Shanghai Shengjian Technology

Shanghai Shengjian Technology is a Chinese green-technology supplier to chip and display fabs. It began in exhaust ducting and grew into one of the country's main designers and integrators of process exhaust treatment systems, which must run in step with a fab's production process. Since listing in 2021 it has used that installed relationship to move up the value chain, into point-of-use scrubbers, zeolite VOC units, dry vacuum pumps, chillers and wet electronic chemicals with a recycling loop. The company is now in a costly transition. Revenue fell from CNY 1.83 billion in 2023 to CNY 1.13 billion in 2025, and new factories, price competition and higher R&D pushed it into loss. The investment case rests on converting customer qualifications for domestic subsystems into volume, and on restoring margins before leverage becomes a constraint.

Company description

In its 2025 Annual Report the company calls itself a well-known green technology service provider to China's high-tech manufacturing industry. Its mission is "committed to a better environment". Its strategy is "industry extension plus product extension", and its operating policy is to provide green services to technology companies and technology products to green companies. It describes three business pillars: green factory system solutions, semiconductor auxiliary equipment and core components, and electronic chemical materials.

Independent characterisation

Shengjian is best understood as a project-based fab-infrastructure contractor that is trying to become an equipment and consumables company. Green factory systems still produced 67.9% of FY2025 revenue. These are mostly non-standard, designed-to-order projects won by tender, with long acceptance cycles. The newer equipment and chemical lines have better long-term economics, because they carry replacement and service demand and depend less on new fab construction. They are not yet large enough to absorb the fixed costs built for them.

Business and revenue model

Green factory systems: Model: Custom design, procurement and system integration; contracts won through tender and competitive negotiation; revenue recognised on installation and commissioning acceptance, or on delivery acceptance where no installation applies

Equipment and components: Model: Made to order with some stock; won through competitive negotiation and tender; revenue recognised on commissioning acceptance or signed receipt

Electronic chemicals: Model: Direct sales to end customers; revenue recognised on delivery acceptance

Services: Model: Operating services recognised as delivered; maintenance recognised on acceptance or over the service period

Customers: Model: Chip, display and new-energy manufacturers, plus the general contractors building their plants

Procurement: Model: Equipment, parts and labour for systems; materials for equipment and chemicals; top five suppliers were 19.54% of FY2025 purchases

Subscription and licensing revenue are not reported lines. Revenue is overwhelmingly product and project based. Rental income appeared in 2026, when part of the Shengjian Building was leased out.

Value chain position and end-markets

The company sits between fab owners and component suppliers. Exhaust and abatement systems are tied directly to yield, utilisation, worker health and emissions compliance, so fabs tend to keep proven suppliers. Its end-markets are integrated circuits, semiconductor display and, on a shrinking basis, new energy. In FY2024, integrated circuits generated CNY 1,002 million and display CNY 342 million, together 92.75% of main business revenue, according to a broker summary of the annual report. New energy contributed CNY 93 million, and its cost of sales fell further, from CNY 53.0 million in FY2024 to CNY 16.9 million in FY2025.

The company's public profile has named customers including SMIC, Hua Hong, BOE, CSOT, HKC, Tianma, Visionox, EverDisplay, Silan and GTA Semiconductor-class regional fabs. Filings do not name the top five customers, who accounted for CNY 731.82 million, or 65.01% of FY2025 sales.

The stated strategy has four themes. The first is to consolidate leadership in exhaust systems. The second is to build a semiconductor auxiliary equipment platform around local scrubbers, LOC-VOC, vacuum and temperature control, with AIoT capabilities added. The third is to create a closed loop of new chemical manufacturing and waste liquid regeneration. The fourth is to fund frontier green technology such as perovskite. Over a 30-year horizon the company aspires to become a leading global green technology company.

Semiconductor equipment platform: Dates: Phase I March 2025 onward; Detail: CNY 600 million project; scrubber, vacuum and chiller validation

Regional manufacturing: Dates: From 2024; Detail: East, Central and South China centres

Electronic materials: Dates: 2025–2026; Detail: Hefei licence obtained; TMAH recycling commercialised; own formulations sampled

Internationalisation: Dates: 2025–2026; Detail: Singapore headquarters, Malaysian entity, Southeast Asia sales and research network

Management renewal: Dates: 2025–2026; Detail: BOE-trained executives Chang Cheng and Zhang Peng promoted

Restricted share plan: Dates: 2026; Detail: 6.655 million shares authorised; revenue-linked vesting

Quality and return programme: Dates: April 2026; Detail: Budget control, customer mix, cost reduction, process improvement

ESG governance: Dates: 2025–2026; Detail: Strategy and ESG committee, ESG management policy, English ESG report

Perovskite: Dates: 2025–2026; Detail: Consumer-grade R&D line; no revenue

IP and laboratory: Dates: 2025; Detail: IP compliance certification and CNAS accreditation

Medium-term targets

Management publishes no formal profit guidance. The restricted share plan provides the clearest revenue markers. The 2023 employee stock plan's second and third unlock targets were missed, and those shares were cancelled.

2026: Trigger revenue (CNY M): 1296; Target revenue (CNY M): 1620

2027: Trigger revenue (CNY M): 1607; Target revenue (CNY M): 1944

2028: Trigger revenue (CNY M): 1899; Target revenue (CNY M): 2236

Pricing is contract-specific and is not published.

Green factory system solutions

Equipment and core components

The company's dry pump and chiller won International Display Technology Innovation awards in 2025, gold and silver respectively.

Electronic chemical materials

Other applications

The company applies its technology to flue-gas purification and to VOC reduction outside semiconductors. It has also built a consumer-grade perovskite solar cell R&D line for indoor and outdoor applications, which has no revenue so far.

