On July 30, Sunwoda Electronic Co.,Ltd. submitted its listing application to the main board of the Hong Kong Stock Exchange, becoming the third domestic power battery company seeking "A+H" dual listing. Goldman Sachs and CITIC Securities serve as joint sponsors.

Frequent IPO participants should be familiar with CITIC Securities, a remarkable brokerage firm with nearly zero breaking rate for Hong Kong new stock sponsorships this year.

Besides the notable sponsor, Sunwoda Electronic Co.,Ltd. should also be familiar to everyone. The company is a global leading lithium battery technology innovation enterprise, deeply rooted in the lithium battery industry for nearly 30 years. Based on the combined shipment volume of mobile phones, laptops, and tablets in 2024, it has become the world's largest lithium-ion battery manufacturer.

Furthermore, from January to May this year, Sunwoda Electronic Co.,Ltd. ranked 7th in China's power battery installation volume with total installations of 6.9GWh and a market share of 2.87%, entering the industry's second tier.

Having already completed its A-share listing, Sunwoda Electronic Co.,Ltd.'s Hong Kong listing is not merely following trends but stems from genuine capital needs. Or rather, the current power battery industry itself is a challenging sector that makes it difficult for market participants to accumulate cash flow. For Sunwoda Electronic Co.,Ltd., which transitioned from consumer batteries, the current transformation battle remains challenging.

**I. The Challenging Second Growth Curve**

Sunwoda Electronic Co.,Ltd. is a global leading lithium battery technology innovation enterprise. Starting with consumer battery business, the company has gradually expanded into power batteries, energy storage systems, and other related fields, forming a comprehensive integrated business layout from battery R&D, design, manufacturing, sales to testing and recycling.

According to Frost & Sullivan data, by 2024 shipment volume, the company holds a 34.3% market share in the global mobile phone battery market. It is also the world's second-largest laptop and tablet battery manufacturer with a market share of 21.6%.

In terms of performance, based on the latest annual data, the company achieved total revenue of 56.02 billion yuan in 2024, with domestic revenue accounting for 58.2% and overseas 41.8%. By revenue composition, consumer batteries account for 53.8% of total revenue; energy storage systems for 3.4%; while the power battery segment, viewed as the second growth curve, accounts for 27% of total revenue.

However, from a gross margin perspective, power batteries represent a thankless business. As of the first quarter this year, Sunwoda Electronic Co.,Ltd.'s gross margin in this business was only 12.9%, significantly underperforming its energy storage at 25.5% and consumer batteries at 20.2%.

Despite this, Sunwoda Electronic Co.,Ltd. persists in developing new business, essentially seeking to escape consumer electronics cycles and pursue a second growth curve.

Reviewing history reveals that the company's performance has not grown steadily, especially in recent years. From 2022 to Q1 2025, Sunwoda Electronic Co.,Ltd. achieved revenues of 52.162 billion yuan, 47.862 billion yuan, 56.021 billion yuan, and 12.289 billion yuan respectively, with net profits attributable to shareholders of 1.068 billion yuan, 1.076 billion yuan, 1.474 billion yuan, and 387 million yuan respectively.

IDC data shows that global smartphone shipments in 2023 were 1.17 billion units, down 3.2% year-over-year. Additionally, according to TechInsights reports, global tablet market shipments in 2023 were approximately 137 million units, down 16% year-over-year. The decline in demand from these two major markets caused Sunwoda Electronic Co.,Ltd.'s operating revenue to experience its first negative growth since 2009.

The company's performance has cyclical characteristics, and larger scale makes cyclical fluctuations more apparent. To reduce volatility, the company actively expands its second growth curve, choosing power batteries because the electric vehicle industry still grows much faster than consumer electronics.

According to GGII industry reports, global power battery shipments grew from 182GWh in 2020 to 969GWh in 2024, with a CAGR of 51.8%, and are expected to reach 3,754GWh by 2030, representing a CAGR of 25.3% from 2024 to 2030. During the same period, the expected CAGR for global consumer battery shipments is only 6.2%.

For this new business, Sunwoda Electronic Co.,Ltd. has invested considerably in R&D. From 2020 to 2024, it spent 13 billion yuan on R&D, equivalent to consuming entire book profits, demonstrating its development ambitions.

