Risk Analysis of Longpan Technology's Lithium Iron Phosphate Capacity Expansion

Based on collected data and market information, I provide you with an in-depth risk analysis report on Longpan Technology’s lithium iron phosphate capacity expansion:

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• Designed capacity at end-2024: 231,800 tons, capacity utilization rate of 79.68% [1]
• Estimated capacity in 2025: 320,000 tons, capacity utilization rate drops to 57.6% [1]
• Indonesia Phase II Project: 90,000 tons of capacity expected to be completed in June 2026
• Private placement financing of RMB 2 billion for 110,000 tons and 85,000 tons of high-performance phosphate-based cathode material projects [2]

Longpan Technology’s capacity utilization rate is significantly lower than that of industry leaders. In stark contrast to the overloaded operation (over 100% utilization) of three leading enterprises—Hunan Yuneng, Wanrun New Energy, and Defang Nano [3], Longpan’s 57.6% utilization rate reflects issues of or .

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Customer	Order Scale	Contract Amount	Time Period
Chuner New Energy	1.3 million tons	Over RMB 45 billion	Until December 31, 2030
CATL (Overseas)	157,500 tons	Over RMB 6 billion	Q2 2026 - 2031
Sunwoda	106,800 tons	RMB 4.5-5.5 billion	Long-term agreement

Calculated based on the Chuner New Energy order, the , which already exceeds Longpan Technology’s current total capacity of 320,000 tons [1]. This means the company is already facing significant pressure to meet existing order demands; while continuing to expand capacity can alleviate delivery pressure, it further exacerbates the .

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• Estimated lithium iron phosphate output in 2025: Approximately 3.7 million tons [3]
• Industry CR3 (Hunan Yuneng, Wanrun New Energy, Defang Nano) market share: Approximately 48% [3]
• Concentrated maintenance actions by leading enterprises: Hunan Yuneng, Wanrun New Energy, and Defang Nano have successively announced production cuts and maintenance in January 2026 [3]

The price of lithium iron phosphate dropped from RMB 42,000/ton at the beginning of 2024 to RMB 32,000/ton in October 2024, and has rebounded to RMB 39,100/ton since Q3 2025 [1]. Price fluctuations reflect the fragile balance of supply and demand in the industry.

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Indicator	Value	Risk Assessment
Price-to-Book Ratio (P/B)	4.65x	High
Price-to-Earnings Ratio (P/E)	-31.37x	Loss-making status
Return on Equity (ROE)	-14.74%	Negative return
Net Profit Margin	-5.66%	Loss
Current Ratio	0.91	Short-term debt repayment pressure
Debt Risk Rating	High Risk	—

The company is in a

and has a high debt ratio. Capacity expansion requires significant capital expenditure; if market demand falls short of expectations or prices remain under pressure, its financial situation will further deteriorate [0].

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1. Overcapacity Risk (High):
   Industry capacity expansion speed far exceeds demand growth; the 57.6% capacity utilization rate indicates existing overcapacity
2. Price Decline Risk (Medium-High):
   Overcapacity leads to intensified price competition, squeezing profit margins
3. Order Execution Risk (Medium):
   Contradiction between delivery pressure from long-term agreement orders and insufficient capacity
4. Cash Flow Risk (Medium-High):
   Private placement financing can alleviate capital pressure, but continuous capacity investment consumes a large amount of cash
5. Technology Iteration Risk (Medium-Low):
   New technologies such as lithium manganese iron phosphate may replace traditional lithium iron phosphate

1. Continuous increase in NEV penetration rate:
   China’s NEV penetration rate reached 43.5% in 2024 [2]
2. Rapid growth of energy storage market:
   Global new energy storage installation increased by 80% in 2024, with lithium iron phosphate batteries accounting for 92.5% [2]
3. Tied up with leading customers:
   Established long-term cooperative relationships with CATL, BYD, Sunwoda, etc. [1]
4. Industry production cuts and maintenance:
   Production cuts by leading enterprises may promote price stabilization and recovery [3]

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Longpan Technology’s lithium iron phosphate capacity expansion plan , mainly reflected in:

1. Continuous decline in capacity utilization rate:
   Dropped from 79.68% to 57.6%, indicating that capacity expansion speed exceeds market demand growth
2. Overall industry overcapacity:
   Estimated output of 3.7 million tons in 2025, putting pressure on market absorption capacity
3. Worrying financial situation:
   Persistent losses and high debt ratio limit the company’s risk resistance capacity

The company has high order certainty by tying up with leading customers such as CATL and Chuner New Energy. If industry integration accelerates and backward capacity is cleared out, surviving enterprises will gain a better market position.

The current 57.6% capacity utilization rate means nearly half of the capacity is idle; expanding capacity will further increase fixed cost burdens. Before industry capacity clearance is completed, investors are advised to remain cautious and pay attention to changes in the company’s capacity utilization rate and improvements in its financial situation.

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

[1] CLS - “Continuous Lithium Acquisition! Longpan Technology Signs Another Long-term Order Worth Nearly RMB 5 Billion” (https://www.cls.cn/detail/2217719)

[2] Securities Times - “Rapid Growth of Downstream Market, Longpan Technology Continues to Increase Lithium Battery Material Capacity” (https://www.stcn.com/article/detail/3561720.html)

[3] Sina Finance - “LFP Industry Storm: Tianqi Lithium Separates from Non-ferrous Network” (https://finance.sina.com.cn/roll/2025-12-27/doc-inhehckm2017383.shtml)

[4] Economic Observer - Reports on Capacity and Price Analysis of Lithium Iron Phosphate Industry

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This analysis is for reference only and does not constitute investment advice. Investors should make independent investment decisions based on their own risk tolerance.