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Market share has been cut in half. Author: White Cat | Editor: Xiao Bai

The "hydrogen story" of the industry leader is collapsing.

Would you believe it? Sinohycet (02402.HK), dubbed the "first hydrogen energy stock," has been losing money ever since its listing on the STAR Market in 2020. More critically, the scale of losses has not improved with industry progress but has instead deepened, becoming increasingly entrenched. From 2020 to the present, cumulative net losses attributable to the parent company, excluding non-recurring items, have reached 2 billion yuan, with a loss of 730 million yuan in 2025 alone.

Regulators have had enough. On June 5 of this year, Sinohycet received an inquiry letter from the Shanghai Stock Exchange regarding its 2025 annual report. Recently, the company responded to the inquiry. The reply mentioned that the industry has many participants, competition is intensifying, and the entire sector is generally experiencing revenue contraction and profitability pressure. This is a stark illustration of the "besieged city" phenomenon: those outside are desperately trying to get in, while those inside are complaining endlessly.

So, the question is: should Sinohycet's dismal performance be blamed on the industry, or is it the company's own problem? What is the current state of this industry? Let's take a closer look.

Path Dependency Solidified, Dark Horse Players Emerge

From 2020 to 2023, benefiting from national hydrogen energy industry subsidy policies, Sinohycet's revenue grew continuously, with a compound annual growth rate (CAGR) of 11.8%. However, decline began in 2024, and by 2025, total revenue had fallen to just 260 million yuan, of which over 90 million yuan came from incidental revenue generated by businesses that had not yet formed or were difficult to form into stable business models. Behind this revenue decline is a continuous drop in both volume and price. From 2023 to 2025, the company's fuel cell system sales volume fell by 71% cumulatively, and the unit price fell by 43%. Under the combined influence of price and volume factors, revenue from the company's core business, fuel cell systems, shrank to just 120 million yuan in 2025, an 83% decline from 2023, a much faster rate than its peers. For comparison, Guohong Hydrogen Energy (09663.HK) saw a 63% decline from 2023 to 2025, and Reform Energy saw a 52% decline over the same period.

Based on fuel cell system sales volume, Sinohycet's national market share in 2025 halved from 13.73% in 2024 to 6.99%. The company attributes the decline in market share not to a lack of product competitiveness, but to a deliberate strategy of scaling back inefficient operations. In our view, the company's first-mover advantage has long since become a path-dependent burden. In the early pilot phase, the industry's goal was technology validation and scenario polishing, with low requirements for mass production scale and cost control. Sinohycet's vertical integration R&D model, "pre-research one generation, develop one generation, promote one generation," aligned with the rules of this phase and supported its "technology leader" brand positioning. Furthermore, Beijing and Zhangjiakou were among the earliest regions in China to launch hydrogen energy demonstration projects, and the Beijing-Tianjin-Hebei region was the absolute core market in the industry's early days. Sinohycet is headquartered in Beijing with production bases in Zhangjiakou, and its first-mover advantage was built on the Beijing-Tianjin-Hebei demonstration cluster and the Northern commercial vehicle ecosystem. The company's deep ties with core vehicle manufacturers like Yutong Bus (600066.SH) and Beiqi Foton, combined with the benchmark effect of the 2022 Beijing-Zhangjiakou Winter Olympics project, helped it quickly establish its industry leadership position.

However, as the pilot orders in the Beijing-Tianjin-Hebei region were largely fulfilled, Guangdong and Hebei (primarily Tangshan and Baoding) became the new growth centers. Sinohycet's dual dependency on customers and regions has become a structural burden that is difficult to shift, and the imbalance in regional layout has caused the company to miss out on the industry's largest incremental growth. In 2025, the Guangdong demonstration city cluster contributed nearly 60% of national hydrogen vehicle sales. Sinohycet's lagging local layout and supporting service capabilities in the South China market naturally prevented it from reaping the benefits of the region's concentrated growth. Looking at the top 10 list for national fuel cell vehicle system installations in 2025, Sinohycet has been pushed out of the top 10. In contrast, Yuntuo Hydrogen Energy, founded in May 2022, has become the top dark horse player. This company, co-founded by Xiongtao Co., Ltd. (002733.SZ) and Baiyun Investment Group, is headquartered in the Baiyun District of Guangzhou. In 2025, Yuntuo Hydrogen Energy ranked first nationwide in both installations and vehicle deployments, being the only hydrogen energy company to deploy over 2,000 vehicles in a single year; we estimate its market share has exceeded 20%. According to public reports, in July of this year, Yuntuo Hydrogen Energy signed a strategic agreement with FAW Jiefang (000800.SZ) for 3,000 hydrogen-powered heavy trucks, the largest single order in the domestic hydrogen heavy truck sector this year.

