In-depth Analysis of Transformation Risks in Ronbay Technology's Cross-border Expansion into Lithium Iron Phosphate (LFP) Business

Ronbay Technology (Stock Code: 688005.SH) was founded in 2014 and listed on the STAR Market in July 2019. As a global leader in ternary cathode materials, it has ranked first in global sales for consecutive years. The company was established by a senior team from the Chinese and South Korean lithium battery industries, and its actual controller, Bai Houshan, has rich experience in the lithium battery industry[0][1].

However, in the face of profound changes in the lithium battery industry structure, the company is undergoing a strategic transformation from “Leader in Ternary Cathode Materials” to “Total Solution Provider for the Cathode Material Industry”. In the first half of 2025, the company officially announced its entry into the LFP track, with multiple driving factors behind this strategic adjustment:

• Market Structure Changes
  : The proportion of LFP batteries to ternary batteries has evolved from the early “3:7” to “8:2”, with LFP occupying an absolute dominant position in the power battery sector
• Industry Cycle Pressure
  : Imbalanced supply and demand in the lithium battery industry chain has put pressure on the overall profitability of the industry, and ternary materials are facing growth bottlenecks
• Customer Demand-driven
  : Core customers such as CATL have sustained demand for LFP materials

To quickly build LFP production capacity, Ronbay Technology has adopted a dual-track strategy of “Merger and Acquisition + Self-construction”:

Date	Event	Investment Amount	Capacity Acquired
December 31, 2025	Acquired 54.9688% equity stake in Guizhou Xinren	RMB 342 million	60,000-ton LFP production line
December 31, 2025	Capital increase in Guizhou Xinren	RMB 140 million	Capacity expansion potential
Total	Holding 93.2034% equity stake in Guizhou Xinren	RMB 482 million	60,000-ton annual capacity

According to the plan disclosed in the company’s roadshow, the target capacity expansion speed is remarkable:

• Reach 370,000-ton capacity by Q3 2026
• The “LFP Super Factory” in the southwest region will reach over 1 million tons by 2028
• Global (China, Europe, North America, South Korea) total LFP capacity plan of 3 million tons by 2030[2]

On January 13, 2026, Ronbay Technology released a major announcement: it signed the “Procurement Cooperation Agreement for Lithium Iron Phosphate Cathode Materials” with CATL, agreeing to supply a total of approximately 3.05 million tons of LFP cathode materials to CATL in the domestic region from Q1 2026 to 2031, with the total sales amount of the agreement exceeding RMB 120 billion[1][2].

This is not the first cooperation between the two parties, but a continuation of their long-term strategic partnership:

• January 2022
  : Signed a supply agreement for high-nickel ternary materials, making Ronbay Technology a core supplier of high-nickel ternary cathode powder for CATL
• November 2025
  : Signed a supply agreement for sodium-ion battery cathode materials, stipulating that CATL’s annual procurement volume shall not be less than 60% of its total procurement volume of sodium-ion battery cathode materials
• January 2026
  : Signed an LFP supply agreement, locking in a supply volume of 3.05 million tons

This deep binding model has become a trend in the lithium battery industry chain. During the same period, CATL also signed a 1.32 million-ton supply agreement (2025-2030) with Wanrun New Energy, and an 80% capacity underwriting agreement with Fulin Precision Industry, paying a RMB 1.5 billion advance payment[2].

Indicator	Data
Current Controlled Capacity (Guizhou Xinren)	60,000 tons/year
Average Annual Supply in Agreement	Approximately 500,000 tons/year (3.05 million tons/6 years)
Capacity Gap	Approximately 440,000 tons/year
Target Capacity to Achieve	Reach 370,000 tons by Q3 2026

According to the inquiry letter from the Shanghai Stock Exchange, the company’s disclosed completed LFP production capacity is far from the expected supply volume under this agreement[1]. Although the company claims to have 280,000 square meters of factory buildings that provide a foundation for rapid capacity expansion, the capacity jump from 60,000 tons to 370,000 tons needs to be completed in less than a year, and there are uncertainties in links such as technical verification, equipment procurement, and capacity ramp-up.

