Fuyou Payment's IPO journey spans ten years with a long and arduous path; re-entering the Hong Kong stock market still faces multiple challenges

Source: Securities Star

Since the launch of A-share listing guidance in 2015, Fuyou Payment has traversed nearly a decade in the capital market, experiencing the termination of A-share listing guidance three times and submitting four prospectuses for Hong Kong stock listings, with multiple instances of prospectus invalidation, making the path to listing quite tumultuous.

Securities Star noted that this third-party payment institution not only faces operational pressures from declining gross margins and weakening revenue growth momentum, but is also mired in financial controversies due to high debt ratios coupled with substantial cash dividends. Additionally, past penalties from regulatory bodies such as the central bank and the foreign exchange administration, along with a surge in consumer complaints regarding unauthorized deductions and unclear charges, have turned compliance shortcomings into a significant obstacle in its IPO process.

1. Ten Years of Failed IPO Attempts, Resuming Battle for Hong Kong Listing

The journey for third-party payment institutions to go public has always been challenging, and Fuyou Payment’s capital market journey serves as a typical example in the industry. According to the filing information from the China Securities Regulatory Commission, this payment institution, established in 2011 and holding a Payment Business License, has aimed for the capital market since its first attempt in 2015, shifting between the A-share and Hong Kong markets but has yet to open the door to listing.

In the A-share market, Fuyou Payment has initiated the listing guidance process three times, each ending in termination. During the early guidance stages, the company revealed flaws in equity structure and business compliance, failing to meet the review requirements for A-share listing, ultimately having to abandon the A-share route and focusing on the Hong Kong market.

Compared to the stringent reviews of the A-share market, the listing process in Hong Kong is relatively efficient, yet Fuyou Payment has faced obstacles in its Hong Kong listing as well.

According to publicly available information from the Hong Kong Stock Exchange, Fuyou Payment submitted its first listing application to the Main Board on April 30, 2024. At that time, the prospectus disclosed the company’s core business and financial data, but just six months later, in October 2024, this prospectus became invalid due to failing to pass the hearing.

On November 8, 2024, the company quickly submitted a second version of the prospectus, supplementing some financial and compliance information, but still failed to break through the review bottleneck, becoming invalid again in May 2025. Subsequently, Fuyou Payment submitted a third version of the prospectus on May 9, 2025, continuing its previous listing application rhythm, but still faced invalidation by November 2025.

It was not until January 18, 2026, that the company submitted its fourth application to the Hong Kong Main Board, with joint sponsors being CITIC Securities and Shenwan Hongyuan Hong Kong. The current prospectus is within the validity period and is still awaiting regulatory hearings and filing approvals.

Behind multiple invalid submissions lies a severe governance issue within Fuyou Payment. The latest prospectus reveals that the company’s equity structure is relatively dispersed, with no identified actual controller. This governance characteristic diverges from the Hong Kong Stock Exchange’s requirements for stable control and clear decision-making mechanisms in listed companies, becoming a key focus of review.

More concerning is that just before the fourth submission in late December 2025, the controlling shareholder, Fuyou Group, had nearly ten million shares judicially frozen by the Chengyu Financial Court for a period of three years until December 2028. This equity freeze could not only affect the stability of the company’s control but also tighten the review of its governance compliance by the Hong Kong Stock Exchange, adding more uncertainty to an already bumpy IPO journey.

2. Revenue Growth Without Profit Increase, Substantial Cash Dividends Amid High Debt Ratio

Apart from the twists in the IPO process, Fuyou Payment’s operational and financial data also reveal many concerns. According to the financial information in the prospectus submitted for Hong Kong listing in January 2026, Fuyou Payment achieved operating revenues of 1.142 billion yuan, 1.506 billion yuan, and 1.634 billion yuan from 2022 to 2024, seemingly showing a steady growth trend. However, during the same period, net profits were 71.17 million yuan, 92.98 million yuan, and 84.33 million yuan, indicating a clear trend of revenue growth without profit increase, with significant profit fluctuations and insufficient profit stability.

While profit quality declines, the company’s gross margin continues to decrease, squeezing profit space. Data shows that Fuyou Payment’s overall gross margin has fallen from 30.5% in 2021 to 28.4% in 2022, and further declined to 25.8% during the first ten months of 2024 and 2025, resulting in a nearly 5 percentage point drop in gross margin over three years.

The company admitted in its prospectus that the decline in gross margin is primarily due to intensified market competition in the payment industry, continuous decreases in transaction fees, and rising channel commissions and operational costs, leading to a narrowing of profit margins in its core business.

More controversial than profit fluctuations is the issue of the company’s overly singular business structure. As a third-party payment institution, Fuyou Payment’s revenue is highly dependent on merchant acquiring services, making it weak in risk resistance. According to the prospectus data, from 2022 to the first ten months of 2025, merchant acquiring service revenue consistently accounted for over 80% of total revenue, with the proportion reaching as high as 85.7% in 2023, and the overall revenue from digital payment services exceeding 92%.

Emerging businesses like digital commercial solutions and cross-border payments account for a low proportion. In the context of tightening regulatory policies in the payment industry and fierce homogenization competition in the acquiring market, the reliance on a single business model makes the company highly susceptible to industry fee adjustments and regulatory policy changes, severely lacking in long-term growth momentum.

