New Stock Outlook | SPC Growth Rate Peak, EPC Gross Margin Drops Sharply by 7 Percentage Points, JingTong New Material Structural Bonus Yet to Take Over Scale Bonus

As the "double champion" of the PVC decorative material export market, Zhejiang Crystal New Materials Group Co., Ltd. (hereinafter referred to as "Crystal New Materials") officially submitted its listing application to the Hong Kong Stock Exchange main board on May 27, with CICC as the sole sponsor. The prospectus shows that by 2025, Crystal New Materials ranked first in total exports of PVC decorative materials and exports to Europe in mainland China. Its products are sold to more than 60 countries and regions worldwide, making it a true industry leader in going global. However, behind the impressive market share, the company is also facing the severe challenges of significantly slowing revenue growth and a sharp decline in gross profit margin in the North American market. In the current environment of accelerated development of green building materials industry, whether Crystal New Materials can leverage the capital market to overcome the growth bottleneck, optimize global layout, is receiving high market attention. Behind the 22% compound profit growth Revenue plummeted while revealing highly concentrated regional risks Crystal New Materials is a leading enterprise in the PVC decorative material industry, driven by the ODM/OEM model and deeply rooted in overseas markets. During the reporting period from 2023 to 2025, the company achieved steady profit growth for three consecutive years due to its leading position in the industry and economies of scale. However, the sharp slowdown in revenue growth, excessive reliance on a single market, and potential pressure on raw material costs pose significant concerns in its fundamentals. From the revenue perspective, Crystal New Materials achieved continuous expansion in scale during the reporting period, but the signal of sharply decreasing growth momentum cannot be ignored. The company's revenue climbed from 15.98 billion yuan in 2023 to 22.19 billion yuan in 2024, with a year-on-year growth rate as high as 38.9%, demonstrating strong market expansion capabilities and order acquisition efficiency. However, in 2025, revenue growth plummeted to 3.9%, with total revenue for the year reaching only 23.07 billion yuan, with a three-year compound growth rate of about 20.2%. From a product perspective, SPC products remain the largest source of revenue, contributing 16.05 billion yuan in revenue in 2025, accounting for 69.5%, but its growth has significantly slowed down. While EPC products have a smaller base, they have a high three-year compound growth rate of 68.3%, increasing from 0.56 billion yuan to 1.78 billion yuan, demonstrating the growth potential of the emerging product line. From the structural dimension of revenue, the company still overly relies on a single product category in the short term, and the product matrix needs further optimization and diversification. In terms of regional structure analysis, Crystal New Materials demonstrates a high degree of market concentration risk. The European market has long dominated, contributing revenue of 19.69 billion yuan in 2025, accounting for as high as 85.3%; although revenue from the North American market increased from 0.70 billion yuan in 2023 to 2.39 billion yuan in 2025, accounting for 10.4%, it has not yet formed an effective regional diversification pattern. This highly concentrated regional revenue structure makes the company's performance highly susceptible to disturbances from the macroeconomic situation in Europe, changes in environmental policies, and geopolitical factors, with relatively weak risk resistance. The market share of mainland China is only about 0.9%, with revenue of less than two hundred million yuan, indicating that the company's brand awareness and channel layout in the domestic market are still in the early stages, and the huge potential of the domestic market has not been effectively unleashed. In terms of profitability, the company overall shows a stable and improving trend, but concerns also coexist. From 2023 to 2025, the company's comprehensive gross profit margins were 35.9%, 37.0%, and 36.8% respectively, fluctuating within the range of 35% to 37%, indicating that the company has maintained strong resilience in cost control and pricing strategies. However, there is a structural differentiation in the quality of profitability that warrants vigilance: while the overall gross profit margin trended steadily, the gross profit margin in the North American region experienced a significant decline. As reported, the gross profit margin in the North American market, which is the second growth pole, has decreased significantly, and the severe differentiation in profitability between regions poses a potential risk to the profit structure. From a cost perspective, sales costs increased from 10.24 billion yuan in 2023 to 14.57 billion yuan in 2025, with a growth rate significantly higher than the revenue growth rate. In particular, in 2024, the cost increase was as high as 36.6% year-on-year, basically in sync with revenue growth during the same period, indicating that the company has not yet realized significant cost leverage effects during its expansion. In terms of period expenses, the growth rate of various expenses continues to exceed the revenue growth rate, exerting continued pressure on profit margins. Sales and distribution expenses increased from 1.69 billion yuan in 2023 to 2.60 billion yuan in 2025, with a growth rate of about 54% over three years, far exceeding the revenue growth rate during the same period; administrative expenses were even more significant, surging from 72.13 million yuan to 1.41 billion yuan, nearly doubling, with an average annual compound growth rate of as high as 