New Stock Preview | Half-year revenue exceeds full-year revenue of last year, Kunlun New Materials files again while the momentum is hot, aggressively expanding capacity to prepare for a new cycle?

Title context: New Stock Preview | Half-year revenue exceeds full-year revenue of last year, Kunlun New Materials files again while the momentum is hot, aggressively expanding capacity to prepare for a new cycle? Text: Since the beginning of this year, with the recovery of the global lithium battery market, demand for electrolytes has been rapidly released, and the supply-demand dynamics of the industry have improved somewhat. GMTEight noted that Kunlun New Energy Materials Technology (Yichang) Co., Ltd. (hereinafter referred to as "Kunlun New Materials") recently submitted a listing application to the Hong Kong Stock Exchange again. According to the prospectus, in the first half of this year, Kunlun New Materials' revenue was 1.972 billion yuan, considerably higher than last year's full-year revenue of 1.746 billion yuan. Kunlun New Materials disclosed that the surge in revenue was mainly driven by accelerated demand growth from downstream power batteries and energy storage system batteries, and was also supported by factors such as rising new energy vehicle penetration and the rapid development of energy storage solutions. Against the backdrop of an overall market recovery, the electrolyte industry has gradually emerged from its loss-making predicament. Within this context, in the first half of this year, Kunlun New Materials' comprehensive gross margin increased by 8.3 percentage points year-on-year to 14.2%, while the company successfully turned profitable, with net profit reaching 148 million yuan in the first half. From significant performance pressure during the previous industry adjustment period to now achieving half-year revenue exceeding the previous full-year level, along with markedly restored profitability, Kunlun New Materials has finally emerged from the cyclical trough. Now listing while the momentum is hot, can Kunlun New Materials impress Hong Kong stock market investors with its fundamentals and next-stage growth expectations? Performance enters recovery channel amid industry rebound Kunlun New Materials' history can be traced back to 2004, and it is one of China's earliest enterprises to research, develop, and produce lithium-ion power battery electrolytes. The company's core product is lithium battery electrolytes, covering four major areas: power batteries, energy storage system batteries, consumer electronics batteries, and emerging applications. By 2025 electrolyte revenue, it ranks third among global independent suppliers, with a market share of 3.6%. During the performance period in the prospectus, Kunlun New Materials' revenue showed a clear V-shaped trajectory: revenue was 1.577 billion yuan in 2023; in 2024, dragged down by industry overcapacity and the sharp plunge in lithium hexafluorophosphate prices, revenue plummeted to 1.021 billion yuan; in 2025, with the surge in energy storage demand, revenue rebounded to 1.746 billion yuan; and in the first half of 2026, it went further, with half-year revenue reaching 1.972 billion yuan. In terms of business structure, power battery electrolytes have always been Kunlun New Materials' foundation, but their revenue share dropped from 77.7% in 2023 to 70.4% in the first half of 2026; during the same period, energy storage system battery electrolytes rapidly climbed from 11.9% to 24.1%, becoming a strong second growth curve; the share of consumer electronics battery electrolytes shrank from nearly 10% in 2023 to 1.9% in the first half of this year. As for emerging application electrolytes, they are still in the early stages, with revenue share in the first half of this year still almost negligible. The recovery on the profitability side is even more significant. In 2024, Kunlun New Materials' comprehensive gross margin once fell to 4.4%, with a full-year net loss of 28 million yuan; in 2025, the gross margin recovered to 9.4%, while successfully turning profitable, with net profit of 36 million yuan; in the first half of 2026, benefiting from the scale effect brought by sales growth and the recovery in average product prices, the gross margin increased by 8.3 percentage points year-on-year to 14.2%, with net profit reaching 148 million yuan, greatly surpassing the full-year profit of 2025 in just half a year. The comprehensive recovery of Kunlun New Materials' performance is closely related to changes in the industry cycle. Data shows that in the first six months of this year, the company's average electrolyte sales volume was 77,164 tons, a year-on-year increase of 82.3%; the average selling price was 25,000 yuan/ton, significantly recovered from 15,000 yuan/ton in the same period last year. The simultaneous rise in product volume and price jointly drove the release of Kunlun New Materials' performance elasticity. However, it is worth noting that in 2023, Kunlun New Materials' average selling price of electrolyte products was 30,000 yuan/ton, still higher than the average selling price in the first half of 2026. Can aggressive expansion long-term growth momentum? The other side of the performance recovery is that Kunlun New Materials is continuing to advance its strategic production expansion. As of now, Kunlun New Materials' total electrolyte capacity is 180,000 tons/year, and it plans to build new facilities or expand production in Yichang, Jining, Huzhou, Yibin, and Szolnok, Hungary. After completion, total capacity will exceed 500,000 tons/year. Among these, the Hungary base is positioned for localized supply in Europe, serving the world's leading new energy technology group and other international customers. The logic of this layout is clear: the European electrolyte market is expected to grow at a compound rate of over 35% from 2025 to 2030, higher than China and the global average, and localized capacity is a prerequisite for entering the European supply chain. Upstream integration is advancing simultaneously. Kunlun New Materials acquired a 51% stake in Shandong Lizhong in November 2025, entering lithium hexafluorophosphate production. It had previously invested in Yingkou Changcheng and Sichuan Mingfang, locking in additive and solvent supply. In the first half of this year, internal supply of lithium hexafluorophosphate accounted for 16.7% of total procurement, and the amount of internally supplied additives accounted for 48.3% of the company's total procurement. The support of vertical integration measures for gross margin has already manifested in Kunlun New Materials' financials: the gross margin in the first half rose to 14.2%, partly benefiting from the increased proportion of self-supplied raw materials. In terms of technology reserves, Kunlun New Materials has laid out directions including solid-state electrolytes, gel electrolytes, solid-liquid hybrid electrolytes, and sodium-ion electrolytes, with the ionic conductivity of sulfide solid-state electrolytes reaching 12 mS/cm. However, the revenue share of emerging battery materials remains low and is unlikely to contribute substantial performance in the short term. But it should be noted that while capacity expansion can amplify performance elasticity, it is also necessary to be alert to mismatches between the pace of expansion and demand growth. At the industry level, rapid capacity expansion across the market from 2022 to 2024, combined with slowing demand, once pushed the industry-wide capacity utilization rate down to about 30%, followed by a price war. During this period, Kunlun New Materials' own capacity utilization rate also lingered at low levels until it rebounded to 87.3% in the first half of this year. However, this rebound was built on the concentrated release of energy storage demand. If the growth rate of downstream power battery or energy storage installations slows, capacity utilization may decline again, and fixed depreciation and operating costs will further erode profits. From an investment value perspective, Kunlun New Materials' core logic lies in the dual elasticity of "cyclical reversal + share expansion." But it must be said that lithium battery electrolytes are, after all, an industry with strong cyclical attributes, and the degree of match between Kunlun New Materials' expansion pace and downstream demand will directly affect the company's performance trajectory. Looking ahead, whether Kunlun New Materials can successfully list on the Hong Kong Stock Exchange at this point of industry recovery, and whether it can deliver on growth expectations after listing, GMTEight will continue to monitor.