Analysis of Longpan Technology's Equity Incentive Plan: A Pragmatic Choice Focused on Revenue Growth

Based on existing data, Longpan Technology (603906.SS) has indeed signed multiple large long-term contracts recently. Regarding the issue that the equity incentive plan only includes revenue growth indicators but no profit indicators, an analysis from the following dimensions is needed:

Longpan Technology has signed significant long-term contracts recently:

: On November 24, 2024, the company signed the “Supplementary Agreement II” with Chunergy New Energy, increasing the sales volume of LFP cathode material products from the original 150,000 tons to 1.3 million tons. The agreement validity period is extended to December 31, 2030, with an estimated total sales amount exceeding 45 billion yuan [1][2].

: A long-term purchase agreement for LFP cathode materials was signed with Sunwoda, with an estimated sales amount of approximately 4.5-5.5 billion yuan. It is agreed that a total of 106,800 tons of LFP cathode materials will be sold to the buyer from 2026 to 2030 [1].

: Including leading battery manufacturers such as CATL, EVE Energy, and Ford Motor.

These long-term contracts reflect the company’s competitive position in the LFP market. As of the end of 2024, the company’s LFP cathode material design capacity was 231,800 tons, with a capacity utilization rate of 79.68%. The Indonesia Phase II 90,000-ton project is expected to be completed in June 2026.

From the financial data, the company’s profitability is indeed facing challenges [0]:

:

• January-September 2025: Operating revenue of 5.8253821 billion yuan, net loss of 131.2753 million yuan
• 2024 Full Year: Operating revenue of 7.6730511 billion yuan, net loss of 798.9961 million yuan
• 2023 Full Year: Operating revenue of 8.7294786 billion yuan, net loss of 1.5142335 billion yuan

:

• Asset-liability ratio: 79.24% (high level)
• Current ratio: 0.91
• Gross margin: The gross margin of LFP cathode materials in 2024 was only 2.52%

Although the specific equity incentive plan announcement of Longpan Technology was not found, the analysis is based on industry practices and the company’s actual situation:

:
The LFP industry has attracted many enterprises in the past, with fierce market competition. The growth rate of capacity expansion has significantly exceeded market demand, making it the most competitive segment in the lithium battery industry chain with the most severe profit pressure [2].

:

:

• Under the overall profit pressure in the industry, management may be cautious about short-term profitability improvement
• Setting only revenue indicators without profit indicators may mean that management believes profit recovery will take longer
• The company is still in a loss state (a loss of 131 million yuan in the first three quarters of 2025)

:

• In the early stage of industry recovery, prioritizing revenue growth is a more pragmatic goal
• By locking in long-term contracts, the company is actively responding to overcapacity risks
• The design of equity incentives focuses more on revenue scale rather than short-term profits, which is in line with the development laws of the new energy materials industry

The fact that Longpan Technology’s equity incentive plan only includes revenue growth indicators instead of profit indicators

, but is more likely:

1. Pragmatic Choice
   : In the early stage of industry recovery, taking revenue growth as the primary goal is more realistic
2. Strategic Priority
   : Locking in market share through long-term contracts to lay the foundation for subsequent profit improvement
3. Industry Consensus
   : The overall profit pressure in the LFP industry makes it difficult to achieve profit indicators, which may affect the incentive effect

From the recent frequent signing of long-term contracts, management still has confidence in the company’s market position and customer development capabilities. However, under the current industry environment, focusing the incentive on the revenue side rather than the profit side is a more pragmatic strategic arrangement.

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[1] CLS - 《Continuously “Grabbing Lithium”! Longpan Technology Signs Another Nearly 5 Billion Yuan Long-Term Order》 (https://www.cls.cn/detail/2217719)
[2] Shanghai Securities News - 《Hard to Get a “Core” + Global Order Grabbing: China’s Lithium Battery Industry Chain Starts a New Round of “Value Leap”》 (https://finance.eastmoney.com/a/202512113588043112.html)