Analysis of Longpan Technology's Financial Distress and Value Assessment of Long-Term Agreement Orders

According to existing data analysis, Longpan Technology is indeed facing the dilemma of ‘increasing revenue without increasing profits’, but there is a discrepancy in the amount regarding the ‘45 billion long-term agreement order’ you mentioned. According to public information, Lithium Source Asia Pacific, a subsidiary of Longpan Technology Hong Kong (02465.HK), signed a long-term purchase agreement (2026-2030) with Sunwoda Automotive Energy Technology (Thailand) for

, not 45 billion [1].

From the latest financial data, Longpan Technology (603906.SS) is in a typical state of increasing revenue without increasing profits or even expanding losses [0]:

Core Indicator	Value	Status Assessment
Net Profit Margin	-5.66%	Severe Loss
Operating Profit Margin	-7.13%	Operational Difficulty
ROE	-14.74%	Negative Shareholder Return
P/E	-31.37x	Pessimistic Market Expectation
Current Ratio	0.91	Short-Term Debt Repayment Pressure

The 2025 Q3 financial report shows that the company’s revenue was 220 million USD, lower than analysts’ expectation of 238 million USD, with a gap of 7.44% [0]. The latest quarterly EPS was -0.04 USD, a sharp drop of 138.47% compared to analysts’ expectation of 0.10 USD, indicating that the company’s profitability continues to deteriorate.

Financial analysis shows that Longpan Technology faces

, with a current ratio of only 0.91, meaning current assets are insufficient to cover current liabilities, leading to significant short-term debt repayment pressure [0].

According to the Hong Kong stock announcement, Lithium Source Asia Pacific, a holding subsidiary of Longpan Technology, signed an agreement with Sunwoda Thailand to sell 106,800 tons of lithium iron phosphate cathode material from 2026 to 2030, with a total sales amount of approximately 4.5-5.5 billion RMB [1]. This order has the following characteristics:

: A longer agreement term provides a stable revenue expectation and basis for capacity planning for the company

: Sunwoda is an important enterprise in the new energy battery field with strong performance ability

: Focusing on lithium iron phosphate cathode material helps the company concentrate resources to optimize production

1. Enhanced Revenue Stability
   : Long-term agreements lock in part of the revenue sources for the next 5 years, reducing the risk of performance fluctuations

2. Increased Capacity Utilization
   : Stable orders help optimize production plans and dilute fixed costs

3. Consolidated Industry Position
   : Cooperation with leading battery enterprises helps improve the competitive position in the lithium iron phosphate supply chain

Although the long-term agreement order has positive significance, its role in improving profits may be limited from the following dimensions:

: The growth rate of the new energy vehicle market has slowed down, lithium carbonate prices have fluctuated sharply, and the entire industry chain is facing overcapacity and price competition pressure. As a midstream material supplier, Longpan Technology has limited bargaining power

: Even if the order is implemented, under the background of the industry’s overall decline in price-bearing capacity, it is doubtful whether the gross profit margin can be improved. The company is currently in a loss state, indicating huge cost-side pressure

: To fulfill the long-term agreement order, the company may need to追加 capacity investment, which further increases the financial burden under the current high debt risk background

: The order will only start execution in 2026, so it will not make a substantial contribution to the 2025 performance in the short term

If Longpan Technology wants to truly get out of the dilemma, it needs to focus on the following aspects:

Key Element	Specific Requirement
Cost Control	Improve production efficiency and reduce the impact of raw material cost fluctuations
Product Upgrade	Extend to high-value-added products to improve gross profit margin
Capacity Optimization	Reasonably control capital expenditure and avoid over-expansion
Working Capital Management	Improve working capital management and reduce debt risk

Based on the above analysis, Longpan Technology’s 45 billion (actual 4.5-5.5 billion) long-term agreement order is difficult to fundamentally reverse its ‘increasing revenue without increasing profits’ dilemma in the short term:

• The order will only contribute to revenue from 2026, so the 2025 performance will still be under pressure
• Against the background of overall industry overcapacity, material price competition is fierce, and there is limited room for gross profit margin improvement
• High debt risk and short-term debt repayment pressure are still important challenges facing the company
• The stock price has risen by 104.92% since the beginning of the year, and the current valuation (-31.37x P/E) has reflected the market’s pessimistic expectations

: The long-term agreement order has positive significance for the company’s medium and long-term development, but it is difficult to effectively improve the profit situation in the short term. Investors should pay attention to the order execution status, industry supply and demand changes, and the company’s cost control ability, and carefully evaluate investment risks.

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[1] Yahoo Finance - ‘Longpan Technology (02465.HK) Signs Long-Term Purchase Agreement with Sales Volume of 4.5-5.5 Billion RMB’ (https://hk.finance.yahoo.com/news/龍蟠科技-02465-hk-簽署長期採購協議-銷售額45-154834112.html)

[0] Jinling API Data - Longpan Technology (603906.SS) Company Overview and Financial Analysis