Profit recovery and capacity structure adjustments are becoming the main themes running through the entire year for lithium iron phosphate (LFP) companies. Recent half-year reports show that major LFP companies have reached a turning point in profit recovery during the first half, with Wanrun New Energy, Desfang Nano, Longpan Technology, and Anda Technology all seeing reduced losses. Leading LFP companies have achieved scale expansion and improved capacity utilization rates by locking in long-term contracts, thereby driving margin improvements. Additionally, the industry's product structure is shifting toward fourth-generation lithium iron phosphate, with fourth-generation high tap density LFP (tap density >2.6g/cc) shipments doubling compared to 2024, expected to reach 15% of total shipments for the full year. High value-added products are enhancing LFP companies' profitability. In the first half, Fulin Precision's cathode material gross margin reached 5.24%, up 3.71 percentage points from last year. However, rising debt ratios from accounts receivable and new project investments remain common challenges facing LFP companies. Under deep adjustments of capacity oversupply and structural shortages, the lithium iron phosphate industry continues its market consolidation process.

**Hunan Yuneng: Two Sides of Major Customer Binding**

Hunan Yuneng secured the top position among LFP companies in the first half. During H1, Hunan Yuneng achieved operating revenue of 14.358 billion yuan, up 33.17% year-over-year; phosphate cathode material sales volume reached 480,800 tons, up 55.38% year-over-year, with energy storage products accounting for approximately 39% of sales volume. The company expects full-year phosphate cathode material sales of approximately 1 million tons.

While production capacity expanded significantly, the company's profitability also recovered. In H1, Hunan Yuneng's net profit attributable to shareholders was 305 million yuan, down 21.59% year-over-year. Looking at Q2 alone, the company's net profit decline narrowed by 18.97 percentage points compared to Q1.

From a product structure perspective, the company's new products (high tap density) such as CN-5 series and YN-9 series saw significant increases in sales volume and proportion, with combined sales of approximately 193,400 tons in H1, accounting for about 40% of total product sales, effectively meeting downstream customers' demand for fast charging, high capacity, long cycle life, and high safety battery applications.

However, it's worth noting that the company's accounts receivable surged significantly in H1 to 6.302 billion yuan, up 43.56% year-over-year, accounting for 18.86% of total assets. Hunan Yuneng's highly concentrated major customer base has weakened its bargaining power regarding receivables. As of period end, 71.58% of the company's accounts receivable came from the top five customers.

**Wanrun New Energy: Long-term Contracts Lock in Performance Recovery**

The major contract signed with CATL in May is delivering performance gains for Wanrun New Energy. In H1 2025, Wanrun New Energy achieved operating revenue of 4.436 billion yuan, up 50.49% year-over-year, with losses narrowing to 266 million yuan compared to Q1; the company's gross margin was 1.70%, up 1.26 percentage points year-over-year.

The half-year report analysis indicates that although main raw material prices like lithium carbonate declined, affecting the company's main product selling prices year-over-year, the significant improvement in capacity utilization rates and emerging economies of scale led to per-ton cost reductions exceeding per-ton price declines, resulting in improved product gross margins compared to the previous year.

In H1, Wanrun New Energy's cumulative LFP shipments were 148,300 tons, up 90.23% year-over-year, ranking second globally in shipment volume. According to the Business Cooperation Agreement signed with CATL, Wanrun New Energy is expected to supply approximately 1.3231 million tons of LFP products to CATL over the next five years, with an average annual supply of 264,600 tons, already exceeding the company's 2024 production and sales volume.

However, looking at H1, high value-added products have not yet significantly contributed to company profits. Energy storage-type high tap density and high-rate LFP cathode materials are currently in mass production phase, while manganese-rich lithium manganese iron phosphate, high tap density NFPP, and high-rate NFPP remain in pilot or semi-pilot stages.

**Desfang Nano: Liquid Phase Process Builds Technical Barriers**

In H1, Desfang Nano achieved operating revenue of 3.882 billion yuan, down 10.58% year-over-year; net profit attributable to shareholders was a loss of 391 million yuan, though the loss margin improved year-over-year.

