Dongheng New Energy Technology Co., Ltd., a leading Chinese manufacturer of conductive materials for lithium-ion batteries, has submitted an application to list on the Main Board of the Hong Kong Stock Exchange.
Ranked as the second largest domestic and third largest global player in its field, the company has experienced a significant decline in its gross profit margin, which lags far behind that of its competitor, Jiangsu Cnano Technology Co.,Ltd.. Furthermore, its net profit has shown extreme volatility, partly attributed to abnormal administrative expenses, raising questions about potential earnings management.
More critically, Dongheng New Energy's overseas sales have suffered a severe setback. The proportion of revenue from international markets plummeted from 43% in 2023 to just 7% in 2025. Conversely, sales to its major shareholder, Contemporary Amperex Technology Co.,Ltd. (CATL), surged, now constituting 75% of total revenue, up from 46%.
Simultaneously, the company's accounts receivable have ballooned by 4.5 times year-over-year, with the receivables turnover period also lengthening. This indicates a rapid deterioration in cash collection, increasing debt repayment pressure and casting doubt on its operational outlook.
Sharp Margin Decline and Profit Volatility
Dongheng New Energy's core products include conductive carbon black, carbon nanotubes (CNT), and graphene. The revenue share from CNT products has grown significantly, rising from 52.3% in 2023 to 81.6% in 2025. Notably, sales of CNT slurry skyrocketed, contributing 69.5% of total revenue in 2025.
The company's revenue for 2023, 2024, and 2025 was RMB 324 million, RMB 315 million, and RMB 897 million respectively. The 185.1% year-on-year growth in 2025 was primarily driven by a substantial increase in CNT slurry sales.
However, its gross profit margin fell sharply from 33.3% in 2023 to 21.7% in 2024, recovering only slightly to 22.6% in 2025. This performance is notably weaker than that of Jiangsu Cnano Technology Co.,Ltd.. A key factor was the dramatic drop in the gross margin for CNT powder products, from 62.5% in 2024 to 19.6% in 2025.
With average selling prices in the CNT market under sustained pressure, the company faces the risk of further margin erosion. As CNT slurry becomes a larger part of its business, any continued price decline would significantly impact overall profitability.
Net profit has been highly volatile, swinging from a profit of RMB 13.85 million in 2023, to a loss of RMB 37.40 million in 2024, and back to a profit of RMB 59.51 million in 2025. The administrative expense ratio, which fluctuated wildly from 17.30% to 22.77% and then down to 9.17% over the three years, was a major contributor to this volatility. Given that its sales and financial expense ratios remained relatively stable, and that Jiangsu Cnano Technology Co.,Ltd. maintains a steady administrative expense ratio of around 5-6%, this raises questions about potential profit smoothing through expense management.
Customer Concentration and Deteriorating Finances
The shift in revenue sources is a significant concern. Revenue from the top five customers accounted for 95.6%, 94.2%, and 96.1% of total revenue from 2023 to 2025. Notably, the largest single customer, Contemporary Amperex Technology Co.,Ltd. (CATL), contributed 45.9%, 49.9%, and 74.9% of revenue in those respective years. This means nearly three-quarters of 2025 revenue depended on one client.
Contemporary Amperex Technology Co.,Ltd. (CATL) is also a significant shareholder, indirectly holding a 4.17% stake in Dongheng New Energy through its investment arm, Wending Investment.
The financial strain from this customer concentration is evident. Accounts receivable surged from RMB 149 million in 2024 to RMB 823 million in 2025, a 4.5-fold increase. The receivables turnover period extended from 154 days to 184 days, and the asset-liability ratio climbed from 57.23% to 73.99%, signaling worsening cash flow and mounting debt pressure.
Additionally, in an era of tightening environmental regulations, Dongheng New Energy and its affiliates have faced multiple environmental inspections. Public records show the company underwent 12 on-site environmental checks in 2023. A subsidiary's project was also cited by environmental authorities for issues with its environmental impact assessment report, requiring corrective action.
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