On the final day of 2025, the IPO application of LYGEND RESOURCE, which plans a secondary listing on the A-share market after its Hong Kong listing, was accepted. The company aims to list on the main board of the Shenzhen Stock Exchange, with China International Capital Corporation Limited acting as the sponsor.
LYGEND RESOURCE primarily engages in nickel product trading and nickel product production. During the reporting period (from 2022 to 2024, and the first half of 2025), the company's operating revenue maintained steady growth, but its net profit experienced significant fluctuations. It is noteworthy that, whether in trading or production business, the company's gross profit margin during the reporting period was significantly higher than the industry average, sometimes even more than double. The company attributed this to "differences in traded varieties" and "differences in product types and structure."
During the reporting period, over 70% of the laterite nickel ore required for LYGEND RESOURCE's production business was sourced from Indonesia at one point, with prices primarily determined according to the HPM pricing formula published by Indonesia's Ministry of Energy and Mineral Resources. This situation exposes the company to the risk of potential supply chain bottlenecks for its raw materials. In fact, the company's operations were negatively impacted in the short term by the Indonesian government's comprehensive ban on the export of raw laterite nickel ore in 2020.
It was also observed that the actual controller of LYGEND RESOURCE is Cai Jianyong, who has, at some point, divorced his wife, Xie Wen. At the time of the Hong Kong listing in December 2022, Cai Jianyong and Xie Wen were jointly recognized as controlling shareholders. Even in the company's interim report for 2024 disclosed in September 2024, they were still listed as married. However, in this A-share listing application, the prospectus indicates that Xie Wen's status has changed from Cai Jianyong's wife to his "ex-wife."
Crucially, just before the application, in August and November 2024, Cai Jianyong transferred a total of 8% of the company's shares to Xie Wen in two transactions at a consideration close to zero cost per share. As she is now an "ex-wife," Xie Wen is no longer recognized as a joint actual controller for this IPO. Consequently, her shares are not subject to a 36-month lock-up period post-listing but only a 12-month lock-up before they can be reduced.
The sudden divorce of Cai and Xie on the eve of the listing application raises questions: is it a coincidence, or does it suggest a potential "technical divorce"? This warrants close scrutiny.
Revenue showed stable growth while net profit fluctuated significantly, and the gross profit margin was more than double the industry average. According to the prospectus, LYGEND RESOURCE started with nickel product trading and, through continuous vertical integration of the industrial chain, has now established an integrated business layout covering nickel product trading, production, and sales. In the first half of 2025, nickel product trading accounted for approximately 45% of revenue, while nickel product production accounted for about 55%.
Financially, during the reporting period, LYGEND RESOURCE's operating revenues were RMB 18.319 billion, RMB 21.286 billion, RMB 29.846 billion, and RMB 18.497 billion, respectively, showing stable growth. In contrast, the net profit attributable to owners of the parent company after deducting non-recurring gains and losses was RMB 1.727 billion, RMB 1.001 billion, RMB 1.842 billion, and RMB 1.396 billion, respectively, indicating substantial volatility.
It was noted that LYGEND RESOURCE's inventory grew rapidly during the reporting period, significantly outpacing the growth of operating revenue. At the end of each period, the book value of the company's inventory was RMB 1.15 billion, RMB 2.189 billion, RMB 3.368 billion, and RMB 4.396 billion, accounting for 6.28%, 10.28%, 11.28%, and 23.76% of the operating revenue for the respective periods.
LYGEND RESOURCE acknowledged that in recent years, domestic and international companies such as Huayou Cobalt, GEM, PT Merdeka Battery Materials Tbk, PT Harum Energy Tbk, Tsingshan Holding Group, Zhongwei Co., Ltd., and Jinchuan Group Co., Ltd. have been establishing pyrometallurgical and hydrometallurgical smelting projects in Indonesia, which is expected to further increase the global supply capacity of nickel products. If downstream demand weakens in the future, an oversupply of nickel products could occur.
A notable phenomenon is that, for both trading and production businesses, LYGEND RESOURCE's gross profit margin was significantly higher than the average of comparable companies. For the trading business from 2022 to 2024, the average gross profit margin of comparable companies Huayou Cobalt, Shengtun Mining, and CITIC Metals was only around 2%, 2.27%, and 1.07%, respectively. In contrast, LYGEND RESOURCE's gross margin reached 7.21%, 3.69%, and 3.03%, being more than double the industry average in the highest year. It was only in the first half of 2025 that the company's gross margin began to converge with industry peers, which the company explained was due to "differences in traded varieties."
LYGEND RESOURCE's gross profit margin for nickel production was also remarkably strong, standing at 41.59%, 33.07%, 38.82%, and 33.18% during the reporting period. Meanwhile, the average for four peers—Huayou Cobalt, Shengtun Mining, GEM, and Zhongwei Co., Ltd.—was only 26.76%, 19.46%, 15.43%, and 15.04%, respectively. In years where LYGEND's margin was lower, it still exceeded the peer average by 70%; in higher years, it was more than double. The company again attributed this to "differences in product types and structure," considering the disparity "reasonable."
