IPO outlook | Electronic ceramics leader Sanhuan Group sprints to “A+H”: annual revenue reaches 7.266 billion yuan, and there is still “triple pressure”

The advanced electronic ceramic materials and components industry is in a boom phase brought about by the upgrading and resonance of key sectors of the national economy, such as communications, AI and data centers, consumer electronics, automotive electronics, semiconductor manufacturing and packaging, new energy, and intelligent industrial control.

On this occasion, Sanhuan Group, a leader in electronic ceramics from Chaozhou, Guangdong, has also begun its own “A+H” listing path.

On December 5, Chaozhou Sanhuan (Group) Co., Ltd. (hereinafter referred to as “Sanhuan Group”) submitted a listing application to the Hong Kong Stock Exchange to be listed on the Hong Kong Main Board. The sole sponsor is China Galaxy International. The company was listed on the Shenzhen Stock Exchange on December 3, 2014. As of the close of trading on December 10, its stock price was 45 yuan, with a total market value of 86.242 billion yuan. Once it is listed on the Hong Kong stock market, the Sanhuan Group will form an “A+H” pattern.

The company has been deeply involved in the field of advanced electronic ceramic materials and components for over 55 years, and has now developed into a leading global enterprise in the field of advanced electronic ceramic materials and components. According to Frost & Sullivan, the company's products have now developed significant competitiveness in some segments. For example, the company's alumina ceramic substrates have gone through many technical upgrades and production expansions, and have gradually achieved full coverage of chip resistors. Furthermore, the company has now developed into one of the world's leading suppliers of alumina ceramic substrates, with a global market share of over 50% in terms of 2024 revenue; in terms of 2024 revenue, the company ranks first in the global market share of SOFC diaphragms.

As a well-deserved “leading enterprise” in the industry segment, what is the investment value of Sanhuan Group?

Annual revenue reached 7.266 billion yuan, and accounts receivable increased year by year

According to reports, the Sanhuan Group is mainly based on a deep “material” base, and with “materials+structure+function” as the strategic development direction, has built a core product matrix of four categories, including electronic and ceramic materials, electronic components, communication devices, and equipment components, forming a business framework covering core application areas such as communications, AI and data centers, consumer electronics, automotive electronics, semiconductor manufacturing and packaging, new energy, and intelligent industrial control.

Under the diversified business layout, the fundamentals of the Sanhuan Group are also quite solid. Not only did the annual revenue scale exceed 7 billion yuan, but the profit scale also exceeded 2 billion yuan during the same period.

According to the prospectus, from 2022 to 2024, the company achieved revenue of 5,089 billion yuan, 5.682 billion yuan, and 7.266 billion yuan respectively, increasing year by year; profit during the realized period was 1,506 billion yuan, 1,583 billion yuan, and 2.19 billion yuan, respectively, and also achieved continuous growth.

As of the first three quarters of 2025, revenue reached 6.421 billion yuan, up 20.67% year on year; profit for the period was 1,958 billion yuan, up 22.09% year on year.

In addition to the steady increase in revenue and profit scale, the gross margin level of the Sanhuan Group is also at a high level: from 2022 to the first three quarters of 2025, the company's gross margins were 41.3%, 37.9%, 40.9%, and 40.1%, respectively.

Thanks to the combined effects of steady growth in the company's performance and continuous improvement in profitability, the cash flow of the Sanhuan Group is also in a steady state. As of the first three quarters of 2025, the net cash generated by the company's operating activities was $1,990 billion, while cash and cash equivalents increased to $4.299 billion.

However, as the scale of the company's business continued to expand, Sanhuan Group's accounts receivable also continued to rise.

According to the prospectus, from 2022 to September 30, 2025, the company's accounts receivable were approximately RMB 1,198 billion, RMB 1,627 billion, RMB 1,872 billion, and RMB 2,036 billion respectively. Although the company's accounts receivable are rising year by year or are related to the expansion of business scale, that is, the company's accounts receivable growth rate from 2022 to 2024 basically matches the revenue growth rate, too high accounts receivable will also increase the risk of the company's asset impairment.

