Red Avenue New Materials Group
彤程新材 · Global #1 in tire-grade phenolic resin additives and China’s leading domestic photoresist supplier — A+H dual-listed in Shanghai (603650.SH) and Hong Kong (9607.HK)
Red Avenue New Materials Group (Chinese name: 彤程新材料集团股份有限公司) traces its operating origins to Shanghai Tongcheng Chemical, established in August 1999 by Zhang Ning. Per company disclosure, the business was first operated through that entity. It now spans three segments: tire-grade rubber additives and other chemicals, electronic materials, and fully biodegradable materials. The shares listed on the Shanghai Stock Exchange main board in June 2018, and an H-share tranche began trading in Hong Kong on September 29, 2026.
Born April 1974; Canadian citizen and Hong Kong permanent resident. Founded the business in August 1999 at age 25 and reports 26+ years in chemical-materials manufacturing operations (company disclosure). Holds a bachelor’s degree in biochemical engineering from Beijing Technology and Business University, an MSc from the University of Warwick (2002), a CKGSB EMBA (2006) and a DBA from Arizona State University (2015); the listing documents also cite a Peking University materials and chemical engineering doctorate awarded June 2026. Director of Zhongce Rubber, an associate and downstream customer, since September 2021.
Born 1973; Canadian citizen. Served as vice president (HR and administration) from inception through December 2012 and has held no executive role or day-to-day involvement since January 2013. In May 2023 the couple divorced via court mediation; all listed-company equity and proceeds held directly or indirectly by either party were assigned to Ms. Zhang, making her the sole ultimate controller.
Held 47.81% as of June 30, 2026 (pre-H-share offering); affiliated Virgin Holdings held 13.01%. Combined, the Zhang Ning-controlled stake is approximately 61%, consistent with the roughly 61% cited in secondary reporting. As of July 2022 the two vehicles held 294,570,000 and 99,737,800 shares respectively, prior to the post-divorce consolidation.
Executive directors: Zhang Ning, Ding Lin, Yuan Minjian, Yu Yaoming and Tang Jie. Non-executive: Li Xiaoguang. Independent non-executive: Zhang Yun, Jiang Changjian and Feng Yaoling. Sourced from listing-document coverage; we have not independently verified individual director backgrounds.
• Nature of the divorce: The Bamboo Works characterizes it as a pre-arranged capital restructuring (ex-spouse share reduction in 2022 followed by dilution via new issuance). This is media analysis and is not directly confirmed by company filings; we do not rely on it in our assessment.
• Education field: Undergraduate major varies by outlet (biochemical engineering, biochemistry, biomedical engineering). We adopt the listing-document-derived wording.
Per a Frost & Sullivan report commissioned by the company (fiscal 2025 revenue basis), the group ranks first globally and in China in tire-grade phenolic resin rubber additives. In electronic materials it ranks first among Chinese domestic suppliers in both the semiconductor photoresist and TFT array photoresist markets.
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China share
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The cash-generative core, at roughly 69.7% of 9M25 revenue per secondary reporting. Linkage to Zhongce Rubber (8.92% indirect stake) supports demand visibility.
Semiconductor and display photoresists, high-purity solvents, and CMP pads (own production base invested in 2024). Revenue mix rose from 19.1% (2023) to 27.8% (9M25); segment gross margin has at times exceeded 30% (secondary reporting).
Third segment with limited disclosure available to us. As a residual of the other two mix figures it implies roughly 2.5% of 9M25 revenue (our estimate), so it is immaterial to the investment case today.
| Metric | 2023 | 2024 | 2025 | 1H 2026 |
|---|---|---|---|---|
| Revenue (RMB 100M) | 29.37 | 32.63 | 34.21 | 21.33 (+29.2% YoY) |
| Profit for the period (RMB 100M) | 4.04 | 5.34 | 5.77 | 3.89 (+8.6% YoY) |
| Gross margin | 23.3% | 24.4% | 23.8% | 22.9% |
Analyst observations: (1) 1H26 revenue grew 29.2% but profit only 8.6%, and gross margin slipped to 22.9%; earnings growth is lagging the top line materially. (2) Combining the 9M25 gross margin of 25.2% (secondary reporting) with the FY25 figure of 23.8% implies a 4Q25 gross margin near 19.9%. This is our derivation, not a disclosed figure. (3) At end-September 2025, total liabilities were RMB 5.427B (about 60% of assets) with over RMB 2.5B of borrowings and financial liabilities due within a year; cash fell from RMB 806M at end-9M25 to RMB 436M at June 30, 2026. Roughly 10% of H-share proceeds are earmarked for bank debt repayment, consistent with this balance sheet.
• Market-share figures come from a company-commissioned Frost & Sullivan study and are not independently verified. A 5.8% semiconductor photoresist share alongside a “domestic #1” ranking implies that foreign incumbents still hold most of the market.
• FY2024 figures differ by source: the H-share listing-document lineage shows revenue of RMB 3.263B and profit of RMB 534M, while Baidu Baike shows revenue of RMB 3.270B and net profit of RMB 517M. This likely reflects accounting-basis or attribution differences but is unconfirmed.
