IPO Preview | "High Growth and Strong Constraints" Coexist, What Is the Value of Tongbo Technology?

As one of the few companies in the market endorsed by both BYD Company Limited and Contemporary Amperex Technology, Jiangxi Tongbo Technology Co., Ltd. (hereinafter referred to as "Tongbo Technology") has made recent progress in its journey towards a listing in Hong Kong. It has been noted that after initially submitting a prospectus to the Hong Kong Stock Exchange on January 28 this year, Tongbo Technology submitted a second listing application to the main board of the Hong Kong Stock Exchange on August 31, with Sinolink (Hong Kong) acting as its exclusive sponsor. Tongbo Technology focuses on the design, research and development, production, and sales of electrolytic copper foil. According to data from Frost & Sullivan, based on sales figures in 2025, Tongbo Technology ranks as the world's tenth-largest producer of electrolytic copper foil, with a market share of approximately 2.3%; it also ranks third among high-performance lithium battery copper foil suppliers in China, holding a market share of 12%. Supporting this market position is a diversified shareholder base behind Tongbo Technology. As of the IPO, Fuzhou High-tech (local state-owned assets) held approximately 3.43%, CICC held about 1.50% through CICC Yibin, Southeast Science and Technology Innovation (Nanjing State-owned Assets) held approximately 0.90%, BYD Company Limited held about 3.00%, and Contemporary Amperex Technologys capital Yibin Chenda held approximately 3.09%. While the endorsement from diverse shareholders is surely a "plus" for Tongbo Technology, the impressive performance is the company's biggest confidence booster in pursuing an IPO. Data shows that from 2023 to 2025, Tongbo Technology's revenues are projected to be 3.163 billion, 3.212 billion, and 4.212 billion yuan, with net profits of 63.057 million, 20.58 million, and 93.834 million yuan respectively, showing a trend of sustained revenue growth paired with fluctuating profits. By the first half of 2026, Tongbo Technology's revenue reached 3.403 billion yuan, an 88.85% year-on-year increase, with a net profit of 165 million yuan, representing a staggering 1,141.85% increase year-on-yearmarking a dual explosion in both revenue and profit. The data trends clearly indicate that Tongbo Technology entered a fast growth trajectory in 2025 and experienced a rapid explosion in the first half of 2026, suggesting a significant improvement in the company's fundamentals. However, the crucial question is: what is the core logic driving Tongbo Technology's explosive performance? Is this drive sustainable? This not only determines the company's future fundamentals but also anchors its IPO valuation. Industry demand recovery and improved product structure accelerate performance release Founded in 2016, Tongbo Technology is a provider of electrolytic copper foil solutions, focusing on the design, research and development, production, and sales of high-performance electrolytic copper foil. The companys revenue primarily comes from the sale of copper foil products for lithium batteries and electronic circuits, accounting for 87.8% and 11.4% of total revenue respectively by mid-2025, with lithium battery copper foil representing the bulk of the companys income. According to the prospectus, the key reason for Tongbo Technology entering a period of accelerated growth in 2025 is the scaling production of high-performance lithium battery copper foil and steady growth of electronic circuit copper foil. From 2023 to 2025, the sales volume of high-performance lithium battery copper foil was 2,739 tons, 22,598.5 tons, and 32,872.3 tons respectively, and in the first half of 2026, sales surged by 76.20% to 24,947 tons. With rapid sales growth and a generally stable average selling price, the revenue from high-performance lithium battery copper foil achieved substantial growth of 239 million, 1.881 billion, and 2.888 billion yuan from 2023 to 2025. In the first half of 2026, it demonstrated "simultaneous growth in volume and price," with sales increasing by 76.20% while the average price rose from 84.2 yuan/kg to 107.1 yuan/kg. This collectively drove revenue growth for high-performance lithium battery copper foil by 124.20% to 2.671 billion yuan, signaling a strong growth momentum. Clearly, high-performance lithium battery copper foil has become the core growth engine driving the overall revenue increase for the company. Meanwhile, the sustained and stable growth of electronic circuit copper foil products has also become an important pillar supporting the companys explosive performance. Revenue figures for this product reached 323 million, 351 million, and 479 million yuan from 2023 to 2025, with a year-on-year increase of 21.18% to 280 million yuan in the first half of 2026. The continuous growth in revenue for this product is largely attributed to increased volume and price. From 2023 to 2025, both the average selling price and sales volume of this product showed consistent growth. Although sales saw a slight decline in the first half of 2026, the continuous rise in average selling price still led to ongoing revenue growth. In contrast to the ongoing acceleration in revenue, Tongbo Technology's profit trajectory took on a more dramatic "deep V" curve. In 2024, net profit plummeted by 67.36% year-on-year to 20.58 million yuan, hitting a temporary bottom; however, starting from 2025, it rebounded sharply and exploded. This reversal is closely in line with the recovery of gross profit margins. According to