Introduction: Global electrolyte leader Guangzhou Tinci Materials Technology Co.,Ltd. holds over 35% market share and has secured partnerships with top-tier clients. However, the company's cash reserves have plummeted by 70% over three years while profitability remains under pressure. The upcoming Hong Kong IPO represents both an expansion opportunity and a critical test for resolving liquidity risks.
Key Points: 1. Liquidity constraints: Guangzhou Tinci Materials Technology Co.,Ltd.'s cash reserves have shrunk by 70% over three years, with rising borrowing levels creating acute liquidity pressure. 2. Market leadership: The company ranks first globally in electrolyte shipments with a 35.7% market share, maintaining deep partnerships with leading clients. 3. Performance decline: Revenue and net profit have continued falling from 2022 peaks, with 2025 first-half recovery still well below historical highs.
When it comes to global electrolyte shipment volumes, Guangzhou Tinci Materials Technology Co.,Ltd. (002709.SZ) would dare claim second place, but no one would dare claim first. This daily chemical company founded in 2000 initially focused on chemical and advanced materials as core businesses, later gradually concentrating on lithium-ion battery materials (especially electrolytes and key intermediates) and daily chemical/specialty chemical products, forming a product matrix of "full electrolyte chain support + partial cathode/adhesive materials."
According to Frost & Sullivan data, Guangzhou Tinci Materials Technology Co.,Ltd. has maintained the world's top position in electrolyte shipments for nine consecutive years since 2016, achieving approximately 35.7% global market share in 2024. The company states it has established stable partnerships with eight of the world's top ten power battery manufacturers, the top ten energy storage battery manufacturers, eight of the top ten consumer battery manufacturers, and nine of the top ten personal care product manufacturers.
However, this industry leader has been significantly affected by sector volatility in recent years, with annual revenue dropping from the 20 billion yuan level to 10 billion yuan. Against a backdrop of continuously increasing annual borrowings, cash reserves have declined consecutively, creating liquidity pressure that has drawn market attention. On September 22, Guangzhou Tinci Materials Technology Co.,Ltd. submitted its application to the Hong Kong Stock Exchange, launching another fundraising initiative. For the company, this represents not only capacity expansion and global market share growth, but also a critical moment for liquidity support.
Top Five Clients Account for Up to 70%, with Client-Supplier Overlap
Guangzhou Tinci Materials Technology Co.,Ltd.'s predecessor was Guangzhou Tinci High-tech Materials Technology Co., Ltd., established in June 2000, initially starting with daily chemical product R&D and beginning exploration in the fine chemicals sector. In 2005, the company keenly identified the broad prospects for lithium-ion battery materials, formally launching related R&D work and laying the foundation for subsequent business expansion. In 2007, the company reached an important turning point, not only restructuring as a joint-stock company but also establishing Jiujiang Tinci, one of its core production bases, paving the way for large-scale production.
Guangzhou Tinci Materials Technology Co.,Ltd. listed on the Shenzhen Stock Exchange in 2014. Through years of capacity expansion and acquisitions, it has established multiple production bases in China and built supply and service networks globally (including Europe and North America OEM/contract processing), with overseas expansion and overseas capacity becoming strategic priorities in recent years.
In 2016, Guangzhou Tinci Materials Technology Co.,Ltd.'s electrolyte shipments first ranked globally first, maintaining this leading position for nine consecutive years thereafter. By shipment volume as of 2024, the company is the world's largest lithium hexafluorophosphate supplier, the world's largest lithium bis(fluorosulfonyl)imide supplier, the world's third-largest iron phosphate supplier, the world's third-largest lithium-ion battery PACK structural adhesive producer, the world's second-largest carbomer producer, and the world's third-largest amphoteric surfactant producer.
Currently, Guangzhou Tinci Materials Technology Co.,Ltd.'s main business revolves around two major segments: lithium-ion battery materials and daily chemical materials and specialty chemicals, forming a dual-drive business structure. However, from a revenue composition perspective, lithium-ion battery materials remains the core business, contributing 93.3%, 91.6%, 87.7%, and 89.7% of revenue from 2022 to the first half of 2025, respectively.
The company's core products in lithium-ion battery materials include electrolytes and their key materials. Lithium-ion batteries provide power support for new energy passenger vehicles and commercial vehicles in the electric vehicle sector; in energy storage systems, they ensure stable storage of renewable energy like wind and solar power and grid peak regulation; in consumer electronics, they power smartphones, laptops, wearable devices, etc.; additionally, they are gradually expanding to emerging fields like construction machinery, ships, eVTOL (electric vertical takeoff and landing aircraft), and intelligent robots.