: ⚠️

The Shanghai Stock Exchange has questioned the binding force of the agreement, which is a core issue related to whether the company can obtain expected returns[1][2]:

:

“This agreement is binding on both parties”

:

“It has a certain degree of binding force, but it is not very strong. It is inconvenient to disclose the details here”

:

• The agreement stipulates that “the final procurement volume and the company’s demand guarantee shall be subject to the framework, annual, or single procurement contracts signed by both parties subsequently”
• When a mandatory obligation is not performed in accordance with the agreement, the breaching party shall pay liquidated damages in accordance with the agreement
• The actual sales volume and amount are uncertain, and the estimated sales amount does not constitute a performance commitment

Industry insiders analyze that leading enterprises in the lithium battery chain are using long-term agreements to lock in the priority allocation right of upstream suppliers’ future new capacity, listing technical indicators, cost control, and delivery rhythm as preconditions, rather than making a bottom-line commitment of “buy whatever is built”. In essence, they are transferring the risks of capacity expansion and technological iteration to upstream suppliers[2].

: ⚠️

The LFP industry is facing a serious overcapacity problem, which is a structural risk that Ronbay Technology must face directly in its transformation.

:

Year	Capacity	Output	Capacity Utilization Rate
2024	4.7 million tons	Approximately 2.3 million tons	Approximately 50%
2025	5.32 million tons (available)	Approximately 2.89 million tons (estimated)	Approximately 54%
H1 2025	-	1.6 million tons (+57% YoY)	Approximately 55%

:

• First Echelon
  : Hunan Yuneng (market share approximately 30%, output exceeding 1 million tons in 2025), Fulin Precision Industry
• Second Echelon
  : Wanrun New Energy, Dynanonic (output at 100,000-150,000 ton level)
• Third Echelon
  : Youshan Technology, Guoxuan High-Tech, Longpan Technology (output at 200,000 ton level)
• Ronbay Technology was not on the list before, and has just started with the 60,000-ton capacity of Guizhou Xinren[3][4]

:

“The top five enterprises are basically operating at full capacity, but only two are profitable, and the rest of the listed companies are basically in a loss-making state” — Liu Jiacheng, Deputy General Manager of Anda Technology

:

• From the end of 2022 to August 2025, the price of LFP materials plummeted from RMB 173,000/ton to RMB 34,000/ton, a drop of 80.2%
• The average order price of Ronbay Technology is approximately RMB 39,300/ton, which is about 30% lower than the current market price of RMB 55,000/ton[2]

: ⚠️

The LFP industry is experiencing rapid technological iteration, with high-compaction density materials becoming the core of competition, and the technological gap may widen rapidly.

:

Generation	Compaction Density	Market Share in 2025	Characteristics
2nd Generation Products	2.4-2.5 g/cm³	Gradually exiting	Conventional products
3rd Generation Products	2.5-2.55 g/cm³	64%	Mainstream in the market
4th Generation Products	>2.6 g/cm³	15% (rapidly increasing)	High-end products, core of competition

:

• In Q1 2025, the shipment share of 4th-generation high-compaction density LFP has doubled compared with 2024
• It is expected that the share of 4th-generation products will reach 15% for the whole year of 2025
• Enterprises with 4th-generation technology and bound with international customers will occupy more than 70% of the effective market share[4]

:

• Its products are at the industry-leading level in key indicators such as iron dissolution rate, first-cycle efficiency, and compaction density
• It has completed the development and application of 3rd-generation and 4th-generation products, and the 5th-generation product has entered the application development stage
• The new process shortens the production process from 15 steps to 6 steps, reducing investment costs by approximately 40% and energy consumption by approximately 30%

However,

. It takes time to verify whether the original production lines of Guizhou Xinren can be quickly transformed to adapt to the new technology, and whether the new technology can achieve stable large-scale production.

: ⚠️

Ronbay Technology’s current financial situation is under pressure, and transformation and expansion require a large amount of capital investment, which may lead to financing pressure.

