In recent years' wealth-creating sectors in capital markets, power batteries have undoubtedly been standouts. Companies like CATL and BYD, ranking first and second globally in market share, boast total market capitalizations of 1.67 trillion yuan and 1 trillion yuan respectively, with their controlling shareholders ranking among the top on various wealth lists.

Within the power battery industry chain, the lithium battery recycling sector has also demonstrated strong wealth-creation capabilities. Among these, Guangdong Jinsheng New Energy Co., Ltd. (hereinafter referred to as "Jinsheng New Energy") made it onto the 2024 Hurun Global Unicorn List with a valuation as high as 12 billion yuan. The Li brothers from Guangdong have achieved billions in wealth through their stake in Jinsheng New Energy.

Jinsheng New Energy is the world's second-largest lithium battery recycling and regeneration enterprise, and the world's largest third-party lithium battery recycling and regeneration company. On September 3, Jinsheng New Energy updated its prospectus, launching another sprint toward Hong Kong stock market listing.

In stark contrast to its impressive industry position, Jinsheng New Energy is currently trapped in a dual predicament of profitability and valuation challenges.

The prospectus shows that in 2023, 2024, and the first half of 2025, Jinsheng New Energy accumulated losses of up to 959 million yuan. Signs of valuation shrinkage have appeared, with Jinsheng New Energy's valuation dropping to 7.3 billion yuan on the 2025 Hurun Global Unicorn List.

More severe is the capital pressure. As of the end of the first half of 2025, Jinsheng New Energy had only 36.61 million yuan in cash and cash equivalents on its books, while bank and other loans due within one year reached 1.8 billion yuan, resulting in a "cash-to-short-term debt ratio" of only about 2%.

The tight cash flow situation makes Jinsheng New Energy's Hong Kong stock market listing a crucial battle for the company's future development.

**"Global Second" Loses Over 900 Million in Two and a Half Years - Where Does Jinsheng New Energy's Profitability Challenge Lie?**

In 2024, China's new energy vehicle annual production first exceeded 10 million units, with production and sales ranking first globally for 10 consecutive years. Have you ever wondered where all the retired power batteries from the first batch of vehicles entering the market have gone?

Jinsheng New Energy's business model provides part of the answer. The company focuses on the recycling and regeneration of retired lithium batteries and lithium battery production waste. After chemical processing and other procedures, the recycled products yield lithium carbonate, nickel sulfate, cobalt sulfate, and other materials, which downstream customers ultimately remake into lithium batteries.

In the first half of 2025, sales of Jinsheng New Energy's lithium regeneration products and nickel regeneration products accounted for over 79% of total revenue. According to Frost & Sullivan reports, based on 2024 regeneration sales revenue, the company is the world's second-largest lithium battery recycling and regeneration enterprise.

Despite wearing the "global second" crown, Jinsheng New Energy's performance faces considerable pressure.

The prospectus shows that from 2022 to 2024, Jinsheng New Energy achieved revenues of approximately 2.905 billion yuan, 2.892 billion yuan, and 2.157 billion yuan respectively, showing continuous decline. In the first half of 2025, the company's revenue was 937 million yuan, compared to 995 million yuan in the same period last year, also showing a decline.

Performance on the profit side is even more severe. In 2022, Jinsheng New Energy achieved a profit of 151 million yuan. From 2023 to the first half of 2025, the company posted losses of 471 million yuan, 344 million yuan, and 144 million yuan respectively, totaling 959 million yuan in losses over two and a half years.

Puzzlingly, from a sales volume perspective, Jinsheng New Energy's core products haven't shown a declining trend. For example, lithium carbonate sales grew from 3,633 tons in 2022 to 10,599 tons in 2024. With sales volume increasing and profitability declining, where does Jinsheng New Energy's profitability challenge lie?

The key reason lies in the mismatch between product pricing mechanisms and market price fluctuations. Jinsheng New Energy generally sells products based on current market prices, but with market prices falling dramatically, this creates an awkward situation of "high procurement costs, low sales pricing," directly impacting profitability.

According to Frost & Sullivan data, in 2022, the average price of lithium carbonate produced from domestic battery recycling and regeneration was 358,600 yuan per ton, which had fallen to 64,100 yuan per ton by 2024.

According to Jinsheng New Energy's projections, domestic lithium carbonate and nickel sulfate prices from lithium battery recycling and regeneration will continue to decline in 2025, while cobalt sulfate prices will see modest growth. This means the company will continue facing significant performance pressure.

So, can the market prices of Jinsheng New Energy's three core products return to historical highs in the future, driving explosive growth in company performance?

In the prospectus, Jinsheng New Energy projects that future average selling prices for domestic lithium carbonate, nickel sulfate, and cobalt sulfate will mainly see moderate increases, making it difficult to return to previous high price levels.

