Profits have skyrocketed by 968%, yet Tianci Materials is in a hurry to raise funds in Hong Kong. Can China's leading electrolyte manufacturers still dominate the overseas market?
Tinci Materials has passed the listing hearing of the Hong Kong Stock Exchange, and the fundraising for overseas capacity expansion remains to be verified.
According to Foresee Energy, the Hong Kong Stock Exchange recently disclosed that Tinci Materials has passed the main board listing hearing, plans to issue no more than 413 million H shares, with JPMorgan Chase, CITIC Securities and GF Securities as joint sponsors. It is expected to raise 400 to 500 million US dollars, about 80% of which will be invested in capacity construction in Morocco and the United States.
This enterprise that has ranked first in global electrolyte shipments for ten consecutive years recorded attributable net profit of 2.861 billion yuan in the first half of the year, a year-on-year increase of 967.91%, but its stock price has retreated from the high of 64.98 yuan in May to 35.68 yuan, with a drop of nearly 40% (as of press time). The simultaneous occurrence of skyrocketing profits and halved stock prices indicates that the market is trading not on current performance, but on the supply and demand expectations for 2027 and even further into the future.
Tinci Materials' current financing in Hong Kong is to secure sufficient funds before its overseas capacity is put into operation in 2028. Whether this fund can be used effectively depends on the sustainability of energy storage demand, the time window for EU compliance, and whether Chinese electrolyte enterprises can truly gain a firm foothold overseas.
Behind the V-shaped reversal of profits, the role of energy storage is more subtle than imagined
Tinci Materials' electrolyte sales exceeded 440,000 tons in the first half of the year, the sales of energy storage battery electrolyte more than doubled year-on-year, and the capacity utilization rate was close to full production. The company judges that with the continuous expansion of AI data centers driving power consumption demand, the demand growth rate of energy storage batteries is expected to continue to outpace that of power batteries in the next two to three years.
There is a reasonable industrial logic behind this judgment. Energy storage is no longer just a supporting facility for new energy power stations, but an independent force for peak shaving and frequency regulation of the power system. The three lines of AI data centers, grid-side independent energy storage, and industrial and commercial energy storage are expanding at the same time, driving the demand for electrolyte more concentrated than power batteries. Power batteries are greatly affected by fluctuations on the consumer side, while the demand for energy storage comes from the rigid configuration on the grid side.
However, the actual situation of Tinci Materials is not as optimistic as imagined, and the quality of its profits needs to be analyzed in detail. The attributable net profit in the second quarter fell by about 27% month-on-month, for two reasons: the rising price of lithium carbonate on the raw material side pushes up costs, and the falling quotation of lithium hexafluorophosphate on the revenue side compresses profit margins.
It is understood that after the price of lithium hexafluorophosphate peaked at 170,000 yuan/ton in the fourth quarter of 2025, it had fallen back to the range of 90,000 to 110,000 yuan/ton by the end of June 2026, with a price fluctuation range larger than market expectations. Morgan Stanley also pointed out in its report in late September that the market's expectation of weakening supply and demand for lithium hexafluorophosphate in 2027 is obvious.
In addition, Foresee Energy believes that a fact that is easily overlooked is that the sharp increase in Tinci Materials' profits in this round is largely a year-on-year effect brought by the low base. Compared with the peak level in 2022 (5.714 billion yuan), Tinci Materials still has a gap to catch up.
Perhaps the cyclical attribute of the electrolyte industry has not disappeared, but is temporarily covered by the demand for energy storage. For the whole industry, this round of rebound is more like a structural repair, not a cycle reversal.
EU carbon footprint rules block the time window for overseas expansion
According to the announcement, 80% of Tinci Materials' raised funds are invested overseas, with Morocco as the core focus overseas. Previously, Tinci Materials has deployed in many regions overseas. For example, it signed a contract with Morocco in June 2025, investing about 280 million US dollars to build an integrated base with an annual output of 150,000 tons of electrolyte, which is scheduled to be put into operation in the first half of 2028. In the US market, it has a joint venture with Honeywell to build a 200,000 tons/year electrolyte project and a 100,000 tons/year liquid lithium hexafluorophosphate project respectively, which are also expected to be put into operation in 2028.
The question to be raised is, why Morocco? On the one hand, it is the geographical location: Morocco is separated from Europe by the sea, with advantages in logistics cost and response efficiency. Phosphate rock resources are another consideration for Tinci Materials, Morocco is home to the world's largest phosphate rock reserves, and phosphate rock is an important raw material source for lithium hexafluorophosphate.
But what really determines the fate of the Morocco project is the EU's carbon footprint rules.
Annex II of the EU Regulation on Batteries and Waste Batteries clearly stipulates that the activity data of electrolyte shall not use default values, and must correspond to specific battery models and specific production plants. This means that the carbon footprint of electrolyte must be traced to the measured data at the workshop level and batch level, and industry averages cannot be used for fraud. A compliance declaration can only be compiled by collecting data from upstream cell manufacturers, material manufacturers and smelters all the way.
