Just four months after 1.9 billion yuan in private placement funds landed in its account, with nearly 1.8 billion yuan still sitting unused in its dedicated fundraising account, domestic semiconductor sputtering target leader Konfoong Materials International Co.,Ltd. (SZSE: 300666) has once again unveiled a plan to list in Hong Kong.
On the evening of October 14, the company released dozens of announcements stating that its board had approved resolutions to issue H-shares and list on the Main Board of the Hong Kong Stock Exchange. Under the plan, the company intends to publicly offer no more than 15% of its total post-issuance share capital in H-shares (before exercise of the over-allotment option) and grant the overall coordinator an over-allotment option of no more than 15% of the aforementioned offering, formally launching its bid for a dual "A+H" capital platform.
However, the secondary market responded coldly to this "international leap" narrative. The day after the announcement, Konfoong Materials' A-shares plunged 5.40%, and on October 16 fell another 1.97% to close at 176.40 yuan per share, with total market capitalization retreating to 48.681 billion yuan. This price is not only more than halved from the intraday historical high of 418.99 yuan per share set on July 1 this year (when market capitalization briefly exceeded 108.8 billion yuan), but has even fallen below the A-share private placement issue price of 181.01 yuan per share completed just in June this year.
To stabilize market confidence, the company's actual controller and Chief Technology Officer Yao Lijun had to urgently propose a share buyback just two days after planning the H-share listing. The capital market's cautious vote of no confidence has torn open a series of hidden concerns behind this star semiconductor materials company's rapid ascent. Beneath the glossy surface of "doubled first-half net profit attributable to shareholders," decelerating non-recurring-adjusted performance, repeated changes and delays in previous fundraising projects, notably slowing export growth, and a chain of capital operations under high leverage are putting the true motivation and necessity of this dual listing financing under severe scrutiny.
Profit Quality Clouded by Reliance on Non-Recurring Gains
As China's "first target materials stock" that broke overseas monopolies, Konfoong Materials has leveraged the tailwinds of semiconductor import substitution and AI computing capacity expansion in recent years to establish a dual-engine strategy of "ultra-high-purity metal sputtering targets plus semiconductor precision components."
In terms of revenue scale, from 2023 to 2025, the company's operating revenue climbed from 2.602 billion yuan to 3.605 billion yuan and then 4.604 billion yuan, with the first half of 2026 recording 2.737 billion yuan in revenue at a year-on-year growth rate of 30.68%. Net profit attributable to shareholders also grew from 255 million yuan in 2023 to 500 million yuan in 2025, reaching 540 million yuan in the first half of 2026, a year-on-year surge of 113.61%.
However, stripping away the embellishment of non-recurring gains and losses, a striking "scissors gap" emerges between the true profitability of Konfoong Materials' core business and its apparent data. In 2025, the company's net profit attributable to shareholders grew 24.70% year-on-year, but non-recurring-adjusted net profit attributable to shareholders grew only 18.74% to 360 million yuan, notably lagging the 27.72% revenue growth. That year, the company's net non-recurring gains and losses reached 139 million yuan, up 43.57% year-on-year, mainly from 74.04 million yuan in disposal gains on non-current assets, 52.04 million yuan in government subsidies, and 34.31 million yuan in fair value changes of financial assets.
In the first half of 2026, this structural divergence further widened: of the 540 million yuan in net profit attributable to shareholders, non-recurring-adjusted net profit attributable to shareholders was only 206 million yuan, with a year-on-year growth rate of just 17.15%, less than 60% of the revenue growth rate. Non-recurring gains and losses of 334 million yuan contributed over 60% of the book profit, with unconventional gains such as net investment income and fair value changes accounting for 75.8% of net profit. Particularly in the second quarter of 2026, the company's single-quarter net profit attributable to shareholders surged 245.73% year-on-year to 330 million yuan, but single-quarter non-recurring-adjusted net profit attributable to shareholders was only 80.58 million yuan, actually declining 4.5% year-on-year. Once subsequent capital market volatility occurs or asset disposal gains recede, the company's apparent performance will face severe mean-reversion pressure.