For example, Jinsheng New Energy states that the average price of domestic lithium carbonate is expected to rise modestly from 65,400 yuan per ton in 2025 to 73,600 yuan per ton in 2031, far below the high of 426,900 yuan per ton in 2022.

To reverse the current profitability downturn, Jinsheng New Energy has adopted or planned a series of measures, including promoting sales through price-locking mechanisms and accelerating inventory turnover. The company is also adjusting its product structure to produce electrolytic nickel and electrolytic cobalt products with higher prices and gross margins.

Jinsheng New Energy is also expanding upstream and downstream into lithium battery material production. For example, it expects to bring lithium iron phosphate battery cathode materials to market in 2025, establishing a full-chain, integrated ecosystem for lithium battery regeneration.

**Cash Shortage, 1.8 Billion Short-term Debt, Urgently Seeking Hong Kong Fundraising, Valuation Fluctuations Significant**

While Jinsheng New Energy has a clear strategy, execution challenges are substantial. On the technical front, the company admits it has "not produced any lithium iron phosphate cathode materials during the track record period," and product performance awaits market validation.

In terms of market competition, major domestic battery manufacturers including CATL, BYD, CALB, Gotion High-tech, EVE Energy, Sunwoda, Hive Energy, and Farasis Energy have all entered the lithium battery recycling business, continuously testing Jinsheng New Energy's differentiated competitive capabilities.

Particularly noteworthy is that Jinsheng New Energy currently faces severe capital expenditure pressure.

The prospectus shows that Jinsheng New Energy's cash and cash equivalents fell from 211 million yuan at the end of 2022 to 53.04 million yuan at the end of 2024, further sliding to 36.61 million yuan at the end of the first half of 2025, with July-end data at 24.2 million yuan.

Meanwhile, Jinsheng New Energy faces high debt pressure. As of June 30, 2025, the company's interest-bearing bank borrowings and other loans totaled 2.1 billion yuan, of which bank and other loans due within one year amounted to 1.8 billion yuan, resulting in a "cash-to-short-term debt ratio" of only about 2%.

Jinsheng New Energy states in its prospectus that if it cannot repay debts on time, the company may be unable to expand its business and may be forced to sell assets, seek additional capital, or seek debt restructuring.

From external financing channels, Jinsheng New Energy has two main paths for obtaining funds. On one hand, it can continue borrowing from banks, though the resulting interest expenses will exacerbate profitability pressure. The prospectus shows that in 2024, the company's interest on interest-bearing bank and other borrowings reached 66.11 million yuan, with the first half of 2025 figure at 46.66 million yuan.

On the other hand, Jinsheng New Energy can raise funds through institutional financing or Hong Kong IPO fundraising. Currently, the company is pushing full steam ahead with its Hong Kong stock market listing.

Notably, Hong Kong IPO fundraising effectiveness is tied to valuation, which not only serves as the core basis for issue price determination but directly affects potential investors' investment willingness.

However, Jinsheng New Energy's valuation performance in recent years has been unstable, even showing signs of growth stagnation and decline. According to Hurun Global Unicorn List data, the company's valuation was 12 billion yuan on the 2024 list, but dropped dramatically by 39% to 7.3 billion yuan on the 2025 list.

From reference valuations in equity changes disclosed in the prospectus, multiple equity transfers from March 2023 to May 2023 showed Jinsheng New Energy reference valuations including 12 billion yuan and 10.2 billion yuan. The November 2024 equity transfer reference valuation was 7.6 billion yuan, relatively close to the 7.3 billion yuan on the 2025 Hurun Global Unicorn List.

In May 2025, Jinsheng New Energy entered into a subscription agreement with Jiangxi Dongliang, representing the company's latest disclosed equity change. Under the agreement, Jiangxi Dongliang agreed to subscribe for shares, with the subscription consideration referencing the company's pre-investment valuation of 10.2 billion yuan, showing significant growth compared to the November 2024 valuation of 7.6 billion yuan.

The prospectus shows that Jiangxi Dongliang is a company owned 100% by the five Li brothers, founders and controlling shareholders of Jinsheng New Energy, each holding 20%.

In other words, the five Li brothers used this subscription to boost Jinsheng New Energy's reference valuation.

Overall, from March 2023 to May 2025, over more than two years, Jinsheng New Energy's valuation has generally shown stagnation or even decline, and the impact this will have on its IPO pricing and fundraising effectiveness remains to be observed.

In fact, this Hong Kong stock market assault is not Jinsheng New Energy's first attempt at capital markets. The company previously initiated A-share listing procedures in 2022, but ultimately terminated A-share listing guidance in August 2024, turning instead to submit a prospectus to the Hong Kong Stock Exchange.

In the future, whether Jinsheng New Energy can successfully list on the Hong Kong stock market and raise funds smoothly, thereby alleviating capital pressure and reversing its performance predicament, remains to be closely watched.