With net profit surging by 1019%, the market value has shrunk by 31 billion yuan. What has happened to Shenzhen Dynanonic?
The leading enterprises in the lithium battery industry have seen a recovery in their performance, but the capital market has reacted very coldly.
Recently, Tianci Materials, known as the "No. 1 in the electrolyte sector," released its first-half 2026 performance forecast. The announcement shows that the company expects to achieve a net profit attributable to shareholders of 2.7 billion to 3 billion yuan in the first half of the year, a year-on-year increase of 907.84% to 1019.82%; it expects to achieve a non-GAAP net profit of 2.65 billion to 2.95 billion yuan, a year-on-year increase of 1029.57% to 1157.44%.
Data shows that Tianci Materials' net profit attributable to shareholders and non-GAAP net profit in the first quarter of this year were 1.654 billion yuan and 1.56 billion yuan, respectively. Even calculated based on the lower limit of the forecast, the company's second-quarter net profit attributable to shareholders and non-GAAP net profit are approximately 1 billion yuan and 1.1 billion yuan, respectively. In the first quarter of 2025, both of these profit figures for the company were less than 200 million yuan.
It is worth noting that Tianci Materials' full-year net profits in 2024 and 2025 were only 483.9 million yuan and 1.362 billion yuan, respectively. This means that the company's total profit in the first half of 2026 has exceeded the sum of its profits in the past two years, clearly indicating that Tianci Materials' profitability is rapidly recovering.
In addition, Tianci Materials disclosed in its performance forecast that its electrolyte shipments in this period increased by more than 40% year-on-year, and the capacity utilization rates of lithium hexafluorophosphate and electrolyte are close to full production. Across the entire lithium battery sector, this half-year performance forecast is outstanding. However, unexpectedly, the capital market gave a negative response.
Public data shows that on July 8, the day the performance forecast was disclosed, Tianci Materials' stock price directly hit the 10% daily limit drop. As of now, the company's overall decline since July has exceeded 28%, and its total market value has evaporated by more than 31 billion yuan.
Anxiety Behind High Growth
Tianci Materials is the absolute global leader in electrolytes, with an industry market share of 32.2%, ranking first in the world for ten consecutive years.
In 2025, Tianci Materials' electrolyte sales exceeded 720,000 tons, and its self-sufficiency rate for lithium hexafluorophosphate exceeded 98%, giving it an unrivaled cost advantage in the industry.
This half-year performance with a pre-increase of more than 10 times is a direct reflection of the company's extreme cost advantage. As we all know, lithium hexafluorophosphate is the core raw material of electrolytes, accounting for 50% to 60% of the total production cost. Relying on an ultra-high self-sufficiency rate of over 98%, while peers purchase lithium salts and passively bear upstream price fluctuations, Tianci Materials can achieve self-sufficiency, and the raw material price difference is directly converted into corporate net profit. Moreover, the company has established a closed-loop full industrial chain from lithium carbonate, lithium salts, additives, electrolytes to battery recycling.
In simple terms, when the price of upstream lithium carbonate rises, the company can hedge cost pressures through internal raw material matching; when the price of downstream electrolytes falls, the company can stabilize gross profit margins through self-developed and self-supplied lithium salts.
In addition, long-term supply agreements add another layer of guarantee to the company's operations. Since the fourth quarter of 2025, Tianci Materials has signed a large number of medium- and long-term supply agreements with downstream leading battery enterprises, covering 2026 to 2030 with a duration of 3 to 5 years. The long-term agreement model locks in supply volume rather than price, but in the current environment of overcapacity and fierce order competition in the industry, stably locking in the basic shipment volume for the next few years keeps the company's capacity utilization rate at a high level and further reduces unit production costs. This is also the core reason why Tianci Materials can still maintain full production operation when the overall industry operating rate is only about 50%.
With the three advantages of scale effect, full industrial chain closed-loop, and long-term agreement volume locking, Tianci Materials' operations are not without hidden worries, and current anxiety has become prominent.