The regulation also points out that from February 2028, products whose carbon footprint exceeds the upper limit set by the EU will be directly banned from being sold in the EU. Tinci Materials' Morocco project is scheduled to be put into operation in the first half of 2028, with an extremely narrow time window. If the carbon footprint accounting system is not up and running when production starts, the completed capacity may face the risk of being unable to enter the market.
This is not a problem unique to Tinci Materials, and other competing enterprises in the industry are facing similar problems. New Zebang has put its first-phase electrolyte capacity in Poland into operation, and the second-phase expansion with an additional capacity of 50,000 tons per year is underway. BYD adopts the self-produced and self-used mode, more than 90% of the electrolyte required for new energy vehicles is self-produced, and the progress of overseas layout is relatively lagging behind.
This round of overseas competition among electrolyte enterprises is a race to see who can put their capacity into operation first and get their compliance system up and running first. Tinci Materials chose Morocco instead of building a factory directly in the EU, which is a balance between cost and compliance. The labor and land costs in Morocco are lower than those in Europe, but the complexity of carbon footprint accounting is higher than that of local production in Europe.
Can the self-sufficiency rate advantage be replicated overseas
From its own perspective, Tinci Materials' strongest advantage is that the self-sufficiency rate of lithium hexafluorophosphate is as high as 98%, and it is the world's first and currently the only enterprise that has achieved large-scale industrial production of liquid lithium hexafluorophosphate. The cost of the liquid process is 15% to 20% lower than the industry average. But whether this system can be replicated overseas is another question.
First of all, building factories overseas means building the supply chain from scratch. The Morocco base needs to solve a series of problems such as phosphate rock procurement, lithium hexafluorophosphate production line commissioning, and customer certification. The transportation radius of liquid lithium hexafluorophosphate is limited, so overseas factories must be equipped with liquid lithium hexafluorophosphate production lines, instead of simply importing solid lithium salt and then dissolving it.
The joint venture project with Honeywell in the US includes a production line with an annual output of 100,000 tons of liquid lithium hexafluorophosphate, which shows that Tinci Materials is replicating the integrated model overseas, rather than a simple electrolyte deployment capacity.
Secondly, the market competition landscape is also changing. At present, Tinci Materials leads with a global market share of 32.2%, BYD ranks second with 13.4%, and New Zebang follows closely with 13%. However, the year-on-year shipment growth rates of Kunlun New Materials, Zhuhai Saiwei, and Shida Shenghua in the second echelon all exceed 70%, significantly outpacing the industry growth rate.
Although the base of these enterprises is small, the growth rate means that they are seizing the incremental market. Kunlun New Materials' shipments in 2025 have ranked fourth in the world, and its market share has increased from 3.0% in 2021 to 4.5% in 2025.
Compared with competing enterprises, Tinci Materials' advantage is built on vertical integration — full-chain control from upstream lithium resources to lithium hexafluorophosphate to electrolyte. However, the overseas layout of lithium resources is still in the stage of going through investment procedures, and the mine projects in Nigeria and Zimbabwe have not formed actual production capacity. Before the overseas supply chain is fully operational, Tinci Materials' cost advantage in the overseas market will be discounted.
For the entire Chinese electrolyte industry, going overseas is not as simple as moving domestic capacity out, but to rebuild a complete supply chain system from raw materials to finished products overseas.
Foresee Energy believes that the core issue of Tinci Materials' fundraising in Hong Kong is whether the market environment will still be as favorable as it is today when its overseas factories are put into operation in 2028.
Whether the growth rate of energy storage demand can be sustained is the first variable. Behind the current rapid growth of energy storage cell shipments, there are policy-driven installation rush factors, as well as the real demand from the expansion of AI data centers. The proportion of the two determines the slope of the electrolyte demand curve.
The digestion of overseas capacity is the second variable. Overseas revenue currently only accounts for about 3% of total revenue, amounting to 444 million yuan. Even if overseas electrolyte sales increase by more than 126% year-on-year, the base is still very low. The planned capacity of 150,000 tons in Morocco plus 200,000 tons in the US needs to be absorbed by the localized demand of the overseas energy storage market.
The price trend of lithium hexafluorophosphate is the third variable. The industry generally expects supply and demand to weaken in 2027, but the clearance of inefficient capacity and prudence in new expansion are also changing the supply curve. Tinci Materials actively terminated its Nantong project, and the expansion projects of the whole industry have slowed down, so the contraction on the supply side may be faster than expected. If the supply contraction speed exceeds the demand decline speed, the price may not continue to fall as pessimistically expected.
The hundreds of millions of US dollars invested by Tinci Materials not only buy capacity, but also buy the time window for its transformation from a leading Chinese electrolyte enterprise to a global electrolyte supplier. How large and how long this window can be opened depends on the real resilience of energy storage demand, the construction progress of the EU compliance system, and the actual willingness of overseas customers to pay for localized supply.
For the industry, this step taken by Tinci Materials is also a touchstone for Chinese lithium battery material enterprises to move from product export to supply chain globalization.