On August 31, 2026, the Hong Kong Stock Exchange website showed that Jiangxi Copper Tech Co., Ltd. has once again submitted a listing application to the main board of the Hong Kong Stock Exchange, with Guojin Securities (Hong Kong) serving as the sole sponsor. This marks the company's second Hong Kong IPO attempt this year—the initial filing on January 28 lapsed on July 28 after the prospectus failed to complete a hearing within six months.

On the surface, this looks like a high-growth scorecard: first-half revenue reached RMB 3.403 billion, up 88.8% year-on-year; profit during the period hit RMB 165 million, a staggering 1141.9% surge compared to RMB 13.28 million in the same period last year. However, the prospectus simultaneously reveals a troubling financial picture—net operating cash outflow of RMB 935 million, short-term borrowings approaching RMB 3 billion, and most deposits already pledged. Beneath the facade of robust earnings growth, the undercurrent of sharply deteriorating cash flow is beginning to stir.

Fragile Profitability: Government Subsidies Prop Up the Bottom Line

According to the prospectus, in 2023, 2024, and the first three quarters of 2025, the company recognized government grants and subsidies of RMB 57.107 million, RMB 109 million, and RMB 27.417 million, respectively. In 2024, the company's pre-tax profit was just RMB 21.35 million, while government subsidies for the same year reached RMB 109 million—without this non-recurring gain, the company would have effectively been in a loss-making position that year. During the first three quarters of 2025, government subsidies of RMB 27.417 million still accounted for 62% of the RMB 44.098 million pre-tax profit. These subsidies mainly include additional VAT credits for advanced manufacturing, electricity fee subsidies, and R&D project grants, most of which are one-time payments made at the discretion of local governments. The company has also acknowledged that government subsidies carry inherent uncertainty. With gross margins on core products still in single digits, government subsidies have become an essential pillar sustaining a positive income statement.

Dried-Up Cash Flow: The Settlement Mismatch Behind the RMB 935 Million Outflow

The rapid growth in profitability alongside continued cash flow deterioration forms the most critical financial contradiction for Copper Tech. The prospectus shows that for 2024, 2025, and the first half of 2026, net cash flows generated from operating activities were RMB -715 million, RMB -416 million, and RMB -935 million, respectively. From 2024 through the first half of 2026, the company has accumulated over RMB 2 billion in net operating cash outflows. The root cause of this persistent cash drain lies in the natural settlement mismatch inherent in its business model. On the raw materials side, the company holds a relatively weak position—purchasing cathode copper often requires substantial cash payments to lock in costs. On the sales side, however, facing downstream battery giants, collections largely materialize in the form of bank acceptance bills. This asymmetry of "cash flowing out, notes flowing in" means that the expansion of production and sales scale is simultaneously extending collection cycles and consuming existing cash reserves. As of the end of June 2026, the company's trade receivables and notes receivable had climbed to RMB 1.7 billion, representing approximately 26.6% of total assets, with a turnover period of 96 days. The company also candidly stated in the prospectus that if operating cash flows continue to remain negative in the future, it could have a material adverse effect on its liquidity and financial position.

Debt Pressure: Short-Term Borrowings Near RMB 3 Billion, Most Deposits Pledged

Against the backdrop of persistently weakening internal cash generation, Copper Tech's debt scale has risen passively. The company's debt-to-asset ratio climbed from 60.5% at the end of 2023 to 71.3% at the end of 2025—an increase of over 10 percentage points in just two years, far exceeding the average debt level of the electrolytic copper foil industry. As of the end of June 2026, total interest-bearing debt reached RMB 3.47 billion, with a net debt capitalization ratio as high as 68.3%. Short-term borrowings are approaching RMB 3 billion, and most deposits have already been pledged. This extremely high leverage ratio does not stem from strategic proactive expansion, but rather from passive borrowing to offset the cash drain on the operational side. To retain orders from core customers, the company must accept longer note collection periods and extremely thin margins; to fill the funding gap during this process, it is forced to frequently borrow from banks. The repayment pressure on the liability side and the recovery risk on the asset side are forming a state of "causal lock-in." Capacity expansion and cash flow loss are occurring simultaneously, with debt repayment pressure and expansion needs creating a dual squeeze. Whether the company successfully passes the HKEX hearing this time will depend not only on whether its earnings growth story gains recognition, but also on whether its cash flow difficulties and debt risks can be adequately explained in the prospectus—and the credibility of that explanation will directly determine whether investors are willing to buy into this "high-growth narrative."