From production and sales perspective, the company's main phosphate cathode material products had H1 output of 125,300 tons, up 8.51% year-over-year, with sales volume of 122,400 tons, up 15.78% year-over-year. Although production and sales continued growing, due to year-over-year declines in lithium source prices, LFP product prices remained at relatively low levels, continuing to pressure overall company performance.

In H1, Desfang Nano's gross margin remained negative at -2.13%, with lithium-ion battery cathode material business gross margin at -1.49%, including 149 million yuan in inventory write-downs and contract fulfillment cost impairments.

In intense industry competition, Desfang Nano pins hopes on its liquid phase process advantages creating new growth in novel cathode materials. Desfang Nano stated that its liquid phase technology can improve LFP tap density by controlling particle morphology and size distribution, with fourth-generation high tap density LFP products already achieving batch shipments and ultra-high tap density new product validation progressing smoothly. The "liquid phase process" and "Nie Jia interface modification technology" and other proprietary process technologies have effectively solved industrialization challenges for lithium manganese iron phosphate. Currently, Desfang Nano has built 110,000 tons/year lithium manganese iron phosphate capacity, the world's largest, with batch production capability and products already entering vehicles, officially beginning commercialization. Additionally, the company's lithium supplementation enhancer products achieved industry-first mass production, with current capacity of 5,000 tons/year built, leading industry in capacity scale and industrialization progress.

**Longpan Technology: Overseas Expansion Model**

In H1, Longpan Technology posted its third consecutive loss in half-year reports: achieving revenue of 3.622 billion yuan, up 1.49% year-over-year; net loss of 85 million yuan, narrowed by 61.70% year-over-year; adjusted net loss of -132 million yuan, reduced but still in loss territory.

Longpan Technology noted in its interim report that in H1 2025, the new energy lithium battery industry remained at cycle bottom overall, with LFP prices declining significantly year-over-year, combined with some inventory write-down impacts, resulting in final losses of 85 million yuan.

In H1, Longpan Technology shifted order focus to international markets and accelerated overseas capacity release. Building on existing long-term supply agreements with LGES, the company locked in long-term supply agreements with international top-tier battery manufacturers like BlueOval and EveEnergy in H1 2025, deepening commitments for overseas LFP cathode material sales from 2026 to 2030. Meanwhile, through global deployment of Indonesia Phase I 30,000-ton LFP cathode material factory capacity - the first overseas facility above 10,000 tons globally - the company successfully built global supply stations for LFP batteries.

The half-year report revealed that the project successfully commenced production in H1 2025 and achieved successful mass production shipments to customers' overseas factories, currently maintaining high capacity utilization rates. Indonesia Phase II 90,000-ton LFP cathode material factory is also under active construction.

Longpan Technology stated it will fully utilize the time window of rapidly exploding overseas LFP demand to further enhance the company's global market share, strengthen global brand image, and improve capital strength and comprehensive competitiveness.

**Fulin Precision: High Tap Density Technology Leader**

In H1, Fulin Precision's LFP shipment volume and sales revenue continued rising compared to the previous year. Company operating revenue reached 5.813 billion yuan, up 61.7% year-over-year; net profit attributable to parent company owners was 174 million yuan, up 32.41% year-over-year. Compared to other LFP companies, its gross margin performance was relatively good at 5.24%.

This mainly stems from high tap density LFP's price advantages. In H1, fourth-generation LFP processing fees were 1,000-3,000 yuan/ton higher than ordinary products. The company accelerated deployment in super fast charging and high-end passenger vehicle markets through high tap density LFP products.

The half-year report shows Fulin Precision's lithium battery cathode materials are all high tap density LFP, with capacity reaching 215,000 tons/year, H1 capacity utilization rate of 97.67%, plus 75,000 tons/year under construction capacity.

However, the flip side of product premiums is volatile raw material price fluctuations. Currently, Fulin Precision mainly strengthens deep cooperation with industrial chain ecosystem partners to reduce potential risks from upstream raw material price volatility in lithium battery cathodes. For example, the company's controlling subsidiary Jiangxi Shenghua jointly invested with Sichuan Ganfeng Lithium to establish Sichuan Fengfu Lithium in Xuanhan County, Dazhou City, building a new 100,000 tons/year lithium sulfate manufacturing lithium dihydrogen phosphate project, currently under orderly construction.