[0]:

Indicator	Value	Evaluation
Market Capitalization	RMB 26.695 billion	-
P/E Ratio	-1090.90x	Loss-making state
ROE	-0.29%	Negative return
Net Profit Margin	-0.19%	Loss-making
Free Cash Flow	-RMB 1.252 billion	Net outflow
Estimated Net Profit in 2025	-RMB 150 million to -RMB 190 million	First annual loss

:

• First Annual Loss
  : Ronbay Technology expects to record its first annual loss since its listing in 2019
• Non-recurring Net Profit
  : -RMB 220 million to -RMB 180 million, putting pressure on the main business operation
• Gross Profit Margin
  : Excluding strategic investments in new industries such as sodium-ion batteries, precursors, and lithium manganese iron phosphate, the ternary business actually achieved a profit of approximately RMB 77 million
• Asset-liability Ratio
  : The average asset-liability ratio of 6 listed enterprises in the industry reaches 67.81%[4]

:

• Acquisition and capital increase of Guizhou Xinren: RMB 482 million
• Capacity expansion to 370,000 tons: It is expected to require billions of RMB in investment
• Subsequent global 3-million-ton capacity plan: The investment scale may exceed RMB 10 billion

: ⚠️

LFP enterprises are facing a dual squeeze from upstream and downstream, and profit margins are continuing to narrow.

:

• The price of lithium carbonate continues to rise. On January 13, 2026, the main futures contract once hit the daily limit (RMB 174,000/ton, hitting a two-year high)
• The prices of raw materials such as lithium sources, iron sources, and phosphorus sources required for LFP production have risen rapidly recently
• Upstream chemical raw materials are in a stage of shortage and rapid price increase[1][4]

:

“Due to low market concentration and extremely fierce competition among enterprises, it is difficult for LFP material enterprises to pass on the pressure of upstream price increases to downstream enterprises such as battery cell manufacturers” — stated by enterprises participating in the industry conference

:

• Power-type LFP: RMB 54,000-60,500/ton (quoted on January 13, 2026)
• Average order price of Ronbay Technology: Approximately RMB 39,300/ton
• Industry average price in 2024: RMB 35,000-40,000/ton
• Processing fees for conventional products have been compressed due to overcapacity[1][4]

: ⚠️

In addition to LFP, a variety of alternative technologies are developing, which may impact a single technical route.

:

• Cost advantages squeeze low-end LFP
• Accelerating penetration in the mid-to-low-end energy storage market
• Although Ronbay Technology has laid out sodium-ion battery cathodes, its output in 2025 was only 11,050 tons, ranking in the second echelon[5]

:

• Energy density increased by 15-20%
• However, due to technical bottlenecks such as manganese dissolution and cycle life, it still needs to be mixed with ternary materials for use at present
• The concentration of leading enterprises is as high as 88%
• Ronbay Technology’s LMFP products have been operating at full capacity and full sales for 9 consecutive months, achieving quarterly profit in Q4, which is a relatively successful business in the current transformation[5]

:

• The company’s high-nickel and ultra-high-nickel all-solid-state cathode materials have achieved ten-ton scale shipments
• The pilot line for sulfide electrolyte materials is expected to be completed in early 2026

: ⚠️

:

• The cancellation of the mandatory energy storage allocation policy in China has led to a downward revision of long-term installation expectations
• Policy uncertainty affects the development expectations of the energy storage market

:

• The new tariffs imposed by the US on Chinese lithium batteries directly affect energy storage exports
• Trade barriers such as the European Union’s New Battery Regulation increase the overseas expansion costs of enterprises
• Developing overseas markets needs to meet higher compliance requirements[4]

:

• Has established localized operation teams in South Korea, Poland, and North America
• The first-phase 20,000-ton/year capacity of the South Korean factory continues to increase, and the second-phase 40,000-ton/year production line has been completed
• The Poland project has been launched and locked in orders from leading customers
• Invested in an LFP battery recycling project in North America

: ⚠️

[0]:

Period	Change
1 Day	+1.66%
5 Days	+6.20%
1 Month	+37.57%
3 Months	+36.56%
6 Months	+66.59%
1 Year	+71.49%

:

