New Stock Preview | Xingyuan Material: Steady Revenue Growth vs. Profit Pressure, Can the Lithium Battery Separator Giant Still Achieve a "A+H" Listing?

Global leading lithium battery separator manufacturer—Shenzhen Xingyuan Material Technology Co., Ltd. (300568.SZ) has once again approached the “A+H” listing. According to the Hong Kong Stock Exchange disclosure on January 30, Xingyuan Material has submitted an application for listing on the Main Board of the Hong Kong Stock Exchange, with CITIC Securities International serving as its sole sponsor. The company previously filed with the HKEX on July 7, 2025.

According to the prospectus, the company’s fundraising will be primarily allocated to four key areas: first, research and development of solid-state battery-related products, other functional membranes, and next-generation lithium-ion battery separator products; second, improving global capacity layout and advancing the construction of overseas production bases in Malaysia, the United States, and other countries; third, investing in companies focused on new battery separator materials and semiconductor fields; fourth, repaying overseas base loans and supplementing working capital.

The world’s second-largest lithium-ion battery separator manufacturer

The prospectus states that Xingyuan Material is a lithium-ion battery separator manufacturer founded in 2003, with over 20 years of industry experience in R&D, production, and sales of lithium-ion battery separators. The company is the first to achieve mass export of lithium-ion battery separators and is also China’s first and one of the few companies to possess dry, wet, and coated separator production technologies.

Dry separators are produced by uniaxial or biaxial stretching of polyolefin materials to form microporous structures. This process is relatively simple and cost-effective, widely used in mid- to low-end markets. Wet separators are made using a thermal phase separation principle, employing high boiling point organic solvents as diluents, mixed with polyolefin resins, then extruded, cooled, biaxially stretched, etc. They have more uniform microporous structures and smaller pore sizes, effectively enhancing battery energy density and cycle life, mainly used in high-end lithium batteries. Coated separators are produced by applying ceramic alumina, PVDF binders, or other coating materials on one or both sides of dry or wet separator substrates, further improving thermal stability, oxidation resistance, adhesion, and safety.

The company excels in many key performance indicators of separators, including thickness, porosity, heat shrinkage, air permeability, and puncture strength. It supplies leading global lithium-ion battery manufacturers such as LG Energy Solution, Samsung SDI, CATL, Murata, SK On, SAFT, BYD, Guoxuan High-tech, CATL, EVE Energy, and Sunwoda.

Currently, the company has six manufacturing bases in China, with overseas bases under construction in Europe, Southeast Asia, and the United States. In terms of innovation, the company has established R&D centers in China, Japan, and Sweden, with plans to set up more in Southeast Asia and the US. Its expanding network supports a broad customer base, including over 100 leading lithium-ion battery manufacturers worldwide.

According to Frost & Sullivan data, the company ranked second globally in lithium-ion battery separator shipments for five consecutive years, with its global market share increasing from 11% in 2020 to 14.4% in 2024. In 2024, the group held approximately 17.1% of the market share, ranking second in China’s battery separator market. In terms of shipment volume, the company was the global leader in dry separator market share in 2024, and ranked second globally in wet separator market share.

Stable revenue growth, product prices under pressure limit profitability

The Smart Finance APP notes that Xingyuan Material’s operating condition shows clear phase characteristics, with continuous expansion in scale but also facing profit pressure due to intensified industry competition.

In terms of revenue, from 2022 to 2024, the company’s operating income was 2.867 billion yuan, 2.982 billion yuan, and 3.506 billion yuan respectively; in the first nine months of 2025, revenue reached 2.932 billion yuan, a year-on-year increase of 13.7%, mainly supported by overseas capacity release and delivery of core customer orders. However, profit fluctuations directly reflect the impact of intensified industry competition. From 2022 to 2024, annual net profits were 748 million yuan, 594 million yuan, and 371 million yuan, showing a declining trend; in the first nine months of 2025, net profit was 141 million yuan, down sharply by 59.9% year-on-year. The weakening profitability is also evident in gross profit margin and net profit margin, which for 2022-2024 and the first nine months of 2025 were 44.8%, 43.3%, 28.1%, and 21.3% respectively; net profit margins declined from 26.1% in 2022 to 4.8% in the first nine months of 2025.

