On May 26, 2026, Shougang Lanza, a leading domestic company in carbon capture, utilization, and storage (CCUS), once again launched a global offering for its Hong Kong stock listing, officially aiming to become the "first CCUS stock on the Hong Kong market." This marks the company's renewed attempt less than a year after its two previous listing applications were suspended in June 2025, drawing significant market attention and controversy. As the first enterprise in China to commercialize low-carbon products using synthetic biology technology, Shougang Lanza holds first-mover advantages and technical barriers in the industry, capitalizing on the dual-carbon policy and energy transition trends. However, on its renewed IPO journey, the company has presented a performance report showing three consecutive years of declining revenue, negative gross margins, and expanding losses. Coupled with historical burdens from the two previous suspension incidents, weak growth in its core business, and new ventures still in their incubation phase, this industry leader's path to listing is undoubtedly fraught with challenges.
The company boasts significant first-mover advantages and forward-looking positioning within the dual-carbon sector. As a pioneer in China's CCUS industry, Shougang Lanza has been deeply involved in carbon capture and utilization since its establishment in 2011. It is the first company in the sector to achieve large-scale production of low-carbon products using verified synthetic biology technology. To date, the company has built four large-scale production facilities in Hebei, Ningxia, and Guizhou provinces, with a combined annual capacity of 210,000 tons of ethanol and 23,200 tons of microbial protein, demonstrating its proven capability for technological commercialization. According to data from Frost & Sullivan, based on 2025 revenue, the company holds a 58.4% market share in the global synthetic biology-based CCUS market, establishing itself as the absolute leader.
In terms of core technology and products, Shougang Lanza has established a one-stop R&D platform spanning from strain selection to industrial application, achieving continuous advancement from first-generation carbon reduction to second-generation negative-carbon technologies. Its core product, ethanol, is widely applicable in automotive fuels, daily chemicals, packaging materials, and other fields. Its microbial protein is China's first new type of feed protein raw material and has also received the country's inaugural new product certificate for feed ingredients from the Ministry of Agriculture and Rural Affairs.
In the broader industry context, the ongoing reinforcement of dual-carbon policies provides long-term growth opportunities for the company. Data indicates that China's fuel ethanol market size declined from 19.6 billion yuan in 2021 to 18.3 billion yuan in 2025, with a five-year compound annual growth rate of -1.7%, reflecting overall weak demand in the sector. However, driven by policy direction and the low-carbon transition, profound structural changes are occurring within the industry: China strictly controls grain-based ethanol capacity and cracks down on coal-to-ethanol capacity expansion, making non-grain, low-carbon ethanol produced from industrial waste gas the only growing segment. From 2021 to 2025, the sales of the industrial waste gas-to-ethanol segment, centered on synthetic biology technology, achieved a compound annual growth rate as high as 45.3%, becoming the only sub-sector within the fuel industry maintaining rapid growth. Looking ahead, from 2025 to 2030, China's overall fuel ethanol market is expected to resume growth, with a compound annual growth rate recovering to 4.6%, while the growth rate for the industrial waste gas-to-ethanol segment is projected to remain at 22.0%, highlighting its strong growth certainty.
In stark contrast to its prominent industry position and forward-looking sectoral positioning is Shougang Lanza's persistently weak fundamental performance. The company's operations significantly deviate from the high-growth trajectory of its sector, with its core business deeply mired in a triple dilemma of declining revenue, negative gross margins, and expanding losses.
On the revenue front, the company has experienced two consecutive years of declining income, forming a sharp contrast with the high growth of the industrial waste gas-to-ethanol segment. Financial data shows that from 2023 to 2025, Shougang Lanza's total operating revenue was 590 million yuan, 560 million yuan, and 520 million yuan, respectively, marking three consecutive years of decline with a cumulative drop of 12%. At the industry level, from 2023 to 2025, sales of industrial waste gas-to-ethanol using synthetic biology technology in China increased from approximately 600 million yuan to 800 million yuan, rising year-on-year. The company's trajectory contradicts the industry trend, raising questions about its core competitiveness and ability to expand market share.
Behind this divergence lies the dual impact of declining volume and price for its core product. Although domestic fuel ethanol market prices generally declined from 2023 to 2024 and fluctuated downward in 2025, demand for industrial waste gas-to-ethanol continued to expand due to its low-carbon premium. However, Shougang Lanza's average selling price for ethanol plummeted from 6,004.5 yuan per ton in 2023 to 4,641.5 yuan per ton in 2025, a drop of 22.7%, significantly underperforming the industry's overall average price. In 2025, ethanol revenue accounted for 81.3% of total revenue, making it the absolute core income source. The sharp price decline, coupled with insufficient sales volume growth, led to the company's downturn within a high-growth sector.
On the profitability front, the company's gross margin experienced a cliff-like drop, turning sharply negative from 3.0% in 2023 to -16.6% in 2024, and further deteriorating to -24.5% in 2025, with the scale of gross losses continuously expanding. Among these, the core ethanol business incurred comprehensive losses, becoming the main factor dragging down performance, with a gross loss rate of 17.8% in 2025.
