New stock outlook | Tongbo Technology: The second largest player in high-performance copper foil, can fundraising and expanding production capacity break through the bottleneck of low gross profit margin?

In the industrial wave of continuous increase in the penetration rate of new energy vehicles, accelerated expansion of energy storage industry, and rapid iteration of 5G/6G communication technology, electrolytic copper foil, as the core basic material of lithium batteries and printed circuit boards, has seen a rapid growth in market demand. The technical threshold and supply stability of high-performance electrolytic copper foil have become the core focus of attention for the industry chain upstream and downstream. In this industry trend, China's leading electrolytic copper foil solution provider, Copper Tech, officially submitted its application for listing on the main board of the Hong Kong Stock Exchange on January 28, aiming to further consolidate its market position through fundraising. This company, which has been deeply involved in the industry for nearly ten years, not only has core advantages in technology and customer resources, but also faces multiple challenges in industry cycles and financial structures. The second largest producer of high-performance lithium copper foil in China According to the prospectus, Copper Tech was established in 2016 and is a provider of electrolytic copper foil solutions, specializing in the design, research and development, production, and sales of high-performance electrolytic copper foil. According to data from Frost & Sullivan, by sales volume in 2024, the company is the ninth largest electrolytic copper foil producer in China, with a market share of approximately 4%. By sales volume in 2024, the company is also the second largest producer of high-performance lithium copper foil in China, with a market share of 13%. The company's product portfolio includes two core categories: standard and high-performance lithium battery copper foil, as an indispensable negative electrode current collector in lithium-ion batteries; and electronic circuit copper foil, used in the production of printed circuit boards (PCBs) and copper clad laminates (CCL). The lithium battery copper foil produced by the company is a key component of various types of lithium batteries used in new energy vehicles, energy storage systems, and consumer electronics products. The company provides customizable copper foil products with thickness ranging from 3m to 10m, covering a variety of tensile strength grades from standard to extremely high strength. In addition, high-end electronic circuit copper foil is a core material for manufacturing printed circuit boards and copper clad laminates, widely used in markets such as 5G/6G communication, AI servers, high-performance computing, commercial aerospace, automotive electronics, and consumer electronics. Furthermore, the company supplies specialized negative electrode current collector samples for solid-state batteries and solid-liquid hybrid batteries to top battery manufacturers worldwide, as well as reverse-treated copper foil (RTF) and ultra-low profile (HVLP) sample products to several leading domestic PCB and CCL manufacturers. Technological innovation is the core competitiveness of Copper Tech, with breakthroughs in key indicators such as ultra-thinness and high strength. In 2019, the company achieved mass production of 5m ultra-thin copper foil, introduced 4.5m ultra-high strength copper foil with a tensile strength of 600MPa in 2023, further launched 6m ultra-high strength products with a tensile strength of 700MPa in 2024, and successfully developed multi-metal current collector samples for solid-state batteries. As of the last practicable date (January 21, 2026), the company holds a total of 96 granted patents and has participated in the drafting of the national industry standard "Electrolytic Copper Foil for Lithium-ion Batteries." In terms of production and supply chain, the company has established a scalable layout. It has an integrated production base in Fuzhou, Jiangxi, which includes Copper Tech Factory (annual capacity of 20,000 tons) and Deep Cultivation Factory (annual capacity of 50,000 tons), with a total designed annual capacity of 70,000 tons, and a total capacity utilization rate of 91.3% by September 2025. To meet the growing market demand, in October 2025, the company started construction of another intelligent automated manufacturing plant in Sichuan Province, with an initial designed annual capacity of 20,000 tons, expected to commence large-scale production in the fourth quarter of 2026. In addition, an additional production line with a designed annual capacity of 20,000 tons was added to the Deep Cultivation Factory and commenced operation in December 2025. In terms of supply chain management, the company adopts a centralized procurement model, establishing long-term cooperation with several large domestic non-ferrous metal suppliers to ensure stability in the supply of raw materials and cost advantages. From 2023 to September 2025, the company's procurement from its top five suppliers decreased from 94.9% to 64%, continuously optimizing supply concentration. In terms of customer resources, the company has established long-term partnerships with six of the top ten lithium battery manufacturers globally, including Contemporary Amperex Technology and Eve Energy Co., Ltd. The top five customers accounted for 82% of the company's revenue by September 2025, with the largest customer contributing 58%. Stable performance faces cash flow management pressure In terms of performance, Copper Tech has shown a stable growth trend in recent years, but also faces fluctuations in gross profit margin and pressure in cash flow management. In terms of revenue, the company achieved revenue of 3.163 billion yuan in 2023, increased to 3.212 billion yuan in 2024, and further increased by 24.4% year-on-year