The profit decline is partly due to structural overcapacity in the industry leading to price competition, which directly compresses the company’s profit margins. For example, in 2024, the average selling prices of dry, wet, and coated separators fell sharply to 0.35 yuan, 0.81 yuan, and 1.25 yuan per square meter, down 38.6%, 23.6%, and 39.2% year-on-year. Although the company has tried to reduce costs through process optimization and scale effects, the decline in product prices far exceeds cost reductions, severely squeezing profit margins. In the first nine months of 2025, the average prices of the three main products dropped to 0.86 yuan per square meter, a decrease of 6.5% year-on-year. Additionally, the construction of overseas bases and capacity expansion have increased depreciation, amortization, and financial costs, which also put pressure on profits, with financial costs reaching 153 million yuan in the first nine months of 2025, up 47.3% year-on-year.

The profit decline has a chain reaction on the company’s financial status. In 2024, net cash flow from operating activities was 368 million yuan, down 67.5% year-on-year, indicating weakened cash generation from core operations. Net cash flow from investing activities remained negative throughout the reporting period, reflecting large-scale investments in capacity expansion and R&D. The net cash flow from financing activities shows the company has relied on debt financing to ease liquidity pressure, further increasing debt burden. The company’s asset-liability ratio rose from 37.4% in 2022 to 56.9% in 2024, and further to 60.8% in the first nine months of 2025.

Industry growth potential remains, diversified layout seizes growth opportunities

Despite short-term profit pressures, Xingyuan Material’s long-term prospects are closely tied to industry growth trends, with multiple positive factors offering broad growth space.

According to Frost & Sullivan, driven by government regulations and technological advances, the global battery separator market shipment volume is expected to grow from 27.7 billion square meters in 2024 to 84.1 billion square meters in 2029, with a compound annual growth rate of 24.8%. Meanwhile, due to increased capacity in Europe, the US, and China’s expansion of overseas markets to support the global lithium-ion battery supply chain, the proportion of battery separator shipments outside China is expected to rise from 16% in 2024 to 34.1% in 2029, with a CAGR of 45.3%.

To capitalize on the demand growth and structural development opportunities in lithium battery separators, Xingyuan Material plans to allocate part of its IPO proceeds to R&D of solid-state battery-related products, other functional membranes, and next-generation lithium-ion battery separators. In solid-state batteries, the company is committed to systematically developing solid-state battery materials, solid electrolyte membranes, and semi-solid electrolyte membranes.

In the semiconductor materials field, Xingyuan Material has developed high-purity ceramic materials such as alumina, silica, and bauxite, which can be used in thermoelectric semiconductors, ceramic plates, and quartz components. The company also plans to invest in companies focused on new battery separator materials and semiconductor fields to enhance core technology and diversify its product portfolio, thereby building a second growth curve. Specifically, potential investment targets include manufacturers of new materials and semiconductor industries with leading technologies, aiming to gain competitive advantages in future battery separator and semiconductor material industries.

In the short term, Xingyuan Material needs to address industry price competition, profit decline, and rising debt ratios, with profit recovery being a key focus. In the long term, benefiting from the growth of the global new energy vehicle and energy storage industries, along with the second growth curve driven by solid-state batteries and semiconductor materials, the industry’s incremental space offers broad opportunities. For investors, the key to Xingyuan Material’s investment value lies in the release of profit elasticity amid improved supply-demand dynamics, as well as the progress of technological R&D, overseas capacity deployment, and order delivery. As a rare entity with a leading global position, technological barriers, and a comprehensive global layout, its market performance after listing in Hong Kong warrants ongoing attention.