Rate Of ReturnHK IPO Subscription|Haiwei Shares: The Second Largest in Capacitor Base Film, Clashing with Quant Funds, How to Choose?
Earlier we were still talking about whether the meme stock Quant Group would have a funding clash, and if so, we wouldn’t want to participate. What a coincidence, now Haiwei Co. has appeared, and there’s a major funding clash. How should we decide?
Since it’s here, let’s go with the flow.
First, let’s analyze Haiwei Co.’s fundamentals before making a decision.
One-sentence summary
Haiwei Co. is a leading Chinese manufacturer specializing in capacitor films, positioned in the midstream of the capacitor industry chain. Ranked second in China by sales volume of capacitor base films, it is deeply tied to downstream demand from new energy vehicles and new energy power.
In-depth fundamental analysis
Haiwei Co. was founded in 2006, focusing on the R&D, production, and sales of capacitor films. Its main products include capacitor base films and metallized films, accounting for 75%-80% and 10%-15%, respectively.
Capacitor films are widely used in new energy vehicles, new energy power generation and power systems, industrial automation, high-end power supplies, and traditional sectors like home appliances.
The company operates in the midstream of the industry chain, providing capacitor film materials to B2B clients. This includes direct sales of capacitor base films and metallized films to capacitor manufacturers, as well as supplying capacitor film materials to automakers like BYD for their in-house capacitor production.
Currently, the thickness of capacitor base films ranges from 2.7–13.8 microns. The company is developing ultra-thin base films (<2.5 microns) to increase energy density and reduce size, targeting higher-end applications.
However, capacitor films are a cyclical and price-sensitive midstream material, and the moat isn’t absolute. Price wars and new entrants still pose threats in certain product lines.
Sales of capacitor base films in China grew from 46,200 tons in 2019 to 113,400 tons in 2024, with a CAGR of ~19.7%. It is projected to reach 224,100 tons by 2029, with a CAGR of ~14.1% from 2025 to 2029, still a medium-to-high growth sector.
China’s capacitor film industry is highly concentrated, with the top five players holding 62% of the market share. The leader, Faratronic, holds only 15.1%, and the gap between leaders is small. Whoever expands production faster will gain more capacity—an extremely cutthroat industry.
Financial health assessment
Revenue from 2022 to 2024 was approximately RMB 327M, 330M, and 422M, respectively. For the first five months of 2025, revenue was RMB 157M, down 3.2% YoY.
Net profit from 2022 to 2024 was RMB 102M, 70M, and 86M, mainly affected by price and cost factors. For the first five months of 2025, net profit was RMB 31M, down 4.6% YoY.
Key highlights
1. Capacitor films directly benefit from long-term structural demand in new energy vehicles, PV energy storage, and grid investments. The industry is expected to maintain medium-to-high growth over the next five years.
2. The company is focusing its raised funds on ultra-thin capacitor base films (<2.5 microns) and new film materials (e.g., composite copper foil base films), aiming to enter higher-end new energy and battery sectors. Successful R&D and industrialization could improve ASP and profit elasticity.
3. Leading companies like BYD and Sungrow are key shareholders and clients, ensuring stable orders and technological synergy in areas like vehicle power supplies and inverters.
Investment risks
1. Downstream clients are concentrated among a few top players like BYD, who have strong bargaining power. During industry downturns or price declines, they may demand stricter price cuts from upstream suppliers.
2. The capacitor film sector has attracted multiple material companies to expand production. High growth and margins often lead to cyclical overcapacity. If downstream demand growth falls short, oversupply could further compress prices and margins.
3. Net profit declined then rebounded from 2022 to 2024, but dipped slightly again in the first five months of 2025, reflecting price wars and cost fluctuations. If capacity continues to expand, price pressure may persist.
4. A static P/E of ~20x lacks sufficient margin of safety for a midstream manufacturer of this scale with fluctuating growth and recent profit declines.
Final subscription strategy
2024 net profit was RMB 86M (~HKD 94M). The IPO market cap is HKD 2.2B, with an LYR of ~23. Faratronic’s a market cap of RMB 24.54B (LYR 23.62), while Tongfeng Electronics has a market cap of RMB 5.29B (LYR 55). By comparison, the valuation seems reasonable, but the natural discount for HK stocks leaves little upside.
Market sentiment: Only one cornerstone investor, a company established in August this year—seems tailor-made.
Group A and B each have 7,708 lots, slightly more than Quant Group, but still not easy to win.
Expected frozen funds: ~HKD 150B (~3,000x oversubscribed). Estimated winning rate: 0.1% for one lot, ~70% for tail A and B. A full subscription could secure one lot, likely two.
With the funding clash, Quant Group will likely take 60%, leaving 40% for Haiwei Co. Quant Group expects ~HKD 230B (~15,000x oversubscribed).
Expected gain: ~50%. One lot costs HKD 2,884, so potential profit is HKD 1,500 per lot.
Factoring in winning rates, tail A and B’s only ~HKD 1,000 profit after financing and lottery fees—hardly comparable to Innovative Industrial.
Overall, between Haiwei Co. and Quant Group, I’d go for the one with higher potential returns—likely Haiwei Co. Quant Group’s winning rate is too low for my luck, and its expected profit is only HKD 600–1,000. Small investors should try Quant Group’s fafa Plan A—betting on probability, with no loss if unsuccessful. For small capital, Haiwei Co. is also hard to win, and Plan A isn’t suitable.
Since Innovative Industrial only allocated two lots for tail A this time, funds will likely go to Haiwei Co. Pray I win one lot in tail A.
The above is based on public information and does not constitute professional investment advice. Please think carefully before acting.
$HAIWEI ELEC(09609.HK)
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