From wafer manufacturing to advanced packaging, from display panels to photolithography processes, an increasing number of domestic material companies are entering the capital markets, aiming to leverage financing to further refine their technological portfolios. Against this backdrop, A-share listed company Hubei Dinglong Co.,Ltd. (SHE: 300054) has also opted for a Hong Kong listing. Reviewing the company's development trajectory, its most significant change is not the growth in revenue scale, but rather the shift in its business focus. In the past, the market primarily viewed Hubei Dinglong as a printing and copying consumables enterprise. Today, however, the company has gradually evolved into a semiconductor materials platform enterprise covering multiple fields including CMP polishing materials, OLED display materials, photoresists, and advanced packaging materials. For this successfully transformed company from traditional consumables, does its high growth stem from a temporary windfall within the wave of domestic substitution, or does it possess the underlying capability to sustain growth through cycles? Betting on domestic substitution, how can Hubei Dinglong break through its growth ceiling?

The company commenced operations in 2000, specializing in speciality chemicals. It initiated R&D for color polymer toner (CPT) in 2006 and achieved commercialization in 2012. However, the true strategic turning point that determined the company's fate occurred in the same year—the company began independent R&D for CMP polishing pads. A key reason for Hubei Dinglong's successful business upgrade is that it did not limit itself to a single product, but continuously expanded its capabilities around materials science. According to its prospectus, the company has now established multiple product lines including CMP solutions, semiconductor display materials, advanced semiconductor materials, and key printing and copying materials. Among these, CMP polishing pads, CMP polishing slurries, and cleaning fluids constitute the company's most important business segment and the fastest-growing revenue stream. Based on data from Frost & Sullivan, calculated by 2025 revenue, the company has become the largest domestic CMP polishing pad supplier in China, with a market share of 38.5%, and is also the third-largest CMP materials supplier in the country. While CMP materials may not receive as much market attention as chip design, they are indispensable key consumables in the wafer manufacturing process. From logic circuits to memory chips, each additional layer of wafer manufacturing process implies more polishing steps, thereby increasing demand for CMP materials.

In recent years, with the continuous capacity expansion of domestic wafer fabs and the increasing proportion of advanced process nodes, the local CMP materials market has maintained rapid growth. The localization of the material supply chain has also become a significant trend in industry development, creating substantial growth space for Hubei Dinglong. Beyond the CMP business, the company has also made rapid progress in the OLED display materials field in recent years. Its main products currently include key materials such as yellow polyimide (YPI) for flexible displays, photosensitive polyimide (PSPI), and thin-film encapsulation inks. According to the prospectus, the company has become the largest supplier of OLED coating-type functional materials in China, with a market share of 38.5%. As flexible OLED penetration continues to rise in smartphones, tablets, automotive displays, and other fields, demand for related materials is expected to maintain growth, benefiting the company from the incremental market driven by display industry upgrades.

However, compared to the already established CMP and display materials businesses, the market pays closer attention to Hubei Dinglong's layout in high-end semiconductor materials. In recent years, the company has continuously invested in R&D for KrF and ArF photoresists, as well as advanced packaging materials. Its photoresist production base in Qianjiang has completed its first-phase construction and is advancing towards the second-phase project's production. Concurrently, the company is also developing advanced packaging materials such as packaging polyimide and temporary bonding adhesives, aiming to cover more aspects of wafer manufacturing and advanced packaging. The prospectus indicates that the company has established seven foundational technology platforms, including organic synthesis, polymer synthesis, physical chemistry, inorganic non-metallic materials, engineering equipment design, and material evaluation. It boasts over 1,000 R&D personnel and more than 600 registered patents. This means that when entering new material sectors in the future, the company can rely more on its existing technology platforms for expansion, rather than rebuilding an R&D system for every new field. This is a competitive advantage that platform-based material enterprises hold over single-product companies.

Simultaneously, the company has consistently maintained a high level of R&D investment in recent years, with cumulative R&D expenditure reaching 1.4 billion yuan during the reporting period, accounting for approximately 20.5% of its continuing operations revenue. For the semiconductor materials industry, customer qualification cycles typically span several years, but once integrated into the supply chain, customer stickiness is relatively high. However, technological leadership does not signify the end of market competition. For a long time, the semiconductor materials industry has been dominated by international leaders holding high market shares, with significant technical barriers present in both CMP materials and photoresists. While Hubei Dinglong currently leads in some domestic substitution areas, a gap remains compared to international frontrunners. Future efforts will require continuous reliance on R&D investment and customer validation to drive product upgrades and further expand market share.

