Core Business: CCUS Tech Commercialization Hits Snags; Business Diversification Stalled
Shougang Lanzhe, a carbon capture, utilization and storage (CCUS) industry player, focuses on converting industrial off-gas into ethanol and microbial protein via synthetic biology. The prospectus shows that since its founding in 2011, the company has operated four large-scale production facilities with total annual capacity of 210,000 tons of ethanol and 23,200 tons of microbial protein, making it the world's first to commercialize industrial off-gas bio-fermentation. Its core tech includes first-gen carbon-reduction (using CO) and second-gen carbon-negative tech (using CO₂), with the latter achieving 93.5% carbon fixation rate, consuming 0.5 tons of CO₂ per ton of ethanol produced.
The company uses a "product sales + tech solutions" dual model. In 2025, ethanol revenue accounted for 81.3%, microbial protein 17.7%. Notably, low-carbon integrated solution revenue was only 26.13 million yuan in 2024, or 4.7%, with no revenue in 2025, showing slow diversification.
Financials: Net Loss Widens for Third Straight Year; Gross Margin Deteriorates
Revenue Fell for Three Years, Down 7.4% YoY in 2025
| Metric | 2023 | 2024 | 2025 | Trend |
|---|---|---|---|---|
| Revenue (CNY '000) | 592,551 | 563,611 | 521,698 | Down 12% over three years |
| Net Loss (CNY '000) | -110,147 | -245,600 | -324,914 | Loss expands 195% in three years |
| Gross Margin | 3.0% | -16.6% | -24.5% | Worsening; gross loss over 100M in 2025 |
| Net Margin | -18.6% | -43.6% | -62.3% | Profitability significantly weakened |
Revenue dropped from 593M yuan in 2023 to 522M yuan in 2025, mainly due to falling ethanol prices and low capacity utilization. Average ethanol price fell from 6,004.5 yuan/ton in 2023 to 4,641.5 yuan/ton in 2025, a 22.7% decline; capacity utilization only 42.1%, far below industry average.
Liquidity Crisis: Current Ratio Only 0.2x
By end-2025, net current liabilities reached 827M yuan, current ratio 0.2x, debt-to-asset ratio 130%, capital gearing 177.6%. Cash and equivalents dropped from 183M yuan in 2023 to 69M yuan in 2025. Operating cash flow volatile; net outflow of 10.5M in 2023, net inflow of 87M in 2025 mainly from increased payables.
Business Risks: Highly Concentrated Customers and Suppliers; High Related-Party Transactions
Top 5 Customers Contribute >80% of Revenue
From 2023-2025, top 5 customer revenue share was 86.0%, 78.9%, and 83.8% respectively, with largest customer always >20%. In 2025, the largest customer contributed 119M yuan, or 22.9%, concentration far above industry average, posing significant dependency risk.
Supplier Concentration >70%; Heavy Related-Party Dependence
| Item | 2023 | 2024 | 2025 |
|---|---|---|---|
| Top 5 supplier purchase share | 76.7% | 76.8% | 70.2% |
| Largest supplier purchase share | 27.3% | 23.6% | 19.6% |
| Related-party off-gas purchase share | 64.6% | 67.8% | 59.0% |
The company mainly relies on Shougang Group and other related parties for industrial off-gas. In 2025, 59% of off-gas purchases were from related parties. Shougang Jingtang, the largest supplier, accounted for >19% each year and is also a customer (1% of sales in 2025), posing conflict of interest risk.
Technology & Compliance: Patent Dependency on External License; Repeated Environmental Violations
Core fermentation tech partly licensed from LanzaTech Group, requiring 8.5%-20% royalties. By 2025, cumulative royalties paid 6.41M yuan. If the "sign 8 sub-license agreements by 2029" diligence requirement is not met, exclusive license may become non-exclusive.
On environmental compliance, the company has four environmental violation records with cumulative fines of 1.2M yuan. In 2023, penalized for starting construction without approval; in 2024, excessive exhaust emissions, indicating environmental management loopholes.
Management & Ownership: Strong State Background; Large Executive Pay Gap
Shougang Group, as controlling shareholder, controls 26.54% equity via a concert party agreement with NZ Tang Ming. Among 11 board members, 5 are independent directors, 3 have Shougang background. Executive pay disparity: in 2025, executive director Dong Yan received 1.92M yuan, while independent non-executive directors only 120,000 yuan.
Outlook: SAF Project Key; Losses Expected to Continue in 2026
The company plans to use IPO proceeds mainly for Hebei Shoulang Phase II (second-gen tech) and SAF (sustainable aviation fuel) facility. SAF facility expected to produce 50,000 tons/year after 2027, but faces uncertainties in tech deployment and feedstock supply. Despite 27.4% production and sales growth in first two months of 2026, the company still expects full-year loss due to listing expenses, R&D, and depreciation.
Risk Warnings:
- Tech License Risk: Dependent on LanzaTech patent license; failure to meet diligence may lose exclusivity
- Policy Compliance Risk: Tighter regulation of coal-to-ethanol may affect competition, but products still face price pressure
- Financial Risk: High current liabilities; cash reserves only support ~6 months operations
- Supply Chain Risk: Unstable industrial off-gas supply; in 2025, upstream restructuring caused Guizhou Jinze to shut down for 93 days
Investors should closely monitor tech commercialization, policy implementation, and cash flow improvement, and carefully assess going-concern ability.
