Turning industrial exhaust into "treasure," Shougang Langze fights again on the Hong Kong Stock Exchange—how difficult is it to escape losses?

Ask AI · How Can Shougang Langze Solve the Problem of Ongoing Losses in a Second IPO?

By converting blast-furnace gas from the steel industry into ethanol and microbial protein, Shougang Langze uses synthetic biology to tell a “turning carbon into gold” story.

On March 27, 2026, this CCUS (carbon capture, utilization, and storage) company, spun out from the Shougang Group, once again submitted its listing prospectus to the Hong Kong Stock Exchange’s main board, with Yuexiu Financing serving as its sole sponsor. This is its second attempt after a failed 2025 IPO that was derailed by shareholder litigation. Although this time it has cleared the litigation hurdle, the shadow of consecutive annual losses, high debt levels, and highly concentrated customers and suppliers still looms over its path to capitalization.

Amid the interplay between the policy tailwind of “dual carbon” and the difficulties of commercialization, when exactly will Shougang Langze’s profitability turnaround arrive?

Shougang Langze has recorded losses for three consecutive years. Xinjing News Shell Finance reporter Duan Wenping, illustration

From a Technical Breakthrough to a Listing Setback

In 2011, Shougang Langze was established in Beijing. It precisely targeted the CCUS track and became one of the earliest domestic companies exploring the resource utilization of industrial off-gas. Backed by the Shougang Group (direct shareholding of about 26.54%), the company carries cross-industry DNA of “steel + biology + low carbon.” Its core business is to use synthetic biology to convert industrial off-gas generated by the steel industry and other sectors into two major core products—ethanol and microbial protein.

Its technical strength is truly a benchmark in the industry. The first-generation carbon-reduction technology can convert carbon monoxide in industrial off-gas into ethanol and microbial protein, and it is widely applicable to industrial off-gas treatment across multiple industries, including steel, ferroalloys, calcium carbide, silicon carbide, and the phosphorus chemical industry. At present, Shougang Langze has laid out four production bases in China: Hebei Shoulang Phase I, Shoulang Jiyuan, Ningxia Binze, and Guizhou Jinze production facilities, forming a large-scale production setup with annual capacity of 210,000 tons of ethanol and 23,200 tons of microbial protein.

Even greater room for market imagination lies in its second-generation negative-carbon technology. The second-generation technology developed by Shougang Langze can use carbon dioxide, carbon monoxide, and hydrogen as feedstocks to realize conversion into ethanol and microbial protein. Currently, the Hebei Shoulang Phase II project is progressing steadily, fully driving the commercialization and implementation of this technology. The implementation of this project can not only accelerate the market-oriented adoption of second-generation negative-carbon technology, but also further expand application scenarios and broaden the customer base.

According to data from Frost & Sullivan, Shougang Langze is the first company in the CCUS industry to achieve commercialized and scaled production of low-carbon products by using validated synthetic biology technology.

In terms of the business model, Shougang Langze centers on the sale of its products—ethanol and microbial protein. At the same time, it provides industrial clients with low-carbon integrated solutions and technology licensing, aiming to gradually break free from the constraints of heavy-asset production and extend toward a “light-asset output” model, thereby opening up diversified paths for revenue.

However, this technical breakthrough route suffered a severe blow at a critical stage of capitalization. In June 2025, Shougang Langze successfully passed the Hong Kong Stock Exchange’s hearing. It was only one step away from listing, but in July the listing process was urgently put on hold due to litigation involving a minority shareholder of a joint venture company in a core project. The minority shareholder accused the company of unilaterally adding an investment of 160 million yuan and of unfair pricing for related-party transactions, which ultimately led to the shelving of Shougang Langze’s listing plan. Not until March 2026, when both parties reached a settlement agreement and all related lawsuits were withdrawn, did Shougang Langze restart its IPO journey and once again knock on the door of the Hong Kong Stock Exchange.

Revenue Slips for Two Consecutive Years, Losses Keep Widening

The advantages from technological leadership did not successfully translate into commercial profitability, and Shougang Langze is mired in a financial quagmire of “inability to secure revenue growth while losses intensify.” According to the prospectus, from 2023 to 2025, Shougang Langze’s operating revenue fell from about 593 million yuan to about 564 million yuan and then to about 522 million yuan. It recorded negative growth for two consecutive years, with decline rates of 4.9% and 7.4%, respectively, and the momentum for growth continued to weaken.

Shougang Langze’s revenue has declined for two consecutive years. Xinjing News Shell Finance reporter Duan Wenping, illustration

The revenue structure is highly dependent on ethanol products, which has become the main reason dragging down Shougang Langze’s overall performance. Over the three-year period, ethanol sales revenue accounted for 84.3%, 78.1%, and 81.3% of the company’s total revenue, respectively. The revenue amount fell from about 500 million yuan to about 440 million yuan and 424 million yuan, with year-on-year decline rates of 11.9% and 3.7%, respectively. The continued decline of the core product directly pulled down the company’s overall revenue level.

