Honghe Technology's funds are only 200 million yuan, aiming to leverage an 8 billion yuan project. The 1 billion yuan private placement has just been received, and the company plans to go public in Hong Kong to "quench its thirst."

Yangtze Business Daily report ●Yangtze Business Daily reporter Shen Yourong

Hewell Technology (603256.SH), a “10x stock” company, is aggressively expanding capacity with an 8 billion yuan investment, triggering market skepticism.

Recently, Hewell Technology announced that the company plans to invest in and build a “High-Performance Electronic Materials Industrial Park” project, with a total investment amount of approximately 8 billion yuan.

As of the end of September 2025, Hewell Technology’s total assets were 2.851 billion yuan, and its cash and cash equivalents were only 212 million yuan, with interest-bearing liabilities of 920 million yuan.

With financial pressure mounting, Hewell Technology’s 8 billion yuan project will inevitably significantly increase leverage.

In February 2026, Hewell Technology completed a private placement (targeted share issuance), successfully raising 995 million yuan. The company plans to use 280 million yuan of the funds to replenish working capital.

One month after the private placement was completed, Hewell Technology proposed a plan to list in Hong Kong.

Hewell Technology’s confidence in listing in Hong Kong lies in the fact that its operating performance in 2025 grew significantly. According to the performance forecast, driven by the rapid growth of AI demand, the price of its electronic-grade fiberglass fabric rose, leading to a projected increase of about 8x in attributable net profit to around 200 million yuan.

In the past year, Hewell Technology’s stock price range increased by 10x.

Listing in Hong Kong, or may be Hewell Technology’s way of easing financial strain. Whether the 8 billion yuan capacity expansion will meet expectations is highly uncertain.

Aggressive 8 billion yuan expansion

Hewell Technology’s large-scale capacity expansion plan has drawn widespread skepticism from the market.

According to the announcement, on March 26, Hewell Technology held a board meeting and considered and approved the proposal titled “Resolution on the Company Signing the .” This proposal still needs to be submitted to the shareholders’ meeting for review.

The content of this proposal is that the company plans to sign the “Project Investment Agreement” with the People’s Government of Tieshan District, Huangshi Economic and Technological Development Zone, and invest in the “High-Performance Electronic Materials Industrial Park” project. The project investment amount is approximately 8 billion yuan (including fixed-asset investment and working capital). The final investment amount and the construction period will be subject to the actual situation after the project is implemented.

The announcement states that the implementation of this investment project is based on the company’s needs for strategic development and its judgment of the market prospects for the high-performance electronic materials industry.

Hewell Technology also pointed out risks: given that there are uncertainties in the development trend of the industry and changes in market conditions, among other factors, it may affect the project’s construction and operations and its expected benefits in uncertain ways.

Hewell Technology’s main business is the R&D, production, and sales of mid-to-high-end electronic-grade fiberglass fabric and electronic-grade fiberglass yarn. Previously, the company has already built multiple projects in Huangshi, and progress has gone smoothly.

According to the disclosure in its 2025 interim report, in 2021, Huangshi Hewell’s electronic-grade fiberglass ultrafine yarn was successfully put into operation. In June 2023, the company’s fund-raising project “5G high-end electronic-grade fiberglass fabric development and production project with an annual output of 50.40 million meters” in Huangshi was fully put into operation. As a result, the company achieved integrated production and operation of electronic yarn and electronic fabric.

Whether it is necessary, reasonable, or promising to invest 8 billion yuan to build the “High-Performance Electronic Materials Industrial Park” project is a separate matter; even just from the standpoint of construction funding, how will Hewell Technology raise the capital?

Currently, Hewell Technology has not disclosed the capital source composition for its 8 billion yuan investment. Clearly, relying solely on borrowing from banks is not realistic, and borrowing from banks would substantially increase the company’s financial pressure.

A surge of about 8x in attributable net profit, with major shareholder selling down

Just after completing an A-share private placement raising nearly 1 billion yuan, Hewell Technology has turned its refinancing focus to the Hong Kong stock market.

On March 20, 2026, Hewell Technology issued an announcement stating that, to advance the company’s global strategy, enhance its overseas financing capabilities, improve its brand image, and accelerate the development of overseas business, the company plans to list on the main board of the Hong Kong Stock Exchange.

Hewell Technology’s confidence in listing in Hong Kong comes from its significantly increased performance. According to the performance forecast, in 2025, the company expects to achieve attributable net profit of approximately 193 million to 226 million yuan. Compared with the same period last year, this would increase by about 170 million to 203 million yuan, representing growth of 745% to 889%. It also expects non-recurring gains and losses excluded net profit of approximately 187 million to 219 million yuan. Compared with the same period last year, this would increase by about 181 million to 213 million yuan, representing growth of 3377% to 3969%.

Hewell Technology explains that, in 2025, terminal market demand increased due to the rapid growth of AI demand, which increased demand for electronic-grade fiberglass fabric. As market demand rose, the company’s product selling prices increased, driving a rapid growth in net profit.

Such strong growth is also related to the relatively low base from the previous year.

Actually, as early as 2017, Hewell Technology’s attributable net profit reached 165 million yuan. Even if calculated using the upper limit of the 2025 forecast figure, it would only increase by about 37% compared with 2017.

Hewell Technology’s capital expenditure is large despite insufficient “cash-generating” capability. From its A-share listing in 2019 through the end of the third quarter of 2025, the company’s total capital expenditures were 2.162 billion yuan, which is 2.2 times the net operating cash flow in the same period.

Hewell Technology relies on bank loans to replenish working capital. At the end of 2020, the company’s interest-bearing liabilities were 466 million yuan; by the end of September 2025, they were 920 million yuan, nearly doubling.

For this listing in Hong Kong, the market’s view is that the company’s direct objective is to address its urgent need for funds. Of course, the company also wants to step up its push for internationalization. In the first half of 2025, revenue from mainland China accounted for 84.59% of the company’s total operating revenue, while the share from regions outside the mainland was relatively low.

In the secondary market, Hewell Technology’s stock price surged at one point. The K-line chart shows that on February 8, 2024, during the trading day, Hewell Technology briefly fell to a low of 4.51 yuan per share. After that, it rebounded and surged significantly. On February 26, 2026, during the trading day, it reached a high of 85.83 yuan per share. Over two years, the increase in the range was as high as 18x.

Recently, the company’s stock price has pulled back somewhat. On March 31, the closing price was 70.05 yuan per share, and its market capitalization was about 63.4 billion yuan.

Major shareholders and executives are reducing holdings to cash out.

From March 10, 2025 to June 9, the company’s chairman and general manager Mao Jiaming reduced his holdings by 320,200 shares, cashing out 3.9898 million yuan; from December 8 to December 22, the company’s secretary to the board of directors, Zou Xinge, reduced holdings by 100,000 shares, cashing out 3.615 million yuan.

In addition, on September 11, 2025 to November 5, 2025, an action-consistent party of the company’s controlling shareholder, SHARP TONE, reduced holdings by 2.7998 million shares, cashing out 83.0186 million yuan. SHARP TONE is controlled by the company’s actual controller, Wang Wen-yang.

Whether Hewell Technology’s Hong Kong IPO will proceed smoothly has attracted close attention.

Editors: ZB

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