The proceeds from LYGEND RESOURCE's current A-share IPO will be entirely invested into the company's main business areas, including a hydrometallurgical slag resource utilization demonstration project and an MHP refining production project, with a total financing amount of approximately RMB 4.047 billion.
The company faces risks of raw material supply bottlenecks and significant pressures regarding production safety and environmental protection. Notably, during the reporting period, LYGEND RESOURCE was highly dependent on Indonesia for its raw materials. Procurement of nickel products and raw materials from Indonesian partners accounted for 25.75%, 54.21%, 43.98%, and 32.94% of its cost of sales, respectively. Purchases of nickel iron from Indonesian partners accounted for 62.24%, 100.00%, 78.54%, and 65.3% of total nickel iron procurement in the respective periods. Procurement of laterite nickel ore from Indonesian partners accounted for 54.52%, 70.51%, 64.32%, and 58.89% of the total laterite nickel ore purchased for production business each period.
The company stated that if the Indonesian government further introduces restrictive measures on nickel product exports, such as imposing tariffs, export quotas, or a comprehensive export ban, the company would face challenges including increased raw material procurement costs and forced adjustments to its production layout. The company's operations were previously negatively affected in the short term by the Indonesian government's 2020 ban on raw laterite nickel ore exports, leading the company to source nickel ore from the Philippines, New Caledonia, and other regions rich in nickel resources. If the Philippines were to implement an export ban on laterite nickel ore in the future, it would force the company to rely more on mines in more distant locations like Turkey, New Caledonia, and Guatemala. However, the supply stability, quantity, and quality from these regions might not meet the company's substantial business needs, and logistics costs would be relatively higher, potentially adversely affecting the company's profitability and long-term development. Furthermore, during the reporting period, the price of laterite nickel ore purchased from Indonesian partners was mainly determined according to the HPM pricing formula published by Indonesia's Ministry of Energy and Mineral Resources. If nickel ore prices rise significantly in the future due to changes in downstream supply and demand, Indonesia tightening mining quotas, or other factors, the possibility of further adjustments to the pricing mechanism beyond HPM cannot be ruled out, which would lead to increased production costs and adversely affect operating performance.
Besides the risk of overseas raw material dependency, LYGEND RESOURCE also faces considerable pressure regarding production safety and environmental protection. While the situation at its overseas subsidiaries is not disclosed in the prospectus, the status of its domestic subsidiaries during the reporting period is disclosed, offering a glimpse into the overall picture. On March 29, 2023, an accident occurred at Huiran Industrial, a subsidiary of LYGEND RESOURCE. Huiran Industrial was held responsible for the accident due to inadequate safety training and safety inspections and was administratively fined RMB 300,000 by the Suyu District Emergency Management Bureau of Suqian City. According to a "Situation Statement" issued by the bureau on October 16, 2025, Huiran Industrial has paid the fine in full and on time and completed rectifications.
On November 5, 2024, Huiran Industrial was fined RMB 59,000 by the Suqian Ecological Environment Bureau for failing to install and use automatic monitoring equipment for atmospheric pollutant emissions as required. According to a "Certificate" issued by the bureau on March 6, 2025, Huiran Industrial has rectified the violation and paid the fine in full and on time.
The actual controller transferred shares to his "ex-wife" before the application, raising questions about the authenticity of the divorce and potential circumvention of share reduction regulations. LYGEND RESOURCE's prospectus shows that Cai Jianyong directly holds 18.77% of the company's shares and indirectly controls the voting rights of 32.65% of the shares through LYGEND Investment and Ningbo Lizhan, resulting in combined direct and indirect control over the voting rights of 51.42% of the shares, making him the company's actual controller. This represents a significant change compared to the identification of the actual controller (controlling shareholder) at the time of LYGEND RESOURCE's Hong Kong listing in December 2022. The prospectus at that time stated: "Mr. Cai and LYGEND Investment, together with Ms. Xie Wen and Ningbo Lizhan (who will be presumed to form part of our controlling shareholder group), became our controlling shareholders."
It is evident that "Ms. Xie Wen" no longer appears among the actual controllers listed in the current A-share prospectus, as her status has changed to Cai Jianyong's "ex-wife" or "former spouse," even though she directly holds 9.77% of the company's shares.
However, although Xie Wen is not recognized as a joint actual controller, the majority of her shares actually came from her "ex-husband," the actual controller Cai Jianyong.