Deeper pressure comes from depreciation surges and impairment risks triggered by heavy-asset expansion. As previous construction-in-progress was concentrated into fixed assets, the book value of Konfoong Materials' fixed assets soared 121.56% from 1.299 billion yuan at the beginning of 2025 to 2.880 billion yuan at year-end, with unit fixed asset output (the ratio of operating revenue to original value of fixed assets) sliding from 1.52 times in the 2024 interim report to 0.95 times in the 2026 interim report. Because semiconductor materials and components have distinct "multi-variety, small-batch" customization characteristics, production line expansion is accompanied by heavy working capital accumulation. As of the end of 2025, the company's inventory reached 1.541 billion yuan, with inventory turnover days as long as 163 days; accounts receivable reached 1.245 billion yuan, and in the first half of 2026 increased another 31.03% from the beginning of the period, outpacing revenue growth over the same period, causing the first-half net cash ratio to fall to 0.70 (compared to 1.2 in the same period of 2025). Affected by extended inventory aging and new product ramp-up磨合, the company's asset impairment losses further expanded from 98 million yuan for all of 2025 to 130 million yuan in the first half of 2026, while minority shareholders' losses recorded -67.2961 million yuan during the same period, with some newly established controlled subsidiaries still mired in losses.
4.3 Billion Yuan Drain from A-Shares Versus Less Than 400 Million Yuan in Cash Dividends
Contrasting with pressured endogenous cash generation is Konfoong Materials' high-frequency "blood extraction" from the capital market. Since listing on the ChiNext board in June 2017, including net IPO proceeds of 212 million yuan, the company has completed four rounds of financing in A-shares, with cumulative gross fundraising reaching 4.347 billion yuan (net approximately 4.253 billion yuan), including 517 million yuan from convertible bond issuance in August 2021, 1.648 billion yuan from private placement in September 2022, and 1.928 billion yuan from private placement in June 2026, three refinancings totaling over 4.09 billion yuan within just five years. Over nine years since listing, the company's cumulative cash dividends amount to only 381 million yuan, with total financing exceeding dividends by more than 11 times.
Behind the密集 fundraising, previous fundraising projects have frequently undergone delays, downsizing, and entity transfers, exposing inadequate project planning foresight and awkward capacity absorption. The Huizhou and Wuhan high-purity metal target and component bases for flat panel displays funded by the 2021 convertible bonds were originally scheduled for two-year construction periods, but the Wuhan base, with an investment of 246 million yuan, underwent delays and only declared completion in April 2025. Less than a year after completion, in February 2026 Konfoong Materials transferred the assets and businesses of the two completed Huizhou and Wuhan projects to newly established Guangdong Fengke Jingsheng and Wuhan Fengke Jingsheng. In July of the same year, when Beijing Fengke Jingsheng, a flat panel display target integration platform in which the company holds a stake, brought in strategic investors including Japan's Ulvac through a capital increase, Konfoong Materials chose to waive its preemptive subscription rights, with its shareholding diluted from 44.84% to 29.63%.
The 1.649 billion yuan private placement project that landed in September 2022 also faced numerous setbacks. Among them, the "Zhejiang Haining annual production of 18,000 ultra-high-purity metal sputtering targets for ultra-large-scale integrated circuits industrialization project," originally planned with an investment of 317 million yuan, saw construction nearly stalled two and a half years after funds arrived. In January 2025, the company relocated the project's implementation site from Haining back to its own factory in Yuyao, changed the implementing entity to the parent company, directly halved the investment scale to 158 million yuan, and redirected approximately 159 million yuan of reduced fundraising to the Ningbo annual production of 52,000 targets project. As of June 30, 2026, nearly four years after the private placement funds arrived, the revised 18,000-target project had cumulatively invested only 19.1054 million yuan in raised funds, with an investment progress of only about 12.1%. The supporting Ningbo semiconductor materials R&D center project (committed investment of 71.926 million yuan) had cumulatively invested only 27.7372 million yuan, with progress under 40%, and 281 million yuan still idle in the dedicated account. During the multi-year construction period, the company repeatedly used up to 540 million yuan, 300 million yuan, and 200 million yuan of idle fundraising to "temporarily supplement working capital."
As for the 1.928 billion yuan private placement that just arrived on June 5 this year, the dedicated account balance at the end of June was as high as 1.784 billion yuan. More than half of the funds (998 million yuan) from this private placement were bet on the "annual production of 5,100 electrostatic chucks for integrated circuit equipment industrialization project." Although the feasibility study report offered an attractive expected after-tax return rate of 35.07%, electrostatic chucks are cross-sector cutting-edge components, and as of the end of June only 30.9156 million yuan of raised funds had been cumulatively invested, still in the early stages of factory construction and customer verification. According to private placement documents, the annual incremental depreciation and amortization after these fundraising projects reach full production will reach 122 million yuan. Under the rigorous 18-to-24-month verification cycle of wafer fabs, with previous fundraising projects still being absorbed slowly, the ability to absorb new capacity from another Hong Kong fundraising round for expansion is questionable.