• Current stock price: RMB 37.35, market capitalization: RMB 26.695 billion
• P/E ratio: -1090.90x (due to losses)
• The stock price has risen by approximately 190% since the low of RMB 12.87 in September 2024

:

• The stock price rose by 1.66% against the trend after the announcement of the RMB 120 billion large order, showing the market’s positive reaction to the order
• However, the valuation level reflects the market’s uncertainty about the company’s transformation prospects
• There may be a divergence between the stock price increase and the improvement of fundamentals

:

Indicator	Data
Calculated Unit Price in Agreement	Approximately RMB 39,300/ton
Market Quotation (Jan 13, 2026)	RMB 55,000/ton
Price Difference	Approximately 30%

:

• Long-term agreement locks in price discounts
• The company claims that cost advantages support low-price supply
• The price is negotiated annually, and the price may be adjusted after 2027

: If raw material prices rise while the price adjustment mechanism is unfavorable, the company’s profitability may come under further pressure.

Risk Category	Risk Level	Main Triggering Factors
Capacity Shortage Risk	⚠️ High	Delayed capacity construction, failure to deliver on time
Agreement Binding Force Risk	⚠️ High	Customer reduces procurement volume, cancels orders
Overcapacity Risk	⚠️ Extremely High	Industry oversupply, intensified price wars
Technological Iteration Risk	⚠️ High	Technology is surpassed, loss of competitive advantage
Financial Pressure Risk	⚠️ High	Tight cash flow, financing difficulties
Upstream and Downstream Squeeze Risk	⚠️ High	Rising costs, inability to pass on price increases
Substitute Technology Risk	⚠️ Medium	Accelerated substitution by sodium-ion batteries/LMFP
Policy and Trade Risk	⚠️ Medium	Increased tariffs, policy tightening

:

1. Rapid Capacity Ramp-up
   : Reach 370,000-ton capacity by Q3 2026
2. Stable Mass Production of Technology
   : Yield and consistency of large-scale production using the new process
3. Realization of Cost Advantages
   : 40% reduction in investment costs and 30% reduction in energy consumption compared with traditional processes
4. Customer Relationship Maintenance
   : Deeply bind with CATL and meet its technical and delivery requirements
5. Capital Chain Security
   : Meet billions of RMB in investment demand through financing
6. Grasp of Industry Cycle
   : Establish competitive advantages before industry capacity is cleared

:

• Mainly adopt a wait-and-see attitude, and pay close attention to the reply to the Shanghai Stock Exchange’s inquiry letter and the progress of capacity construction
• If capacity construction fails to meet expectations or there are variables in the implementation of the agreement, the stock price may face pullback pressure

:

• Pay attention to the progress of capacity release and the results of technical verification
• Track the price trend of LFP and changes in industry operating rates
• Evaluate whether the company can achieve break-even

:

• Observe the company’s market share and profitability in the LFP industry
• Pay attention to the contribution of new businesses such as sodium-ion batteries and solid-state batteries
• Evaluate the effectiveness of the global layout

Ronbay Technology’s cross-border transformation into the LFP business is a strategic gamble with high risks and high returns. As a leading ternary cathode material enterprise, the company has advantages in technology accumulation and customer resources, but it faces multiple challenges such as severe capacity shortage, industry overcapacity, accelerated technological iteration, and financial pressure.

:

1. Severe Mismatch between Capacity and Orders
   : The current 60,000-ton capacity needs to support the annual supply commitment of 500,000 tons
2. Industry in Capacity Clearing Cycle
   : The industry’s average operating rate is only 50%-55%, with fierce price competition
3. Uncertainty in Agreement Binding Force
   : Actual implementation may differ greatly from expectations
4. Technology and Cost Advantages to Be Verified
   : Whether the new process can achieve stable mass production and cost savings
5. Financial Situation Under Pressure
   : First annual loss, negative free cash flow

: Ronbay Technology’s LFP transformation faces . Investors need to closely monitor the progress of capacity construction, the implementation of the agreement, and changes in industry fundamentals, and make prudent decisions.

---

[0] Jinling API Market Data - Company Profile and Financial Analysis of Ronbay Technology (688005.SS)