Figures are in CNY million on the S&P Global standardised presentation, cross-checked to FY2023–FY2025 annual reports. EPS and dividends per share are adjusted for the 2024 1.2-for-1 capitalisation. The FY2023 dividend was CNY 0.27 before that adjustment. The filed FY2025 gross margin is 21.23%; the standardised figure below is 21.03%.

Income statement

Revenue CAGR from FY2021 to FY2025 was -2.2%. Revenue peaked in FY2023 on a display and chip construction wave, then fell 20.54% and 22.42%. The FY2025 annual report attributes the decline to adjusted market strategy, smaller orders and projects not yet meeting recognition criteria. Earnings fell faster than sales because depreciation rose, equipment margins collapsed and financing costs increased 55.01%. Excluding non-recurring items, FY2025 net loss was CNY 27.90 million.

Balance sheet

The defining change is the swing from CNY 809 million of net cash after the IPO to CNY 682 million of net debt in four years. Inventory rose from CNY 183 million to CNY 669 million, property and plant rose from CNY 261 million to CNY 1,077 million, and long-term leases arrived with the Xiaogan and Huizhou plants. The company carries no goodwill. At 30 June 2026 total assets were CNY 3,601 million, cash CNY 248 million, inventory CNY 779 million and total debt about CNY 1,072 million.

Cash flow

Free cash flow has been negative in all five years, for a cumulative CNY 1,126 million, equal to one full year of FY2025 revenue. Cash conversion is the central weakness. Customers pay on long acceptance schedules, while FY2025 payables fell by CNY 399 million as suppliers were paid. Cash dividends paid in FY2025 were CNY 18.42 million, with the rest of the reported line being interest.

2026 year to date

For the nine months to September 2026, revenue was CNY 792 million, down 4.70%, and net loss attributable was CNY 150 million, against a profit of CNY 30.71 million a year earlier. Basic EPS was -1.03. Q3 revenue rose 33.64%, which shows that acceptance of delayed orders has resumed, but gross margin was only 8.99% and the liabilities-to-assets ratio reached 60.21%. H1 2026 gross margin was 10.60%, compared with 26.41% a year earlier. In that half, selling costs rose 50.73%, R&D 43.65%, and credit and asset impairments together reached CNY 33.71 million.

Guidance

Management provides no numeric full-year guidance. To reach the 2026 plan trigger of CNY 1,296 million, Q4 revenue would need to be about CNY 504 million, compared with CNY 294.70 million a year earlier, while the CNY 1,620 million target would require about CNY 828 million. Guotai Haitong sees 2026 as a turning point, because orders are being released and new-energy work has largely been cleared.

Bull case

1. Q3 revenue growth of 33.64% and contract liabilities of CNY 52.66 million at June, up from CNY 19.46 million at December, suggest the order bottleneck is easing.

2. Vacuum and scrubber shortages at global suppliers give Chinese fabs a reason to qualify Shengjian's pumps and dual-chamber scrubbers faster.

3. New plants have operating leverage. Depreciation is already in the numbers, so a recovery in utilisation would lift gross margin quickly from near 9%.

Bear case

1. Gross margin fell while revenue rose in Q3, which suggests that price competition, not just under-absorption, is the problem.

2. Net debt rose to about CNY 824 million at June 2026 while EBITDA was negative on a trailing basis, so further equity issuance is a real possibility.

3. Rival domestic suppliers are ahead in growth and advanced nodes, so the window for pump and chiller entry may close before Shengjian reaches scale.

Key catalysts (next 12 months)

FY2026 preliminary results: Timing: January 2027; What to watch: Size of loss and whether Q4 revenue meets the plan trigger

FY2026 Annual Report: Timing: By April 2027; What to watch: Line margins, receivable aging, impairment, going-concern comfort

Restricted share unlock test: Timing: Spring 2027; What to watch: Revenue against CNY 1,296 million

Huizhou lease: Timing: 31 December 2026; What to watch: Renewal or consolidation

Board term: Timing: 9 May 2027; What to watch: Re-election and whether more BOE executives join the board

Pump and chiller orders: Timing: Rolling; What to watch: Repeat orders from chip customers

Southeast Asia: Timing: Rolling; What to watch: Malaysian start-up and overseas revenue above 5% of sales

Funding: Timing: Rolling; What to watch: New equity, loan refinancing and any Eswin stake monetisation

Analyst verdict

Shengjian remains a real business with a real position. It is one of the few Chinese companies that can engineer an entire fab exhaust path, has built a certified product family and retains access to the country's most capital-intensive manufacturers. Market data place it among the top abatement suppliers worldwide, and its largest customers are not going away. Those strengths explain why investors were willing to pay more than CNY 50 a share in 2026 on the localisation theme.

The financial record tells a different story. Revenue is 38% below its 2023 peak on a trailing basis, gross margin has fallen by about two-thirds from FY2024, free cash flow has been negative for five years and the IPO cash pile has become more than CNY 800 million of net debt. Three consecutive shortfalls under the 2023 employee stock plan show that targets have been missed before. The 2026 plan's first revenue trigger looks demanding.

The new management, drawn from BOE, is the most important recent change. It brings operating discipline and customer credibility, and the discounted equity grant ties it to revenue. But revenue-only vesting does not reward the thing the company most needs, which is profitable growth and cash collection.

The shares no longer discount the summer's enthusiasm, trading at about 1.8 times book, but they are not cheap against a business that is losing money. Evidence of a sustained recovery would be gross margin back above 20%, positive operating cash flow for two straight half-years, and pumps and chillers disclosed as repeat production orders. Until that evidence appears, Shengjian is best viewed as a credible but unproven turnaround with significant operating leverage and balance-sheet risk in both directions.