Anode business growth faces pressure; despite Purui Lai's over 5 billion yuan in cash, why does it still need "blood transfusion" from the Hong Kong stock market?

Ask AI · How can Pu Tai Lai’s Hong Kong listing accelerate its overseas capacity expansion?

Text by Mu Qing

Currently, the global competition in the lithium battery industry is in full swing. Recently, Pu Tai Lai, a versatile company that started with anode materials, submitted its application to the Hong Kong Stock Exchange, launching its “A+H” dual-capital platform push.

Having been listed in A-shares for nearly nine years, this move to Hong Kong is seen as a key step in Pu Tai Lai’s globalization strategy. However, the company faces a dual reality: a strong moat built on integrated operations, and challenges such as high customer concentration and sluggish growth in some business segments. In the urgent context of capacity going overseas, can this materials giant leverage this opportunity to expand internationally?

【Strong Performance Rebound, Profitability Restored】

Pu Tai Lai’s predecessor was established in Pudong, Shanghai, in 2012. In December of the same year, it set up Jiangxi Zichen, officially entering the lithium-ion battery anode material sector, laying the foundation for its materials business. Between 2013 and 2016, the company expanded through multiple acquisitions, entering automated lithium battery equipment and coating separator fields, forming an initial integrated industry chain.

The company successfully listed on the A-share market in 2017, and between 2018 and 2020, completed vertical integration of anode materials and domestic capacity deployment, seizing the explosive growth of new energy.

However, starting around 2023, as nationwide plans and production of anode capacity surged, industry pain points and cleanup efforts intensified, significantly impacting performance. Meanwhile, plans to invest in a 100,000-ton integrated anode project in Sweden were halted due to local approval issues, hindering overseas expansion.

Nevertheless, after industry cyclical adjustments, Pu Tai Lai has shown clear signs of performance recovery and profit restoration. From 2023 to 2025 (the reporting period), the company’s revenue was 15.293 billion, 13.399 billion, and 15.656 billion yuan, respectively, with net profits of 2.153 billion, 1.387 billion, and 2.614 billion yuan.

▲ Operating performance, source: Prospectus

In 2025, revenue grew by 16.84% year-over-year, returning to growth, and net profit nearly doubled. The continuous introduction of new products, new processes, and high-end capacity has effectively captured incremental demand in the energy storage market, significantly improving gross profit margin from 22.1% in 2024 to 29.7% in 2025—the best in nearly three years and close to 2022 levels.

【Business Model Innovation, Building Moats through Integration】

The strong rebound in performance is not accidental. It is supported by Pu Tai Lai’s unique “integrated” competitive advantage established across multiple market segments.

In 2025, Pu Tai Lai’s coating separator shipment reached 10.9 billion square meters, with a global market share of 35.3%, ranking first in the industry for seven consecutive years; simultaneously, the company maintained the top global shipment in PVDF for three years, with a 27.6% market share in 2025. The rapid growth of these high-margin businesses has been the main engine of profit recovery.

▲ Major achievements, source: Prospectus

Starting from anode materials, Pu Tai Lai expanded laterally into coating separators, PVDF, and functional materials like bormite, while vertically, it entered core manufacturing equipment through R&D and acquisitions, and further extended downstream into CAAS (pouch cell OEM) services, forming a unique “materials + equipment + process” integrated platform business model, creating a deep moat.

For example, by self-supplying base films, coating materials, and equipment, Pu Tai Lai has formed significant synergies in cost reduction and rapid response in the coating separator field. Competitors like Enjie and Xingyuan Materials, though larger in base film scale, lack deep integration in coating processes; in equipment, Pu Tai Lai leverages its deep expertise in coating machinery to expand into mid- and downstream equipment (winding, stacking, injection). This contrasts with Leading Intelligent’s “full-line” model and Winsun Technology’s “specialized machine” approach, forming differentiated competition.

This integrated platform reshapes the company’s relationships with downstream customers. Unlike traditional material suppliers competing mainly on price, Pu Tai Lai offers comprehensive solutions deeply embedded in customers’ R&D and manufacturing processes. For example, its CAAS pouch cell OEM service can provide customized pouch manufacturing based on customer battery designs, helping reduce capital expenditure and accelerate product launch.

