GON TECHNOLOGY (02768): Profit alert materializes + cross-industry pressure mounts, goodwill and cash flow challenges await resolution.

From October 13 to 14, GON TECHNOLOGY (02768) came under capital "pressure": its Hong Kong-listed shares fell by nearly 45% cumulatively over two days, while A-share Qingdao Gon Technology hit the daily limit down for two consecutive sessions. In sharp contrast to the steep stock price decline, the company's preliminary third-quarter report disclosed on the evening of October 14 showed that net profit attributable to shareholders is expected to reach RMB 950 million to RMB 1.1 billion, up 54.45% to 78.84% year-on-year, with the high growth of its core modified plastics and composite materials businesses delivered. In our view, the market panic is not unfounded. The stock price anomaly was directly triggered by the company's October 12 announcement of a RMB 1.504 billion cash acquisition of an 80% stake in Sichuan Zhongfuneng the valuation appreciation rate of the target exceeds 200%, and the target is currently embroiled in a trade secret lawsuit; at the same time, the company also faces significant cash payment pressure and guarantee risks from its computing power business. Against the backdrop of solid and improving fundamentals, is this "cross-industry" gamble a precise positioning for the domestic substitution window in semiconductor materials, or a radical adventure under a heavy-asset expansion cycle? Cash Flow Stress Test Under a High-Premium Acquisition According to our understanding, GON TECHNOLOGY's RMB 1.504 billion cash acquisition of an 80% stake in Sichuan Zhongfuneng constitutes a stress test on its balance sheet in terms of transaction structure alone. According to the announcement, the transaction adopts the income approach for valuation. The appraised value of all shareholders' equity of the target company is approximately RMB 1.883 billion, representing an appreciation of approximately RMB 1.256 billion over its book net assets of approximately RMB 628 million, an appreciation rate of 200.07%. After the acquisition is completed, a relatively large amount of goodwill will be formed in the consolidated financial statements. More critically, this is an all-cash transaction: the first installment of RMB 110 million, the second installment of RMB 792.4 million, and the third installment of RMB 601.6 million need to be paid in a concentrated manner within a short period after the agreement takes effect and closing, directly consuming the company's freely disposable monetary funds. The problem is that GON TECHNOLOGY's current cash flow position is not comfortable. As of the end of the first quarter of 2026, the company's monetary funds were approximately RMB 4.006 billion, and net cash flow from operating activities was RMB 132 million, down 28.94% year-on-year. Based on current liabilities of approximately RMB 7.736 billion for the same period, the monetary funds/current liabilities ratio is approximately 51.94%, and the net operating cash flow/current liabilities ratio is approximately 1.71%, leaving a relatively weak short-term liquidity safety margin. Against this backdrop, the RMB 1.5 billion cash outflow, combined with the company's PEEK project, aviation acrylic glass project, Guoen Chemical (Dongming) trial run and commissioning, and other capital expenditure projects that still require nearly RMB 1 billion in follow-up investment, as well as a guarantee limit of up to RMB 15 billion for its computing power business, have significantly compressed the company's liquidity safety margin. Although the transaction includes performance commitments (cumulative net profit of no less than RMB 400 million from 2026 to 2028) and double cash compensation clauses, the market is naturally skeptical about the ability to deliver on cross-industry acquisitions Zhongfuneng's net profit in 2025 was only RMB 71.21 million, and achieving RMB 110 million in net profit in 2026 would mean nearly doubling performance, implying a steep growth trajectory. Once future performance falls short of expectations, goodwill impairment will directly hit the income statement, forming a negative cycle of "buying at a high premium performance misses targets goodwill impairment." Mismatch Between Profit Alert and Hidden Concerns: Strong Book Profit, Pressured Free Cash Flow Expectations The preliminary third-quarter report disclosed on the evening of October 14 showed that GON TECHNOLOGY's net profit attributable to shareholders is expected to reach RMB 950 million to RMB 1.1 billion, up 54.45% to 78.84% year-on-year, with the high growth of its core modified plastics and composite materials businesses beyond doubt. Following the profit alert, the stock price rose in response on the 15th, once gaining more than 18% intraday, though it later retreated to a closing price of 29.48, up 9.84%. The market's concern is that the profits hard-earned from the core business will be used to acquire new assets at a premium that remain uncertain, and future ROE faces the risk of dilution. From a sector perspective, electronic specialty gases do indeed have a long-term narrative of "domestic substitution + AI-driven demand" global tungsten hexafluoride supply has contracted due to the exit of Japanese and South Korean capacity, prices have risen sharply, and industry prosperity has improved. According to TECHCET data, global tungsten hexafluoride demand has grown from approximately 4,500 tons in 2020 to nearly 9,000 tons in 2025, nearly doubling in five years; Business Research Insights predicts that the global tungsten hexafluoride market will be approximately USD 740 million in 2026 and is expected to climb to USD 3.45 billion by 2035, with a compound annual growth rate of approximately 19% during the period. At the same time, China's overall electronic specialty gas market is expected to exceed RMB 42 billion by 2030, with an average annual growth rate significantly higher than the global average. On the supply side, the global supply chain is undergoing structural reshaping. High-purity tungsten powder, the core raw material for tungsten hexafluoride, accounts for 60%-70% of production costs, and China controls more than 80% of global tungsten resources. As domestic export controls on tungsten-related items tighten, Japan's Kanto Denka Kogyo and Central Glass, two leading manufacturers that together account for approximately 25% of global capacity, permanently ceased production starting in July 2026 due to raw material supply cuts, creating a global supply gap of approximately 2,000 tons per year. Under the supply-demand mismatch, tungsten hexafluoride prices rose sharply in 2026, with 5N-grade product quotes rising more than 100% from the beginning of the year, 6N-grade spot quotes once reaching RMB 2.2 million to RMB 3 million per ton, and 7N-grade long-term agreement prices exceeding RMB 3.3 million per ton. In this historic window, the industry is moving from "overseas monopoly" to "domestic dominance," and companies with technical reserves and first-mover advantages in production capacity will fully enjoy the dividends of rising volumes and prices. Zhongfuneng plans a 900-ton-per-year tungsten hexafluoride project, and a 100-ton-per-year pilot facility is currently being advanced, precisely a key layout positioning itself in this scarce track. Although time is still needed from process validation to customer introduction, standing at the starting point of a reversal in the industry's supply-demand landscape, this forward-looking positioning is expected to open a second growth curve for Qingdao Gon Technology as it advances from traditional new materials to core semiconductor consumables. However, the electronic specialty gas industry is ushering in a wave of capacity expansion by domestic companies, and the profit sustainability of new entrants is questionable amid intensifying competition. Peric Special Gases currently has tungsten hexafluoride capacity of 2,000 tons per year, with net profit up 95.63% year-on-year in the first half of 2026; Haohua Chemical Science& Technology Corp.,, Zhongjuxin, Hubei Heyuan Gas Co.,Ltd. and others are also actively advancing capacity expansion and customer certification. In other words, GON TECHNOLOGY's profit is in the "past tense" contributed by its mature core business; while the market is pricing in the "future tense" concerns about deteriorating free cash flow, ROE dilution, and cross-industry integration risks have outweighed the appeal of book profits. Whether GON TECHNOLOGY's cross-industry gamble is a precise positioning for the domestic substitution window in semiconductor materials or a radical adventure under a heavy-asset expansion cycle still needs time and performance to verify.