This all-out commitment to developing new business has begun yielding results in the power battery industry.

Industry data shows that from January to May this year, Sunwoda Electronic Co.,Ltd. ranked 7th in China's power battery installation volume with total installations of 6.9GWh and a market share of 2.87%. Currently, it operates in the second tier, roughly on par with CALB, EVE Energy, and Gotion High-tech.

Of course, besides self-effort, products need customer favor. From customer concentration, the top five customers and largest customer have long accounted for approximately 50% and 20% of Sunwoda Electronic Co.,Ltd.'s total revenue respectively.

The company discloses that its consumer batteries have established partnerships with Xiaomi, Lenovo, OPPO, Vivo, Honor, Transsion, and also supply Roborock and Ninebot. The power battery business has secured domestic customers including Geely, Dongfeng, Li Auto, LEAPMOTOR, and international customers like Renault and Nissan.

Li Auto, which typically targets premium positioning comparable to BBA, also uses Sunwoda Electronic Co.,Ltd.'s battery mixing approach in its L6 model. While criticized by many users, automakers must consider costs. Since new energy vehicle shipment growth slowed, domestic manufacturers' price wars show no signs of stopping, forcing automakers to constantly balance between maintaining sales volume and protecting profits.

CATL, standard in premium models, is indeed excellent, but batteries are functional products after all. Sunwoda Electronic Co.,Ltd. is also a professional battery manufacturer with more competitive pricing. As of Q1 this year, CATL's average battery selling price was around 0.6 yuan/Wh, while Sunwoda Electronic Co.,Ltd.'s power battery average selling price was 0.5 yuan/Wh. Using it as mixed installation in lower-end series can indeed reduce costs.

Since it can produce and install batteries proves its products have passed automotive-grade verification. However, consumers may not necessarily accept Sunwoda Electronic Co.,Ltd., which transitioned from consumer batteries and has long operated in mid-to-low-end markets. In terms of scale and comprehensive strength, Sunwoda Electronic Co.,Ltd. remains only a second-tier manufacturer in the power battery industry, lacking strong bargaining power with customers and not particularly outstanding compared to peers.

**II. The Fate of Second-Tier Manufacturers**

According to GGII industry reports, the global power battery industry presents a highly concentrated competitive landscape. This competitive structure means new entrants find it difficult to challenge leading manufacturers' positions.

On the cost side, CATL is among power battery manufacturers with the largest lithium mineral resources, with lithium carbonate equity reserves of approximately 15 million tons LCE. Lithium carbonate is a key raw material for producing lithium battery cathode materials, accounting for about 40% of power battery costs. Therefore, achieving autonomous control over important upstream raw materials is crucial for reducing cost pressures in the power battery industry.

Although CATL's Yichun mining area in Jiangxi has confirmed production suspension, the company states this suspension won't significantly impact operations, and it still maintains cost competitive advantages. Sunwoda Electronic Co.,Ltd.'s lithium mineral reserves are currently at industry mid-to-lower levels, with known reserves possibly only 1%-6% of CATL's.

In capacity utilization, Sunwoda Electronic Co.,Ltd.'s capacity utilization also ranks at industry mid-to-low levels, especially for power battery business. In 2024, this business's capacity utilization was less than 70%, also lagging behind CATL.

This translates to profit margins, revealing the source of profitability differences.

Transitioning from consumer batteries, Sunwoda Electronic Co.,Ltd.'s power batteries can only rapidly capture market share through low pricing. With relatively fixed costs, selling prices below peers pressures gross margins. Sunwoda Electronic Co.,Ltd.'s gross margin in 2024 was 15.18%, lower than EVE Energy's 17.4%, Gotion High-tech's 18%, and CATL's 24.44%.

Insufficient capacity utilization and continuously increasing R&D expenses continuously squeeze company profits, resulting in a net margin of only 0.93%, with potential losses at any time.

Regarding bargaining power, prices for all three products - consumer, power, and energy storage batteries - have declined, with power battery average prices falling 45% over three years.

Additionally, accounts receivable also shows Sunwoda Electronic Co.,Ltd. lacks bargaining power with customers.

