Analysis of Valuation Impact and Internationalization Strategy Prospects of Zhejiang Rongtai's H-share Listing

Based on the latest collected data, I will provide you with a comprehensive analysis of the valuation impact and internationalization strategy prospects of Zhejiang Rongtai’s H-share issuance and listing in Hong Kong.

Zhejiang Rongtai Electrical Equipment Co., Ltd. (603119.SH) was established in 2011 and listed on the main board of the Shanghai Stock Exchange in August 2023. The company is mainly engaged in R&D, production, and sales of various high-temperature resistant insulating mica products, including

, household appliance flame-retardant insulation parts, cable flame-retardant insulation tapes, etc. [1]. It is a tier-1 supplier to globally renowned automakers such as Tesla, Volkswagen, BMW, Mercedes-Benz, Volvo, and also an important partner of battery manufacturers like CATL [1].

• Operating Revenue
  : Reached 1.135 billion yuan in 2024, up 41.80% year-on-year; 572 million yuan in the first half of 2025, up 14.96% year-on-year [1, 2].
• Net Profit
  : 230 million yuan of net profit attributable to parent company in 2024, up 34.02% year-on-year; 123 million yuan in H1 2025, up 22.23% year-on-year [1, 2].
• Profitability
  : Gross margin was about 34.48% in 2024, net margin about 20.29%; gross margin 35.68% and net margin 21.6% in H1 2025, showing continuous improvement in profitability [1, 2].
• Market Value and Valuation
  : As of the close on December 26, 2025, the company’s share price was about 103.60 yuan, with a total market value of about 37.7 billion yuan (estimated based on 364 million total shares), and a dynamic P/E ratio of about 25.5 times (data from brokerage API tools and web searches) [1, 2].

According to market research, A-shares have long had a certain premium over H-shares, mainly due to:

• Liquidity difference
  : The average daily trading volume of Hong Kong stocks is about HK$100 billion, while that of A-shares is up to trillions of yuan; A-shares with stronger liquidity usually enjoy a valuation premium [1, 2].
• Market structure and investor awareness
  : Hong Kong stocks are an offshore market; global investors have limited understanding of some local small and medium-sized enterprises, and information asymmetry may lead to an “offshore discount” [1, 2].
• Valuation system difference
  : The overall valuation level of Hong Kong stocks is lower, and the valuation of manufacturing enterprises is often not high [1, 2].

As of mid-March 2025, the Hang Seng A-H Premium Index once fell to a low of 128.31, indicating that the premium of A-shares over H-shares was less than 30%; however, the price gap between H-shares and A-shares of some high-quality enterprises is narrowing, and foreign investors’ willingness to allocate high-quality Chinese assets is increasing, which may promote the gradual convergence of the A-H premium center [1, 2].

• Broadening international financing channels
  : Entering the Hong Kong capital market helps attract international capital, optimize the capital structure, and provide financial support for overseas production capacity layout and international business expansion [1].
• Enhancing international brand awareness
  : Dual listing in A and H shares will strengthen the company’s brand recognition among global investors and customers, which is conducive to exploring overseas markets [1].
• Improving corporate governance and information disclosure
  : Adapting to Hong Kong’s stricter regulatory and disclosure standards helps improve corporate governance and enhance investor confidence [1].

• Valuation discount risk
  : If the Hong Kong market gives the company a lower valuation, it may pull down the overall valuation level of the company (referring to the industry phenomenon of A-H share discounts) [1, 2].
• Liquidity pressure
  : The liquidity of Hong Kong stocks is relatively low, which may affect the trading activity and valuation performance of H-shares [1, 2].
• Shareholder dilution
  : Issuing H-shares will dilute the shareholding ratio and earnings per share of original shareholders [1].

• Production base layout
  : The company has established subsidiaries in
  Mexico and Thailand
  through its wholly-owned subsidiary Singapore Rongtai, investing in the construction of “Annual 500,000 Sets of New Energy Vehicle Parts Production Project” and “Annual 18,000 Tons of Mica Materials and New Composite Materials for New Energy Vehicles Project” respectively; currently, the projects are progressing steadily [1].
• Joint venture cooperation
  : On December 26, 2025, the company signed a joint venture letter of intent with Weichuang Electric, planning to establish a joint venture company in Thailand (each party holds 50% of the shares) to jointly develop and produce mechatronics components, intelligent transmission systems, etc., and expand the intelligent robot mechatronics market [1].
• Overseas market contribution
  : In 2024, the company’s overseas revenue reached 570 million yuan, up 76% year-on-year, accounting for 50% of total revenue; the gross margin of overseas business was 42.6%, 16.4 percentage points higher than that of domestic business, showing outstanding profitability [1].