40.0%. This phenomenon may be related to one-time professional service fees and management structure expansion incurred during the preparation for listing on the Hong Kong stock exchange. However, at the financial data level, the trend of accelerated growth in period expenses directly reduces the marginal profit corresponding to unit revenue, which hinders the improvement of net profit margins. Main growth slows sharply Profitability of new products is not stable Observing the reporting period from 2023 to 2025, the highest revenue category SPC consistently maintained its absolute dominance, accounting for 72.3%, 71.6%, and 69.5% respectively, with corresponding revenues increasing from 11.55 billion yuan to 16.05 billion yuan, with a three-year compound growth rate of about 17.8%. SPC flooring uses calcium carbonate and PVC composite material to form a high-density rigid core layer, with excellent dimensional stability and waterproof performance, making it one of the most demanding technology routes in the global PVC resilient flooring market. Crystal was the first to achieve large-scale production in this category, forming a significant first-mover advantage and economies of scale by deeply integrating with large overseas building materials retailers through the ODM model. However, it is worth noting that the proportion of SPC revenue has declined for two consecutive years, with the year-on-year growth rate in 2025 dropping sharply to about 1.0%, and revenue almost remaining flat compared to 2024. This signal indicates that the main product may have entered a stage of stock competition in major export markets, and the logic of "total volume expansion" relying solely on a single large category is facing the bottleneck of diminishing marginal returns. Against the backdrop of slowing SPC growth, the growth potential of LVT and EPC, the two major categories, becomes an important observation window for optimizing the company's revenue structure. The LVT category is a traditional resilient floor, with revenues increasing from 3.52 billion yuan in 2023 to 4.88 billion yuan in 2025, with a compound growth rate of about 17.6%, and the proportion of revenue stable at 21%-22%, making it the company's second largest source of revenue. The more positive change has occurred in the gross profit margin of LVT: from 31.9% in 2023 to 36.4% in 2025, indicating a cumulative increase of 4.5 percentage points over three years. This shows that the company has significantly improved the quality of profitability in the traditional category through material process improvements and product upgrades. The EPC category demonstrates the strongest growth potential, with revenue jumping from 56.3 million yuan in 2023 to 178 million yuan in 2025, with a high compound growth rate of 77.9%, and the revenue share increasing from 3.5% to 7.7%. EPC uses foamed polymer core layers, and compared to SPC, it is more lightweight and has a softer feel, positioning itself between traditional LVT and rigid SPC. The rapid volume of sales in this category verifies the company's efficiency in new product introduction and market response. However, caution is needed as the gross profit margin of EPC reached a high of 38.3% in 2024, but sharply dropped to 31.3% in 2025, with a fluctuation of 7 percentage points. This steep decline may be due to intensified pricing competition during the initial phase of volume exploration, or the initial scale effects have not been fully realized. In any case, whether EPC can repair and stabilize profitability while expanding its scale will be key to determining whether it can truly become a second growth curve. In addition, compared to leading companies in the industry, Crystal still lags behind in the depth of product iteration. Taking Zhejiang Tianzhen Technology as an example, the company has continuously upgraded from traditional LVT to new types of composite flooring such as WPC, SPC, MGO, and even RPET, and has pioneered the mass production and bulk order delivery of RPET flooring. Tianzhen has effectively avoided tariff barriers and dominated the industrial process of new material routes through high research and development investment and overseas production capacity layout (Vietnam, Thailand, the United States). In contrast, Crystal's research and development expenses as a proportion of revenue have decreased from about 4.7% to about 3.6% during the reporting period. During the rapid evolution of industry technology, the weakening of research and development intensity may weaken its first-mover advantage in high-end new products (such as higher environmental standards, lighter and thinner, or functional composite flooring). In conclusion, the business growth logic of Crystal New Materials is essentially an evolutionary process from a "gradual shift from scale dividends to structural dividends." SPC, as a cash cow category, has contributed stable revenue and profit base, but its incremental space has significantly narrowed; LVT has achieved continuous improvement in profitability through quality upgrades, completing the revaluation of traditional categories; EPC is in the stage of volume exploration, and the significant fluctuations in its gross profit margin indicate that its business model has not yet fully matured. The company's current business competitiveness lies more in its long-term supply relationship with core overseas customers under the ODM model and its ability to smooth out the single-product cycle fluctuations through a combination of multiple categories. However, in order to break through the structural bottleneck of slowing revenue growth and excessive reliance on a single market, Crystal needs to make more forward-looking layouts in dimensions such as product innovation intensity, speed of incubating high-end new products, and global production capacity allocation.