Driven by surging demand from the electric vehicle and stainless steel sectors, coupled with Indonesia's stranglehold on nearly half of global nickel reserves and its tightening export quotas, the nickel market is at a pivotal juncture.

Lygend Resources & Technology Co., Ltd., already listed on the Hong Kong Stock Exchange, has officially launched its IPO on the Shenzhen Stock Exchange's main board, marking its "return to A-shares" journey. This full-chain nickel service provider, which began as a trading house and established a major presence on Indonesia's Obi Island, has grown into a global leader in HPAL (High-Pressure Acid Leach) hydrometallurgical processing. Behind its impressive revenue and capacity figures, however, lies a business fate deeply interwoven with Indonesia's policy landscape. Based on the company's prospectus and public information, this analysis dissects the value of its A-share return, the logic behind its fund-raising initiatives, and the critical risks that cannot be overlooked.

Understanding the Business: A Two-Pronged Model

Lygend Resources & Technology Co., Ltd. operates as a comprehensive nickel industry chain service provider, with its business divided into two primary segments: nickel product trading and nickel product production and sales.

The trading business has established the company as China's largest nickel ore trader, sourcing laterite nickel ore and ferronickel from Indonesia and the Philippines for domestic stainless steel mills and commodity traders. While this segment's revenue contribution has been declining, it still accounted for 42.15% in 2025. The production and smelting business, with its core operations on Obi Island, Indonesia, utilizes third-generation HPAL hydrometallurgical and RKEF pyrometallurgical technologies. These facilities produce mixed hydroxide precipitate (MHP), nickel sulfate, and ferronickel, supplying battery material manufacturers and the stainless steel industry. By 2025, this segment's revenue share had risen to 57.85%.

In essence, the company purchases upstream ore, trading a portion directly while processing the rest locally in Indonesia into battery-grade nickel materials for China's new energy supply chain. Its trajectory shows a clear progression: entering nickel trading in 2009, acquiring domestic smelting capabilities in 2017, establishing a large industrial park on Obi Island in 2018, listing in Hong Kong in 2022, and launching the A-share IPO in 2026.

According to the prospectus, Lygend Resources & Technology Co., Ltd. claims the world's largest nickel product trading volume and a 35.8% market share in China's domestic nickel ore trade. It ranks second globally and in Indonesia for HPAL hydrometallurgical capacity. The Obi Island project stands out as one of the few successful overseas greenfield laterite nickel hydrometallurgical projects developed by a Chinese company. Its downstream clients include industry leaders such as the CATL group, Ronbay Technology, GEM, and Tsingshan Holdings.

Key Highlights and Advantages of the A-Share Return

The company's financial performance demonstrates substantial growth aligned with the main board's criteria for large-cap blue chips. From 2023 to 2025, revenue grew from RMB 21.286 billion to RMB 40.255 billion, representing a compound annual growth rate of 37.52%. Net profit attributable to shareholders surged from RMB 1.05 billion to RMB 2.862 billion, a CAGR of 65.11%. This growth has been fueled by the full commissioning of its Indonesian hydrometallurgical and pyrometallurgical lines. With assets approaching RMB 50 billion, the company fits the profile of a mature, large-scale, representative resource manufacturing enterprise.

Having secured overseas production capacity, Lygend Resources & Technology Co., Ltd. is well-positioned to capitalize on the rising nickel demand from the EV sector. Given China's limited domestic nickel resources, overseas investment has become essential for supply chain security. On Obi Island, the company has developed both hydrometallurgical and pyrometallurgical capacity, including 120,000 tonnes of nickel-cobalt compound production for MHP and nickel sulfate, plus controlling and participating interests in ferronickel capacity of 185,000 and 95,000 tonnes, respectively. As the global demand structure shifts from stainless steel towards ternary lithium batteries, with institutions projecting battery-grade nickel demand to reach 30% by 2029, the company's dual focus on both markets provides flexibility and long-term growth potential.