First, although the company's first-half performance is expected to increase significantly, the growth momentum in the second quarter has clearly weakened. Tianci Materials' net profit attributable to shareholders in the first quarter was 1.654 billion yuan, while in the second quarter it was only about 1 billion to 1.1 billion yuan, with a month-on-month decrease of nearly 35%. In an investor exchange event, Tianci Materials stated straightforwardly that due to the dual impacts of rising prices of raw materials such as lithium carbonate and a month-on-month drop of about 10,000 yuan/ton in the average quarterly price of lithium hexafluorophosphate, the company presented a typical pattern of "increased volume but decreased profit" in the second quarter. The ultra-high performance growth rate in the first half of the year is entirely supported by the high base in the first quarter, and the growth momentum in the second quarter has continued to decline.
More fatal than the slowdown in growth rate is the continuous pressure from downstream vehicle manufacturers.
In 2026, the domestic new energy vehicle industry is experiencing a profit collapse across the entire industrial chain. Data from the China Association of Automobile Manufacturers shows that the average profit margin of domestic vehicle manufacturing has dropped to 1.5%, hitting a new low in nearly a decade. For a new energy vehicle priced at 200,000 yuan, the net profit of the vehicle manufacturer is less than 3,000 yuan.
Cost-side pressures are hitting comprehensively: the price of lithium carbonate has skyrocketed from 75,000 yuan/ton to 180,000 yuan/ton, the price of storage chips has increased by 2 to 5 times, and the prices of bulk raw materials such as copper and aluminum have continued to rise; however, the selling prices of terminal vehicle manufacturers cannot rise synchronously, and they are trapped in a prisoner's dilemma of increased revenue without increased profit.
Vehicle manufacturers are struggling to make profits, which will inevitably transmit pressure to the upstream industrial chain. Price suppression, extended payment periods, and requirements for annual price reductions have become the norm in the industry.
Tianci Materials is precisely the core enterprise that bears this part of the pressure. At the end of the first quarter of 2026, the net cash flow from the company's operating activities was only -21.39 million yuan. Earning a net profit of 1.654 billion yuan in a single quarter but having a negative operating cash flow reveals obvious operational hidden dangers. In addition, the company's accounts receivable increased by 41.28% year-on-year to 6.88 billion yuan; inventories increased by 40.9% compared to the beginning of the year, reaching 2.28 billion yuan.
Book profits have increased significantly, but actual cash has been slow to recover. In layman's terms, the payment collection cycle of downstream battery manufacturers continues to lengthen, and the company's upstream stocking expenditures continue to increase. Tianci Materials is forced to provide two-way capital advances: making advance payments to upstream lithium salt enterprises to lock in raw material supplies, and relaxing payment terms for downstream battery manufacturers to secure order shares. Eventually, most of the book profits are converted into accounts receivable, and cash flow remains under pressure.
Overall, Tianci Materials' 10-fold high performance growth in the first half of the year is essentially a phased profit recovery achieved by relying on integrated cost advantages and long-term agreement volume locking during the industry's capacity clearing stage. However, both the continuously rising lithium carbonate raw material and the downstream vehicle industry trapped in price wars with meager profits determine that the current high growth is unsustainable, which is also the core logic behind the company's explosive performance growth but a falling rather than rising stock price.
The "Dilemma" of Contraction
In addition to slowing profit growth and cash flow pressure, major changes at the industry strategic level are also restricting Tianci Materials' long-term growth, and the company's development strategy has shifted from comprehensive expansion to active contraction.
On July 3, Tianci Materials issued two important announcements: its subsidiary Nantong Tianci officially terminated the project with an annual output of 243,000 tons of lithium battery and fluorine-containing new materials. The original planned total investment of this project was 2.654 billion yuan. As of the termination date, only 9.3613 million yuan had been actually invested, only completing the construction of the enclosure wall and road foundation, while the main project had not yet started construction.
On the same day, the company announced that it would adjust the remaining 406 million yuan of raised funds from the 2022 convertible bond, originally allocated to the planned project, to be used for the electrolyte expansion and renovation project at the Fujian Fuding base.
Behind the adjustment of "one stop and one expansion" is a thorough transformation of Tianci Materials' strategic path: shifting from the past model of building new projects in different locations and blind scale expansion to technical transformation and upgrading of existing bases and refined quality improvement and production increase.
