Chapter 7

Related Parties

A recurring worry sits under the valuation and the receivable book: with a controlling parent (新疆特变电工集团) atop a web of affiliates, how much of TBEA's reported revenue and its ¥19.5bn of trade receivables is genuinely earned from third parties rather than recycled through the group? The audited FY2025 disclosures answer it. Related-party sales were ¥1.15bn — 1.2% of revenue — and zero among the top-five customers; related-party receivables were roughly ¥0.2bn, about 1% of the book. The dependence runs the other way: TBEA buys ¥4.57bn (4.6% of procurement) from parent-group suppliers.

Sources: related-party sales and purchases FY2025 notes [1]; related-party receivables [2]; non-operating fund occupation [3].

Revenue is arm's-length

The customer disclosure is the cleanest read on revenue quality. In FY2025 the five largest customers bought ¥30.9bn (31.77% of sales), of which the related-party portion was ¥0 — zero percent [4]. That is not a one-year result: related-party sales were also zero within the top five in FY2024 (¥9.0bn, 9.23% of revenue) and in FY2022 (¥19.8bn, 20.67%), the peak-polysilicon year [5][6].

Source: major-customer disclosures, FY2022/FY2024/FY2025 annual reports [7][8][9].

The rising top-five percentage overstates concentration: from FY2025 the exchange requires customers under common control to be aggregated, so a group like State Grid's regional companies now counts as one buyer rather than several. Total related-party sales across every affiliate came to ¥1.15bn, up from ¥0.59bn a year earlier but still 1.2% of the ¥97.3bn revenue base [10].

The receivable book follows from the customers. The ¥19.5bn of trade receivables that grew 51% on flat revenue (Cash Conversion) is not an intra-group construction: related-party receivables and contract assets totalled roughly ¥0.2bn gross — the largest single line, a Gurbantunggut desert new-energy developer, was ¥66m — against a ¥19.5bn book [11]. Whatever collection risk sits in that book, it is third-party risk on frontier-market EPC and grid contracts, not receivables owed by the parent.

The dependence runs the other way

Where the group does lean on itself is procurement. Related-party purchases totalled ¥4.57bn in FY2025 — 4.6% of the roughly ¥100bn TBEA spends on goods and services, and up modestly from ¥4.38bn in FY2024 [12]. The audited supplier disclosure frames the same fact: ¥4.15bn (4.14% of procurement) of the top-five suppliers' ¥22.2bn was related-party, against ¥0 of related-party sales in the top-five customers [13].

Source: related-party transaction notes, FY2025 annual report [14].

The concentration is in the parent itself, and it touches the transformer core. TBEA bought ¥2.50bn of oil tanks, copper parts, cores and tower brackets from 特变集团 — 42.53% of its total spend in that category — plus ¥1.22bn of construction and engineering services and ¥0.22bn of transport [15]. In other words, close to half of the fabricated tank-and-copper content that goes into TBEA's transformers is supplied by the parent group rather than made in-house — a real qualifier to the self-sufficient scale that underpins the Grid Franchise. Sales back to the parent were trivial by comparison, ¥0.09bn (0.21% of that transaction class) [16].

Source: major related-party transactions with the first-largest shareholder, FY2025 annual report [17].

The prices are set by disclosed formula rather than by negotiation each time — the tank price, for instance, is steel cost (referenced to named benchmark grades) plus a processing fee — which is what makes the 42.53% dependence defensible even though it is high [18]. The residual concern is not fraud but pricing power: a parent that supplies 42% of a key input has room to move the margin split between listco and parent within the formula, and minority holders rely on the audit and the independent directors to police it.

The items that are clean

Three checks a skeptic would run come back empty. First, fund occupation: at year-end the controlling shareholder, the actual controller and other related parties had ¥0 of non-operating funds tied up in the company, and the year saw ¥0 of new occupation [19]. This matters more than usual because TBEA owns a licensed group finance company (特变电工集团财务有限公司), a common conduit for lending listco cash upstream — but it is a wholly consolidated subsidiary, and the report marks financial business between it and related parties "not applicable" [20].

Second, guarantees run downhill, not up: the parent 特变集团 provides ¥1.07bn of pro-rata guarantees to a TBEA subsidiary's affiliates, and there were no related-party loans (资金拆借) at all [21]. Third, key-management remuneration was ¥33.3m, down from ¥40.2m — modest for a group this size and moving the right way [22].

The texture that remains

The one place the parent uses the listco actively is asset consolidation. During FY2025 特变集团 transferred three businesses into TBEA subsidiaries — a 67%-then-larger stake in a Fangchenggang new-materials company, a 100% engineering-repair unit for ¥46m, and a recycling company for ¥10m — each accounted for as a business combination under common control at appraised or mutually-agreed prices [23]. The sums are small and the direction is inward, but combination-under-common-control prices are negotiated between affiliates rather than tested against an outside bidder, so they are not fully arm's-length in the way a third-party acquisition would be.

Governance sits on top of this as a live, annual process rather than a one-time sign-off. TBEA's independent directors reviewed the 2025 and 2026 daily related-party dealings with 特变集团 in dedicated sessions; the December 2025 opinion states the transactions follow market pricing, do not harm minority shareholders, and "will not cause the company to become materially dependent on related parties" [24]. The numbers support that read on the revenue and balance-sheet side, and qualify it on the supply side.

The evidence points one way: TBEA's reported revenue and receivables are real and third-party — the steady core is earning from customers, not from the group — and the meaningful related-party fact is a ~4.6% procurement reliance concentrated in the parent's transformer components. The read would change if the annual related-party caps started to be filled rather than left largely unused, if related-party receivables climbed off their ~1% base, or if the pricing formulae on parent-supplied components were quietly loosened in the listco's disfavour — each of them a line item to watch in the next report.