"Internationalization" Slogan Loud, But Overseas Business Growth Is Slowing
In this H-share listing announcement, Konfoong Materials listed "accelerating international strategic layout and enhancing overseas financing capabilities" as core reasons, and the market widely views its overseas revenue share of over 30% in 2025 as the confidence behind the Hong Kong listing. But翻开 the regional revenue ledger reveals that the company's overseas business growth pace is actually slowing.
In 2025, Konfoong Materials' domestic sales revenue surged 40.57% year-on-year to 3.036 billion yuan, while export revenue grew only 8.51% year-on-year to 1.568 billion yuan, less than a quarter of domestic growth. By the first half of 2026, this divergence became even more pronounced: domestic sales revenue reached 1.933 billion yuan, while export revenue was 804 million yuan, up 7.61% year-on-year, far below the company's overall 30.68% revenue growth. Drag down by this, the company's export revenue as a proportion of total revenue fell 6.29 percentage points from 35.67% in the same period of 2025 to 29.38%. Although the export business maintained a relatively high gross margin of 33.21% thanks to major overseas customers such as TSMC, SK Hynix, and United Microelectronics, the reality of decelerating growth shows that overseas markets are not currently the main engine driving performance growth.
In terms of overseas heavy-asset investment, the company's core project currently being substantively advanced is the "annual production of 12,300 ultra-high-purity metal sputtering targets for ultra-large-scale integrated circuits industrialization project" in South Korea (with total investment rising to 700 million yuan after a 350 million yuan capital increase to Korea Konfoong in 2025). However, this project has already received 256 million yuan in fundraising support from the A-share private placement completed in June this year, with only 34.9598 million yuan invested as of the end of June, and there is no urgent overseas factory construction funding gap. More concerning is that the South Korean target project's expected after-tax internal rate of return is only 11.75%, with an investment payback period of 8.85 years, significantly lower than domestic target projects and electrostatic chuck projects, reflecting how high overseas factory compliance and operating costs dilute returns. Coupled with the spillover effects of US tariffs on specific advanced computing chips since 2026, upstream minor metal export controls, and exchange rate fluctuations from USD and JPY settlement (190.2 million yuan in exchange losses in 2024, 160.9 million yuan in exchange gains in 2025), the cost-effectiveness of ramping up overseas heavy-asset expansion at this time is hardly optimistic.
Actual Controller Yao Lijun's "Three-Pronged" Capital Strategy
Since the previous three A-share refinancing dedicated accounts still had a combined 2.084 billion yuan in unused raised funds as of the end of June 2026, and overseas factory construction is also backed by A-share private placement, why is Konfoong Materials so eager to plan a Hong Kong IPO just four months after its private placement landed? Piercing through the balance sheet reveals that the liquidity strain caused by "short-term debt funding long-term investment" is the real driving force pushing the company to open new financing channels.
Over the past three years, aggressive production line investment has pushed Konfoong Materials' debt-to-asset ratio up by approximately 20 percentage points, briefly exceeding 57% at the end of the first quarter of 2026, and still reaching 51.70% after the June private placement funds arrived. As of the end of June 2026, the company's total debt had swelled to 4.750 billion yuan, of which short-term debt (short-term borrowings plus non-current liabilities due within one year) was as high as 2.552 billion yuan. Surging debt directly ignited financial costs, with interest expenses reaching 84.21 million yuan in 2025, driving full-year financial expenses to surge 438.45% to 81.46 million yuan, while cash paid for debt repayment that year soared 337.28% year-on-year to 1.785 billion yuan. Meanwhile, elevated capital expenditure has kept the company's free cash flow bleeding, with free cash flow from the first half of 2024 to the first half of 2026 at -1.067 billion yuan, -529 million yuan, and -271 million yuan respectively.
Because A-share fundraising dedicated accounts are subject to strict regulations requiring earmarked use, they cannot be directly used to repay existing loans or for external acquisitions. Raising more flexible overseas funds through a Hong Kong listing has become a realistic choice to alleviate the thirst for capital. More puzzling is that while core business free cash flow remains persistently and substantially negative and bank borrowings are piling up, Konfoong Materials has been intensively deploying large amounts of its own cash into acquisitions and related-party industrial funds in 2026.
