Analysis of Tongcheng New Materials' CMP Polishing Pad Business

Based on the collected information, I hereby provide a detailed analysis report on Tongcheng New Materials’ CMP polishing pad business.

Tongcheng New Materials Group Co., Ltd. (Stock Code: 603650.SH) is a leading Chinese enterprise in special rubber additives. In recent years, it has actively carried out strategic transformation into the electronic chemicals sector. As a key component of the company’s electronic chemicals layout, the CMP polishing pad business has achieved breakthrough progress [1].

• In April 2025, subsidiary Tongcheng Electronics signed a cooperation agreement for the “Advanced Polishing Pad Project for Semiconductor Chips”
• The project for advanced semiconductor chip polishing pads with an annual capacity of 250,000 units has completed production line construction and production validation
• In the first half of 2025, the product entered the validation process of leading domestic chip enterprises
• As of the date of the mid-year report disclosure, the company has received its first formal order, achieving mass production and delivery of CMP polishing pads [1]

Currently, the localization rate of semiconductor materials is clearly on the rise, and international trade frictions have accelerated the process of domestic substitution. Relying on its technical accumulation and customer resources in the photoresist field, Tongcheng New Materials has successfully replicated its strategic M&A model in the CMP polishing pad field, moving towards becoming a platform-type leader in electronic materials [1][3].

The company has formed three major business segments: “Special Materials for Automobiles/Tires, Electronic Chemicals, and Biodegradable Materials”. Relying on Tongcheng Electronics to build an electronic chemicals industrialization platform, the company has continued to launch new products and steadily develop new customers, with a favorable synergistic effect between its photoresist business and CMP polishing pad business [1].

From 2021 to the first three quarters of 2025, the company’s R&D expenses were RMB 147 million, RMB 158 million, RMB 180 million, RMB 217 million, and RMB 177 million respectively. The R&D expense ratio increased from 6.32% to 7.02%, which is at a relatively high level among domestic photoresist enterprises [1].

• As of January 14, 2026, the stock price was RMB 55.61 per share
• Surged 77.84% from the closing price of RMB 31.27 on January 3, 2025
• Current total market capitalization is RMB 34.226 billion [1]

• Price-to-Earnings (P/E) Ratio: 64.95x
• Price-to-Book (P/B) Ratio: 10.66x
• Return on Equity (ROE): 16.85%
• Net Profit Margin: 16.99% [4]

Shanghai Securities predicts that the company will achieve operating revenues of RMB 3.592 billion, RMB 4.238 billion, and RMB 5.187 billion in 2025-2027, with year-on-year growth rates of 9.85%, 17.98%, and 22.38% respectively; net profits attributable to shareholders will be RMB 560 million, RMB 683 million, and RMB 883 million, with year-on-year growth rates of 8.34%, 21.97%, and 29.37% respectively [1].

1. The CMP polishing pad business has transitioned from validation to mass production, entering the commercial harvest period
2. Benefiting from the major trend of domestic substitution of semiconductor materials, with broad market space
3. The photoresist business is growing steadily, and CMP polishing pads are expected to become a new growth driver
4. The company has a clear strategy to develop into a platform-type leader in electronic materials

1. Cyclical fluctuations in the semiconductor industry may impact market demand
2. The CMP polishing pad market is highly competitive; attention should be paid to market share expansion
3. Changes in international trade policies may affect raw material supply or customer development
4. The current valuation is at a historically high level; attention should be paid to the risk of a pullback

[1] NetEase Finance - “Rushing for A+H Share Listing, Tongcheng New Materials’ ‘Crown Jewel’ Becomes a Key Chip” (https://www.163.com/dy/article/KJ8QJHM60511RIVP.html)

[2] Caifuhao - “Storage Giant Sharply Raises Prices, AI Drives Explosive Opportunities for Domestic Industry Chain” (https://caifuhao.eastmoney.com/news/20260108130100443971830)

[3] Caifuhao - “Commercial Aerospace/Controllable Nuclear Fusion/Brain-Computer Interface/Electronic Gases/Semiconductor Materials/AI…” (https://caifuhao.eastmoney.com/news/20260109095016961721170)

[4] Jinling AI - Company Profile Data (Based on real-time market data via API)