Analysis of Tongcheng New Materials (603650) Limit-Up: Leading Photoresist Player Ignites Rally, Resonance of Fundamentals and Event Drivers

The recent limit-up of Tongcheng New Materials is the result of a resonance of three factors:

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. The company is planning to issue foreign shares (H-shares) overseas and list on the main board of the Hong Kong Stock Exchange [1]. This move aims to deepen its international strategic layout and broaden financing channels. The news gained traction on January 8, directly igniting market enthusiasm and driving consecutive limit-ups.

. According to the company’s announcement data, the electronic chemicals business delivered outstanding performance, with sales volume reaching 13,001.64 tons, generating operating revenue of RMB 701 million. The price rose 19.53% year-on-year and 7.86% month-on-month [2]. This indicates that the company has seized a first-mover advantage in the domestic substitution of photoresist, and its actual performance growth has been verified.

. By holding a controlling stake in Beijing Kehua, the company holds over 40% of the domestic market share in KrF photoresist [3]. Its subsidiary Beijing Kehua is the only A-share enterprise cooperating with ASML to develop EUV photoresist [4]. Against the backdrop of growing uncertainty in Japan’s photoresist supply to China, the demand for domestic substitution is urgent. In addition, the new export control regulations against Japan issued by the Ministry of Commerce on January 6 have further accelerated this trend [5]. The 11,000-ton annual output photoresist project invested by its subsidiary Tongcheng Electronics in the Shanghai Chemical Industry Park has gradually entered the trial production stage [6], and capacity expansion lays a foundation for future growth.

From the perspective of capital flows, data from the Dragon and Tiger List on January 8 shows strong bullish sentiment in the market. Total purchases amounted to RMB 513 million, total sales reached RMB 261 million, and net purchases hit RMB 251 million [7]. Notably, northbound funds had a net purchase of RMB 104 million, UBS Securities Shanghai Huayuan Shiqiao Road bought RMB 138 million, and Goldman Sachs (China) Securities Shanghai Pudong New Area Century Avenue purchased RMB 76.07 million [7]. The active participation of well-known institutional seats reflects professional investors’ confidence in the outlook.

From a technical analysis perspective, the stock price has broken through the 2025 high and set a new all-time record [0], just shy of the 52-week high of RMB 58.66. The 20-day moving average at RMB 47.50, 50-day moving average at RMB 43.68, and 200-day moving average at RMB 36.54 all provide support for the stock price, forming a bullish moving average pattern.

The company’s 2025 third-quarter report shows operating revenue of RMB 869 million, net profit of RMB 494 million, a year-on-year increase of 12.65%, and ROE of 16.85% [0], demonstrating stable profitability. The company has maintained cash dividends for six consecutive years, with a dividend yield of 1.9% in 2024 [2], reflecting its emphasis on shareholder returns.

However, the current valuation level has sparked controversy. The company’s trailing P/E ratio is 55.52x, significantly higher than the industry average of 28.89x, with a premium of nearly 100% [1]. On one hand, the high valuation reflects the market’s premium for the company’s leading position in domestic substitution; on the other hand, it means the stock price has fully priced in optimistic expectations, limiting upward flexibility.

The core logic of this rally lies in the broader context of

. Global semiconductor equipment sales are expected to reach a record high of USD 133 billion in 2025 [4]. The rapid development of the AI industry has fueled the semiconductor sector, driving growth in upstream photoresist demand. As a leading domestic photoresist player, Tongcheng New Materials is set to benefit significantly from this industry trend.

From a capital market perspective, the planned H-share listing not only broadens financing channels but is also expected to enhance the company’s international reputation, attract more overseas institutional investors, and create an opportunity for valuation re-rating.

The company has been featured on the Dragon and Tiger List and triggered the Shanghai Stock Exchange’s abnormal fluctuation criteria [1], indicating obvious short-term capital game characteristics. It has recorded limit-ups for three consecutive trading days, with a cumulative price deviation of over 20% [7]. Investors need to pay attention to subsequent regulatory developments and profit-taking pressure.

: The current P/E ratio of 60x is significantly high, requiring time to digest the overvaluation. After a short-term gain of over 30% [0], profit-taking pressure is increasing.

: Volatility will intensify after consecutive limit-ups, and the stock price may pull back rapidly. The company has issued a stock trading abnormal fluctuation announcement, confirming normal operations and no material information that should be disclosed but has not been disclosed [1].

: The H-share listing is still under discussion, with uncertainties involved. Photoresist R&D has a long cycle, requires heavy investment, and has high technical barriers [3], so project progress may fall short of expectations.

: The price of phenol, the main raw material, is highly affected by crude oil fluctuations, which may compress profit margins.

In an

, if substantial progress is made in the H-share listing and the semiconductor boom continues, the stock price is expected to challenge the RMB 60 mark, opening up upward space.

In a

, if market enthusiasm remains and trading volume stays stable, the stock price may consolidate in the range of RMB 55-58.

: Subsequent institutional movements on the Dragon and Tiger List, changes in trading volume, progress of the H-share listing, and the sustainability of growth in the electronic chemicals business.

Tongcheng New Materials, as a leading domestic KrF photoresist player, has long-term growth potential against the backdrop of domestic substitution. The volume and price growth of its electronic chemicals business verifies improved fundamentals, the planned H-share listing provides an event-driven catalyst, and continuous inflows of institutional capital demonstrate market confidence. However, the current valuation is significantly overextended, and short-term gains are excessive. Investors are advised to participate rationally and pay attention to pullback risks.

In terms of key price levels, RMB 58.66 is the 52-week high resistance level, RMB 55 is the integer support level, and RMB 47.50 (20-day moving average) is the strong support level.