the prospectus, from 2023 to 2025, the company's gross profit margins were 6.7%, 3.1%, and 5.7%, showing an initial decline followed by a rise; in the first half of 2026, the gross profit margin further climbed to 8.1%, a significant increase of 3.6 percentage points compared to 4.5% in the same period of 2025, reaching a new high since 2023. Specifically, the gross profit margin fell sharply to 3.1% in 2024, primarily due to an imbalance in the supply and demand of standard lithium battery copper foiloversupply put significant pressure on processing fees, causing the products gross profit margin to plunge from 8.4% in 2023 to 1.5%, primarily dragging down overall profitability. In 2025, the gross profit margin rose to 5.7%, benefiting from dual improvements: on one hand, the recovery of gross profit margins for standard products to 5.1% driven by improved downstream demand; and on the other hand, the accelerated scaling of high-performance lithium battery copper foil, with its gross profit margin further improving to 6.8%; additionally, electronic circuit copper foil transitioned to profitability due to strong demand from AI PCs, shifting its gross profit margin from negative to positive. Entering the first half of 2026, these two improvement factors not only continued but were further strengthenedthe proportion of high-performance products continued to rise, and the high-end transformation of electronic circuit copper foil continued to be realized, collectively pushing the gross profit margin up to 8.1%, fully releasing profit elasticity. Thus, it is evident that the acceleration of Tongbo Technology's performance in 2025 and its explosion in 2026 result from a dual resonance at both the industry and company levels. On the industry side, the recovery in demand for new energy vehicles and energy storage has led to a rebound in processing fees for lithium battery copper foil, while the deployment of AI servers and high-performance computing has accelerated the evolution of electronic circuit copper foil towards high-value low-profile (HVLP), ready-to-fabricate (RTF), and other high-end categories, highlighting a structural supply shortage for high-end copper foil. Amid this industry trend, Tongbo Technology is accelerating its transition to high-value categories, with the sales proportion of high-performance lithium battery copper foil rising from 7.6% in 2023 to 78.5% in the first half of 2026. Moreover, the gross profit margin for electronic circuit copper foil has shifted from negative to positive, reaching 6.2% in the first half of 2026, driven by high-end products. The increase in the share of high-value product structures has released profit elasticity for Tongbo Technology. With company resonating with industry , high growth is expected to continue Clarifying the logic behind Tongbo Technology's past performance explosion has also made the company's future growth potential clearrelying on the resonance between two high-prosperity tracks () and the company's own strengths (), a continuation of revenue growth is a high-probability event. From the industry perspective, both downstream sectors in which the company operates are in a phase of rapid expansion, suggesting that the current prosperity is not merely a flash in the pan. On the demand side, data from Sullivan shows that driven by surging energy storage demands, overseas scaling, and ultra-thin upgrades, the market growth rate of high-performance lithium battery copper foil in China is expected to maintain a compound annual growth rate of 46.9% from 2026 to 2030. Meanwhile, propelled by the increase in the number of PCB layers in AI servers and the growing consumption of copper foil per unit, the market scale growth rate of AI and computational power PCB copper foil is anticipated to reach 30.2% from 2026 to 2030. On the supply side, since copper foil is a capital-intensive industry, with investments in ten-thousand-ton production lines reaching 400 to 800 million yuan, and construction and ramp-up cycle stretching 18 to 24 months, coupled with the prior down cycle in processing fees leading to low willingness among manufacturers to expand, new supply is unlikely to be released quickly in the short term. Thus, the tight balance of supply and demand in the industry shows strong rigidity, with the market commonly anticipating that there will be a sustained high-end copper foil supply gap from 2026 to 2028, and processing fees are likely to rise and be difficult to fall; this cycle supported by structural supply gaps and technological barriers is not short-term speculation, but rather a long-term structural opportunity. Under this favorable trend of sustained high prosperity in the industry, Tongbo Technology is seeing harvest periods in both product structure and capacity reserves, with accelerated release of profit elasticity firmly supported. In terms of product structure, by the first half of 2026, the revenue share of high-performance lithium battery copper foil has risen to 78.5%, a substantial leap from 7.6% in 2023. As the trend toward ultra-thin products becomes clearer, with processing fees for 4.5 m products approximately 7,000 yuan per ton higher than those for 6 m products, the continuous increase in the share of high-performance lithium battery copper foil will directly push overall profitability upward, as this business sector is expected to continue realizing its structural alpha above industry beta. More exciting is the second curve in the electronic circuit copper foil sector. The companys RTF1 to RTF3 already have mass production