Hangcha Group Co.,Ltd. (SH: 603298) has drawn market attention with its latest convertible bond plan worth nearly RMB 2.3 billion. The company intends to issue convertible bonds to unspecified investors, raising no more than RMB 2.259 billion over a six-year term. After deducting issuance expenses, the proceeds will fund a forklift robot smart factory project, a new energy forklift expansion project, a forklift and logistics robot R&D project, and working capital replenishment.
Breaking down the allocation, the two robot-related projects together account for RMB 984 million, or 43.6 percent of the total raise. The new energy forklift expansion project is set to receive RMB 705 million, representing 31 percent, while working capital replenishment amounts to RMB 570 million, or 25 percent of the proceeds. The key questions are whether this fundraising plan is justified, whether the necessity is truly established, and whether the scale of the convertible bond issuance is appropriate.
Why raise working capital when nearly RMB 3.8 billion sits on the books
First, the working capital portion approaches the regulatory ceiling. Article 40 of the Measures for the Administration of Securities Issuance and Registration by Listed Companies stipulates that for rights issues, preferred share issuances, or targeted placements where the issuance target is determined by the board, the entire proceeds may be used for working capital and debt repayment. For other fundraising methods, the proportion used for working capital and debt repayment must not exceed 30 percent of total proceeds. For companies with asset-light models or high R&D investment, exceeding this ratio requires thorough justification, and the excess portion should generally be directed to R&D related to core operations. Hangcha's working capital allocation of 25 percent sits close to this 30 percent red line.
Does this suggest the company is under financial strain and urgently needs capital injection? The data suggests otherwise. Hangcha's debt-to-asset ratio remains below 40 percent, its cash position is comfortable, and it even holds funds in wealth management products. Wind data shows the company's debt-to-asset ratio stood at 38.74 percent as of the end of the first half of 2026, down from 42.03 percent in 2021. Meanwhile, combined cash and trading financial assets approach RMB 3.8 billion, while short-term interest-bearing debt is less than RMB 1 billion. Clearly, the company does not face a liquidity crunch.
The contradiction is evident: the company enjoys ample on-book funds yet still seeks to raise working capital through this issuance. Notably, there is precedent for regulatory rejection in similar cases. Rike Chemical, which held large wealth management products and extended entrusted loans while attempting to raise funds for working capital, saw its convertible bond plan rejected. In February 2024, the Shenzhen Stock Exchange's listing committee ruled that Rike Chemical failed to meet issuance conditions, listing requirements, and information disclosure standards. That company had planned to raise RMB 515 million, with RMB 415 million for a production facility and RMB 100 million for working capital. Its debt-to-asset ratios were 15.26 percent, 18.36 percent, 17.10 percent, and 27.36 percent across reporting periods, while it used idle funds to buy bank wealth products and extend entrusted loans averaging over RMB 400 million annually, including RMB 100 million in entrusted loans at the latest period end. Regulators required that company to explain whether the financing necessity and rationality were sufficient, and whether the financing scale was rationally determined.
Expanding capacity amid intense competitive pressure
The second-largest investment project is the expansion of new energy forklift production. According to the proposal, the project will be implemented by the company at the Hengfan block of Qingshan Lake Science and Technology City in Lin'an District, Hangzhou, Zhejiang Province. Total investment is RMB 781 million, with RMB 705 million coming from the offering. The project deploys automated and intelligent production equipment to strengthen manufacturing capabilities for new energy forklift complete machines and core components, enhancing supply capacity for high-end new energy orders both domestically and internationally.
The critical question is how the expanded new energy forklift capacity will be absorbed amid intense competition. Looking at market penetration, electric forklifts have already achieved significant market share. According to Guanyan Report data, electric forklifts accounted for 73.6 percent of China's market in 2024, with sales reaching 946,300 units, dominated by low-value Class III vehicles. Internal combustion forklift sales, by contrast, declined to 339,300 units, a drop of 10.06 percent. By the first half of 2025, electric forklift penetration rose further to 74.4 percent, an increase of about 3 percentage points year-on-year.
Industry competition appears exceptionally fierce. In the first half of 2026, the industrial vehicle sector continued its growth trajectory with rising electrification penetration, but the competitive landscape has grown increasingly complicated. Homogenized competition among electric forklift products is intensifying, with significant price war pressure. Engineering machinery companies are accelerating their cross-border entry into the new energy forklift and intelligent logistics tracks, sharply increasing industry competition risks. The industry is experiencing intensifying internal competition, where some companies see output rise without profit increases, and revenue growth without margin improvement, as sales growth coexists with profit pressure. With electrification penetration already at elevated levels, product homogenization and price competition becoming white-hot will be the industry norm.
By vehicle type, the first half of 2026 saw Class I electric counterbalance rider forklifts achieve sales of 142,257 units, up 28.30 percent year-on-year. Class II electric rider warehouse forklifts sold 21,863 units, up 42.13 percent. Class III electric pedestrian warehouse forklifts sold 527,095 units, up 21.92 percent. Class IV and V internal combustion counterbalance forklifts sold 170,719 units, down 5.56 percent year-on-year.
Notably, Hangcha's forklift sales grew by nearly 20 percent in 2025. However, revenue growth does not appear to match sales growth. Data shows the company's revenue growth rates were 5.9 percent in 2025 and 8.65 percent in the first half of 2026. This raises the question of whether, against the backdrop of mismatched sales and revenue growth, the company may be trading price for volume, potentially falling into an internal price war.
It should be noted that since 2025, engineering machinery giants have been aggressively entering the forklift sector. Zoomlion Heavy Industry Science & Technology Co., Ltd. is investing RMB 1.68 billion in a new intelligent logistics equipment base at Ma'anshan Zhengpu Port, covering 300 mu with 26 intelligent production lines, set to commence operations in August 2026, with annual capacity of 50,000 intelligent forklifts and output value of RMB 5 billion. Taiyuan Heavy Industry Co., Ltd. has built a new energy intelligent forklift industrial park covering about 410 mu in Shanxi's Xiaohe Park, with official website-claimed annual capacity of 130,000 units, and launched the world's largest 65-ton lithium battery counterbalance forklift in November 2025, featuring a 528 kWh battery pack, dual-gun fast charging in 1.5 hours, and transmission efficiency exceeding 95 percent. XCMG Construction Machinery Co., Ltd. has included its telescopic handler project in Jiangsu Province's 2026 major projects list, with annual production of about 6,000 units. SANY Group, through Sany Robotics as the main entity, expects 5,000 units in orders and approximately RMB 1 billion in sales for 2025, with targets of RMB 4 billion in overseas revenue by 2035 and a push toward global top six electric forklift rankings.
During the reporting period, Hangcha's electric forklift sales as a proportion of total units reached 80.19 percent, and the electrification ratio for counterbalance forklift unit sales hit 45.45 percent. The company claims its models, particularly new energy lithium battery forklifts, have seen significantly improved competitiveness, with notably higher market share both internationally and domestically.
Regarding this fundraising-driven expansion, the company states that global electric forklift sales continue their growth trend. In 2025, overseas revenue climbed to 44.11 percent of main business revenue, with overseas main business gross margin at 30.69 percent, 10.5 percentage points higher than domestic main business gross margin, making overseas markets an important profit growth driver. However, the global high-end new energy forklift market remains dominated by international brands such as Toyota Industries Corporation, KION Group AG, and Jungheinrich AG. The company's new energy product lines remain constrained by production capacity bottlenecks, making it difficult to achieve full-scale volume expansion and effectively compete for high-end market share.