In comparison, the company's daily chemical materials and specialty chemicals business serves as a secondary operation, mainly targeting personal care and household care product manufacturers, with relatively small scale but rising proportion in recent years.
Despite ranking first globally in shipments, Guangzhou Tinci Materials Technology Co.,Ltd. has relatively high customer concentration, which represents both benefits and certain pressures for the company. Public data shows the company's customers are primarily large battery manufacturers, vehicle manufacturers, and consumer battery factories. During the reporting period, the top five customers accounted for 70.8% (2022), 71.2% (2023), 58.7% (2024), and 58.7% (first half 2025) of revenue, indicating high customer concentration. During these periods, revenue from the largest customer represented 54.5%, 52.7%, 40%, and 39% respectively.
High customer concentration reflects the company's strong connections with leading clients and large-scale supply capabilities, but also implies dependence on a few major customers, bringing pricing power and revenue volatility risks. Additionally, it's worth noting that in key raw material procurement, the company's main raw materials come primarily from domestic suppliers (including upstream fluorochemical, solvent, and lithium salt supply enterprises), with situations where some leading battery manufacturers (such as CATL) serve as both customers and suppliers.
Industry Leader Under Pressure: Revenue Shrinks Nearly 10 Billion Yuan, Liquidity Constraints
Although Guangzhou Tinci Materials Technology Co.,Ltd. has achieved global leadership in shipment volumes, recent years have shown signs of performance "regression." From 2022-2024, revenue was approximately 22.317 billion yuan, 15.405 billion yuan (down 31% year-over-year), and 12.518 billion yuan (down 18.8% year-over-year), respectively, shrinking nearly 10 billion yuan over three years. Net profit followed revenue trends, falling from approximately 5.84 billion yuan in 2022 to 1.84 billion yuan in 2023, then further declining to 478 million yuan in 2024.
Additionally, gross profit dropped from approximately 8.474 billion yuan in 2022 to approximately 2.364 billion yuan in 2024, with gross margin falling from 38% to 18.9% in 2024, and approximately 18.7% in the first half of 2025. The 2024-first half 2025 gross margin has stabilized but remains far below the 2022 peak.
However, in the first half of 2025, revenue increased 29% year-over-year to 7.029 billion yuan, with net profit also recovering slightly compared to the same period in 2024, reaching 265 million yuan.
The core reason for the company's historical performance volatility lies in changes in the lithium-ion battery materials industry environment: 2022 benefited from surging global lithium-ion battery demand, with tight supply of key raw materials like lithium carbonate driving up product prices and delivering outstanding performance; from 2023, as upstream capacity expanded and raw material supply improved, combined with intensifying industry competition, average selling prices of lithium-ion battery materials fell significantly, leading to revenue and profit declines; in the first half of 2025, with marginal improvement in industry demand, revenue and net profit recovered somewhat, but overall profitability remains below 2022 highs.
Currently, the most concerning issue is the company's debt service pressure. Financial reports show short-term borrowings have continuously risen from 798 million yuan at end-2022 to 1.936 billion yuan in the first half of 2025. Meanwhile, non-current liabilities due within one year increased from 194 million yuan to 521 million yuan over the same period.
From total annual borrowings perspective, according to public data, borrowings from 2022 to the first half of 2025 were approximately 5.056 billion yuan, 5.874 billion yuan, 6.395 billion yuan, and 7.006 billion yuan respectively, with borrowing scale growing annually.
Financial costs including borrowing interest, discounted receivables interest, and lease liability interest expenses increased from 113 million yuan in 2022 to 228 million yuan in 2024. In just the first half of 2025, interest costs reached 123 million yuan.
As of the first half of 2025, the asset-liability ratio was approximately 45.5%, down from 49.7% in 2022 but up from 2023-2024 levels, remaining at moderate industry levels.
Contrasting with continuously growing borrowing scale, cash and cash equivalents have steadily decreased from 4.658 billion yuan at end-2022 to 2.256 billion yuan at end-2023 (down 51.6% year-over-year), then 1.602 billion yuan at end-2024 (down 29.0% year-over-year), and further declining to 1.303 billion yuan in the first half of 2025, down 18.6% from June 30, 2024.