Unlike traditional capacity expansion, this A-share IPO, which involves issuing 172.89 million new shares (10% of post-issuance total capital) to raise RMB 4.047 billion, is directed towards two specific projects. The first is a hydrometallurgical residue resource utilization project that processes smelting waste into rebar, enhancing resource efficiency and aligning with ESG principles. The second is an MHP refining project to create differentiated, higher-value products. This approach signifies a shift towards circular economy upgrades and deep processing at the existing Obi Island facility, rather than building new smelting capacity. Simultaneously, the A-share listing would establish an "A+H" dual capital platform, broadening financing channels to support its capital-intensive overseas operations. The move further solidifies its access to domestic equity financing following its 2022 Hong Kong listing.

A significant technical barrier is the company's HPAL process expertise. This high-pressure acid leach technology for low-grade laterite ores is technically demanding with a low tolerance for operational errors. Lygend Resources & Technology Co., Ltd.'s Obi Island project is among the few overseas HPAL ventures by Chinese companies to achieve smooth ramp-up and competitive cash costs, building a formidable know-how advantage through accumulated experience in construction and local operations.

Prospectus Warnings: Four Critical Risks Underlying the Gloss

The foremost risk is the company's extreme dependence on Indonesian policy, which represents the largest source of uncertainty outside its own control. The majority of its smelting capacity and core ore sources are located in Indonesia, a country that has been tightening its nickel industry policies. Recent measures include significant cuts to mining quotas (a year-on-year reduction of over 30% for 2026), revised HPM pricing formulas that have increased raw material costs, and the potential for future export controls, taxes, and restrictions on new smelting projects. During the reporting period, 55.87% of its production ore came from Indonesian partners, leaving operations vulnerable to policy shifts or partnership disputes. In simple terms, despite the company's capabilities, a policy change in Indonesia could severely disrupt raw material costs and supply stability. Adding to this, the Philippines is also discussing export restrictions, heightening global supply uncertainty.

Secondly, the business is highly susceptible to volatile LME nickel prices, which have historically experienced extreme fluctuations. While rising prices boost production profitability, falling prices compress margins in both production and trading, potentially leading to price inversions. After a sustained downturn from 2023 to 2025, prices rebounded in 2026 on Indonesian policy news. As a strongly cyclical commodity, any weakness in downstream stainless steel or new energy demand would directly impact profits. The company uses futures and forward contracts to hedge, but these derivatives introduce their own fair value volatility.

Thirdly, the company's operations rely heavily on overseas subsidiaries, with 85%-90% of gross profit derived from these entities. Profits and dividends are primarily generated by the Indonesian subsidiary, which is subject to local foreign exchange controls, taxation, labor laws, environmental regulations, and land certification requirements. The subsidiary currently benefits from income tax exemptions; however, the expiry of these incentives or the implementation of OECD global minimum tax rules could lead to additional tax liabilities, eroding profits. Furthermore, some property and land permits are still being processed, and any complications could impact production operations. Repatriating overseas profits as dividends to China is also constrained by foreign exchange policies.

Finally, substantial capital expenditure and high debt levels pose a challenge, alongside the risk of technological disruption. With a consolidated debt-to-asset ratio of 56.65% and significant short and long-term borrowings, the company will face additional depreciation from new projects, which could pressure profits if they underperform. On the technology front, the potential for large-scale commercialization of low-nickel or nickel-free batteries in the power battery segment could significantly undermine long-term nickel demand.

Assessment and Outlook: A Double-Edged Sword

The A-share return of Lygend Resources & Technology Co., Ltd. represents a typical case of a Chinese enterprise "going global" to secure strategic overseas mineral resources. With China's inherent lack of domestic nickel, securing raw material security for the new energy industry chain necessitates acquiring mines and building plants abroad. Lygend Resources & Technology Co., Ltd. seized the opportunity presented by Indonesia's laterite nickel reserves, transforming from a trader into a large-scale smelting producer and capitalizing on the upstream lithium battery boom.

However, the company's business model is a double-edged sword: its advantages stem from Indonesian mineral resources, yet its greatest risks also originate from Indonesia's policies, geopolitical environment, and partnership dynamics.

On the positive side, the key attractions are the "A+H" dual listing platform, mature HPAL capacity, coverage of both stainless steel and lithium battery markets, and a fundraising plan focused on resource recycling and deep processing. The critical variables to monitor going forward are Indonesia's nickel mining policy changes, LME nickel price trends, ore supply from Indonesian partners, potential tax changes from OECD minimum tax rules, and the evolution of downstream battery technology.