UOB Kay Hian Private Limited
Date of Report: Wednesday, 20 August 2025
Guangzhou Tinci Materials Technology: 2Q25 Earnings Miss, But Long-Term Growth Outlook Remains Strong
Executive Summary: Tinci’s Mixed 2Q25, Strategic Upgrades and Upbeat Volume Guidance
Guangzhou Tinci Materials Technology Company Limited (Tinci, 002709 CH), a leading player in fine chemicals and new materials, has reported a second quarter 2025 net profit that fell short of market expectations. Despite the earnings miss—caused primarily by lower than expected average selling prices (ASP) and margin compression—the company maintains an optimistic outlook for the remainder of 2025 and beyond. With a projected rebound in ASP, robust volume growth, product upgrades, and aggressive cost control, Tinci remains a BUY with a revised target price of RMB30.00, presenting an attractive 45.6% upside.
Stock Snapshot: Key Facts and Shareholder Structure
Share Price: RMB20.60
Target Price: RMB30.00
Market Cap: RMB39,587m (~US$5.1bn)
Shares Issued: 1,922 million
GICS Sector: Materials
Major Shareholder: Mr. Xu Jinfu (36.37%)
52-Week Price Range: RMB25.63 / RMB12.86
FY25 NAV/Share: RMB6.32
FY25 Net Debt/Share: (RMB1.60)
2Q25 Financial Performance: Earnings Miss on ASP and Margins
Tinci’s 2Q25 net profit came in at RMB118 million, representing a 3.9% year-on-year (YoY) decline and a 20.9% drop quarter-on-quarter (QoQ). Adjusted for exceptional items, net profit was RMB100 million (+17.4% YoY, -25.2% QoQ). The primary culprit was a sharper-than-anticipated fall in ASP, even as revenue growth was strong on a YoY basis.
| Metric |
2Q25 |
1Q25 |
2Q24 |
YoY Change |
QoQ Change |
| Revenue (RMBm) |
3,540 |
3,489 |
2,989 |
+18.5% |
+1.5% |
| Gross Profit (RMBm) |
644 |
670 |
546 |
+17.9% |
-4.0% |
| Gross Margin (%) |
18.2 |
19.2 |
18.3 |
-0.1ppt |
-1.0ppt |
| EBIT (RMBm) |
237 |
256 |
253 |
-6.3% |
-7.5% |
| EBIT Margin (%) |
6.7 |
7.3 |
8.5 |
-1.8ppt |
-0.6ppt |
| Net Profit (RMBm) |
118 |
149 |
123 |
-3.9% |
-20.9% |
| Net Margin (%) |
2.8 |
3.8 |
2.8 |
0.0ppt |
-1.0ppt |
Operating Metrics: Cash Flow, FCF, and Margins
Operating Cash Flow in 2Q25 soared 55.2% YoY to RMB532 million, reflecting improved operating efficiency.
Free Cash Flow jumped 105.3% YoY to RMB394 million.
Gross Margin dipped slightly to 18.2% (down 0.1ppt YoY and 1.0ppt QoQ) due to falling electrolyte prices.
EBIT Margin contracted to 6.7% (down 1.8ppt YoY, 0.6ppt QoQ).
SG&A-to-Revenue Ratio rose 0.5ppt YoY to 5.6%, but was lower on a half-year basis (down 1.0ppt).
R&D-to-Revenue Ratio increased to 6.0% in 2Q25 (+0.3ppt YoY) and 6.2% in 1H25 (+0.6ppt YoY), underscoring Tinci’s commitment to innovation.
Sales Volume and Revenue: Strong Growth Amid ASP Headwinds
Electrolyte Sales Volume: Up 25% YoY in 1H25, exceeding 310,000 tonnes.
Cathode Materials Volume: Up 40% YoY.
Despite volume growth, overall revenue growth lagged due to ASP declines.
Key Financials: 2023–2027 Forecasts
| Year (RMBm) |
2023 |
2024 |
2025F |
2026F |
2027F |
| Net Turnover |
15,405 |
12,518 |
14,790 |
16,715 |
18,301 |
| EBITDA |
3,379 |
2,006 |
2,244 |
2,405 |
2,603 |
| Net Profit (Adj.) |
1,824 |
382 |
887 |
967 |
1,080 |
| EPS (fen) |
98.4 |
25.4 |
46.0 |
50.2 |
56.1 |
| PE (x) |
20.9 |
81.1 |
44.7 |
41.1 |
36.8 |
| Dividend Yield (%) |
1.5 |
0.5 |
0.7 |
0.7 |
0.8 |
| ROE (%) |
14.1 |
2.9 |
6.6 |
6.8 |
7.2 |
Strategic Outlook: Upward ASP Trend and Capacity Expansion
2025–2027 Lithium-ion Battery Materials Sales Volume: Estimates maintained at 1.19m/1.43m/1.57m tonnes, implying a 26% CAGR.
Electrolyte Sales Guidance: Management targets a 15% QoQ increase in 3Q25 (nearly 200,000 tonnes for the quarter), with full-year 2025 volume seen at 700,000 tonnes (+40% YoY).
Cathode Material Sales: Expected to exceed 150,000 tonnes in 2025.
ASP Outlook: Management forecasts an upward trend in electrolyte ASP for 2H25, citing:
Tightening supply-demand dynamics
Raw material cost inflation (e.g., Li₂CO₃ and 6F)
Reduced new industry capacity additions
80% utilisation rates among leading peers
Long-Term ASP: Company targets stable, moderate price increases to avoid volatility.
Margin Management and Global Expansion
Gross Margin Targets: Maintained at 19.0% for 2025, 18.5% for both 2026 and 2027.
Cost Control Initiatives:
Vertical integration to secure key raw materials
Product innovation (fast-charging electrolytes, Gen 4 LFP cathode)
Global expansion, with accelerated projects in the US and Morocco aimed at mitigating tariff risks
Profit and Loss, Balance Sheet, and Cash Flow Highlights
| Metric |
2024 |
2025F |
2026F |
2027F |
| Net Turnover (RMBm) |
12,518 |
14,790 |
16,715 |
18,301 |
| EBITDA (RMBm) |
2,006 |
2,244 |
2,405 |
2,603 |
| Net Profit (RMBm) |
484 |
887 |
967 |
1,080 |
| Net Margin (%) |
3.0 |
6.0 |
5.8 |
5.9 |
| ROE (%) |
2.9 |
6.6 |
6.8 |
7.2 |
| Operating Cash Flow (RMBm) |
882 |
3,364 |
2,368 |
2,238 |
| Capex (Growth) (RMBm) |
772 |
1,250 |
1,250 |
1,250 |
Valuation and Recommendation
BUY rating maintained with a target price of RMB30.00 (cut from RMB39.60), implying a 45.6% upside.
Valuation is based on a 10-year discounted cash flow (DCF) model (WACC: 12.0%, terminal growth: 4%).
Key Risks to Monitor
Further ASP declines beyond current projections
Margin pressure from raw material cost spikes
Delay in ramp-up of global projects or capacity expansions
Adverse regulatory or trade developments
Conclusion: Positioned for Recovery and Long-Term Growth
Despite a challenging 2Q25, Guangzhou Tinci Materials Technology remains a top pick in China’s advanced materials space. Its resilient sales volumes, strategic capacity expansions, product innovation, and robust cost controls position the company for a strong second half and sustained long-term growth. Investors with a medium- to long-term horizon should consider accumulating on dips, given the favorable industry dynamics and Tinci’s leadership in battery materials.
Broker: UOB Kay Hian Private Limited
Date of Report: 20 August 2025