On July 1 this year, Konfoong Materials spent 591 million yuan in cash to acquire 20.64% equity in Beijing Stock Exchange-listed Kede Quartz (920179.BJ) and obtain control. Kede Quartz's 2025 revenue fell 8.46% year-on-year and net profit attributable to shareholders fell 26.62% year-on-year, making the high-premium cash acquisition not only consume precious own funds but also fill subsequent performance integration with uncertainty.
Immediately after, on October 13 - the day before announcing the H-share listing plan - Konfoong Materials' wholly-owned subsidiary Ningbo Jiangfeng Boxin completed industrial and commercial registration, contributing 417 million yuan (69.50% stake) in self-raised funds to jointly establish the 600 million yuan Ningbo Yongguang Tongxing Partnership with actual controller-related party Jiangfeng Tongchuang Technology Group, Chairman Bian Yijun, CFO Yu Yongqun, Board Secretary Zou Junwei, and related venture capital fund "Zhumeng Tongxing" series.
Additionally, in July this year, the company waived its preemptive subscription rights in a capital increase of controlled subsidiary Jingfeng Xinchi (related funds participated in debt-to-equity conversion and subscription, with Chairman Bian Yijun receiving unpaid equity for zero consideration), causing its shareholding to drop from 42.00% to 28.29%. Reaching out frequently to the secondary market for fundraising on one hand, while spending over 1 billion yuan in self-raised funds on acquisitions and related-party fund contributions on the other, this capital allocation logic inevitably raises market questions about fundraising proceeds being used to indirectly replace self-raised funds.
Broadening the perspective, behind Konfoong Materials' Hong Kong listing is a "three-pronged" capital strategy simultaneously orchestrated by 59-year-old actual controller Yao Lijun (who holds Chinese nationality and Japanese permanent residency, resigned as chairman in May 2025 to become CTO, with Bian Yijun succeeding as chairman and general manager): midstream Konfoong Materials is sprinting toward Hong Kong after ChiNext private placement, horizontally acquiring control of Beijing Stock Exchange-listed Kede Quartz, while upstream raw material company Shanghai Tongchuang Purun New Materials Co., Ltd. (hereinafter "Tongchuang Purun") had its STAR Market IPO application accepted on June 30, 2026, planning to raise 1.5 billion yuan (suspended for review on September 30 due to financial report updates).
This multi-location capital map is facing severe scrutiny over independence and related-party transactions. The prospectus shows that from 2023 to 2025, Tongchuang Purun's revenue from Konfoong Materials and its related parties accounted for 36.84%, 53.58%, and 53.08% respectively, while firmly holding the position as Konfoong Materials' largest supplier (33.53% of procurement in 2025), and the two also have bidirectional circular transactions involving waste target material recycling and procurement. Yao Lijun himself had cumulatively borrowed and occupied over 140 million yuan of Tongchuang Purun subsidiary funds, only settling in August 2025. In September 2026, Konfoong Materials had just significantly raised its 2026 annual daily related-party transaction estimated total from 2.176 billion yuan at the beginning of the year to 3.302 billion yuan. Such a massive and complex related-party transaction network will certainly become a key focus of Hong Kong Stock Exchange hearings.
From the current Hong Kong market environment, as of the end of September this year, over 600 companies were queuing for review at the Hong Kong Stock Exchange, and H-share issuances of non-top-tier core assets generally face valuation discounts of 20% to 40% compared to A-shares. Konfoong Materials' A-shares currently have a dynamic P/E ratio exceeding 45 times and a non-recurring-adjusted P/E ratio of 124 times, with the stock price having fallen below the previous A-share private placement issue price. Meanwhile, approximately 900 million yuan in private placement shares just allocated to National Big Fund Phase III affiliates Guotou Jixin, Guodiao Fund and others at 181.01 yuan per share will see their lock-up expire on December 23 this year. If an H-share discounted issuance of up to 15% of post-issuance total share capital (approximately 17.25% including over-allotment) is forced through at this time, it will not only significantly dilute existing shareholders' immediate earnings per share and return on net assets, but may also form a second suppression on the A-share valuation center.
Transitioning from a single target manufacturer to a comprehensive semiconductor materials platform, Konfoong Materials' industrial blueprint is certainly grand, but a company's long-term value ultimately depends on solid free cash flow and endogenous returns, not endless refinancing and capital puzzle assembly. Facing over 2 billion yuan in unused raised funds, decelerating non-recurring-adjusted net profit, and elevated short-term debt, Konfoong Materials' path to Hong Kong is destined not to be smooth.
Comments