Ask AI · Can IPO fundraising solve Changjing Photonics’ capacity bottleneck?

Kechuangban Daily, March 26 (Reporter Yu Shiqi) On March 27, Wuhan Changjing Photonics Technology Co., Ltd. (hereinafter referred to as “Changjing Photonics”) will be scheduled to face the review for its Kechuangban IPO.

As one of the few domestic manufacturers capable of realizing mass production of high-performance specialty optical fibers, this company located in “China Optics Valley” is a relatively young player in the photonics industry. Its entrepreneurial background—backed by a professor team from Huazhong University of Science and Technology—and major industrial capital investors such as Huawei Hubble and CMIT Capital have all brought it substantial attention.

Valuation surges 5x in one year

From the prospectus, Changjing Photonics’ business development can be clearly divided into three stages. From 2012 to 2019 was the company’s “technology research and breakthrough stage.” During this period, at the end of 2017, the company acquired 6 invention patents from Huazhong University of Science and Technology, initially forming the basic theories and solution framework for the design, production, and testing of specialty optical fibers. In 2019, it successfully achieved mass production and sales. But at that time, the company had not yet entered the mainstream capital markets’ field of view.

The turning point came in 2020 to 2022, which was the company’s “key breakthrough stage.” During this period, Changjing Photonics’ erbium-doped optical fiber, erbium-ytterbium-doped optical fiber, polarization-maintaining ytterbium-doped optical fiber, and other products achieved mass production, and it also opened up major laser device manufacturers such as Xincheng Laser, Raycus Laser, and JPT as core customers.

In 2022, Changjing Photonics began formal external financing, and within a year its valuation achieved “three consecutive jumps.” In April of that year, the venture capital firm Jiaxing Wotu transferred the equity of the original shareholder Changrui Fengzheng at a pre-money valuation of RMB 202 million.

By August, Shenzhen Hubble Technology Investment Partnership (Limited Partnership) subscribed for Changjing Photonics’ newly added registered capital at a price of RMB 57.34 per unit of registered capital, committing RMB 20 million; its pre-money valuation rose to RMB 430 million, doubling it.

In December, a new round of financing attracted multiple institutions, including Hechuang Venture Capital and Huagong Technology’s Huagong Ke Investment, which invested at a price of RMB 20 per share. At that time, the company’s pre-money valuation had rapidly climbed to RMB 1.2 billion.

From RMB 202 million in April to RMB 1.2 billion in December, Changjing Photonics’ valuation increased 5x within one year.

It is worth noting that, besides them, there was also an investor that acted earlier and in a more discreet manner—its major customer of Changjing Photonics, JPT.

According to the prospectus, JPT began business cooperation with Changjing Photonics in 2019. Immediately afterward, on January 10, 2020, JPT signed the “Investment Agreement” with Changjin Ltd. (Changjing Photonics’ predecessor), as well as the founding team (Li Jinyan, Liu Changbo, and Li Yaojiang).

By November 2022, when Changjin Ltd. underwent an overall conversion into a joint-stock company, JPT—one of the founding shareholder investors—held 8.6007 million shares, representing a 14.34% stake. It ranked second largest shareholder, behind the controlling shareholder Changhexin (41.82%). This shareholding quantity did not change until before the listing.

Now, Changjing Photonics’ IPO plans to raise RMB 780 million, and it plans to issue no more than 23.4175 million shares. Based on this, if the proceeds are fully subscribed, the offer price would be approximately RMB 33.31 per share, corresponding to a total market value after the issuance of about RMB 3.12 billion. If the offering is successful, the aforementioned institutions can all obtain at least 2x or more in book gains.

Multi-track expansion and CMIT Capital enters the scene

Starting in 2023, Changjing Photonics entered a “multi-track expansion stage.” From a past single layout that relied highly on ytterbium-doped fibers in the advanced manufacturing field, it shifted to a diversified arrangement built on advanced manufacturing as the base, with optical communications and defense and military industry as two growth engines, and measurement and sensing as an emerging reserve.