As microbial protein is the company’s second-largest business, it maintained a modest growth trend. However, because its scale is too small, it cannot support the company’s overall performance growth. Over the three-year period, microbial protein revenue increased from about 86.53 million yuan to 92.40 million yuan, and its share of total revenue rose to 17.7%, yet it has never become a core force that can support growth in the company’s performance.

The profitability outlook is even more bleak. In 2023, Shougang Langze still had gross profit of about 17.712 million yuan. But in 2024, gross profit turned directly from positive to negative, with losses reaching 93.345 million yuan. In 2025, losses further widened to 128 million yuan. The loss in net profit also surged year by year—from about 110 million yuan in 2023 to about 246 million yuan in 2024 and about 325 million yuan in 2025.

Delving into the root causes of the losses, the core lies in a double squeeze of “rising costs” and “revenue decline.” From 2023 to 2025, the company’s selling costs increased from about 575 million yuan to 657 million yuan and 649 million yuan. In the latter two years, selling costs were even higher than operating revenue in the same period, directly resulting in gross profit remaining negative. At the same time, fixed expenditures such as administrative expenses and finance costs continued to consume the company’s profits, intensifying profitability pressure.

The company’s financial health has also flashed a red warning. As of the end of 2025, Shougang Langze’s current ratio was only 0.2, indicating insufficient short-term solvency. Its asset-liability ratio was as high as 130%, its capital-liability ratio was 177.6%, and its debt-to-equity ratio was 166.3%. The cash flow situation is under pressure; future plans such as capacity expansion and technology R&D will also be constrained by a lack of funds.

Shougang Langze’s selling costs are high. Xinjing News Shell Finance reporter Duan Wenping, illustration

Highly Reliant on Related Parties, Business Independence in Doubt

In addition to its severe financial predicament, Shougang Langze also faces the dual risks of highly concentrated customers and suppliers, which has led the market to cast doubt on the independence of its business.

From the customer side, Shougang Langze is extremely dependent on its five core customers. From 2023 to 2025, the top five customers contributed revenue accounting for 86.0%, 78.9%, and 83.8% of the company’s total revenue, respectively. Although the largest customer’s share of revenue fell from 46.5% to 22.9%, it still exceeded one-fifth of total revenue. Once core customers adjust their procurement plans or terminate cooperation, the company’s revenue faces the risk of a cliff-like decline.

On the supply chain side, the company’s core raw material is carbon-containing industrial off-gas, and most of its off-gas suppliers are related parties. From 2023 to 2025, the proportion of carbon-containing industrial off-gas purchased from related parties to total procurement was 64.6%, 67.8%, and 59.0%, respectively—nearly 60% of the feedstock depends on delivery by related parties. Meanwhile, the procurement share of the company’s top five suppliers has always exceeded 70%, and the procurement share of the largest supplier is close to 20%. The supply chain is highly concentrated. This structure not only may trigger market disputes over the fairness of related-party transaction pricing, but also exposes the company to production risks if off-gas supply is interrupted.

How Good Are Shougang Langze’s Chances in the Second IPO on the Hong Kong Stock Exchange?

With this restart of its IPO, although Shougang Langze has resolved the core obstacle of shareholder litigation, it still faces multiple tests. The probability of IPO success and the emergence of a profitability turnaround are both subject to considerable uncertainty.

From the perspective of IPO review, the company has certain core strengths. As a technology pioneer in the CCUS track, its business aligns with the national “dual carbon” strategy. It has globally leading synthetic biology technology, as well as 257 authorized patents. The commercialization and implementation of its second-generation negative-carbon technology could open up new growth space for the company. At the same time, backed by the strong shareholder Shougang Group, it has inherent advantages in areas such as raw material supply and funding support, and its technology licensing model has already achieved breakthroughs, providing new possibilities for performance growth.

However, the disadvantages are also obvious and have become the core pain points in the Hong Kong Stock Exchange’s review: the financial situation of three consecutive years of losses and tight cash flows may draw regulatory inquiries. In addition, the high concentration of customers and related parties means insufficient business independence, making it difficult to demonstrate that it can operate stably even after being separated from related parties. This IPO comes with favorable developments from a litigation settlement, but there is still resistance after the hearing. Even if it successfully lists, it will still have to face the capital market’s strict scrutiny of its profitability prospects.

From the resource utilization of steel off-gas to a technical breakthrough in the CCUS track, and then to two attempts to approach the Hong Kong Stock Exchange, Shougang Langze is both an important vehicle for the Shougang Group’s low-carbon transformation and a snapshot of China’s CCUS companies’ exploration of commercialization.

Against the backdrop of both the “dual carbon” wave and market laws, whether this technology pioneer can successfully enter the capital market, and when it can escape the quagmire of losses and deliver a profitability turnaround—only time will validate the answer.

Xinjing News Shell Finance reporter Duan Wenping

Editor Yang Juanjuan

Proofreader Yang Li