In response, the company also indicated the risk in the prospectus that if the credit status of the company's customers deteriorates, or if a large number of customers fail to settle all of their accounts receivable for any reason, the company may continue to incur impairment losses in the future. If the customer delays settlement or is unable to settle at all, the company's financial position and operating results may be adversely affected.

From the above, it can be seen that the steady growth in Sanhuan Group's performance stems from a virtuous cycle of leading technology, an explosion of downstream demand, and financial soundness, while the increase in accounts receivable is due to natural results such as business expansion+customer structure optimization. Overall, the company currently has solid fundamentals and manageable risks.

The industry is booming vs. unavoidable “triple pressure”

Of course, the steady growth of the Sanhuan Group's performance is inseparable from a booming industry.

According to Zhitong Finance, advanced electronic ceramic materials are the foundation of the industry, providing high-precision and high-reliability support for downstream components. Typical products include alumina/aluminum nitride ceramic substrates, electronic paste, and SOFC diaphragms. Advanced ceramic components mainly include ceramic electronic components, ceramic communication devices, and ceramic equipment components. They are widely used in key aspects such as functional support, electrical performance regulation, structural stability and thermal management, and play a central role in domestic substitution.

In recent years, under the continuous influence of trends such as high-end consumer electronics, the spread of AI and the Internet of Things, electrification and intelligence of automobiles, expansion of global computing power infrastructure, deepening domestic semiconductor substitution, and energy transformation, demand for all categories of products in the industry has risen across the board, and the market size has continued to expand.

According to Frost & Sullivan, the global market size of core advanced electronic ceramic materials, core ceramic electronic components, core ceramic communication devices and core ceramic equipment components is expected to grow at compound annual growth rates of 11.8%, 7.1%, 8.3% and 11.8%, respectively, to reach RMB 42.2 billion, RMB 251.7 billion, RMB 70.4 billion and RMB 96.5 billion respectively in 2030.

Among these, Sanhuan Group, as a leading enterprise in advanced electronic ceramics, will naturally benefit from the continuous growth of the industry's boom.

Its core business, MLCC (Chip Multilayer Ceramic Capacitors), is growing strongly. As the largest MLCC supplier in mainland China, the company's products cover a full range of products from consumer electronics to automotive standards. The increase in performance directly benefits from the demand brought about by the construction of AI servers and data centers, as well as the continued promotion of domestic substitution.

Meanwhile, the SOFC business has gradually become a new growth point, with the company leading the global share of SOFC diaphragms. The country's first 300-kilowatt commercial demonstration project, which it participated in construction, has been put into operation. The business is thought to fully benefit from the demand for AI power construction in North America, and there is huge room for growth.

However, it should be noted that even as a leading enterprise in the segment, Sanhuan Group cannot escape rising costs and price pressure.

Specifically, according to the prospectus, in recent years, Sanhuan Group's raw material costs as a share of operating costs have continued to rise, from about 51% in 2022 to 59% in the first three quarters of 2025, and may face some upward pressure on costs. At the same time, core products faced price reduction pressure, and the average sales price of MLCCs and communication devices declined during the reporting period.

In addition to this, the global competitive position of the Sanhuan Group still needs to be improved: although the company is a domestic leader, the global market share of the MLCC business is only about 2%, ranking ninth. Leading companies in the industry still have an absolute advantage, and the company still faces fierce global competition. The main manufacturers are from Japan, South Korea, Taiwan, and mainland China. In terms of global revenue in 2024, the total market share of the top ten companies reached about 98%.

Looking at the above, it can be seen that the Sanhuan Group is a leading domestic electronic ceramics company with solid fundamentals and is on a booming circuit. The listing in Hong Kong is a key step in its international layout, and the long-term growth logic is clear. The main challenge now is how to continuously increase global share in competition with international giants and effectively manage costs and the pace of expansion.