Financial Performance and Long-Term Value Assessment

From a financial performance perspective, the company's revenue grew from 1.305 billion yuan in 2023 to 2.468 billion yuan in 2025, a cumulative increase of nearly 90% over two years. During the same period, net profit from continuing operations rose from 230 million yuan to 743 million yuan, while the net profit margin improved from 17.6% to 30.1%, indicating sustained enhancement in profitability. In the first four months of 2026, the company achieved continuing operations revenue of 1.090 billion yuan, a year-on-year increase exceeding 50%, with the net profit margin further rising to 32.3%, continuing the rapid growth momentum. From revenue scale and profitability to gross margin, the company's overall operational quality shows an upward trend, reflecting that the semiconductor materials business is gradually entering a phase of scale release.

As the proportion of revenue from CMP solutions continues to increase, the company's overall gross margin improved from 57.1% in 2023 to 66.7% in 2025. The gross margin for the semiconductor materials business reached nearly 70%, significantly higher than that of the traditional key printing and copying materials business. For a materials enterprise, this signifies that the company is gradually moving away from low-value-added product competition and entering a technology-driven growth stage. However, it is also important to recognize that high growth does not imply an absence of future challenges. Firstly, the semiconductor materials industry is characterized by typically long qualification cycles. Whether for CMP polishing materials, OLED functional materials, or photoresists, entering a customer's supply system requires undergoing long-term testing, validation, and small-batch qualification. Even if product technology meets requirements, it may not quickly translate into large-scale sales. Therefore, there is often a significant time lag between R&D achievements and commercial revenue, meaning that some of the company's new products will still need to undergo market validation in the future.

Taking the highly anticipated photoresist business as an example, Hubei Dinglong has already established KrF and ArF photoresist production lines and is continuously advancing its industrialization layout. From an industry development perspective, high-end photoresists have long been a key focus for domestic substitution, with a vast market space, but they are also among the semiconductor materials with the highest global technical barriers. Compared to products like CMP polishing pads, photoresists involve not only material formulation but also require high compatibility with exposure equipment, process nodes, and customer production flows, making qualification significantly more difficult. Therefore, although the company has completed capacity construction, the future commercial scale of its products will still depend on the progress of customer validation and the pace of domestic substitution, which will remain a key variable of market focus in the coming years.

Currently, while Hubei Dinglong has established a relatively comprehensive product portfolio, many of its businesses are still in a continuous investment phase. High R&D investment helps to consolidate technological advantages, but it also implies that the company will need to maintain continuous capital expenditure to support the development of new businesses such as photoresists, advanced packaging materials, and new energy materials. In the long term, this is a necessary investment to build competitive moats, but in the short term, it may exert some pressure on cash flow and capital expenditures. The current Hong Kong listing is viewed by the market as an important step for the company to further bolster its capital strength and support subsequent R&D and global expansion.

Additionally, Hubei Dinglong will need to face pressures arising from international competition. Despite the ongoing trend of domestic substitution in recent years, the global semiconductor materials market remains dominated by a few international leaders, who possess deep moats in terms of technological accumulation, customer resources, and global supply capabilities. For Hubei Dinglong, while it has established a leading domestic advantage in certain niche segments, further market share gains in the future will require continuous improvement in product performance, expansion of customer coverage, and narrowing the gap with international manufacturers. This tests both R&D capabilities and the ability for sustained industrialization and large-scale delivery.

Overall, Hubei Dinglong's move towards a Hong Kong listing appears more like a fresh start after completing its transformation. Having evolved from a printing and copying consumables enterprise into a platform company covering CMP materials, OLED functional materials, photoresists, and advanced packaging materials, the company has successfully shifted its business focus. It also benefits from the development trends of semiconductor localization and the push for self-sufficiency in high-end materials. If the company can consistently translate its technological advantages into market share and further enhance its global competitiveness, its positioning as a platform-based semiconductor materials enterprise is expected to be further solidified. Conversely, if the industrialization progress of some new businesses falls below expectations, the market may reassess its growth trajectory.