Core Viewpoint - Kangpeng Technology, once a model of policy benefits in China's hard technology localization narrative, is now facing significant operational challenges, including declining profit margins and increased inventory impairment, leading to a potential capital exodus from the company [1][16]. Company Overview - Kangpeng Technology specializes in fine chemicals, focusing on the research, production, and sales of new materials, pharmaceuticals, and agricultural chemicals, with a strong emphasis on fluorinated fine chemicals [2]. - The company was recognized as a "specialized, refined, distinctive, and innovative" enterprise in Shanghai in 2021 and officially listed on the Sci-Tech Innovation Board in July 2023 [2]. Financial Performance - The company has experienced a dramatic reversal in performance post-IPO, with revenues declining for three consecutive years: 1.238 billion in 2022, 980 million in 2023, and 675 million in 2024, marking a 20.89% year-on-year decline in 2023 and a further 31.11% drop in 2024 [3]. - Gross margin has been on a downward trend since 2020, with an overall gross margin of only 12.65% in 2024, down nearly 30 percentage points from 2020, and significantly lower than 2023 [5]. - The new materials segment faced a gross margin of 2.7% in 2024, a decrease of 7.9 percentage points year-on-year, while the CDMO segment saw a gross margin of 23.17%, down 16.06 percentage points [5]. Expense Trends - Sales, management, and R&D expense ratios have all increased from 2022 to 2024, leading to a net profit decline of 37.58% in 2023 to 113 million, followed by a loss of 49.53 million in 2024, marking a 143.95% year-on-year decline [7]. - The net cash flow from operating activities also decreased sharply from 213 million in 2023 to 60.8 million in 2024 [9]. Business Risks - The Shanghai Stock Exchange has inquired about the significant changes in Kangpeng's new materials and CDMO business, as well as the increased inventory impairment provisions [11]. - The new materials business reported a gross margin of only 1.19% in Q1 2025, continuing a downward trend, with potential risks from market supply-demand changes and price declines [11]. - The CDMO business revenue fell by 48.29% in 2024 to 295 million, with a slight recovery in Q1 2025, but remains vulnerable to pricing pressures and market dynamics [12]. Market Position and Competition - Kangpeng's market share in the global LiFSI market was only 6% in 2023, significantly lower than competitors like Tianqi Materials (55%) and CATL's Times Technology (16%) [13]. - The company faces intense competition and pricing pressures, particularly from larger players who have integrated supply chains, leaving Kangpeng in a precarious position [13][14]. Future Outlook - The reliance on policy support and capital influx for growth may lead to value destruction, especially as the market environment evolves and competition intensifies [16].