Chengfeng New Material is navigating a complex IPO path. The company responded to the Beijing Stock Exchange's first-round inquiry on September 15. A key issue involves a 2006 transaction where Hong Kong Zeqiang transferred 9.60% of its equity to Li Yixuan but held the shares in trust on his behalf. This trust arrangement lasted for eleven years, and the company admitted it "did not complete the foreign investment approval and filing procedures," concluding there was "no circumvention of laws or regulations."

Adding another layer, Shifa International, a wholly-owned subsidiary of Hong Kong Zeqiang, remained a supplier during the reporting period, with its procurement value rising from 4.72 million yuan to 5.19 million yuan over three years.

The company's IPO journey has been turbulent. It filed for the Shanghai Stock Exchange main board in June 2022, was selected for on-site inspection on July 15, and withdrew its application on July 28—just 13 days after being chosen—citing concerns that "the review timeline would affect project investment."

Valuation adjustment (VAM) clauses were amended three times between 2022 and 2026, extending the repurchase deadline from the end of 2024 to the end of 2027, expanding the listing venue to the Beijing Stock Exchange, and finally adding an "automatic reinstatement" clause upon termination. In December 2024, Ningbo Houpu exercised its repurchase right, with actual controller Shi Ruhui acquiring shares at approximately 20.01 yuan per share, while Shi Bin exited concurrently at about 19.79 yuan per share.

Financially, the company's gross margin for its main business was 34.39%, 36.27%, and 34.77% during the reporting period, roughly 10 percentage points higher than the average of three comparable companies (Runyang Technology, Xiangyuan New Material, and Xinhengtai). Its polyester product gross margin was about 17 points higher, which the company attributes to the fact that "comparable companies do not offer this product."

Export data contradicts this explanation: the average export unit price fell from 53.66 yuan/kg in 2024 to 43.92 yuan/kg in 2025, a drop of 18.15%, while the gross margin plummeted from 54.67% to 38.21% in a single year. Export cost growth outpaced revenue growth by a factor of 2.3, with management attributing the change to "product structure adjustment."

Raw materials aged over one year surged from 7.01% to 26.90% of total inventory, yet the provision ratio for inventory impairment decreased from 8.64% to 6.57%. For the first time in 2025, the industry average provision ratio exceeded the company's. Meanwhile, mismatched responses to income confirmation letters remained between 21% and 27.5% over three years, classified by the company as "timing differences."

The company plans to raise 716 million yuan to expand capacity by 47%. However, the same response discloses that existing construction and planned capacity total 8,164.80 tons, meaning combined new and existing expansion projects would increase capacity by 78.56%.

Chengfeng New Material, formerly known as Changzhou Chengfeng Foam Co., Ltd., was established in ZhengLu Town, Changzhou on April 8, 2002. Its registered capital underwent multiple changes, reaching 108.42 million yuan before the filing. Controlling shareholders Ruan Guoqiao and Shi Ruhui, a married couple, hold 82.46% of the voting rights through direct ownership and various holding platforms. Their daughter, Ruan Rong, holds an additional 1.00% and acts in concert with her parents.

Both founders have notable backgrounds. Ruan Guoqiao, born in November 1972, has a high school education. He started as a workshop manager at Dongguan Henglong Foam in 1991, later founded Changzhou Xushun, and has led Chengfeng New Material since 2002. Shi Ruhui also has a high school education, having worked in finance at Dongguan Henglong before becoming the finance head at Changzhou Xushun.

In 2002, at the company's founding, shareholder Changzhou Xushun contributed 125,000 US dollars in physical assets, including factory buildings and production equipment. Eighteen years later, in 2020, Changzhou Xushun made another contribution of 1.03 million yuan, nominally to "solidify" the 2002 in-kind contribution "to ensure the company's paid-in capital is sufficient."

The most scrutinized event in the company's history is the foreign share-trust arrangement. In 2006, Hong Kong Zeqiang transferred its 9.60% equity stake to Li Yixuan, a nephew of former Hong Kong Zeqiang shareholder Shi Xingchang. Li had joined Chengfeng New Material in 2002 and later became deputy general manager. The shares were held on his behalf by Hong Kong Zeqiang, with a payment of only 48,000 US dollars. This trust arrangement persisted for a full 11 years until 2017 when Hong Kong Zeqiang transferred all its shares to Changzhou Qiaoshun.