▲ Pouch cell OEM business, source: Prospectus

This deep integration significantly raises customer switching costs, transforming Pu Tai Lai from a replaceable supplier into an indispensable manufacturing partner, thereby enhancing bargaining power and business stability.

【Weak Growth in Anode Business, High Customer Concentration Raises Risks】

Despite impressive recovery and clear advantages from integration, a closer look at the business structure and customer composition reveals some structural risks. The growth of the anode material business, which was the company’s starting point, is notably sluggish, and dependence on a few major battery manufacturers remains high—these two issues pose dual challenges for sustainable, steady growth.

In 2025, Pu Tai Lai’s total anode material shipment was 143,000 tons, up about 8.1% year-over-year, far below the national growth rate of 38.1%. The company’s market share faces erosion as competitors like Shantai Technology and Zhongke Electric rapidly increase their share. Since anode materials are the foundation of the company’s integrated moat, this is a critical area.

Although the company has reduced costs through process optimization and increased graphiteization self-sufficiency, and made breakthroughs in high-end silicon-carbon anodes, standard graphite anodes still face price wars, with prices dropping from 40.5 yuan/kg in 2023 to 24.5 yuan/kg in 2025—a nearly 40% decline. Therefore, mass production of high-end technologies, extreme cost control (graphiteization self-sufficiency), and global capacity deployment are crucial.

▲ Anode material sales volume and prices, source: Prospectus

A deeper concern is the high customer concentration risk. The prospectus shows that during the reporting period, revenue from the top five customers accounted for 70.4%, 66.1%, and 58.4% of total revenue, respectively. Although this ratio is decreasing, it remains much higher than many industry peers. The largest customer’s revenue has consistently been around 39%.

This close dependence provides stable orders but also tightly links the company’s performance to the strategic decisions, procurement strategies, and market positions of a few key clients. If these core customers adjust their technology routes, diversify their supply chain, or face market challenges, it could have an immediate and significant impact on Pu Tai Lai’s revenue.

While management emphasizes in the prospectus that ongoing R&D, new customer development, and product mix optimization are gradually reducing reliance on any single customer, and believes these relationships are long-term stable, the risk of high customer concentration cannot be fully eliminated.

【Holding Large Cash Reserves, Hong Kong Listing Primarily for Global Expansion】

To strengthen its core business, eliminate structural risks, and take a crucial step toward building the “A+H” dual-platform, this move is more than just a secondary financing. As of the end of 2025, the company holds approximately 5.19 billion yuan in cash and equivalents, with nearly 3 billion yuan in annual net cash flow from operating activities, indicating ample liquidity.

▲ Cash flow situation, source: Prospectus

Despite holding over 5 billion yuan in cash, the primary strategic motivation for listing in Hong Kong is to support its ambitious global capacity expansion. In recent years, leading battery manufacturers like CATL, EVE Energy, Samsung SDI, and LG New Energy have built production bases in Southeast Asia to better serve local markets and mitigate trade risks. As a key part of the supply chain, Pu Tai Lai must establish “close support” by building capacity near customer factories to ensure just-in-time supply and stable delivery, deepening customer relationships. The funds raised from the Hong Kong listing will be directly used for overseas capacity construction and R&D investments, fueling the company’s global expansion.

Additionally, the “A+H” dual-platform allows access to a broader international investor base, reducing dependence on a single capital market and enhancing risk resilience. Although the company’s overseas revenue share declined from 14.9% in 2023 to about 6% in 2025, international sales remain weak. This listing and overseas capacity deployment aim to reverse that trend, expanding the company’s market boundary from heavily relying on China to a broader global stage.

As the global competition in the new energy industry chain deepens, consolidating roots and expanding global competitiveness are urgent and vital for Pu Tai Lai.

Disclaimer

This article involves content related to listed companies, based on the author’s personal analysis and judgment of publicly disclosed information (including but not limited to interim announcements, periodic reports, and official platforms). The information or opinions herein do not constitute investment or other commercial advice. MarketWatch is not responsible for any actions taken based on this article.