Changjin Photonics IPO is imminent, and the "value" of R&D is being questioned.

Source: IPO Daily

On March 27, Changjin Photon will appear before the review for an IPO on the STAR Market. During the reporting period, its compound annual growth rate in performance exceeded 30%, but its supplier concentration is far higher than that of its peers, its core raw material imports rely heavily on imports, its R&D scrap rate is high, and its patents are all assigned from universities. Regulators are questioning its technical independence and whether its R&D is reasonable.

On March 27, Wuhan Changjin Photon Technology Co., Ltd. (hereinafter “Changjin Photon”) will usher in the STAR Market IPO review, formally launching its push toward the capital markets.

An IPO Daily review found that this company, centered on rare-earth-doped optical fibers as its core product and focused on two major downstream segments—laser equipment and optical communications—achieved revenue of RMB 247 million and net profit of RMB 95.64 million in 2025. While its results appear impressive, multiple hidden risks behind the scenes—doubts about its technical independence, a high dependence on overseas supply chains, and a soaring customer concentration—may well become “stumbling blocks” on its path to listing.

For this IPO, Changjin Photon plans to raise about RMB 780 million. After deducting issuance expenses, all funds will be投入 into the construction of a high-performance specialty optical fiber production base and an R&D center, while also replenishing working capital. The company aims to focus on upgrading its main business and technical R&D, trying to further solidify its standing in the industry.

Zhangli Tuxing

Its “gold content” in R&D is under key scrutiny

According to the prospectus, Changjin Photon has deepened its efforts in the R&D and industrialization of high-performance specialty optical fibers. Its core product, rare-earth-doped optical fibers, as a key optical material at the upstream of the laser industry chain, are critical components for various fiber laser oscillators, fiber amplifiers, and fiber laser radars. They are widely used in multiple strategic fields such as advanced manufacturing, optical communications, national defense and military industry, medical and healthcare, and scientific research.

At the financial-data level, from 2023 to 2025 (hereinafter the “reporting period”), Changjin Photon has shown steady growth: revenue was RMB 145 million, RMB 192 million, and RMB 247 million, respectively; net profit was RMB 54.65 million, RMB 75.76 million, and RMB 95.64 million, respectively. Its three-year compound growth rate was all above 30%; non-recurring profit attributable to shareholders (after deducting non-recurring gains and losses) grew in tandem, reaching RMB 51.86 million, RMB 71.82 million, and RMB 86.81 million, respectively. Gross margin of the main business was maintained at above 65%, and its profitability was outstanding.

However, the momentum of performance growth has shown signs of slowing. According to Changjin Photon’s disclosed performance forecast, in January to March 2026, the company expects to achieve revenue of RMB 52 million to RMB 55 million, representing year-over-year growth of 16.25% to 22.96%. It expects net profit attributable to the parent of RMB 15.56 million to RMB 16.40 million, representing year-over-year growth of 2.49% to 8.02%. It also expects non-recurring profit attributable to the parent of RMB 14.56 million to RMB 15.40 million, representing year-over-year growth of 4.22% to 10.23%. It is not hard to see that whether before or after the deduction of non-recurring items, its net profit growth rate is far lower than the full-year growth rate in 2025, and the engine behind profit growth has weakened.

In addition, although Changjin Photon places emphasis on R&D investment, during the reporting period its R&D expenses were RMB 21 million, RMB 28 million, and RMB 35 million, respectively, accounting for more than 10% of revenue each year. Cumulative R&D investment totaled RMB 84.43 million, accounting for 14.48% of cumulative revenue. But the “gold content” of its R&D has already become a key focus of the C&S (CSRC) review committee’s questions. The core doubts are concentrated in two areas.