On July 1, 2024, Cai Jianyong and Xie Wen signed a share transfer agreement. On August 26, 2024, they signed a supplementary agreement, stipulating that Cai Jianyong would transfer 4.02% of LYGEND RESOURCE's shares (corresponding to 62,506,900 unlisted domestic shares) to Xie Wen for a price of RMB 625.07 (RMB 0.00001 per share). On September 27, 2024, Cai Jianyong and Xie Wen signed another share transfer agreement, stipulating that Cai Jianyong would transfer 4% of LYGEND RESOURCE's shares (corresponding to 62,237,300 unlisted domestic shares) to Xie Wen for a price of RMB 622.37 (RMB 0.00001 per share). It was noted that in the 2024 interim report of LYGEND RESOURCE disclosed on the Hong Kong Stock Exchange on September 20, 2024, Xie Wen's status was still "spouse of Mr. Cai Jianyong." This suggests that Xie Wen's sudden transition to "ex-wife" likely occurred within the last year or even later, and the company applied for the A-share IPO shortly after their divorce.
What are the benefits of Xie Wen becoming an "ex-wife"? The answer lies in the share lock-up period and reduction commitments. As the actual controller, Cai Jianyong's shares are subject to a 36-month lock-up period from the date of listing, as per regulatory requirements. In contrast, Xie Wen, as a "shareholder holding more than 5% of shares," is only required to lock up her shares for 12 months, effectively receiving the same "treatment" as a general financial investor.
In fact, the "Interim Measures for the Management of Share Reductions by Listed Company Shareholders" (hereinafter referred to as the New Reduction Rules) issued by the China Securities Regulatory Commission in March 2024 specifically address potential circumvention through "technical divorce." They stipulate that "both the transferor and the transferee of the shares shall continue to jointly comply with the provisions of these Measures regarding share reductions by controlling shareholders and actual controllers after the share transfer," aiming to close this loophole. However, it appears that "for every policy from above, there is a countermeasure from below," as some shrewd individuals opt to divorce just before the listing.
Keeping benefits within the family, Cai Jianyong's two younger brothers also receive multi-million yuan "top salaries." As the saying goes, when one man gets the Tao, his pets all rise to heaven—a phenomenon fully manifested at LYGEND RESOURCE. Besides arranging matters for his "ex-wife," Cai Jianyong has also been generous to his two brothers. Despite having only junior high school educations, they both hold executive positions in the company with annual salaries in the tens of millions of yuan.
The prospectus shows that the actual controller, Cai Jianyong, was born in January 1971 and holds a junior college diploma. He previously worked at Zhejiang Yuanda Import & Export Co., Ltd. (now Yuanda Wuchan Group Co., Ltd.), focusing on commodity import/export and domestic trade. From January to December 2008, he served as Deputy General Manager of Ningbo Qiancheng Import & Export Co., Ltd., leveraging his experience in ore trading to focus on international commodity trade. He started his own business in 2009, successively serving as Director, General Manager, and Chairman of the company. The General Manager position is now held by the newly appointed professional manager, Hu Zhichun, born in the 1980s.
The prospectus indicates that Cai Jianyong has two younger brothers working in the company. The elder brother, Cai Jianwei, was born in June 1972 and has a junior high school education. From April 2009 to September 2021, he served as Sales Manager, Sales Director, and General Manager of the Trading Business Division at the company. From September to December 2021, he served as Director and Deputy General Manager of the company. Since December 2021, he has served as an Executive Director and Deputy General Manager of the company.
Cai Jianyong's younger brother, Cai Jiansong, was born in December 1974 and also has a junior high school education. From October 2009 to May 2015, he served as a Sales Manager at the company. From January 2016 to March 2018, he served as Deputy General Manager of Huiran Industrial. From February 2018 to October 2020, he served as General Manager of Huiran Industrial. Since April 2018, he has served as Chairman of Huiran Industrial. Since April 2022, he has served as Executive Director of Suqian Huixiangtong. Since April 2023, he has served as Executive Director and General Manager of the headquarters management company. Since December 2024, he has served as Deputy General Manager of the company.
In 2024, Cai Jianyong set his own annual salary at RMB 25.17 million. To put this into perspective? Among currently listed A-share companies, only 15 chairmen have annual salaries exceeding ten million yuan, and only three exceed twenty million yuan: Li Ge of WuXi AppTec, Li Xiting of Mindray Bio-Medical, and Oleg Nussbaum of BeiGene—mostly giants with net profits exceeding tens of billions. If LYGEND RESOURCE successfully lists, Cai Jianyong's compensation could rank among the top three, even though the company's net profit scale is considerably smaller.
Cai Jianyong has not forgotten to "look after" his brothers. Cai Jianwei received an annual salary of RMB 19.06 million in 2024, which would surpass over 99% of deputy general managers in the A-share market and is far higher than that of other directors, supervisors, and senior executives in the company. Cai Jiansong, having served as Deputy General Manager for less than a month, also received compensation of RMB 800,000, which, when annualized, would likely also exceed ten million yuan.
Additionally, Cai Jianwei directly and indirectly holds a combined 1.32% of LYGEND RESOURCE's shares, while Cai Jiansong directly and indirectly holds a combined 0.99% of the company's shares. Cai Jianyong's daughter, Cai Xiaoou, also works at the company and directly holds 0.66% of its shares, although, perhaps due to limited seniority, she does not currently hold an executive position.