capabilities, and RTF4 has also been sent for samples to leading domestic PCB and CCL manufacturers and has entered the verification stage. This business has seen continuous negative gross profits from 2023 to 2024, but is projected to turn profitable in 2025, with gross profit margins further improving to 6.2% in the first half of 2026. Driven by the explosive demand for AI computational power, HVLP, as a high-frequency and high-speed PCB copper foil, can command processing fees ranging from 50,000 to 200,000 yuan per ton, far exceeding the 20,000 to 50,000 yuan per ton of RTF products, and several times that of lithium battery copper foil. As the dedicated electronic circuit copper foil production line for AI PCB in Jiangxi is expected to go into production in 2027, following the rapid scaling of high-end products, this business is anticipated to swiftly transition from supplementary earnings to becoming the core of the company's profits, significantly elevating the overall profitability level. On the capacity side, there is a solid support for the aforementioned product structure upgrades. The company currently has three major production bases, with a total designed annual capacity of about 90,000 tons, achieving a capacity utilization rate of 92.2% in the first half of 2026, nearing full production. Based on this, the 20,000 tons capacity from the Sichuan smart automated manufacturing plant was put into production in August 2026 and is expected to reach full capacity by the fourth quarter; the 20,000 tons production line for AI PCB-specific electronic circuit copper foil is anticipated to be operational in 2027. From 2026 onward, the total newly added capacity will amount to approximately 40,000 tons, equivalent to an increase of about 44% over existing capacity, and this capacity increase is not a blind expansion, but is precisely targeted towards the two fastest-growing areas of high-performance lithium battery copper foil and AI PCB copper foilthis "structural allocation" closely aligns with demand, making it highly probable that the new capacity will be absorbed without issue. Consequently, the revenue scale for the company over the next one to two years still presents clear and quantifiable upward potential. High customer concentration and continuous cash flow outflow While Tongbo Technology's future development appears promising, potential challenges and operational risks faced by the company are also worthy of significant investor attention. The first is the risk of cyclical fluctuations in the industry. Tongbo Technology utilizes the industry-standard pricing model of copper price + processing fee for electrolytic copper foilwhile fluctuations in copper prices can be transferred to downstream customers due to a cost pass-through exceeding 99%, the processing fee is the core variable determining gross profit margin and is fully influenced by industry supply and demand. If the current high prosperity in the industry fails to continue, the quality of the company's growth may be significantly compromisedshifting from "simultaneous growth in volume and price" to being driven solely by volume will considerably constrain performance elasticity. Secondly, a disproportionately high customer concentration and reliance on a single client act as a "double-edged sword." According to the prospectus, from 2023 to 2025, revenue from Tongbo Technology's top five clients accounted for 85.8%, 87.3%, and 83.1% respectively, with 82.4% in the first half of 2026, showing no improvement. Among these, the revenue share from the largest client for the period from 2023 to the first half of 2026 was 48.5%, 62.2%, 58.8%, and 54.9%, indicating particularly heavy reliance on a single client. Over-reliance on a single client weakens the company's bargaining power, significantly compressing the negotiation space for processing fees within the "copper price + processing fee" model. If a core client reduces orders due to adjustments in technical routes, supplier substitution, or changes in procurement strategy, Tongbo Technology's revenue may face a direct impact. Additionally, persistent cash flow outflow has led to higher debt levels. The prospectus shows that the net cash flow from operating activities for 2024, 2025, and the first half of 2026 was -715 million, -416 million, and -935 million yuan respectively, with a cumulative net outflow exceeding 2 billion yuan over two and a half years. The continuous outflow of operating cash primarily arises from the mismatch in settlements caused by the company's excessive reliance on major clientscash payments are needed to lock in cathode copper (which constitutes over 82% of the total production cost), while downstream battery giants primarily settle with bank acceptance bills, resulting in an imbalance between "cash outflow" and "receipt of bills." This leads to increased cash bleeding for larger production and sales scales, with the companys debt ratio rising from 60.5% at the end of 2023 to 71.3% in the first half of 2026. If cash flow conditions do not improve, Tongbo Technology's debt ratio may continue to grow alongside increased scale. If Tongbo Technology cannot effectively improve its customer concentration and cash flow situation, even if its performance continues to grow, its valuation in the capital markets will be suppressed; moreover, should the industry high prosperity cycle reverse, a decline in processing fees coupled with squeezed bargaining power from major clients could trigger a "double kill" on profits and valuations, significantly impacting the company's market value.