Looking at the full year, Fulin Precision's shipment volume has established stable growth expectations. In June this year, subsidiary Jiangxi Shenghua signed a supplementary agreement with CATL, with CATL paying 500 million yuan prepayment to support its Jiangxi base 160,000 tons/year and Sichuan Phase III 200,000 tons/year LFP capacity construction. Jiangxi Shenghua already entered full production in H1, with company effective capacity expected to increase to 300,000 tons within the year.

**Anda Technology: Aggressive Capacity Expansion**

Half-year reports show Anda Technology's operating revenue was 1.54 billion yuan, up 126.8% year-over-year; net loss attributable to parent changed from 357 million yuan loss in the same period last year to 168 million yuan loss, with reduced loss amount.

Benefiting from dual support from new energy vehicle power batteries and energy storage industries, LFP cathode material shipments increased 68% year-over-year during the reporting period; however, affected by lithium carbonate price bottoming and supply-demand structural mismatches, LFP material overall pricing power declined over time, with product prices following downward trends.

The company predicts that second and third-generation product pricing power is gradually declining, with generation 3.5 and fourth-generation products becoming important levers for LFP companies' performance turnaround, accelerating new capacity construction. As of H1 this year, Anda Technology has 150,000 tons/year iron phosphate and 150,000 tons/year LFP capacity. Additional 450,000 tons/year LFP precursor project under construction and 240,000 tons/year LFP project Phase I construction entered preliminary preparation stage.

Significant capacity expansion led to consolidated asset-liability ratio of 62.88%. Its multiple expansion pace also creates hidden concerns - if future market demand and industry competitive landscape undergo major adverse changes, it will result in the company's new capacity being unable to be smoothly absorbed, adversely affecting company operating performance.

**Second Half: From "Scale Expansion" to "Quality Enhancement"**

Profit recovery and capacity structure adjustments are becoming the main themes running through the entire year for LFP companies. After anti-involution closed-door meetings, "Proposal on Maintaining Healthy and Orderly Development of Lithium Iron Phosphate Material Industry (Draft for Comments)" was officially released. Regarding strengthening capacity self-discipline management, industry consensus is that when annual capacity utilization falls below 70%, companies should proactively postpone new capacity deployment plans and formulate elimination timetables for backward capacity, prioritizing elimination of early first and second-generation production lines with high energy consumption, low efficiency, and poor performance.

In half-year reports, Wanrun New Energy already proposed cautious consideration for new capacity deployment. As of H1, Wanrun New Energy's 120,000 tons/year LFP and 240,000 tons/year iron phosphate capacity had been completed and put into production. However, due to downstream market demand fluctuations, it timely adjusted the release progress of another 120,000 tons/year LFP capacity, with this portion of the project's scheduled usable state date postponed to December 2025.

The LFP industry urgently needs to shift from "scale expansion" to "quality enhancement." After product upgrades, generation 3.5 and even fourth-generation LFP cathode material shipments are growing substantially, becoming the current focus of corporate expansion. On August 21, Longpan Technology released a private placement plan, raising 2 billion yuan for an 110,000-ton high-performance phosphate cathode material project, 85,000-ton high-performance phosphate cathode material project, and supplementing working capital.

Bangpu Times' new generation LFP project will begin production by year-end. The project plans total annual capacity of 450,000 tons, adopting industry-leading fourth-generation LFP technology, using iron phosphate and lithium carbonate as main raw materials to produce new generation LFP products.

On the other hand, expectations for lithium carbonate price rebounds in H2 remain unclear, squeezing cost support for LFP price increases. LFP companies continue deepening integrated layouts to hedge raw material price volatility while building thicker profit walls for themselves. Hunan Yuneng recently stated in institutional research that the company is orderly advancing mine construction, with Huangjiopo phosphate mine expected to begin production in H2 this year. If phosphate ore self-supply ratio reaches 20%, it corresponds to 600 yuan/ton increase in cathode per-ton profit, gradually thickening profits starting from 2025.