Are the four major moat barriers closing in? Is it time to reevaluate the value of leading new material companies?

Ask AI · How does Global New Material International’s globalization mergers and acquisitions reshape industry discourse power?

For Global New Material(06616.HK), 2025 is a milestone year of breakthrough significance. Its latest financial report confirms a substantial enhancement in the group’s value chain position and marks the official completion of its layout transition toward a globally leading new materials platform.

Capital markets rarely price companies at their “best” stage. True valuation reshaping often occurs at critical points of structural change — “when the financial statement structure becomes more complex, short-term profits fluctuate, but core underlying capabilities are undergoing systematic reconstruction.”

01

From “Product Going Global” to “Global Operations”

Currently, China’s manufacturing industry is entering a stage of accelerating global market share capture, with strategies focused on export margin and overseas high-margin performance realization. The reason lies in the dual background of global order reconfiguration and “supply anxiety”: China’s manufacturing urgently needs to enhance its industry discourse power worldwide and systematically build global competitive advantages.

The main indicator measuring this direction is the overseas revenue share of midstream manufacturing — the higher the overseas income proportion, the purer the “going global” logic, and the stronger the ability to hedge single-market risks and capture global macro beta. Global New Material International’s globalization strategy exemplifies this policy direction.

In 2025, Global New Material International achieved revenue of RMB 2.92B, a significant increase of 76.9% year-on-year; among them, the non-China business share surged to 43.8%, with the newly consolidated German business accounting for 34%.

Benefiting from the substantial revenue growth, the group’s gross profit reached a record high of RMB 1.14 billion in 2025, a 30.5% increase from RMB 873 million in 2024.

In terms of composition, with the implementation of the strategic integration of the former Merck surface solutions business in Germany, Global New Material International officially completed its systematic transition from “regional champion” to “global platform leader.” In fiscal year 2025, sales in Europe grew fivefold year-on-year, North America tenfold, and Asia, Africa, and South America all doubled or more. Relying on a marketing network covering over 150 countries and regions, the group has developed a strong global resource allocation capability.

A more profound breakthrough is that the group has overcome decades-long brand verification barriers in high-end materials. During the reporting period, the revenue share from terminal customers jumped from 16% to 40%. Directly entering the core supply chains of top automakers and beauty giants signifies that the group now holds greater discourse power in the industry chain. Such penetrating barriers and the resulting industry discourse power are precisely the original intention of China’s manufacturing going abroad.

According to the group CEO, Chairman Su Ertian, this series of mergers and acquisitions is not merely for short-term expansion but is a systematic layout centered on core technology, product structure, and global customer systems.

02

R&D Collaboration to Create New Growth Curves

Another achievement of globalization mergers and acquisitions is mainly reflected in breakthroughs in scientific research and production lines.

By 2025, the group’s product matrix has exceeded 5,056 items, with 2,884 new types added within the year. In terms of categories, pearl luster pigments remain core products, while mica functional fillers and active substances for cosmetics have become the main directions of the group’s R&D.

Mica functional fillers: New materials developed based on mica properties, used as multifunctional materials for insulation, fireproofing, and new energy battery raw materials;
Cosmetic active substances: The core raw materials for high-end beauty products, with leading market share and customer recognition in key segments such as moisturizing, whitening, sun protection, and anti-aging.

R&D is the foundation of the group’s existence. By integrating German processes, Japanese and Korean precision manufacturing, and China’s scale advantages, the group has established absolute advantages in high-margin sectors like beauty, automotive, and pharmaceuticals, and is beginning to penetrate emerging industries such as photovoltaics, new energy, and aerospace under the “14th Five-Year” strategic plan.

By 2025, two innovative businesses have become the group’s “second growth curve.” The mica functional filler business generated RMB 176 million in revenue, an 89.8% increase; the cosmetic active substances, as a newly added business, achieved RMB 187 million in revenue, accounting for 6.4% of total revenue.

(Data source: Company annual performance announcement)

The rapid growth of mica functional fillers and cosmetic active substances not only opens new markets such as new energy and high-end beauty but also validates the efficient transformation from basic material R&D to commercialization. As the synthesis capacity of mica continues to expand and customer collaborations deepen, these high-potential businesses will become important pillars of the group’s performance growth.