As of 2024, the company's trade receivables and bills receivable totaled 16.513 billion yuan, accounting for approximately 30% of total revenue. In Q1 this year, company revenue was 12.289 billion yuan, while trade receivables and bills receivable reached 14.726 billion yuan, already exceeding revenue, with potential short-term cash flow disruption risks.

B2B business models inherently struggle to accumulate cash flow, and cash shortages are precisely characteristic of the power battery industry.

First, on the supply side, lithium carbonate prices remained high in previous years. Second, on the sales side, automobiles are engaged in price wars. Third, overall industry capacity utilization is insufficient. In Q1 2025, China's power battery production reached 54.1GWh, but installation volume was only 32.6GWh, with capacity utilization below 60%.

In oversupplied markets, second-tier manufacturers' fate is difficulty recovering cash. Most battery manufacturers have weak bargaining power and struggle to collect receivables timely, yet must simultaneously expand and build factories to meet downstream automaker demands, making free cash flow accumulation nearly impossible.

Since Sunwoda Electronic Co.,Ltd.'s A-share listing, related actions have continued: In September 2020, actual controller Wang Mingwang reduced holdings, cashing out approximately 750 million yuan; in December 2021, he again reduced holdings, cashing out nearly 1.4 billion yuan; in February 2022, he cashed out over 770 million yuan. Since 2020, Wang Mingwang has cumulatively cashed out nearly 3 billion yuan.

Between 2018 and 2021, the company also completed two private placements, raising a total of 6.469 billion yuan. In March 2023, Sunwoda Electronic Co.,Ltd. proposed another private placement plan to raise no more than 4.8 billion yuan, but this plan was ultimately terminated.

Business models struggling to accumulate cash flow require continuous market funding, but facing transformation development, major shareholder lacks resolve to bear growing pains and weather difficulties together. Fortunately, the company's current valuation isn't high.

**III. Fortunately, Valuation Isn't High**

Citing Pacific Securities data, Sunwoda Electronic Co.,Ltd.'s expected 2025 PE is 16x. Among peers listed in Hong Kong, CALB's expected 2025 PE is 26.7x; CATL's is 17x; current industry average PE is around 25x.

By business development, affected by continued tariff uncertainties, Southeast Asian smartphone market declined 1% year-over-year in Q2 2025, with shipments of 25 million units. Brand-wise, Xiaomi reclaimed the top position after four years with 19% market share, up 8% year-over-year. Considering Vivo and OPPO are also company customers, differentiation in domestic manufacturer phone shipments will somewhat affect Sunwoda Electronic Co.,Ltd.'s overall consumer battery shipments.

However, from the overall consumer electronics industry perspective, it remains in cyclical recovery. Mobile phone market demand is expected to remain stable, while PC products provide key stability under Windows 10 support termination in October this year. Therefore, Sunwoda Electronic Co.,Ltd.'s consumer battery business will likely remain steady.

The power battery business, still in strategic loss period, will be the biggest variable. If new energy vehicle battery mixing models gain market acceptance, driven by cost-efficiency, other automakers will follow suit, creating shipment volume increase expectations for Sunwoda Electronic Co.,Ltd.'s power batteries, making current valuations attractive.

After all, current net margins are already dismal. Once power battery business turns profitable and driven by volume increases, profit elasticity is substantial.

**Conclusion**

Rather than "following trends," Sunwoda Electronic Co.,Ltd.'s Hong Kong IPO is an inevitable breakthrough move. Under power battery industry's "high investment, low return" characteristics, Hong Kong financing can alleviate short-term capital pressure. Sponsor CITIC Securities maintains industry-leading approval rates for sponsored projects. As of end-June 2025, among 65 Hong Kong filing companies it sponsored, only Wintech Holdings clearly broke after listing, with breaking rates below industry leading institution averages.

Considering the sponsor, Sunwoda Electronic Co.,Ltd.'s IPO deserves attention.

Valuation-wise, because Sunwoda Electronic Co.,Ltd.'s performance quality lags peers, markets struggle to view it favorably. However, if consumer battery business remains steady while power batteries see turnaround, current pricing offers certain attractiveness. If final H-share pricing shows discount versus A-shares, that would be even better.