The change in revenue structure can directly reflect this shift. By product type, as the company’s traditional core product, the revenue share of ytterbium-doped fibers has continued to decline from 65.34% in 2023 to 44.98% in 2025, dropping by more than 20 percentage points. However, this is not business contraction—its absolute revenue from ytterbium-doped fibers increased from RMB 94.4583 million to RMB 110.5073 million, still maintaining growth. It’s just that the growth rate of other businesses is faster, diluting its share.

The two main segments driving the change are: first, function-enhanced rare-earth-doped optical fibers, whose revenue surged from RMB 5.0830 million in 2023 to RMB 55.2955 million in 2025—nearly 10x growth over three years. The revenue share rose from 3.52% to 22.51%; second, the erbium-doped optical fiber business, with revenue soaring from RMB 17.1904 million in 2023 to RMB 44.4218 million in 2024, representing a year-on-year growth rate of as high as 158.41%.

Among them, function-enhanced rare-earth-doped optical fibers correspond to the defense and military industry—especially anti-radiation optical fibers, which are key components for space laser communications in the construction of low-orbit satellite internet. In 2025, the company successfully achieved batch delivery and acceptance to customer B. At the same time, anti-radiation products were delivered in batches to DEKELI; they also successfully passed verification by customer A and were supplied in small batches, driving a 219% growth in revenue in the defense and military industry.

And erbium-doped optical fibers correspond to the optical communications field. Changjing Photonics states that the direct source of its business surge is that China’s 400G optical transmission network has entered a large-scale commercial stage. In March 2024, China Mobile announced that the world’s first 400G all-optical inter-provincial backbone network was officially launched for commercial use, marking the official start of the first year of large-scale commercial 400G optical transmission backbone networks. In this construction wave, Changjing Photonics’ ultra-wideband L-band erbium-doped optical fibers became key beneficiaries.

One year later, in March 2025, CMIT Fund at a price of RMB 27.05 per share invested RMB 100 million to subscribe for Changjing Photonics’ newly issued shares, with a pre-money valuation of RMB 1.8 billion. This is also the largest and highest-valuation financing round before Changjing Photonics’ IPO.

At the time, Changjing Photonics said that after the financing it would begin in-depth collaboration with China Mobile’s industry investment to provide support for upgrades to China Mobile’s 400G backbone network, helping to build high-reliability, high-bandwidth intelligent computing network infrastructure.

However, after peaking in 2024, the erbium-doped fiber business quickly fell back to RMB 34.7416 million in 2025. The prospectus explains that this is due to a hiatus interval: the initial completion of the first round of large-scale 400G construction, while the next round of construction had not yet fully rolled out. Therefore, this is categorized as cyclical fluctuations.

Although Changjing Photonics states that, as the “East Data to West Computing” project increasingly urgently requires high-speed computing capacity, the scale construction of the 400G backbone network will continue to be promoted based on clear industrial planning, and the optical communications business still has a foundation for sustained growth. But in the short term, this business is difficult to return to the growth rate level seen in 2024.

For Changjing Photonics, the challenges go beyond that. Its year-by-year decline in gross margin for its main business and the highly concentrated customer base are also situations that cannot be ignored. From 2023 to 2025, its gross margin fell from 69.31% to 65.06%. Among them, as the company’s most core product line, the gross margin of rare-earth-doped fibers fell from 70.21% to 64.77%, which is the main driver behind the overall gross margin decline.

The issue of highly concentrated customers points to another kind of vulnerability in the company’s market position. In the reporting period, the revenue share of the company’s top five customers decreased from 82.26% in 2023 to 66.20% in 2025. Moreover, in its risk warning, the prospectus specifically points out that within the top five customers, Raycus Laser has already acquired the capability to self-supply specialty optical fibers through its subsidiary Wuhan Ruixin, and Xincheng Laser is also expanding its own production capacity. If these customers increase their self-supply proportion due to supply-chain security or cost-control considerations, it will directly squeeze the market space of independent third-party manufacturers including Changjing Photonics.

In addition, the capacity bottleneck is another constraint that cannot be ignored. In the reporting period, the company’s capacity utilization rate remained at 96% or above, operating in a saturated state. This means that any additional orders may face delivery pressure. Although the high-performance specialty optical fiber production base in this IPO’s fund-raising projects is precisely intended to address this issue, from construction to commissioning to stable operation, new capacity requires a relatively long cycle.

(Kechuangban Daily reporter Yu Shiqi)