• High-quality customer resources
  : Long-term service to overseas leading automakers such as Tesla, Volkswagen, BMW, Mercedes-Benz, laying a solid foundation for opening up the international market [1].
• Strong product competitiveness
  : Leading in the global niche market of new energy vehicle thermal runaway protection insulation parts (according to industry research, the company is in the first echelon of the market) with deep technical accumulation [1].
• Policy and market demand-driven
  : The global new energy vehicle and power battery safety protection market is expanding rapidly; the niche market of mica materials is expected to have a compound annual growth rate of more than 20%-25% from 2024 to 2029; the new domestic national standard GB38031-2025 will be implemented in 2026, and the thermal runaway protection standards are becoming stricter, which will further drive market demand [1].

• Financing convenience
  : The Hong Kong capital market is closer to international investors, which is conducive to raising funds for overseas expansion projects.
• Brand and influence
  : Exposure in the international capital market will enhance the company’s voice and cooperation opportunities in the global industrial chain.
• Talent and resource integration
  : It is more convenient to carry out cross-border mergers and acquisitions, attract international talents, and allocate resources globally.

The new energy vehicle thermal runaway protection market has broad prospects:

• Market size growth
  : The global battery system safety protection market is expected to grow from 11.54 billion yuan in 2024 to 32.42 billion yuan in 2029; the mica material niche market is expected to have a compound annual growth rate of 25.88% from 2024 to 2029 [1].
• Policy-driven
  : Domestic and foreign safety standards are becoming stricter (such as domestic GB38031-2025, internal control standards of international automakers and battery factories), which will promote the continuous increase in demand for thermal runaway protection materials [1].
• Technical barriers
  : The industry has high technical and certification barriers; leading enterprises are expected to continue to increase their market share relying on first-mover advantages, patent accumulation, and customer stickiness [1].

1. Increased market competition
   : The high industry prosperity may attract more competitors, and price competition may compress profit margins.
2. Overseas project risks
   : The construction of overseas production bases is affected by local policies, supply chains, labor costs, etc., and there are uncertainties in project progress and returns.
3. A-H share valuation difference
   : The valuation of the company in the Hong Kong market may be lower than that in A-shares; it is necessary to be alert to valuation fluctuations after the issuance of H-shares.
4. Technology iteration risk
   : New energy vehicle technology is iterating rapidly; if alternative solutions appear, it may affect the demand for existing products.
5. Exchange rate and geopolitical risks
   : Overseas business accounts for a relatively high proportion; exchange rate fluctuations and changes in international trade environment may affect performance.

Zhejiang Rongtai plans to issue H-shares and list on the Hong Kong Stock Exchange, which is an important strategic measure for the company to deepen internationalization, broaden financing channels, and enhance brand influence. In the short term, attention needs to be paid to the fluctuation risks brought by A-H share valuation differences, but in the medium and long term:

• Valuation level
  : The current A-share valuation of the company is about 25.5 times P/E, which has certain premium support in the new energy thermal management niche track; if international investors have a high recognition after the H-share listing, it is expected to gradually narrow the A-H premium range and achieve a dual-market balance of the valuation system.
• Strategic level
  : Relying on the already laid-out bases in Mexico and Thailand, as well as the joint venture cooperation with Weichuang Electric, the company will be closer to overseas customers and market demands, improve global delivery and service capabilities, and further strengthen its position as a leading global supplier of thermal runaway protection.
• Industry opportunities
  : The new energy vehicle and power battery safety protection market continues to be highly prosperous, coupled with stricter policies and standards, the company as an industry leader is expected to fully benefit.

: Investors should focus on key indicators such as H-share issuance pricing, progress of overseas production capacity construction, and changes in overseas orders and gross margins to evaluate the actual effect of the company’s internationalization process and its long-term impact on valuation.

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[1] Jinling API Data (including company fundamentals, valuation and related market data)
[2] Relevant reports from Sina Finance/Securities Times/Everyday Economic News (company announcements and market information)
[3] Industry research reports (new energy vehicle thermal runaway protection and mica material market data)
[4] Hang Seng A-H Premium Index and A-H share valuation research materials