First, the structure and efficiency of R&D investment are in question. In Changjin Photon’s R&D expenses, the proportion of direct materials exceeds 50%, and its R&D scrap rate is as high as 90% or above. In response, the company only provides a simple explanation that “the R&D is exploratory,” and generally states that its overall scrap rate is higher than that of comparable companies in the same industry, Changying Tong. However, it does not disclose Changying Tong’s specific R&D scrap rate data, making it unable to sufficiently prove the reasonableness and efficiency of its R&D spending.

Second, there are potential issues with technical independence and patent ownership. The company currently has 12 invention patents, all assigned from Huazhong University of Science and Technology. Its core technical teams (including founder Li Jinyan and core technical personnel Li Haiqing, etc.) all have backgrounds at Huazhong University. Among them, Li Jinyan only went through procedures for leaving Huazhong University to start a business in July 2025. During his early employment at the university, whether he used university research resources to conduct R&D for the company, and when the company iterates the technology based on assigned patents, how it ensures that it does not infringe on derivative intellectual property rights of Huazhong University, still lacks clear and sufficient argumentation. It is understood that Changjin Photon assigned patents from Huazhong University twice—in 2017 and again in 2025. While it has obtained complete ownership of the relevant patents, the deep linkage between the original technology source and the universities remains a key focus for regulators.

Customer concentration, supplier concentration

With customer concentration at a high level, this is the primary operating risk Changjin Photon faces. During the reporting period, the proportion of revenue from the company’s top five customers combined as a share of revenue for the period was 82.26%, 73.19%, and 66.20%, respectively. Although this proportion shows a downward trend year by year, the overall concentration level remains high, indicating a strong reliance on core customers.

Industry background shows that the domestic market for fiber laser oscillators itself has a high concentration. According to the “2023 China Laser Industry Development Report,” in 2022, four laser manufacturers—Raycus Laser, Chuangxin Laser, IPG, and JPT—together accounted for 78.10% of the domestic fiber laser oscillator market. Among them, IPG in the United States, as the world’s largest fiber laser oscillator manufacturer, adopts a vertically integrated model of self-developed and self-supplied core components. Most domestic laser oscillator manufacturers, however, do not yet have the capability to supply specialty optical fibers on their own, which leaves market space for Changjin Photon.

Although the “2024” and “2025 China Laser Industry Development Reports” did not disclose the specific market shares of each manufacturer, publicly available information indicates that the combined domestic market shares of Raycus Laser, Chuangxin Laser, and JPT have continued to exceed 50%. Moreover, these three companies have long been listed among Changjin Photon’s top five customers and are the company’s core sources of revenue. What is worth being alert to is that improvements in the core customers’ self-supply capabilities and changes in cooperation may pose a challenge to Changjin Photon’s business: Raycus Laser subsidiary Wuhan Ruixin has achieved supporting production of rare-earth-doped (Yb-doped) optical fibers and energy-transmitting optical fibers for fiber laser oscillators; Changjin Photon’s 2023 net profit margin is similar to Wuhan Ruixin’s; in 2024, Changjin Photon’s net profit margin is slightly higher than that of Wuhan Ruixin. Meanwhile, Chuangxin Laser also maintains close cooperation with Changjin Photon’s competitor Changfei Optical Fiber, and the risk of customer loss cannot be ignored.

Compared with customer concentration, the issue of supplier concentration for Changjin Photon is more prominent, and supply-chain stability faces tests. From 2022 to 2024, the proportion of purchases from the company’s top five suppliers was in the high range of 72.31% to 92.10%. In the same period, for comparable companies Changying Tong, Focitech Technology, and OptoGlobal Technology, the top five suppliers’ purchase proportions were at most 50.45%, and were generally concentrated around 20%, making the gap significant. More importantly, the company’s core raw materials rely heavily on imports. In 2025, the amounts of imported quartz tube materials and fiber coatings accounted for approximately 62% and 97%, respectively, of the purchase amounts of raw materials of the same type. These include key materials such as high-purity quartz tube materials and low-refractive-index fiber coatings. Fluctuations in overseas supply chains may directly affect the company’s production and operations.

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Responsible editor: Yang Hongbo