At the end of 2025, a regulatory warning revealed the hidden corner of the withdrawal of the IPO of Zhuzhou Keneng New Materials Co., Ltd. (hereinafter referred to as "Zhuzhou Keneng").

This new materials company, which submitted its IPO application to the Shanghai Stock Exchange's Science and Technology Innovation Board in June 2023 but withdrew its application two and a half years later, was named by the Shanghai Stock Exchange for issues such as inaccurate disclosure of R&D investment and inaccurate disclosure of internal control-related information.

Subsequently, Zhuzhou Keneng and its relevant personnel received regulatory warnings.

But this did not hinder Zhuzhou Keneng's listing process.

Less than six months later, Zhuzhou Keneng once again stood before the door of the Science and Technology Innovation Board—recently, Zhuzhou Keneng submitted its IPO application to the Shanghai Stock Exchange and was accepted.

Compared to its previous application, Zhuzhou Keneng is now bringing higher revenue and profits, reduced R&D expenses, ongoing performance-based compensation pressure, and a fundraising plan that is more likely to spark discussion, thus knocking on the door of its IPO once again.

Zhuzhou Keneng's main products include high-purity gallium, high-purity indium, and refined indium, which are ultimately applied to 5G/6G, high-speed optical communication and other scenarios. In 2025, its revenue exceeded 1 billion yuan, and its net profit attributable to the parent company exceeded 100 million yuan in the same period.

It is worth mentioning that although Zhuzhou Keneng reduced the overall fundraising scale in this IPO, the amount used to supplement working capital actually increased.

Zhuzhou Keneng plans to raise 560 million yuan, of which 100 million yuan will be used for "working capital replenishment," an increase of 50 million yuan compared to its previous IPO.

Whether this fundraising plan will be approved by regulators is attracting attention.

Back in June 2023, Zhuzhou Keneng had submitted an application for an IPO on the Science and Technology Innovation Board to the Shanghai Stock Exchange, but withdrew its application after two and a half years.

A regulatory warning subsequently issued by the Shanghai Stock Exchange revealed another side of Zhuzhou Keneng's previous failed IPO attempt.

On-site inspection revealed that Zhuzhou Keneng's basis for including some waste material losses and employee salaries in R&D expenses was insufficient. The total amount of R&D expenses that should be deducted was RMB 4.4117 million, accounting for 5.19% of the cumulative R&D investment from 2021 to 2023.

Ultimately, Zhuzhou Keneng, along with its chairman Zhao Kefeng, chief financial officer He Fen, and Qing Songhui, were given regulatory warnings.

Despite the regulatory warning being issued less than six months ago, Zhuzhou Keneng has embarked on its IPO journey again.

Zhuzhou Keneng has always had a strong desire to push forward with its listing timeline.

In fact, prior to its previous IPO application, Zhuzhou Keneng had disagreements with intermediaries regarding the pace of its listing application and had changed its sponsoring institution.

In March 2022, Zhuzhou Keneng signed a tutoring agreement with China Merchants Securities and filed for tutoring with the Hunan Securities Regulatory Bureau in April of the same year. However, less than a year later, in January 2023, the two parties terminated their tutoring relationship.

Subsequently, Zhuzhou Keneng changed its sponsoring institution to Shengang Securities and launched its IPO on the Science and Technology Innovation Board.

According to Zhuzhou Keneng, it originally planned to use June 30, 2022 as the filing base date and complete the IPO filing by the end of 2022. However, by the fourth quarter of 2022, China Merchants Securities still had not pushed forward the relevant filing preparations as planned, and the two parties could not reach an agreement on the listing filing time, listing venue, and other arrangements.

In order to expedite the listing process, Zhuzhou Keneng ultimately chose to hire another sponsoring institution.

The fact that Zhuzhou Keneng resubmitted its application less than six months after the regulatory warning demonstrates its sense of urgency regarding the capitalization process.

This sense of urgency may also be related to the performance-based pressure behind Zhuzhou Keneng.

According to the prospectus, in June 2022, Zhao Kefeng and Tang Yan, the actual controllers of Zhuzhou Keneng, signed an investment agreement with shareholders such as Jingshi Fund, promising that if the company fails to complete its IPO before December 31, 2026, the special clauses such as repurchase will be reinstated.

This has made Zhuzhou Keneng's situation after its previous withdrawal from the IPO quite delicate.

