny during the second round of inquiries, with questions ranging from the authenticity of earnings growth to discrepancies between its gross margins and those of comparable companies.

Former Employee Turned "Order Engine"

Han Sheng Marine, a marine equipment manufacturer headquartered in Zhangjiang, Shanghai, specializes in water resources and environmental protection equipment for ocean-going vessels and offshore engineering projects, including freshwater generators, freshwater systems, incinerators, EGR scrubber water treatment systems, and sewage treatment devices. Its products hold certifications from nine global classification societies and the USCG, and its client base encompasses all of China's top ten shipbuilders and eight of the world's top ten shipbuilding groups. With production facilities in Qidong, Jiangsu, and subsidiaries in Singapore, Hong Kong, and Malaysia, the company has demonstrated remarkable growth between 2023 and 2025, with revenue climbing 96.9% to RMB 384 million and net profit attributable to shareholders surging 122.7% to RMB 98.68 million. However, this growth trajectory is showing signs of deceleration, raising questions about its sustainability. In the first half of 2026, revenue grew 25.51% year-on-year to RMB 209.54 million, but net profit increased only 14.73% to RMB 50.52 million, with recurring net profit up a mere 12.82%. Projections for the first nine months of 2026 indicate further slowdown, with expected net profit of RMB 75-81 million, representing growth of just 6.26%-14.76%. The company itself has flagged "unsustainable rapid growth" as a material risk factor in its prospectus.

More concerning is the first question posed by the Beijing Stock Exchange in its second-round inquiry, which directly targets "business model rationality and earnings growth authenticity." The focal point of regulatory concern centers on a network of intermediaries controlled by a former employee. According to the inquiry response, a former sales engineer employed from May 2011 to March 2021—whose performance and salary in the three years prior to departure were both below the average for sales personnel—gained effective control of Shandong Changge in July 2021, a company established in August 2020 by his spouse and friend. This entity subsequently began providing intermediary services for Han Sheng Marine, connecting the equipment manufacturer with downstream shipyard or shipowner clients and collecting commissions based on contract values and agreed rates. In March 2023, Hong Kong Changge was established specifically for USD settlement purposes. During the reporting period, these two intermediaries generated cumulative revenue of RMB 103.1294 million for Han Sheng Marine from shipbuilding and offshore engineering clients in the Shandong region, with annual breakdowns of RMB 28.4308 million, RMB 27.9324 million, and RMB 46.7662 million. Notably, in 2025, revenue from intermediary channels surged 67.4% year-on-year, far exceeding the company's overall revenue growth of 28.95%—and this increase was almost entirely attributable to a single client. The inquiry response reveals that one commission of RMB 34.4576 million in 2025 accounted for 73.68% of total intermediary income and 8.98% of the company's full-year revenue, with the client's identity granted exemption from disclosure. The primary project involved was an FPSO (Floating Production Storage and Offloading) unit, while the remaining seven intermediary clients collectively contributed only RMB 12.3086 million.

The company explains this anomaly by citing limited regional existing clients and the former employee's accumulated customer resources and reputation with shipyards. However, during the intermediary verification process, the former employee refused to provide personal and corporate bank statements, forcing the verification agencies to rely on alternative procedures to trace commission flows. Additionally, the company applied for information disclosure exemptions on commission rates and amounts, citing commercial confidentiality. Verification procedures for earnings authenticity show that intermediary agencies conducted on-site visits covering 62.84%, 61.52%, and 58.77% of total revenue across the reporting period, with confirmation letter response rates of 79.62%, 83.24%, and 81.64%. However, the rate of replies confirming stated amounts was alarmingly low at just 37.05%, 37.34%, and 48.52%. In 2025 alone, discrepancies totaled RMB 67.5876 million, with RMB 14.9172 million lacking any explanation from clients. The agencies attributed these variances to timing differences, confirmation methodology differences, and non-substantive discrepancies, claiming 100% confirmation after alternative procedures. In the trader segment, penetration verification of purchase, inventory, and sales records covered 70.89% of trader revenue, but terminal customer visits reached only 39.02%, meaning that over 60% of the critical question—"to whom did traders ultimately sell and did they hold inventory"—could not be directly verified. Furthermore, SEATRIUM (2024 revenue of RMB 8.0554 million) explicitly refused site visits, SBM Offshore (2024 revenue of RMB 5.5504 million) did not respond to multiple emails, and LLC «Micron-Marine» failed to return its confirmation letter, resulting in zero verification coverage for these three overseas clients, supported solely by alternative procedures.

High Gross Margins Coexisting with Negative Margins

Throughout the reporting period, Han Sheng Marine's gross margins on main operations stood at 45.26%, 47.96%, and 47.5%, significantly exceeding the averages of comparable companies such as Zhongzhou Environmental Protection, Huige Environmental Protection, and China State Shipbuilding Corporation. Regulators have explicitly highlighted this discrepancy and questioned the selection range of comparable companies. When the comparison set was expanded to include companies from sectors such as electric desalination, electric dehydration equipment, and petrochemicals—which have even weaker relevance to marine equipment—the conclusion of "significantly above average" appeared increasingly dependent on a biased selection. The company attributes its higher margins to its focus on ocean-going vessels (versus Zhongzhou's inclusion of inland vessels), higher export ratios, and greater product added value. However, during the same reporting period, three projects in 2023—a pulp carrier, a marine geological survey vessel, and a wind power installation vessel—recorded negative gross margins. The company explained these losses respectively as "thin margins for series orders," "client-requested changes without price adjustment," and "misunderstanding of initial technical agreements."

The company's 2023, 2024, and 2025 gross margins of 45.56%, 48.29%, and 47.80% exceeded comparable company averages by 12.98, 14.54, and 22.86 percentage points respectively. The middle-ground comparison paints a telling picture: Zhongzhou Environmental Protection recorded margins of 33.74%, 42.23%, and 33.72%; Huige Environmental Protection showed 48.89% and 39.91% (2025 data undisclosed under China's accounting standards); and China State Shipbuilding's electromechanical equipment division reported 15.12%, 19.12%, and 16.15%. The weighted average of comparable companies was 32.58%, 33.75%, and 24.94% across the three years. Behind these numbers lies a fundamental regulatory question about the very comparability of these benchmarks. Whether the "significantly above average" conclusion rests on favorably selected peers remains unresolved, adding another layer of uncertainty to the company's listing prospects.