Summary of Key Points
Like Rukun New Materials, which failed in its initial IPO on the STAR Market in 2024, it is attempting to make a second bid on the GEM (Growth Enterprise Market) approximately two years later, aiming to raise funds from 649 million yuan to 1.2 billion yuan. However, the company faces significant fundamental issues: its revenue has been steadily increasing (from 647 million yuan in 2023 to 910 million yuan in 2025), but profit growth has stagnated (only a 1.51% increase in 2025), and the gross margin has decreased by nearly 4%. There is a severe mismatch between cash flow and net profit (the net cash ratio over three years is only 51.3%, meaning that half of the profits are merely nominal). The company also has a high concentration of customers and suppliers (both exceeding 60% and 70% respectively), which puts it at a disadvantage in bargaining power negotiations. It faces significant short-term debt repayment pressure (with only 25.91 million yuan in cash on hand and over 290 million yuan in short-term interest-bearing debt). The proportion of research and development (R&D) investment has been declining year by year, and its new businesses (such as solid-state battery materials) are still in the early stages. Although the fundraising plan includes expanding production capacity, R&D, and a technology center, there are doubts about the feasibility of these projects due to their long cycles and the potential difficulty in absorbing the increased capacity. The success of this application to the GEM will depend on whether these issues can be substantially improved.
Detailed Analysis
1. Second Attempt: Changing Market Segment and Doubling Funds – A Shift in “Narrative Logic”
The difference between the STAR Market and the GEM is akin to the distinction between different competition tracks in a talent show: the STAR Market focuses on “hard technology” (such as breakthroughs and import substitution), while the GEM emphasizes “growth potential” (stable performance and established business models). Rukun New Materials' previous failure on the STAR Market means it is now shifting its approach, from a “technology-focused” company to one that emphasizes growth. The increase in fundraising from 649 million yuan to 1.2 billion yuan reflects this shift in strategy. However, the new projects combine capacity expansion with R&D and a technology center, aiming to convey a different narrative: the company no longer wants to highlight its technological prowess but rather its ability to sustain long-term growth in the industry. The problem is that, with its already strained financial situation (insufficient funds to cover short-term debts), investing in three-year R&D projects will not only generate immediate profits but may also exacerbate cash flow challenges.
2. Revenue Growth Without Profit Growth: Where Has the Money Gone?
Despite annual revenue increases, profit growth has been lacking for several reasons:
- Price Drops: Increased market supply has led to lower product prices, with the gross margin dropping from 28.89% in 2023 to 24.96% in 2025.
- Cash Held by Customers: The company is unable to collect payment for sold goods, with accounts receivable rising from 157 million yuan to 335 million yuan, accounting for nearly 70% of its current assets. Its customers are giants like BYD and Tianci Materials, who set the terms and have long payment periods.
- Bilateral Pressure: Both suppliers and customers are highly concentrated (the top five suppliers account for 73% of purchases), leaving the company with little leverage in pricing negotiations.
- High Short-Term Debt: With only 25.91 million yuan in cash and over 290 million yuan in short-term debt, the company is under significant financial pressure.
3. Tight Cash Flow: Insufficient Funds to Cover Short-Term Debts
The company's financial situation is precarious:
- Short-Term Debt Repayment Challenges: It has only 25.91 million yuan in cash at the end of 2025, while it owes 240 million yuan in short-term loans and another 58.74 million yuan in debts due within one year, totaling nearly 300 million yuan—well below the required level.
- Poor Liquidity: The current ratio (current assets to current liabilities) has dropped to 0.88, meaning that for every 1 yuan of short-term debt, there are only 0.88 yuan in assets to cover it, far lower than the industry average of 2.59.
- Double-Digit Interest Expenses: Interest expenses have doubled from 4.22 million yuan to 8.5 million yuan, further eroding profits.
Despite these challenges, the company is still pursuing large-scale fundraising for capacity expansion and R&D. If the new projects fail to generate revenue or if the increased production capacity cannot be sold, it will only worsen its financial situation.
4. Declining R&D Investment: New Businesses as a Band-Aid
Rukun New Materials hopes to break through with new businesses such as photoresists, sodium batteries, and solid-state battery materials, but these are still in the early stages:
- Reduced R&D Spending: The R&D expense ratio in 2025 was only 3.41%, half of the industry average of 6.39%. The company attributes this to revenue growth diluting the R&D budget, but even as industry revenues increase, R&D spending is declining.
- New Businesses Still Lacking Momentum: Solid-state battery materials are in their infancy and generate no revenue, while the main business relies on the新能源 sector, which experienced a 13.4% decline in new vehicle sales from January to June 2026. If the industry continues to shrink, the company's performance will be even more vulnerable.
- Lack of Support: Without sustained R&D investment, new businesses are unlikely to succeed and will not provide the necessary momentum for future growth.
5. Fundraising Projects: A Promising Blueprint, but Unresolved Issues
The fundraising plan covers various aspects, but core problems remain:
- Capacity Digestion: The project to produce 5,600 tons of high-end fine chemicals each year faces intense industry competition, and there is uncertainty about whether the additional capacity can be sold at a profitable price.
- Technological Risks: If solid-state batteries become more widespread, demand for traditional lithium salts may decline, potentially rendering the company's existing capacity obsolete.
- Unresolved Issues: Problems such as customer and supplier concentration, poor cash flow, and insufficient R&D will persist, making it difficult to achieve sustainable performance even after a successful IPO.
Whether the GEM accepts Rukun New Materials depends on whether these issues can be resolved in a short period (e.g., 1-2 years). If the company continues to experience revenue growth without profit growth and tight cash flow, market acceptance may be limited, despite a positive application outcome.
Conclusion
Rukun New Materials' attempt to re-enter the stock market reflects the shift in the新能源 sector from high growth to a period of competitive consolidation. While the company has a solid supply chain foundation (through partnerships with leading customers), it faces common industry challenges such as declining prices and increased competition. Its success will depend on its ability to break the cycle of revenue growth without profit growth and convert nominal profits into actual cash flow. For investors, this case study highlights the importance of examining financial fundamentals under the registration-based IPO system—no matter how appealing the company's story is, financial data must support its claims.