The continuous decline in cash reserves has raised market concerns about liquidity pressure.
Why is "Billionaire" Xu Jinfu Expanding Now?
The actual controller of Guangzhou Tinci Materials Technology Co.,Ltd. is Xu Jinfu, originally from Hangzhou, Zhejiang, who studied in the Chemistry Department at Hangzhou University and has deep expertise in chemical materials. Xu once worked with classmate Luo Qiuping (founder of Blue Moon) and others at Daoming Chemical (predecessor of Blue Moon), an experience considered his initial commercial starting phase.
In 2000, Xu founded Tinci High-tech Materials in Guangzhou (later the predecessor of Guangzhou Tinci Materials Technology Co.,Ltd.). In the early entrepreneurial phase, Tinci's main business leaned toward daily chemical materials, detergent raw materials, surfactants, silicone oils, etc. Later, the company began positioning in new energy and lithium battery materials (especially electrolyte/LiPF₆/lithium salt areas), forming a transformation path "from daily chemicals to new energy materials."
Before the 2014 A-share listing, the company improved its equity structure through multiple rounds of capital increases and equity transfers, introducing external investors. In 2007, when Xu restructured the company as a joint-stock company, he introduced Lin Fei (brother-in-law of Xu's spouse), Li Xinghua, Xu Jinlin (Xu's brother), and 17 individual investors. Subsequently until September 2010, the company conducted a series of capital increases and equity transfers, introducing institutional investors like Tonglian Venture Capital Co., Ltd. and Guoxin Hongsheng Venture Capital Co., Ltd. (now Guoxin Hongsheng Private Fund Management Co., Ltd.), while adjusting some individual shareholders' stakes, laying capital and governance foundations for subsequent listing.
In January 2014, Guangzhou Tinci Materials Technology Co.,Ltd. successfully listed on the Shenzhen Stock Exchange SME Board, raising approximately 295 million yuan mainly for lithium-ion battery materials, daily chemical materials, and specialty chemical production line construction and technology upgrades to further expand capacity.
Since the 2014 listing, the stock price has shown long-term volatile upward trends with obvious cyclical characteristics, highly correlated with lithium-ion battery industry prosperity and company performance. As of the last practicable date disclosed in the prospectus, the stock price has experienced multiple bull-bear cycles.
Xu Jinfu's personal wealth valuation has fluctuated accordingly. During 2020-2021, explosive growth in the global new energy vehicle industry led to surging lithium-ion battery demand, with electrolyte products in short supply, driving significant performance growth and continuous stock price increases to a historical peak of 84.01 yuan per share, with market capitalization once exceeding 100 billion yuan. Core drivers included industry demand expansion, rising product prices, and increased market share.
In the first half of 2022, continued rising prices of key raw materials like lithium carbonate drove electrolyte product prices higher, with revenue and net profit reaching historical highs and stock prices surging again to an annual high of 66.88 yuan per share, mainly benefiting from raw material price transmission and better-than-expected performance.
In the "2022 New Fortune 500 Rich List," Xu Jinfu ranked 99th with wealth of 40.22 billion yuan.
However, from the second half of 2022, as industry capacity gradually released and lithium-ion battery material prices fell from peaks, market expectations for performance growth cooled, combined with overall market adjustments, leading to significant stock price corrections with maximum declines exceeding 50%, primarily due to improved supply-demand relationships, falling product prices, and slowing earnings growth.
Throughout 2023, performance declined significantly with net profit down 68.5% year-over-year, intensifying market concerns about profitability and continuing stock price weakness with maximum declines exceeding 40%, mainly affected by below-expected performance and intensifying industry competition.
The lithium-ion battery materials industry has numerous participants, including domestic companies like Capchem and Jiangsu Guotai, plus some international chemical giants. In 2024, the top five global lithium battery electrolyte companies held 75.4% market share, indicating high industry concentration but fierce competition. With continuous new entrants and existing company capacity expansion, product prices face continued downward pressure. Since 2023, average selling prices of lithium-ion battery materials have fallen significantly. If competition intensifies further, it could lead to market share loss and further margin compression, adversely affecting profitability.
In promoting global market expansion, Xu's perception of global market volatility has deepened. "Don't diversify across industries, but do one thing deeply and steadily" reflects his business philosophy. After experiencing recent industry volatility, the prudent Xu has chosen financing expansion - could this be a positive signal?
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