In the public consciousness, the narrative around lithium batteries is largely dominated by trillion-dollar giants in the power and energy storage sectors—where billions in capacity and global competition form the main storyline. However, in the "micro" world that these giants often overlook, a very different race is unfolding: the smaller the battery, the steeper the technical barrier and the stronger the customer loyalty. Recently, Micro Electric New Energy's filing for a Hong Kong IPO has turned the market's spotlight onto this long-undervalued yet rapidly growing niche—micro lithium-ion batteries. This manufacturer, ranked second among Chinese suppliers and fourth globally in the micro-battery space, is trying to prove to the capital markets that achieving excellence in an unassuming sector can still sustain a listed company's fundamentals. But when the story reaches the income statement, what is the real financial substance of this industry player?

New Business Accelerating, Yet Growth Still Awaits Volume Production Validation

Looking at operational data, Micro Electric New Energy's growth over the past few years carries strong industry cycle characteristics: from 2023 to 2025, the company generated revenues of RMB 351 million, RMB 533 million, and RMB 565 million respectively, with a 51.7% year-on-year revenue increase in 2024, demonstrating robust volume expansion capability. In the first half of 2026, the company achieved revenue of RMB 337 million, up 18.0% year-on-year, maintaining relatively fast growth on a higher revenue base, which indicates that the demand foundation for its core business remains intact. Among these, smart wearable devices have consistently been the company's revenue pillar, accounting for 76.5%, 78.4%, and 75.5% of total revenue from 2023 to 2025, respectively. Additionally, revenue from the personal smart medical sector has risen from 8.1% in 2023 to 10.8% in 2025, further climbing to 11.9% in the first half of 2026. At the same time, the company's development services revenue reached RMB 12.3 million, while in the first half of 2026 it had already hit RMB 38.07 million, representing 11.3% of period revenue, a staggering year-on-year surge of 612.8%. This signals a shift from being purely a battery product seller to increasingly offering R&D, design, and co-development services tied to customers' new products. The significance of this change does not lie entirely in the revenue scale of development services itself. For micro-battery companies, engaging in battery solution development during the customer's new product design phase means the supplier can get involved in product definition earlier, creating synergies with customers across battery dimensions, structure, material systems, and manufacturing processes. Once related products enter mass production, the early R&D relationship can further translate into stable battery orders. Therefore, development services act more like an "entry point" into new product supply chains, with commercial value that may exceed their current revenue contribution.

On the profitability front, the company's 2024 performance stands out, with gross profit rising from RMB 102 million in 2023 to RMB 186 million, and gross margin improving from 29.0% to 35.0%. Taking wearable device batteries as an example, the company reduced unit costs from RMB 3.3 to RMB 2.8 through process improvements and scaled production, while the average selling price dropped from RMB 4.6 to RMB 4.2—still driving the product's gross margin up from 28.3% to 32.6% despite the price decline. In 2025, the company's gross margin eased back to 32.0%, impacted by changes in wearable battery pricing, rising raw material costs, export tax rebate policy adjustments, and increased fixed costs during the expansion phase. However, based on first-half 2026 performance, gross margin has already recovered to 32.7%, with net profit growing 12.1% year-on-year to RMB 26.3 million. Meanwhile, the company is actively seeking new demand drivers. As of the end of June 2026, the company has begun mass production of ultra-thin curved batteries for smart rings and expects large-scale deliveries in the second half of 2026. Additionally, the company has signed an AI toy development and supply agreement with a global toy manufacturer, with an estimated order volume of around 10 million units, and expects to enter scaled production and delivery phases starting in 2027. The company is also expanding into applications such as drones, smart sports cameras, robotics, and high-power stacked batteries. It's worth noting that these new scenarios share a common theme: they demand different battery characteristics compared to traditional TWS products. For instance, smart rings place greater emphasis on battery thickness and curved form factors, AI terminals may require higher instantaneous power and longer battery life, while robotics and drones could push further demands on energy density, rate performance, and safety. For Micro Electric New Energy, this represents both an expansion of market space and an opportunity to upgrade its technical capabilities from "mass manufacturing of mature products" to "multi-specification customized battery solutions."