Regarding the reasons for terminating the new Nantong project, Tianci Materials explained very frankly: the company's existing 200,000-ton electrolyte capacity at the Liyang, Jiangsu base is close to core customers such as CATL, CALB, and EVE Energy, and the existing production lines still have sufficient space for technical transformation and upgrading, so the comprehensive investment benefit of building the new Nantong project is relatively low. At the same time, the current production process of fluorine-containing materials is rapidly iterating, and the production lines constructed according to the original plan will easily face the problem of lost product competitiveness in the future, making the new production lines not worth the loss.
The industry leader's active suspension of new capacity construction directly confirms the severe overcapacity crisis in the electrolyte industry.
Statistics show that in the first half of 2026, the total domestic electrolyte capacity is close to 5.8 million tons/year, but the actual annual shipment volume is expected to be only 2.7 million to 3 million tons, and the overall industry capacity utilization rate is less than 50%. Globally, the electrolyte capacity in 2025 has reached 3.5 million tons, corresponding to a market demand of only 1.2 million tons. The global operating rate is less than 40%, and the gap between industry supply and demand continues to widen.
In fact, overcapacity has long been a common problem across the entire lithium battery material track, with none of the four major segments - cathode, anode, separator, and electrolyte - spared, and Tianci Materials is not an isolated case.
Since the second half of 2025, leading enterprises in various sub-sectors of lithium battery materials have made a unified choice: terminate capacity expansion and shrink their business lines.
Separator leading Semcorp terminated a new lithium battery separator project in Malaysia with a total investment of about 2 billion yuan in May this year, and the project did not start substantial construction; cathode leading Dynanonic terminated two phosphate cathode material projects in Qujing and Huize in the same month, with a total capacity of 440,000 tons/year and a total investment of nearly 10 billion yuan; in the anode material field, ZKETECH stopped three projects in Ganmei Industrial Park, Lanzhou, and Morocco in June, with a total capacity of 330,000 tons/year and an involved investment of 10.3 billion yuan, while Tianhe Technology terminated the 100,000-ton modified graphite anode project in Lujiang; in the electrolyte track, Yongtai Technology terminated the 200,000-ton electrolyte project in Shaowu as early as March this year, with an investment of 950 million yuan.
According to incomplete statistics, since August 2025, at least 8 major capacity expansion plans in the lithium battery material industry have been terminated or postponed, involving a total investment of up to 29.53 billion yuan.
The collective contraction of the four major lithium battery material leaders - cathode, anode, separator, and electrolyte - is not a decision deviation of a single enterprise, but a signal of the cycle inflection point of the entire industry.
Looking back at the development history of the industry, in 2021, the electrolyte was in short supply and prices skyrocketed, leading the entire industry to expand capacity frantically; in the second half of 2023, the growth rate of industry demand fell to 20%-30%, but market capacity still maintained a high-speed expansion of 70%-80%; in 2024, lithium battery material prices collapsed collectively, and the industry entered a downward cycle; in 2025, small and medium-sized backward capacities were accelerated to be cleared; today, even industry leaders have actively stopped new capacity construction.
The lithium battery industry has completely bid farewell to the expansion era of wild growth and reckless market occupation, and has officially entered a new stage of intensive cultivation and stock competition.
For Tianci Materials, even with the advantage of a closed-loop full industrial chain that is sufficient to withstand the impact of the industry's downturn, strategic contraction means that the stage of high performance growth in the future is likely to end.
From asset data, it is not difficult to see the problems left by industry expansion: in 2021, Tianci Materials' fixed assets were 2.493 billion yuan and construction in progress was 987.5 million yuan, totaling less than 3.5 billion yuan; as of the first quarter of 2026, the company's fixed assets were 8.052 billion yuan and construction in progress was 1.892 billion yuan, totaling nearly 10 billion yuan. In just five years, the scale of the company's core assets has nearly tripled.
Continuous capacity expansion has driven rapid revenue growth. Tianci Materials' revenue in 2020 was only 4.119 billion yuan, and by 2025 it had climbed to 16.65 billion yuan. However, the huge existing capacity has also become an operational burden for the company in the future.
In summary, behind the extreme contrast of Tianci Materials' 10-fold surge in first-half performance but a massive 31 billion yuan evaporation in market value is the capital market's deep concern about the company's future growth space and the industry's cycle inflection point.
When the entire lithium battery material track enters a contraction cycle, even Tianci Materials, which stands at the top of the industry, cannot stay out of it, and cannot ultimately escape the constraints and dilemmas of the industry cycle.