Another major contradiction on the financial side is the extreme contrast between high debt ratios and substantial cash dividends. According to the prospectus, as of October 31, 2025, Fuyou Payment’s asset-liability ratio reached 86.88%, with only 317 million yuan in cash and a large scale of current liabilities, placing its financial leverage at a high level.

Yet, against this financial backdrop, the company implemented a cumulative cash dividend of up to 365 million yuan from 2021 to 2024, with a single dividend of 225 million yuan in 2023, exceeding 240% of that year’s net profit, far surpassing the current period’s earnings, and even higher than the company’s available cash, raising market doubts about “borrowing to pay dividends” and “shareholders cashing out in advance.”

Payment institutions belong to capital-intensive industries, requiring sufficient liquidity to manage reserve funds, compliance corrections, and business expansion. Fuyou Payment’s substantial dividends amid high debt and low cash flow not only weaken the company’s risk resistance but also affect subsequent R&D investment and business transformation, making this financial decision clearly unfavorable for long-term sustainable operations.

3. Frequent Compliance Shortcomings, Intertwined Regulatory Penalties and Consumer Complaints

For licensed payment institutions, compliance is the lifeline for survival and development, as well as the core bottom line for capital market reviews. However, Fuyou Payment has faced multiple regulatory penalties in recent years, with clear compliance record flaws, while consumer complaints have surged, further amplifying its operational risks.

According to administrative penalty decisions publicly disclosed by the Shanghai branch of the central bank and the Shanghai branch of the State Administration of Foreign Exchange, as well as compliance information voluntarily disclosed in the prospectus, Fuyou Payment and related responsible persons have been fined a total of approximately 6.9 million yuan for various violations of payment business regulations.

Specifically, in March 2021, Fuyou Payment was fined 180,000 yuan by the Shanghai branch of the central bank for failing to process change matters as required, not implementing merchant information management systems, and illegally settling funds to non-same-name accounts.

In November 2023, the company was fined 4.55 million yuan by the Shanghai branch of the central bank for failing to fulfill customer identity verification obligations, not submitting large transaction reports and suspicious transaction reports as required, and engaging in transactions with unidentified clients, with the then-chairman also fined personally 85,000 yuan.

In March 2024, the company was fined 650,000 yuan by the Shanghai branch of the State Administration of Foreign Exchange for violating foreign exchange management regulations and illegally conducting foreign exchange business. Moreover, the company was previously suspended from some provincial acquiring businesses by the central bank due to violations related to “pre-authorization empty card cashing,” with compliance issues permeating its development history.

In addition to regulatory penalties, Fuyou Payment is also deeply mired in historical litigation, particularly with outstanding P2P-related litigation risks. According to the prospectus, since 2021, the company has been involved in a total of 47 relevant lawsuits due to early collaborations with P2P platforms. Although 43 of these cases have been concluded with no compensation liability for the company, one case involving an amount as high as 124 million yuan (including principal and interest) is still in the trial stage and has not reached a final judgment.

On the consumer side, Fuyou Payment’s compliance issues have also drawn widespread attention, with unauthorized deductions and unclear charge complaints remaining consistently high. Data from third-party complaint platforms indicate that many consumers have reported being charged amounts ranging from 49.9 yuan to 5,000 yuan without their knowledge, with deductions involving various merchants such as Xinyuehui, Dongguan Pengfa Jewelry, and Tongguan Meow. Most consumers have not signed withholding agreements with the relevant merchants, nor have they made actual purchases.

More alarmingly, Fuyou Payment was publicly named by the Supreme People’s Procuratorate for allegedly providing payment channels for fraudulent stock trading platforms and network stock recommendation “pig-butchering” schemes, facilitating illegal fund flows.

Although the company later stated that it had strengthened merchant reviews, such compliance risk in payment channels not only harms consumer rights but also violates regulatory requirements in the payment industry, becoming a significant negative factor for regulatory reviews and capital market assessments. Additionally, the company’s mini-program has also been required to rectify due to illegal collection of user information, and the overdue rectification has exposed vulnerabilities in its internal control management.

From three failures in the A-share market to four prospectus submissions in the Hong Kong market, Fuyou Payment’s nearly ten-year journey to go public reflects the survival dilemmas faced by small and medium-sized payment institutions amid intensified industry competition and tightening regulations. The licensed payment qualification was once the company’s core advantage, but as the industry landscape solidifies and leading institutions squeeze market share, coupled with its own single business reliance, weak profitability, and frequent compliance shortcomings, Fuyou Payment’s attractiveness in the capital market is inevitably affected.

Currently, Fuyou Payment’s fourth submission to the Hong Kong market is still in the review stage. Although it has completed the submission of the prospectus, it still needs to obtain the domestic filing notice from the China Securities Regulatory Commission and pass the hearing of the Hong Kong Stock Exchange, and will subsequently face the test of capital market issuance subscriptions.

For the company, if it wants to advance the IPO process in the short term, it urgently needs to resolve visible risks such as the equity freeze of the controlling shareholder and significant pending lawsuits; in the long term, it must optimize its business structure, free itself from reliance on a single acquiring business, enhance profit stability, and address internal control compliance shortcomings to mitigate consumer complaints and regulatory penalty risks. (This article was first published by Securities Star, Author | Zhao Zixiang)

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