Liabilities approach RMB 50 billion; GEM Co. pursues HK IPO: Expansion or a 'high-stakes gamble'?

While the market focuses on debt, GEM is quietly building a little-known 'resource empire'—perhaps the very confidence that emboldens Xu Kaihua to take a high-stakes gamble in Hong Kong. GEM holds three 'world's firsts', each carrying substantial weight. First, its high-nickel cathode precursor business shipped 126,600 tonnes of 8-series/9-series material in August 2024, capturing 37.4% of the global market—and serving as a core supplier for Tesla’s 4680 batteries and CATL’s Kirin batteries. Second, in battery recycling, all six of GEM’s recycling bases are listed on China’s MIIT white list; in 2024, it recycled 359,000 tonnes of batteries from third parties—the highest volume in China—with nickel and cobalt recovery rates exceeding 98% (industry average: ~90%). Third, in the 'urban mining' domain, GEM processes one million tonnes of e-waste annually, extracting cobalt equivalent to 3.5 times China’s primary cobalt output and tungsten accounting for 6% of domestic mining output. This capability enabled GEM to maintain stable supply even during the DRC’s cobalt export ban—solidifying its reputation as the dominant player in the 'nickel-cobalt-tungsten resource pool'. Moreover, GEM’s partnerships with the world’s top ten battery manufacturers further bolster its confidence in capacity expansion. A glance at GEM’s customer list reveals an all-star roster of global new-energy giants—including Brunp (CATL’s recycling subsidiary); ECOPRO (accounting for 15.1% of GEM’s procurement volume in 2024); and Samsung SDI (its exclusive high-nickel precursor supplier). Beyond resources, technology, and blue-chip clients, another underappreciated advantage of GEM’s Hong Kong listing lies in its 'carbon business'. The 'circular + low-carbon' narrative aligns precisely with ESG premiums highly valued by Hong Kong investors. UBS reports note that GEM’s carbon footprint data already meets international automotive supply-chain admission standards—potentially serving as a 'ticket' into European and U.S. markets. 03 From Professor to 'Resource Patriarch': Xu Kaihua’s Wealth Formula Xu Kaihua, a professor-turned-entrepreneur from Central South University, has—in over two decades of entrepreneurship—built a 'resource empire' now valued at nearly RMB 38 billion. He currently serves as Executive Director, Chairman, and General Manager of GEM; his wife Wang Min also serves as an Executive Director. Xu’s nephew Xu Dingbang serves as Deputy General Manager, overseeing business development, sales, and marketing. Prior to this role, he held deputy GM or GM positions at Jingmen GEM New Materials Co., Ltd., Jiangxi GEM Resource Recycling Co., Ltd., and GEM (Wuhan) Urban Mining Industry Group Co., Ltd. Currently, Xu Kaihua and his wife hold 16.5% of GEM’s shares through Shenzhen Huifengyuan Investment Co., Ltd., and have established 93 subsidiaries conducting operations across multiple sectors. Beyond A-share and H-share listings, the Xu family’s capital reach extends overseas: In July 2022, GEM issued Global Depositary Receipts (GDRs) on the SIX Swiss Exchange, raising USD 381 million (~RMB 2.4 billion). In Indonesia, GEM established Qingmei Bang New Energy Materials Co., Ltd. ('Qingmei') as its core platform, holding a 63% stake. However, GEM’s 'circular economy business' has drawn regulatory attention: In both 2024 and the first half of 2025, four of GEM’s top five customers were also suppliers—primarily sourcing Indonesian nickel ore from Tsingshan Group and selling MHP back to them. These customer-supplier transactions accounted for 6.3% and 2.7% of GEM’s total procurement volume in the respective periods.

Investment outlooks for 2026 and target prices for A-share companies from Morgan Stanley, JPMorgan, and UBS

Omnivision Technologies is a fabless semiconductor design company specializing in chip design. According to market research firm TrendForce, it ranks among the world’s top ten fabless semiconductor firms. Its semiconductor design and sales business comprises three major segments: image sensor solutions, display solutions, and analog solutions. Omnivision recently launched its new OV50R CMOS image sensor, featuring a 1/1.3-inch optical format and 50-megapixel resolution, with a pixel size of 1.2 μm. Targeted at premium main-camera applications, the OV50R serves smartphones, action cameras, vlog cameras, and portable cameras. Samples have been completed, and mass production is scheduled for Q1 2026—expected to further enhance the company’s penetration in the high-end imaging market. JPMorgan forecasts net profit growth of 33.82% for 2025 and 40.05% for 2026. UBS: Global Tech Stocks Set for a New Rally in 2026! Upgrades Four Companies to 'Buy'! In its 2026 investment outlook, UBS states that the A-share market stands at a positive inflection point where earnings growth converges with valuation re-rating. It expects A-share earnings growth to accelerate from 6% in 2024 to 8% in 2025. This acceleration stems from two key drivers: First, faster nominal GDP growth coupled with a narrowing year-on-year decline in PPI should jointly boost corporate revenues; second, the implementation of supportive macroeconomic policies and sustained healthy deleveraging by enterprises may drive modest improvements in overall profitability. Moreover, the current A-share equity risk premium—above its historical average—implies significant potential for valuation recovery. Additionally, recent market corrections stem largely from broad-based adjustments in the global tech sector and short-term trading congestion—but present an opportune moment to position for medium-term re-rating logic. UBS’s Global Strategy Team believes global tech stocks will enter a new upswing in 2026. Investment themes to prioritize include technological self-reliance, consumption recovery, sectors benefiting from 'anti-overcompetition' policies (e.g., photovoltaics, lithium batteries, chemicals), and Chinese enterprises expanding overseas. Key risks to monitor include escalation in U.S.-China trade friction, continued real estate sector weakness, and a potential burst of the global AI bubble. Our analysis shows that since October this year, UBS has issued updated ratings for 196 A-share companies: maintaining 'Buy' ratings for 131, upgrading four to 'Buy', and one to 'Neutral'; and initiating coverage on 15 new names—including 'Buy' ratings for Great Wall Motor, Akeso Bio, and Longhua Technology. Regarding target price upside, UBS’s latest target price for Aibody Medical is RMB 118 per share, compared to its closing price of RMB 61.28 on December 5—implying over 90% upside potential. Morgan Stanley, Goldman Sachs, and Citigroup: A-Share Valuations Remain Attractive—Stock Selection Is Key! Wang Ying, Chief China Equity Strategist at Morgan Stanley, notes that in 2025, China’s equity market completed a decisive valuation recovery—driven by strengthened confidence from consumption support and 'anti-overcompetition' policies, growing recognition of Chinese enterprises’ global competitiveness, and marginally improved geopolitical conditions. The MSCI China Index P/E ratio rose from 9x to over 13x.

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