Notably, from the perspective of theoretical costs based on the technological route, industry reports indicate that the production cost for the industrial waste gas-to-ethanol synthesis route adopted by the company ranges from 4,800 to 5,900 yuan per ton, with the actual cost in 2025 being approximately 5,500 yuan per ton. This is lower than the 6,800-7,000 yuan per ton cost for the grain ethanol route used by peers like COFCO Tech, suggesting it should possess a stronger cost advantage. However, in actual operations, while facing similar industry price fluctuations, COFCO Tech managed to maintain its gross margin stable within a low positive range, even achieving a gross margin of 7.4% in 2025. This contrast highlights Shougang Lanza's significant shortcomings in capacity utilization, economies of scale, and cost control, as the inherent advantages of its technological route have not translated into actual profitability.
Regarding losses, the company's net loss scale has continued to expand, with a profitability turnaround yet to materialize. Data shows that Shougang Lanza's net losses from 2023 to 2025 were 110 million yuan, 250 million yuan, and 320 million yuan, respectively, resulting in cumulative losses exceeding 650 million yuan over three years, representing a 195% increase in the loss magnitude.
Furthermore, shortcomings on the production side continue to amplify inefficiency issues. Despite having an annual ethanol production capacity of 210,000 tons, the overall capacity utilization rate in 2025 was only 42.1%, indicating severe idle capacity. Coupled with frequent unplanned shutdowns each year, the rigid expenses for depreciation and utilities during shutdown periods further increase unit costs, exacerbating the already sluggish operations.
Regarding operational conditions in early 2026, the company's latest disclosed data shows marginal improvement but not a turnaround to profitability. In the first quarter of 2026, ethanol production reached 28,800 tons, a year-on-year increase of 22.0%; the average price was 4,696 yuan per ton, up 3.8% year-on-year; and capacity utilization rose to 54.8%. Benefiting from the recovery in volume and price, the quarterly gross loss narrowed from 21.1 million yuan in Q1 2025 to 7.6 million yuan, with the gross margin improving from -19.4% to -4.8%. However, a profitability inflection point remains distant.
Against the backdrop of its core ethanol business deviating from high industry growth and being deeply entrenched in losses, Shougang Lanza is also investing in two major new sectors: China's feed protein raw materials and sustainable aviation fuel (SAF). However, both face practical constraints of small scale, long cycles, and intensifying competition.
In the feed protein raw materials business, as the only enterprise in China producing microbial protein via industrial waste gas fermentation, market participants are extremely few, and the company is the absolute leader. Revenue from microbial protein increased from 87 million yuan in 2023 to 92 million yuan in 2025, with its proportion rising to 17.7%. However, the current market size is extremely small, offering limited short-term boost to performance.
In the SAF business, the company currently generates no related revenue. Its 50,000-ton-per-year SAF facility in Baotou, Inner Mongolia, is expected to commence construction in 2026 and officially begin operations in 2027, meaning business realization still requires a cycle of at least one year. In terms of market conditions, the global SAF market has reached a certain scale, amounting to 34.2 billion yuan in 2025, but the domestic market is still in its early development stage, with an overall size of only 800 million yuan. Although both the global and Chinese SAF markets are expected to achieve rapid growth in the future, with China's SAF market projected to have a compound annual growth rate of 87.0% from 2025 to 2030, as industry interest heats up, global leading energy and aviation companies have already begun entering the SAF sector. It is possible that global competitors may enter the Chinese market in the future, posing significant competitive pressure on the company.
Beyond operational risks, Shougang Lanza's renewed IPO attempt also faces dual tests from historical legacy issues and market confidence. In mid-2025, the company twice initiated global offerings for its Hong Kong listing, but both were forced to suspend issuance due to shareholder disputes and related-party transaction litigation with Jiyuan Junyi, a minority shareholder of Shoulang Jiyuan. Although the relevant litigation was settled and withdrawn in March 2026, the impact of the historical dispute has not been completely eliminated. In the first quarter of 2026, the volume of industrial waste gas supplied by Jiyuan Metallurgy to Shoulang Jiyuan decreased by 27.6% year-on-year, and the stability of the supply chain still requires verification.
Furthermore, compared to the initial submission, which featured a syndicate of six investment banks including Guotai Junan International and CITIC Securities as underwriters, this time not only has the sole sponsor been replaced by Yuexiu Financing, but the underwriting syndicate has been expanded to ten institutions, with none overlapping from the previous group. The absence of leading investment banks, replaced instead by small and medium-sized as well as internet brokerages such as Mango Financial, Tianze Securities, and Livermore Securities, reflects a cautious avoidance by major institutions regarding the company's fundamentals.
Despite its weak fundamentals, the scale and valuation of this IPO have increased rather than decreased. Calculated based on the upper limit of the offering price, the company's market capitalization upon issuance is approximately 6.8 billion Hong Kong dollars, corresponding to a price-to-sales ratio as high as 11.6 times based on 2025 figures, far exceeding COFCO Tech's price-to-sales ratio of less than 1 times. Even with its scarce CCUS concept, the company's valuation safety margin remains very limited. Against the backdrop of few participants in the global market and China's market still being in its infancy, this valuation level clearly lacks support from definitive performance.
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