Red Avenue did not follow a conventional venture-round path. Growth was financed by founder capital and then public-market instruments (A-share IPO, convertible bond, H-share offering). We could not identify pre-IPO external equity rounds. Capital allocation has centered on M&A (Beixu Electronics, Zhongce Rubber) and listed-market fundraising.
Founded in 1999 as a distributor; own Zhangjiagang plant from 2006. In 2016 the company converted to a joint-stock company and acquired Huaqi Chemical, consolidating the Zhangjiagang base and adding tackifying and resorcinol resin capacity.
Proceeds funded the Huaqi expansion and equipment upgrades. First-year revenue was RMB 2.175B and attributable net profit RMB 412M (secondary reporting).
In 2019 a subsidiary acquired 10.16% of Zhongce Rubber (8.92% effective). In 2020 it bought 45% of Beixu Electronics from BOE (reported RMB 205M) and added 33.0050% in 2022, bringing Beixu into consolidation. Zhongce Rubber’s Shanghai IPO application was reported approved in February 2025.
Listed February 22, 2021. Coupon steps from 0.30% to 2.00%; initial conversion price RMB 32.96. As of June 30, 2022, 67.1% of principal remained unconverted.
Following the May 2023 divorce, Zhang Ning-affiliated holdings stood at 64.66% (stake value reported near RMB 14B). In 2025 the employee holding platform Zhoushan Yutong sold 11,434,623 shares at RMB 51.80–64.17, realizing about RMB 656M, and exited fully.
HKEX application filed February 2026; CSRC overseas-listing filing confirmed in August; listing hearing passed in September; offering ran September 21–24 and trading began September 29. Offer price HK$44 (range HK$39–44). The stock opened at HK$40, roughly 9.1% below the offer price per secondary reporting, and was added to the Shenzhen-Hong Kong Stock Connect southbound list the same day.
• Size: 68,118,700 H shares (10% Hong Kong public offer / 90% international), offer price HK$44
• Subscription: Hong Kong public offer 3.39x; international placing 2.75x
• Cornerstones: eight investors, about US$126M, roughly 35.1% of offer shares at the HK$41.5 midpoint, six-month lock-up
• Use of proceeds: R&D 32.8% · production facilities 21% · strategic investments/M&A 20% · bank debt repayment 10% · overseas footprint 6.2% · working capital 10%
• Sponsor: Haitong International (Guotai Haitong group), sole sponsor
• Cornerstone amount conflict: US$126.4M is paired with HK$909M in some coverage (BigGo, Tencent lineage), whereas the individual tickets sum to US$126M and the HK$988M figure in other coverage reconciles at roughly 7.8 HKD/USD. The 35.1% share of offer shares also sits closer to HK$988M. We view HK$909M as a probable misprint but do not treat it as confirmed.
• Hearing date: September 10 (Sina) versus September 16 (Rui Caijing). Employee-platform proceeds: RMB 656M versus RMB 659M across sources.
• We could not verify the listing-day close or subsequent trading. The below-offer open is our calculation against the offer price.
• The precise mechanics of the ex-spouse’s 2022 share reduction (including any issuance-based dilution) are unverified against filing text.
We frame the group’s advantages as (1) market leadership in a mature segment, (2) a clearly import-substitution-driven electronic materials option, (3) an ability to redeploy capital between the two, and (4) A+H capital access. Commercial scale in (2) remains early, and we condition our view on that.
Company-commissioned data show 41.4% global and 45.9% China share. Equity and board ties to a top-tier tire customer (Zhongce Rubber) offer relatively high demand visibility and customer lock-in. The market is mature and cyclical, with raw-material exposure.
Following consolidation of Beixu Electronics, the group is China’s leading domestic TFT array photoresist supplier (26.2%). Semiconductor photoresist share is only 5.8%, but the product ladder spans g/i-line and KrF with ArF under development. Localization policy tailwinds are the core of the option value.
Tire-materials cash flow and resin-synthesis know-how are being transferred into electronic materials. Mix rose from 19.1% to 27.8% (2023 to 9M25), which should support margin mix over time, although consolidated gross margin has recently declined instead.
Net H-share proceeds of about HK$2.9B provide funding for R&D, capacity and M&A plus deleveraging room, and Stock Connect inclusion opens mainland capital access. The Zhang Ning-controlled block of about 61% (pre-offering) gives decision-making consistency but also concentrates minority-holder governance risk.
Our assessment and monitoring list: The thesis combines a mature cash cow with a localization option. Current financials, however, show (i) a gap between revenue and profit growth, (ii) softening margins, and (iii) high leverage with falling cash, so the cost of executing the option is already visible. A first-day open below the offer price suggests the market is still discounting that gap. We would monitor: electronic-materials mix and margins, ArF and semiconductor photoresist customer qualifications, deployment of proceeds, the six-month cornerstone lock-up expiry, and progress on the Zhongce Rubber IPO.