Business Model Under Pressure, Price War Erodes Pricing Power

The hydrogen energy industry faces three major hurdles: expensive hydrogen, expensive vehicles, and expensive stations. One root cause is the fragmentation and siloed operations across the industry chain, making it difficult to run a sustainable commercial closed loop. Yuntuo Hydrogen Energy was founded only in 2022, but its rapid rise to the top is supported not only by the market volume in Guangdong but also by a new model it adopted from birth that is perfectly suited to the current industry stage, creating a dimensionality reduction attack on traditional system integrators. Unlike Sinohycet's business model of "selling equipment in a single link," Yuntuo has built a complete industry chain ecosystem covering "hydrogen production, storage, transportation, refueling stations, systems, and vehicle operations," with the battery system being just one component. This model breaks the fragmentation between links, improves efficiency, and distributes cost pressures across the entire chain. According to official data, in 2025, Yuntuo reduced the refueling price in Guangdong to 27.5 yuan per kilogram, making it highly competitive domestically. Without the synergistic advantages of the entire industry chain, such a price would be difficult to achieve.

As the industry's demand for "cost, service, and supply stability" becomes more urgent, the bargaining power of pure system integrators like Sinohycet has long been lost, and the technological barriers they previously established are gradually eroding. The fuel cell stack is considered the heart of the fuel cell engine system, and the membrane electrode assembly (MEA) accounts for over 60% of the stack's cost. Although Sinohycet claims its core product is a self-developed fuel cell engine system and that it has achieved self-supply of the core component, the fuel cell stack, the company has not yet achieved self-sufficiency for upstream key components. In its reply to the inquiry, the company mentioned that key materials for producing fuel cell systems, such as the MEA, depend on component suppliers, and due to small procurement volumes, it cannot reduce costs through bulk purchasing. Having completely lost pricing power in the price war on one hand, and facing rising unit costs due to the inability to achieve economies of scale and a deliberate scaling back of operations on the other, Sinohycet's gross margin has further and significantly declined. From 2023 to 2025, the company's main business gross margin fell by 44 percentage points, turning negative in 2025 to -11.9%, the fastest decline among its peers. This indicates that the company's cost control capabilities have failed to keep pace with the industry's price war rhythm. Under the real pressure of persistent large losses and shrinking business scale, the company has been unable to maintain its "technology self-development-driven" positioning. In 2025, the company decided to no longer plan to self-research and produce core components like the MEA. Overall, R&D investment in 2025 has fallen to just over 40 million yuan, lower than its selling expenses.

All Earnings Are in IOUs, Customer Risks Escalate

Sinohycet is essentially a player that everyone in the upstream and downstream can push around. This frustration is directly reflected in its credit ledger. Its top five customers consume nearly 80% of its revenue. It has no say in payment terms, it cannot wait for subsidies, and all its earnings are in the form of IOUs, creating immense pressure on capital turnover. Just how extreme is this? As of December 31, 2025, the company's accounts receivable balance was nearly 2 billion yuan, 7.7 times its 2025 revenue, with an allowance for bad debts as high as 45.4%. Among the overdue major customers, one stands out: Customer M, with overdue amounts exceeding 5 years totaling 270 million yuan, fully provided for. The reason for the overdue status is that its parent company, Dongxu Optoelectronics, has been delisted, and the company itself is in financial distress. Based on the timeline, this customer was the company's largest customer during its IPO, Shenlong Bus, whose parent company Dongxu Optoelectronics was already facing liquidity risks at that time. The fifth-largest customer, Zhongzhi Automobile, is in a similar situation. The concentrated outbreak of customer risks now is nothing less than a reckoning for the company's past "sick entry" and "blind listing."

Harshly, this is just the first wave of exposure after the decline in hydrogen energy hype. Sinohycet states that the withdrawal of industrial subsidies in recent years has amplified its operational pressure. The hydrogen energy policies implemented at the start of the "15th Five-Year Plan" period have clearly not brought any "good news." This round of policy shifts the direction of hydrogen energy support from transportation to industrial and other fields, expanding from fuel cell vehicles to five or six new scenarios like green ammonia and methanol, hydrogen metallurgy, and hydrogen blending combustion. The total central financial reward ceiling for this round of national pilots is 80 billion yuan, compared to about 90 billion yuan during the "14th Five-Year Plan" period. Previously, it only had to compete with peers; now it must also share the market with these new scenarios. At the same time, the incentive mechanism for hydrogen energy policy has shifted to "performance-based incentives." For Sinohycet to secure these incentives, it must achieve results on a more crowded track. What is Sinohycet's remaining capacity to fight back? One investor asked the company: "Are you planning to continue contracting, or go all out?" Sinohycet chose to evade the question.

Commercialization Forecast: Five Years, Then Another Five

The most pressing question now is: when will large-scale commercialization finally arrive? According to Sinohycet's earlier prospectus, the industry's development goal at that time was to have about 50,000 fuel cell vehicles in China by 2025, with large-scale commercialization by 2030. In reality, the number of vehicles by 2025 was only slightly over 30,000, achieving only 60% of the target. Meanwhile, a white paper published on April 20, 2026, by Reform Energy and Roland Berger divides the industry into three phases: a transition period from 2026 to 2030, focusing on verifying technology maturity and business models through ultra-large-scale demonstration projects; a full commercialization phase from 2031 to 2035, where the industry chain achieves cost self-sufficiency and breaks free from policy dependence; and a hydrogen commodity phase from 2036 to 2040, where hydrogen becomes a standardized global trade energy category. So, five years after five years, by 2035, who can guarantee it won't be another "waiting for the next five years"? In summary, these fuel cell system integrators currently lack effective strategies for a turnaround, and how many more "five-year" periods can Sinohycet and its investors afford to wait?

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