Rongbai Technology Valuation Analysis: Have the Expectations from the RMB120 Billion Orders Been Fully Priced In?

Based on a comprehensive analysis of the latest market data, financial statements, DCF valuation model, and recent major events, below is my professional judgment:

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[0]:

Valuation Scenario	Valuation Price	Upside from Current Stock Price	Implied Expectations
Conservative Scenario	¥144.57	+287.1%	Zero Growth Assumption
Base Case Scenario	¥236.21	+532.4%	41.2% Historical Average Growth Rate
Optimistic Scenario	¥396.53	+961.7%	44.2% High Growth
Weighted Valuation	¥259.10	+593.7%	Probability-Weighted Average

: The current stock price of ¥37.35 is only of the DCF weighted valuation (approx. ¥259), indicating that the market may have significantly underpriced the RMB120 billion orders.

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[1][2]:

Item	Details
Parties to the Agreement	Rongbai Technology (Seller) vs. CATL (Buyer)
Agreement Term	Q1 2026 to 2031 (6 years)
Supply Volume	Total 3.05 million tons of lithium iron phosphate cathode materials
Estimated Amount	Over RMB120 billion
Annual Average Supply Volume	Approx. 508,000 tons

(Core Risk Point):

Indicator	Current Status	Target Demand	Gap
Lithium Iron Phosphate Production Capacity	60,000 tons/year	508,000 tons/year	448,000 tons (89% Gap)
Capacity Satisfaction Rate	Approx. 12%	100%	Requires over 8x capacity expansion
Estimated Expansion Investment	-	Approx. RMB4.5 billion	Significant Capital Pressure

[1][2]:

1. Huge Capacity Gap
   : The company’s lithium iron phosphate production capacity mainly comes from the acquisition of Guizhou Xinren in December 2025, with only 60,000 tons/year
2. Significant Capital Constraints
   : As of Q3 2025, cash on hand is RMB3.241 billion, with an asset-liability ratio of 65.67%
3. Unverified Technology
   : The company’s claimed new “RB One-Step Method” process is still in the pilot test stage, and mass production capability remains to be verified
4. Weak Order Binding
   : CATL only promised “priority procurement rights”, and the final procurement volume is subject to annual orders
5. Ambiguous Pricing Mechanism
   : The RMB120 billion is an estimated amount, not a contract-locked figure, and will fluctuate with raw material prices

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[0]:

Indicator	Actual Value	Consensus Expectation	Deviation
Q3 FY2025 EPS	-¥0.19	¥0.06	-410.88%
Q3 FY2025 Revenue	¥2.74 billion	¥3.37 billion	-18.86%
2025 Full-Year Expected Loss	RMB150-190 million	Profit Expectation	First Annual Loss

[0]:

Indicator	Value	Risk Rating
P/E (TTM)	-1090.90	Loss-Making Status
ROE	-0.29%	Negative Return
Net Profit Margin	-0.19%	On the Verge of Loss
Current Ratio	1.25	Barely Sufficient
Financial Stance	Conservative	Prudent Expansion

: From Q3 2024’s ¥0.22 EPS and ¥4.44 billion revenue, it plummeted to Q3 2025’s -¥0.19 EPS and ¥2.74 billion revenue, with profitability deteriorating sharply[0].

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[0]:

Time Period	Increase	Driving Factor
Past 1 Month	+37.57%	Order Expectations Building Up
Past 6 Months	+66.59%	Deepening Cooperation with CATL
Past 1 Year	+71.49%	Recovery of the New Energy Sector as a Whole
After Order Announcement	Basically Flat	Market Doubts

[0]:

Indicator	Value	Signal Interpretation
KDJ	K:86.2, D:82.1, J:94.3	Overbought Zone
RSI (14)	High Level	Overbought Risk
Stock Price Range	¥32.71 - ¥38.17	Consolidation
Trend Judgment	Sideways Consolidation	No Clear Direction

:

1. Regulatory Inquiry
   : The Shanghai Stock Exchange issued an inquiry letter overnight, questioning the compliance of the agreement[1][2]
2. Concerns Over Performance Capability
   : Capacity gap and capital pressure have triggered market worries
3. Differences in Valuation Models
   : Traditional valuation methods struggle to quantify the value of long-term agreements

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:

1. DCF weighted valuation of ¥259 vs. current ¥37.35, representing
   594% upside potential
2. If the orders are fulfilled successfully, it will generate
   approx. RMB20 billion in annual revenue
   , which is 1.3x the 2024 revenue
3. Deep binding with CATL brings
   stable order guarantees

:

1. The 1-month increase has reached
   37.57%
   , and the market has already reacted
2. The stock price has broken through the 50-day/200-day moving averages, confirming the uptrend technically
3. Trading was suspended after the order announcement, and there was no significant fluctuation after resumption

:

Risk Factor	Adjustment Range
Uncertainty in Performance Capability (Capacity/Capital)	-30%~-50%
Technology Verification Risk	-15%~-25%
Regulatory Compliance Risk	-10%~-20%
Weak Order Binding	-20%~-30%

: ¥78 - ¥130 (still 109%~248% upside from current price)

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1. Capacity Expansion Risk
   : Significant uncertainty over whether the capacity expansion plan from 60,000 tons to over 500,000 tons can be completed on schedule
2. Funding Risk
   : Sources and financing costs of the billions of RMB required for capacity expansion
3. Technology Commercialization Risk
   : Mass production stability of the “RB One-Step Method” new process remains to be verified
4. Order Execution Risk
   : CATL’s priority procurement commitment is not a rigid constraint
5. Regulatory Compliance Risk
   : Subsequent impacts of the Shanghai Stock Exchange’s inquiry letter
6. Industry Cycle Risk
   : Overcapacity risk and price fluctuations in the lithium iron phosphate industry

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The RMB120 billion lithium iron phosphate procurement agreement signed between Rongbai Technology and CATL,

, provides huge growth imagination space for the company’s long-term development, and the DCF valuation model also shows that the current stock price has significant valuation repair potential. However, from the , the company faces multiple challenges in capacity, capital, technology, etc., which make the implementation of these orders highly uncertain.

: The positive news from the orders has been partially reflected in the stock price (approx. 37% monthly increase), but the DCF valuation shows that the .

: Given the high performance risks and incomplete technology verification, it is recommended that investors maintain cautious attention and wait for further clarity on the response to the Shanghai Stock Exchange’s inquiry letter, capacity expansion progress, and order execution before making investment decisions. For investors with higher risk appetites, they can accumulate positions on dips in the ¥32-35 range, but must strictly set stop-loss levels and continuously track order execution progress.

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[0] Jinling API Data - Rongbai Technology (688005.SS) Company Profile, Financial Analysis, DCF Valuation, Technical Analysis

[1] Securities Times - “Behind the Inquiry into the RMB120 Billion Mega-Order: Leading Lithium Battery Cathode Material Supplier Ties Up with CATL” (https://www.stcn.com/article/detail/3594323.html)

[2] Caizhongshe - “‘Estimated’ RMB120 Billion Orders: Rongbai Technology Receives Inquiry Letter” (https://m.caizhongshe.cn/news-5680479060180271865.html)