It is noteworthy that Shifa International (Shanghai) Trading Co., Ltd., a wholly-owned subsidiary of Hong Kong Zeqiang, was a supplier to Chengfeng New Material during the reporting period, with procurement amounts of 4.72 million yuan, 4.03 million yuan, and 5.19 million yuan across three years.

The company's IPO path has been particularly challenging. After filing for the Shanghai main board in June 2022 and being selected for information disclosure quality inspection on July 15, it withdrew on July 28—just 13 days later—citing "concerns that prolonged review timelines would affect the Guangdong Shifeng project investment progress." The company restarted its listing counseling in September 2024, was listed on the NEEQ Innovation Layer in September 2025, and received Beijing Stock Exchange acceptance in June 2026, with fundraising reduced from 1.1 billion yuan to 716 million yuan.

The VAM clause adjustments are significant. A termination agreement in May 2022 retained the repurchase right with a trigger condition of "failure to list by December 31, 2024." Between late 2024 and early 2025, the deadline was extended to December 31, 2027, with the listing venue expanded to include the Beijing Stock Exchange. In February-March 2026, all repurchase clauses were terminated, with a provision that if listing fails, "the repurchase obligation automatically resumes and is deemed effective from the beginning." In December 2024, Ningbo Houpu exercised its repurchase right, transferring 1.21 million shares to Shi Ruhui for 24.23 million yuan, approximately 20.01 yuan per share. Concurrently, Shi Bin exited, selling 302,700 shares for 5.99 million yuan, or approximately 19.79 yuan per share.

Chengfeng New Material specializes in flexible polyurethane foam, generating 921 million yuan in revenue for 2025 with a net profit attributable to the parent of 175 million yuan. However, growth has slowed markedly: net profit grew 34.67% in 2024 but dropped to 1.92% in 2025. The company forecasts first quarter 2026 revenue between -0.12% and 5.11% year-over-year, with non-GAAP net profit declining 14.38% to 19.57%.

During the reporting period, the company's main business gross margin was 34.39%, 36.27%, and 34.77%, compared to an industry average of 29.11%, 24.66%, and 25.50% for comparable companies (Runyang Technology, Xiangyuan New Material, and Xinhengtai). The polyester product gross margin reached 42.56%, 43.94%, and 41.36%, approximately 17 percentage points higher than the industry average, with the company explaining that "comparable companies do not offer this product."

Export data provides contradictory evidence. Export unit price dropped from 53.66 yuan/kg in 2024 to 43.92 yuan/kg in 2025, an 18.15% decline, while gross margin fell from 54.67% to 38.21%—a 16.46 percentage point erosion in a single year. The company's explanation is a single sentence: "product structure adjustment, which is reasonable." Notably, while export revenue grew 37.24%, export costs grew 87.07%, making cost growth 2.3 times faster than revenue growth.

At the end of each reporting period, raw materials aged over one year increased from 9.75 million yuan to 37.88 million yuan, with the proportion jumping from 7.01% to 26.90%. Simultaneously, the inventory impairment provision ratio decreased from 8.64% to 6.57%, while the industry average rose from 4.73% to 6.69%. In 2025, the industry average exceeded the company's for the first time.

Verification data from the sponsor and auditor reveals another concerning fact: between 2023 and 2025, the mismatch rate for revenue confirmation letters was 25.69%, 27.50%, and 21.42% respectively. The company attributes these to "timing differences" (goods shipped and signed for by customers but not yet invoiced), with a confirmation rate approaching 100% after adjustment.

The company plans to raise 716 million yuan, with 507 million allocated to the "New Generation High-Performance, Eco-Friendly Polyurethane Materials Project," adding 12,200 tons of capacity, equivalent to 47.07% of existing capacity. However, another section of the same response discloses current construction and planned capacity of 8,164.80 tons (Guangdong Shifeng: 4,082.40 tons; Hubei Shifeng: 2,296.35 tons; Zhenjiang Yufeng: 1,786.05 tons). Combined fundraising project and existing construction capacity totals 20,364.80 tons, equivalent to 78.56% of existing capacity.

During the reporting period and subsequently, the company paid cumulative cash dividends of 75.90 million yuan, representing nearly 15% of cumulative net profit. The first half of 2026 alone saw dividends of 32.53 million yuan, equivalent to 18.62% of 2025 net profit. Meanwhile, the company estimates potential supplementary social security and housing fund payments of 6.51 million yuan, representing 3.13% of current-period total profit.