When Competition Shifts from Cost to Technology, How Far Can Micro Electric New Energy Go?

If TWS and smart wearables form Micro Electric New Energy's current foundation, then R&D capabilities and customer collaboration will determine whether the company can truly unlock a second growth curve. According to the prospectus, the company has continued to increase R&D investment, with R&D expenses of approximately RMB 54.3 million in 2024, rising to RMB 93.5 million in 2025, a 72.1% year-on-year increase. The number of R&D personnel also grew from 235 in 2024 to 411 in 2025, with research focusing on miniaturization, high energy density, safety, fast charging, and cycle life. The importance of such investment for micro-battery companies lies in the fact that customers' new products often lack fully standardized battery specifications. Especially for new terminals like smart rings, AI toys, and robotics, where product form factors and internal space vary significantly, batteries often need to be customized according to the device structure. Therefore, companies that can quickly complete cell design, structural adjustments, material matching, process development, and production ramp-up are more likely to secure orders during customers' new product cycles. Micro Electric New Energy's technical expertise in certain products has already begun migrating to new applications. For example, the company has continuously invested in button cell structures, safety design, and fast-charging technology, with some products supporting 8 to 10C charge rates and capable of charging from fully depleted to 80% in approximately 6 minutes. At the same time, the company is advancing solid-state and semi-solid-state battery technologies, achieving commercialization of micro solid-state batteries in 2024. While these new technologies ultimately still need to pass customer validation and scaled production trials, from an industry logic perspective, the company's ongoing frontier technology reserves help enhance its ability to respond to evolving demands of next-generation terminal products. Another notable change is the customer structure: revenue from end-customers has declined from 93.6% in 2023 to 89.7% in 2025, further dropping to 85.7% in the first half of 2026. Revenue concentration among the top five customers also fell from 51.7% in 2023 to 43.3% in the first half of 2026, while the largest single customer's revenue share dropped from 21.0% to 12.7%. The gradual decline in customer concentration indicates that the company is broadening its customer coverage, providing a better foundation for future volume expansion of new products and applications. Meanwhile, the company's operating cash flow has also improved, with net cash generated from operating activities of approximately RMB 32.3 million, RMB 84.93 million, and RMB 188 million from 2023 to 2025 respectively. As of the end of June 2026, cash and cash equivalents stood at approximately RMB 271 million, with bank borrowings of approximately RMB 64 million. Overall, the company has demonstrated a certain level of self-sustaining cash generation capability, which is particularly important for a manufacturer in a phase of continuous capacity expansion and R&D investment. From an industry competition perspective, the global consumer-grade micro lithium-ion battery market is not an easy track to enter. Customer certification cycles, product consistency, yield rates, delivery capabilities, and cost control all affect a supplier's long-term competitive position. The fact that Micro Electric New Energy has entered the global top-tier consumer electronics supply chain and achieved a high market ranking in wireless earbud micro-batteries indicates that the company already possesses certain manufacturing and customer service capabilities. What truly deserves observation going forward is whether these capabilities can be replicated in incremental markets such as smart rings, AI terminals, robotics, and drones. Therefore, the investment thesis for Micro Electric New Energy is not simply "growth in the micro-battery industry," but rather a more specific industrial upgrade logic: building scale and customer base through TWS and smart wearables, entering new products through R&D and co-development capabilities, and then converting orders through mass production. If smart rings, AI toys, robotics, and drones can progressively scale up as outlined in the prospectus, the company's revenue structure has the potential to further diversify, extending its growth space from mature consumer electronics markets into the next wave of smart terminal supply chains. Currently, the company's new businesses are still in a phase of continuous introduction, and their ultimate contribution depends on the launch timeline of customer products, order realization, and production efficiency. Going forward, the core measure of this company's value will gradually shift from "how much more can existing businesses grow" to "how much incremental contribution can new products deliver." If smart rings, AI terminals, and high-power battery businesses can successfully enter the scaled stage, Micro Electric New Energy has the potential to open up new growth space while consolidating its traditional consumer electronics battery business. At that point, whether the company can complete the transition from a "micro-battery manufacturer" to a "new-generation smart terminal battery solution provider" will become the key indicator for observing its long-term growth potential.