Accounts Receivable Surge, Gross Margin Slightly Declines, Changjin Photonics Pursues STAR Market Listing

Queuing for nearly 8 months, Wuhan Changjin Photonic Technology Co., Ltd. (hereinafter referred to as “Changjin Photonics”) has made new progress in its IPO. Recently, the Shanghai Stock Exchange official website showed that Changjin Photonics’ Sci-Tech Innovation Board IPO updated its prospectus and disclosed the second round of inquiry responses.

Reviewing the company’s latest prospectus, Beijing Business Daily reporters noted that while the company’s performance is expected to grow by 2025, its main business gross profit margin has slightly declined. Additionally, the company’s accounts receivable balance at the end of 2025 has increased significantly.

Gross profit margin declines during the reporting period

In the latest disclosed prospectus, Changjin Photonics updated its financial data for 2025, showing revenue and net profit both increasing.

It is understood that Changjin Photonics is a manufacturer of special optical fibers with capabilities in high-performance, multi-category R&D and industrialization. The company’s main product, rare-earth-doped optical fibers, is an important subclass of special optical fibers and a core optical material upstream in the laser industry chain. The company’s IPO was accepted on August 29, 2025, and entered the inquiry stage on September 11 of the same year.

In terms of performance, during the reporting period, Changjin Photonics achieved consecutive growth in revenue and net profit.

Specifically, from 2023 to 2025, Changjin Photonics’ operating revenue was approximately 145 million yuan, 192 million yuan, and 247 million yuan, respectively; corresponding net profits attributable to shareholders were approximately 54.66 million yuan, 75.76 million yuan, and 95.64 million yuan.

However, behind the year-over-year growth, the gross profit margin of Changjin Photonics’ main business has shown a downward trend. The prospectus indicates that during each period, the company’s main business gross profit margins were 69.31%, 69.13%, and 65.06%.

Regarding the decline in gross profit margin in 2025, Changjin Photonics stated that it was mainly due to a 6.25 percentage point decrease in gross profit margin for rare-earth-doped optical fibers, which contributed a 3.59 percentage point reduction to the overall gross profit margin. As the core product, the gross profit margin of rare-earth-doped optical fibers has the highest contribution to the company’s gross profit margin; its fluctuation significantly impacts the company’s overall gross profit margin level.

Zhi Peiyuan, Vice President of the Listing Company Investment Committee of the China Investment Association, said that the phenomenon of simultaneous performance growth and declining gross profit margin essentially reflects a stage of market expansion and profit balance. On one hand, it demonstrates the company’s active efforts to expand its market; on the other hand, it also reveals increasing industry competition pressures.

Accounts receivable balance increases

Behind the impressive performance, Changjin Photonics’ accounts receivable balance has also increased substantially.

Financial data shows that at the end of each period, Changjin Photonics’ accounts receivable balances were approximately 59.11 million yuan, 77.60 million yuan, and 117 million yuan, accounting for 40.89%, 40.49%, and 47.48% of operating revenue, respectively.

Regarding the trend of rising accounts receivable, Changjin Photonics also issued a risk warning, stating that if the company’s accounts receivable continue to grow rapidly and remain at high levels, it will occupy the company’s working capital, reduce cash flow from operating activities, and lower capital utilization efficiency. Furthermore, if there are significant adverse changes in downstream industry development or major customer operations, or if the company poorly manages its accounts receivable, failure to collect receivables timely and fully could lead to extended recovery cycles and large bad debts, adversely affecting the company’s operating performance and financial condition.

In this IPO attempt, Changjin Photonics plans to raise about 780 million yuan. After deducting issuance costs, the funds will be used for a high-performance special optical fiber production base and R&D center project, and to supplement working capital, with planned investments of 680 million yuan and 100 million yuan, respectively.

Behind the fundraising plan, Changjin Photonics’ asset-liability ratio has increased. At the end of each period, the company’s asset-liability ratios were 19.7%, 18.6%, and 29.08%. Changjin Photonics explained that this was mainly due to the company taking out new long-term loans to promote the construction of the special optical fiber production base and R&D center projects. As of the end of 2025, the company’s long-term loan balance was approximately 92.86 million yuan.

Regarding these developments, Beijing Business Daily reporters sent interview requests to Changjin Photonics but had not received a response as of press time.

Beijing Business Daily Reporter: Ma Huanchuan, Li Jiaxue