New stock outlook | Electronic ceramic leader Chaozhou Three-Circle (Group) is sprinting towards "A+H": annual revenue reaches as high as 7.266 billion yuan, still facing "threefold pressure".

The advanced electronic ceramic materials and components industry is currently in a high prosperity stage brought about by the upgrade resonance in key sectors of the national economy such as communication, AI and data centers, consumer electronics, automotive electronics, semiconductor manufacturing and packaging, new energy, and intelligent industrial control. At this moment, the electronic ceramic industry leader from Chaozhou, Guangdong Chaozhou Three-Circle(Group) has also embarked on its path to an "A+H" listing. On December 5th, Chaozhou Three-Circle(Group) submitted an application for listing on the Hong Kong Stock Exchange, intending to be listed on the main board. China Galaxy International is the exclusive sponsor. The company was listed on the Shenzhen Stock Exchange on December 3, 2014, with a closing price of 45 yuan and a total market value of 86.242 billion yuan as of December 10. Once listed on the Hong Kong Stock Exchange, Chaozhou Three-Circle(Group) will form an "A+H" dual listing structure. The company has been deeply involved in the field of advanced electronic ceramic materials and components for over 55 years and has now evolved into a leading global enterprise in this sector. According to Frost & Sullivan data, the company's products have already gained significant competitive advantages in some specific areas. For example, the company's alumina ceramic substrates have undergone multiple technological upgrades and expansions, gradually achieving full-specification coverage for chip resistors. Additionally, the company has developed into one of the top suppliers of alumina ceramic substrates globally, with a market share exceeding 50% by revenue in 2024; in terms of revenue in 2024, the company's SOFC membrane slices rank first in the global market share. As a deserving "industry leader" in specific sectors, what is the investment value of Chaozhou Three-Circle(Group)? Annual revenue reaches 7.266 billion yuan, with accounts receivable increasing year by year It is reported that Chaozhou Three-Circle(Group) is mainly grounded in a strong "material" gene and has strategically developed "material + structure + function," constructing core product matrices in four major categories including electronic and ceramic materials, electronic components, communication devices, and equipment components, forming a business framework covering core application areas such as communication, AI and data centers, consumer electronics, automotive electronics, semiconductor manufacturing and packaging, new energy, and intelligent industrial control. Under a diversified business landscape, the fundamentals of Chaozhou Three-Circle(Group) are relatively solid, with annual revenue exceeding 7 billion yuan, and profits exceeding 2 billion yuan. According to the prospectus, the company achieved revenues of 5.089 billion yuan, 5.682 billion yuan, and 7.266 billion yuan from 2022 to 2024, with annual growth rates; and profits during the period were 1.506 billion yuan, 1.583 billion yuan, and 2.19 billion yuan, showing continuous growth. As of the third quarter of 2025, the revenue reached 6.421 billion yuan, an increase of 20.67% year-on-year; and the profit for the period was 1.958 billion yuan, an increase of 22.09% year-on-year. In addition to stable revenue and profit growth, Chaozhou Three-Circle(Group)'s gross profit margin is also at a high level: from 41.3%, 37.9%, 40.9%, to 40.1% from 2022 to the third quarter of 2025. With the combined effect of steady performance growth and improving profitability, Chaozhou Three-Circle(Group)'s cash flow is also in a robust state. As of the third quarter of 2025, the net cash flow from operating activities of the company was 1.99 billion yuan, and cash and cash equivalents increased to 4.299 billion yuan. However, with the continuous expansion of the company's business, its accounts receivable have also been increasing. According to the prospectus, from 2022 to September 30, 2025, the company's accounts receivable were approximately 1.198 billion yuan, 1.627 billion yuan, 1.872 billion yuan, and 2.036 billion yuan, respectively. Although the increase in accounts receivable may be related to the expansion of the business scale, the high level of accounts receivable also increases the risk of asset impairment for the company. In this regard, the company also noted in the prospectus that if the credit conditions of the company's customers deteriorate, or if a large number of customers fail to settle their accounts receivable for any reason, the company may continue to incur impairment losses in the future. Delayed or unable settlement by customers could have a certain adverse impact on the company's financial condition and operating performance. It can be seen that Chaozhou Three-Circle(Group)'s stable performance growth is due to a virtuous cycle of leading technology, surging downstream demand, and robust financials, while the increase in accounts receivable is a natural result of business expansion and customer structure optimization. Overall, the company's fundamentals are relatively solid, with manageable risks. The industry is in a high prosperity phase vs. the inevitable "triple pressure" Of course, the steady growth of Chaozhou Three-Circle(Group)'s performance cannot be separated from the high prosperity of the industry. According to GMTEight, advanced electronic ceramic materials are the foundation of the industry, providing high-precision and high-reliability support for downstream components. Representative products include alumina/nitride ceramic substrates, electronic pastes, and SOFC membrane slices. Advanced ceramic components mainly include ceramic electronic components, ceramic communication devices, and ceramic equipment components, widely used in key areas such as functional support, electric performance adjustment, structural solidity, and thermal management and play a core role in domestic substitution. In recent years, driven by trends such as the high-end consumer electronics, AI and IoT proliferation, electric and intelligent automotive trends, global computing infrastructure expansion, deepening semiconductor domestic substitution, and energy transformation, the demand for full-category products in the industry has been continuously increasing, leading to the continuous expansion of the market size. According to Frost & Sullivan, the global market size of core advanced electronic ceramic materials, core ceramic electronic components, core ceramic communication devices, and core ceramic equipment components is expected to grow at annual compound growth rates of 11.8%, 7.1%, 8.3%, and 11.8%, reaching RMB 42.2 billion, RMB 251.7 billion, RMB 70.4 billion, and RMB 96.5 billion respectively by 2030. Among them, as a leading enterprise in advanced electronic ceramics, Chaozhou Three-Circle(Group)'s performance will naturally benefit from the continuous growth of the industry. Its core business, MLCC (Multi-Layer Ceramic Capacitors), has strong growth potential. As China's largest MLCC supplier, its products cover a full range from consumer electronics to automotive-grade. The performance growth directly benefits from the demand brought by AI servers, data center construction, and the continuous promotion of domestic substitution. The SOFC business is gradually becoming a new growth point, with the company's SOFC membrane slices leading globally. The company's participation in the construction of the country's first 300-kilowatt commercial demonstration project has been put into operation. This business is expected to fully benefit from the demand for AI power construction in North America, with huge growth potential. However, it is important to note that even for a leading company in a specific industry, Chaozhou Three-Circle(Group) is not immune to rising costs and pricing pressures. Specifically, according to the prospectus, in recent years, the proportion of raw material costs to operating costs for Chaozhou Three-Circle(Group) has continued to rise, from approximately 51% in 2022 to 59% in the first three quarters of 2025, facing certain cost pressures. At the same time, core products are facing price pressures, with average selling prices of MLCC and communication devices declining during the reporting period. Additionally, Chaozhou Three-Circle(Group)'s global competitive position still needs to be improved: although the company is a domestic leader, its global market share in the MLCC business is only about 2%, ranking ninth. Industry leaders still maintain absolute advantages, and the company faces fierce global competition, with major competitors coming from Japan, South Korea, Taiwan, and mainland China. Based on global revenue in 2024, the top ten companies collectively hold around 98% market share. In summary, Chaozhou Three-Circle(Group) is a domestic electronic ceramic leader with a solid foundation and is on a high-prosperity track. Its Hong Kong listing is a key step in its international layout, with a clear long-term growth logic. The main challenge currently lies in how to continuously increase global market share in competition with international giants, and effectively manage costs and expansion pace.