Following its initial submission in late last year, Guangdong Jinsheng New Energy Co., Ltd. (hereinafter referred to as "Jinsheng New Energy") resubmitted its listing application to the Hong Kong Stock Exchange main board on September 3, with CICC and CMB International serving as joint sponsors. This renewed IPO process comes at a time of deep adjustment in the lithium battery industry: despite long-term demand growth driven by global new energy transition, the supply chain has recently experienced price declines and capacity consolidation, with lithium carbonate prices falling sharply from last year's highs, intensifying industry competition. The market is closely watching how this company, focused on lithium battery cascade utilization and recycling, can leverage its resource recycling technology advantages to tell a new story in the capital markets.
Behind the Losses - "Roller Coaster" Market Conditions for Lithium Battery Metal Materials
According to the prospectus, Jinsheng New Energy is a leading global provider of lithium battery recycling and reuse solutions, committed to exploring a circular and clean future world. According to a Frost & Sullivan report, based on 2024 recycling sales revenue, Jinsheng New Energy is the world's second-largest lithium battery recycling and reuse enterprise, and the world's largest third-party lithium battery recycling and reuse company.
Jinsheng New Energy's recycling business covers mainstream battery systems including ternary lithium batteries and lithium iron phosphate batteries. The company's products are widely used downstream in electric vehicles, energy storage systems, and consumer electronics - the main application scenarios for lithium batteries, forming a comprehensive and vertically integrated business model with a complete industrial chain closed loop. For the six months ended June 30, 2025, sales of lithium recycling products and nickel recycling products accounted for over 79% of total revenue.
Despite bearing the halo of "world's second-largest lithium battery recycling company" and "largest third-party service provider," the latest financial data reveals the harsh reality behind the industry's high-growth narrative: the company has accumulated losses exceeding RMB 1 billion over the past three and a half years, with revenue plummeting 56.5% year-over-year in the first half of 2025, highlighting how dramatic lithium carbonate price volatility and capacity expansion pains are severely impacting the recycling supply chain.
Specifically, for 2022, 2023, and the six months ended June 30, 2024 and 2025 (hereinafter referred to as "the reporting period"), Jinsheng New Energy's revenue was approximately RMB 2.905 billion, RMB 2.892 billion, RMB 2.157 billion, and RMB 937 million respectively. During the same periods, the company's annual profit was approximately RMB 151 million, -RMB 471 million, -RMB 344 million, and -RMB 144 million respectively.
Jinsheng New Energy's financial performance clearly reflects the "roller coaster" conditions in the lithium battery metal materials market. The prospectus frankly admits that the core issue behind its gross losses in 2023 and 2024 was the cliff-like decline in prices of metals such as lithium carbonate, nickel, and cobalt, leading to "selling prices below costs." This directly explains the company's consecutive losses.
Frost & Sullivan data shows that lithium carbonate average prices plummeted from a peak of RMB 426,900 per ton in 2022 to RMB 80,100 in 2024, a cumulative decline of over 80%, and further dropped to a historic low of RMB 62,300 per ton in the first half of 2025.
In the cold wave of continuously declining lithium carbonate prices, leading lithium battery recycling company Jinsheng New Energy's profitability is undergoing an extreme stress test. However, a turning point has emerged. The company disclosed that it successfully achieved positive gross margins in the first half of 2025. This turnaround sign is not merely driven by market beta factors, but results from the combined effect of improved external environment and internal operational efficiency alpha: on one hand, benefiting from market factors such as cobalt price recovery; on the other hand, more importantly, benefiting from cost reduction achieved through production technology innovation and precise inventory management that avoided significant impairment risks.
Betting Big on "Integrated Ecosystem" to Break the Cyclical Curse
Facing dramatic price volatility and consecutive financial losses, Jinsheng New Energy has not chosen to contract, but instead outlines an aggressive vertical integration blueprint across the entire industrial chain in its prospectus. Its strategic core directly addresses industry pain points - by strengthening black mass capacity upstream and extending downstream to cathode material manufacturing, building an industrial closed loop from "recycling to regeneration," attempting to fundamentally escape the "weather-dependent" profit model.
First, breaking through upstream to resolve raw material dependence and cost challenges. The Ganzhou base processes 80,000 tons/year of retired batteries with black mass capacity of 15,000 tons/year, planning to further expand direct retired battery pack processing capability. This aims to strengthen cost control over front-end raw materials, reduce dependence on outsourced black mass, and squeeze profit margins from the source.
Second, extending downstream to counter price volatility and market risks. The under-construction Yichun facility with 10,000 tons of lithium iron phosphate cathode material capacity marks the company's first entry into downstream manufacturing. Although the strategic logic is clear, execution risks cannot be overlooked. First, technology transition barriers - the company admits "no production of any lithium iron phosphate cathode materials during the track record period," indicating technical barriers and learning curves from recycling to cathode material manufacturing. Second, capital expenditure pressure - large-scale capacity expansion may further increase financial burden amid tight cash flow. Third, intensifying industry competition - as downstream battery giants (such as CATL and BYD) build their own recycling systems, how third-party companies maintain differentiated competitiveness is crucial.
Notably, Jinsheng New Energy faces severe customer dependence and cash flow challenges. In the first half of 2025, revenue from the top five customers soared to 67.3% (2022: 52.7%), reaching a historic high. This means over two-thirds of the company's revenue depends on a few customers, making any major customer order loss or payment delays directly impact operational stability.
Additionally, trade receivables turnover days extended from 38 days in 2022 to 56 days in mid-2025, an increase of nearly 50%, significantly higher than healthy industry levels. Although total receivables decreased from a 2023 peak of RMB 421 million to RMB 279 million, the continued decline in turnover efficiency suggests: first, weakened payment capability or willingness of downstream customers, possibly reflecting widespread supply chain funding pressure; second, the company being forced to relax credit policies to maintain customer relationships, making this "trading payment terms for market share" strategy particularly dangerous during industry downturns.
The dual deterioration of customer concentration and collection efficiency forms a dangerous closed loop - large customers typically demand longer payment terms, while the company's limited bargaining power forces acceptance of these conditions. Should lithium prices fluctuate dramatically again, causing downstream customer funding chain breaks, bad debt risks would escalate sharply.
In conclusion, despite dramatic lithium carbonate price volatility once plunging the company into loss difficulties, the positive gross margins in the first half of 2025 quietly signal resilience. The focus for investors is now clear: under the grand narrative of resource recycling, to what extent can its performance elasticity withstand cyclical attacks from commodity markets?