to 2.849 billion yuan in the first nine months of 2025. In terms of profitability, the company's gross profit margin fluctuates due to industry cycles and product structure. The gross profit margin was 6.7% in 2023, decreased to 3.1% in 2024 due to temporary oversupply in the lithium copper foil market leading to a decline in processing fees, and increased to 4.8% in the first nine months of 2025 as market demand rebounded and sales of high value-added products increased. It is worth noting that the electronic circuit copper foil business is still in a loss-making state, but the gross loss rate is gradually narrowing. With the outbreak of downstream markets such as AI and 5G, it is expected to become a new growth point in performance. The company uses an industry-standard pricing model of "copper price + processing fee" to effectively isolate the impact of raw material price fluctuations on core profits, providing relative stability for profitability. In terms of financial structure, the company faces certain liquidity pressures. The net cash outflow from operating activities was 715 million yuan in 2024, 349 million yuan in the first nine months of 2025, mainly due to the business characteristics of "cash purchase of copper + bill collection". This has led the company to supplement its cash flow through financing activities. As of September 30, 2025, the company's debt-to-equity ratio was 172.7%, significantly higher than the 115.7% in 2023. Additionally, the company has a relatively long turnover period for trade receivables and bills. The turnover period for trade receivables and bills was 170.5 days in the first nine months of 2025, with trade receivables totaling 1.501 billion yuan and bills receivable totaling 344 million yuan during the same period. Copper Tech stated in the prospectus that the company cannot guarantee the timely or full recovery of all or any trade receivables and bills, and may face credit risks. In addition, the company has provisioned for expected credit losses on trade receivables and bills receivable. If the conditions of trade receivables and bills deteriorate, the company may need to make corresponding provisions for impairment. The electrolytic copper foil industry is expected to maintain rapid growth With the electrolytic copper foil industry entering a high cycle of prosperity, Copper Tech is expected to enhance its competitiveness and improve profitability through listing. From the industry trends perspective, a report by Frost & Sullivan shows that the global sales volume of electrolytic copper foil increased from 590,300 tons in 2020 to 1,493,400 tons in 2024, with a compound annual growth rate of 26.1%. It is projected that by 2029, the global sales volume of electrolytic copper foil will further increase to 4,066,900 tons, with a compound annual growth rate of 22.2% from 2024 to 2029. China's sales volume of electrolytic copper foil increased from 362,400 tons in 2020 to 1,048,100 tons in 2024, with a compound annual growth rate of 30.4%. In the future, it is expected that by 2029, China's sales volume of electrolytic copper foil will further increase to 2,714,700 tons, with a compound annual growth rate of 21% from 2024 to 2029. At the policy level, the government's support for the new energy industry and the promotion of the "dual carbon" goals provide a favorable development environment for the electrolytic copper foil industry. The company has obtained the qualification of a high-tech enterprise, enjoying a 15% preferential enterprise income tax rate, and has been identified as a national key small and medium-sized enterprise specializing in innovation, research and development expenses, and industrial policy support. In addition, the industry trend of "ultra-thinness, low roughness, and green production" aligns well with the company's technological layout, laying the foundation for seizing market opportunities. The company has obtained the green factory certification in Jiangxi Province, implementing large-scale applications of green, arsenic-free roughening processes through measures such as wastewater recycling and green electricity procurement, in line with the industry's trend of sustainable development. In terms of competitive landscape, the concentration of China's electrolytic copper foil industry is relatively low, with the top ten manufacturers collectively holding a market share of only 48.1%, indicating significant industry consolidation potential. Leveraging its comprehensive advantages in technology research and development, customer resources, and production capacity, Copper Tech is poised to further increase its market share in industry consolidation. The funds raised through the IPO are intended for capacity expansion, research and development investments, and working capital supplementation, with the construction of the intelligent factory in Sichuan strengthening its scale advantage, and the upgrade of the research and development center helping it maintain a leading position in cutting-edge areas such as solid-state battery current collectors and high-frequency high-speed copper foil. As a benchmark company in the field of high-performance electrolytic copper foil, Copper Tech, with its technological accumulation, solid customer relationships, and expanding production capacity, has successfully positioned itself at the forefront of the industry trend. This listing in Hong Kong is expected to provide capital support to further enhance its brand influence and industrial integration capabilities. However, the company still needs to address potential risks such as fluctuations in gross profit margin, high debt-to-equity ratio, and high customer and supplier concentration. For investors, the company's technological barriers, customer quality, and industry growth dividends are core focus areas, while its ability to manage industry cycles and financial risks will determine its long-term investment value.