With the resumption of the IPO, Zhao Kefeng and others agreed with shareholders that the aforementioned special rights clauses would remain invalid from the outset, effective October 31, 2025. However, if Zhuzhou Keneng's IPO fails again, the relevant special rights clauses will automatically regain their validity.

From this perspective, Zhuzhou Keneng's decision to resubmit its listing application shortly after regulatory warnings is not merely a matter of choosing the right time to go public, but also relates to the stability of external investors' exit expectations.

The first step in restarting IPOs is to correct the issues that were highlighted in the previous regulatory warning.

Prior to this IPO, Zhuzhou Keneng had already adjusted its R&D expenses.

In the latest version of the prospectus, Zhuzhou Keneng's R&D expenses in 2023 and 2024 were RMB 27.8892 million and RMB 29.7165 million, respectively, which were reduced by RMB 640,900 and RMB 601,900 compared with the previous application.

Furthermore, the number of R&D personnel has also changed slightly. The latest prospectus states that as of the end of 2023, Zhuzhou Keneng had 30 R&D personnel, a decrease of one person compared to the number disclosed in its previous IPO.

The simultaneous adjustment of R&D expenses and the number of R&D personnel is, to some extent, a response to the previous issue.

Compared to the previous application, the performance growth has given Zhuzhou Keneng more confidence.

In 2025, Zhuzhou Keneng's revenue reached 1.027 billion yuan, an increase of over 30% year-on-year; during the same period, its net profit attributable to the parent company exceeded 100 million yuan, reaching 128 million yuan, an increase of over 80% year-on-year.

The direct driver of the revenue growth was the large order from customer B.

In 2024, customer B contributed 54.4404 million yuan in revenue, accounting for 6.92% of total revenue; however, by 2025, this amount had jumped to 320 million yuan, accounting for 31.12% of total revenue, making customer B the largest customer of Zhuzhou Keneng.

In other words, customer B alone will contribute nearly one-third of Zhuzhou Keneng's revenue in 2025.

This pulling effect may continue. Zhuzhou Keneng expects that the revenue generated by this type of business contract will still account for a high proportion in 2026, and will have a significant impact on the company's operating performance in 2026.

In addition to customer orders, Zhuzhou Keneng's improved performance over the past two years is also related to its timing of the upward cycle in metal prices.

Starting at the end of 2023, Zhuzhou Keneng, optimistic about the market for indium and bismuth products, increased its inventory of corresponding raw materials based on existing orders. In 2024, its inventory reached 635 million yuan, nearly doubling year-on-year.

Pre-stocking amplifies the profit elasticity of Zhuzhou Keneng during a price uptrend.

In 2024, the market prices of indium ingot (In99995) and metallic gallium (Ga4N) were RMB 2,304.2/kg and RMB 2,044.12/kg, respectively, representing year-on-year increases of 48.43% and 26.39%.

As subsequent new orders saw prices rise along with market prices, the inventory of raw materials purchased at low prices in the early stages gradually turned into a cost advantage.

The time lag between procurement and revenue recognition allowed Zhuzhou Keneng to benefit from the "low-price inventory, high-price sales" scissors effect, directly increasing its gross profit margin.

In 2025, Zhuzhou Keneng's gross profit margin reached 24.16%, an increase of more than 7 percentage points compared to 2023.

However, despite a significant improvement in performance, Zhuzhou Keneng's IPO fundraising target has actually been reduced.

Zhuzhou Keneng plans to raise 560 million yuan in this IPO, a decrease of 28 million yuan compared to its previous application.

However, while the total amount of funds raised was reduced, Zhuzhou Keneng actually increased the amount of "work capital replenishment".

In this IPO, Zhuzhou Keneng plans to use 100 million yuan to supplement working capital, an increase of 50% compared to the previous application, accounting for 17.86% of the total funds raised.

It is worth mentioning that while replenishing working capital through the IPO, Zhuzhou Keneng still maintained a relatively high dividend payout during the reporting period.

From 2023 to 2025, Zhuzhou Keneng distributed a total of RMB 53.9736 million in cash dividends, accounting for nearly a quarter of the total net profit attributable to the parent company during the same period.

This makes Zhuzhou Keneng's capital arrangement seem delicate: on the one hand, it increases the amount of funds raised through the IPO, and on the other hand, it distributes large dividends.

While Zhuzhou Keneng has improved its financial performance and continued to pay cash dividends, it has increased the proportion of its IPO-funded working capital. Whether the rationality of its fundraising can be recognized by regulators remains to be seen.