03

Stage Pressure Under Global “Time Difference”

Behind the scale leap, there must be pains of systemic restructuring. Like two sides of a coin, while achieving platform-level transformation in business, the financial side also enters a short-term fluctuation window due to mergers and acquisitions integration.

In 2025, Global New Material International recorded a loss of about RMB 306 million, turning from profit to deficit; however, its net profit after non-recurring gains and losses was RMB 250 million. This short-term profit fluctuation is essentially a technical consideration after strategic M&A enters the integration phase, involving two types of costs:

Explicit costs: Direct impacts of mergers and acquisitions

One-time integration expenses: Costs related to audits, legal consulting, and restructuring involved in cross-border M&A, concentrated within the year, directly lowering EBITDA.

Non-cash accounting amortization (PPA): Under international standards, the intangible asset appreciation from M&A must be amortized annually; while it does not affect cash flow, it reduces the book net profit on the accounting level.

Financing phase costs: To support rapid acquisitions, the group’s interest expenses increased with the scale of financing, squeezing short-term earnings.

After excluding direct impacts, the group’s adjusted EBITDA was RMB 844 million, a 37.7% increase from 2024. Notably, the German operations, acquired on July 31, 2025, contributed RMB 116 million in incremental EBITDA over five months.

Implicit costs: Structural reshaping deep in the financial statements

Gross margin compression from accounting assessments: Due to fair value revaluation of inventory at the acquisition date, sales costs were passively inflated, causing technical narrowing of gross profit.

Systemic operational challenges: As high-cost regional production bases are consolidated, energy and labor costs temporarily dilute overall gross margin; currency fluctuations also disrupt previous operational rhythm.

Strategic upfront R&D investment: The group maintains a 4.52% R&D expenditure ratio. This proactive investment in new sectors and growth engines is currently a profit deduction but will become a source of premium in the future.

04

Building the “Four Major Moats” for Growth

Looking at global industrial history, the rise of any multinational giant is essentially a tough expedition of “localization” and “premium rights.” From early German chemical industries to Japanese and Korean precision manufacturing’s global expansion, all have experienced financial wear from mergers and acquisitions, conflicts with legal regulations, and pains of cultural reconstruction.

China’s manufacturing industry has entered the second half of its overseas journey, shifting from simple “capacity spillover” to deep “value chain reshaping.” For Global New Material International, the current financial report’s account fluctuations and integration costs are the “strategic consideration” necessary to cross this globalization threshold.

The most resource-consuming “breaking the ice” period has basically ended. With the foundation of globalization encirclement, the group’s focus is now fully on how to leverage this platform to initiate a new cycle of value centered on sustainable growth. Chairman Dr. Su Ertian proposes the “Four Major Moats” as the core of its ongoing growth.

First, build a full-chain technological innovation platform to strengthen technological barriers. Relying on the “6+6+6” global collaboration system, the group has achieved an efficient resource closed loop: 6 R&D centers focused on mica upgrading and high-performance color solutions; 6 manufacturing bases across Asia, Europe, and Africa for distributed capacity; 6 application centers close to consumer markets, shifting from single supply to a “R&D—production—feedback” collaborative development loop.

Second, leverage customer certification and channel advantages to enhance global stickiness. Through overseas mergers and acquisitions, the group has completed the initial construction of a global channel network, successfully opening sales pathways covering major economies worldwide.

Third, utilize global manufacturing and delivery advantages to build operational resilience. The group’s current distributed manufacturing layout, complemented by the upcoming 100k-ton artificial mica plant in Tonglu, provides a reliable supply of raw materials globally.

Fourth, utilize full industry chain integration to solidify scale and cost advantages. With leading global capacity, the group’s economies of scale are gradually manifesting in operations. Through integrated management across the entire industry chain, the group continues to implement cost reduction and efficiency measures in R&D, procurement, and production.

Through these “Four Major Moats,” Global New Material International is undergoing a substantive leap from a single-material supplier to a global high-performance surface material platform. The early investments in M&A integration and technological R&D are gradually transforming into operational dividends with resilience against volatility.

In the second half of global competition, early strategic investments are no longer just accounting costs but have built a long-term competitive wall across cycles. With the dust of mergers and acquisitions settling and the seeds of R&D taking root, Global New Material International is traversing the consolidation window through long-termism, laying a solid foundation for the next stage.

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