IPO "stalled" for over two and a half years: What are Sunshine Group's chances of successfully listing on the A-share market?

Why Has Sun Group’s IPO Been Delayed? Is the Recovery in Net Profit a Key Turning Point?

Since its establishment in 1998, Shanxi Sun Coking Group Co., Ltd. (hereinafter referred to as “Sun Group”) has developed into a major coking enterprise under the leadership of Xue Dianmin over nearly 30 years. However, the company’s journey to enter the capital market does not seem to have gone smoothly. Since entering the inquiry phase in June 2023, Sun Group’s main board IPO has been in line for over two and a half years but has yet to enter the listing committee review meeting. Behind the “stalled” IPO, Sun Group’s net profit declined continuously from 2022 to 2024; however, in the first three quarters of 2025, the company’s net profit scale saw some recovery. In terms of control, before this issuance, Sun Group was controlled by actual controllers Xue Dianmin and Xue Guofei, who together held over 80% of the shares.

Net Profit Recovery in the First Three Quarters of 2025

Sun Group, which entered the inquiry phase back in June 2023, has yet to find an opportunity for its IPO.

It is understood that Sun Group’s main business is the production and sale of coal chemical products and fine chemical products. The company’s IPO was accepted on February 27, 2023, and entered the inquiry phase on June 8 of the same year.

From a fundamental perspective, between 2022 and 2024, Sun Group’s net profit experienced a significant decline. Previous financial data shows that from 2021 to 2024, the company achieved operating revenues of approximately 15.992 billion, 20.438 billion, 18.194 billion, and 15.83 billion, respectively; the corresponding net profits attributable to shareholders were approximately 2.136 billion, 1.175 billion, 674 million, and 379 million, respectively. In the first three quarters of 2025, the company achieved operating revenue of approximately 9.076 billion, down from 11.83 billion in the same period last year; the corresponding net profit attributable to shareholders was approximately 282 million, an increase from 223 million in the same period last year.

In terms of R&D expenses, from 2022 to 2024 and in the first half of 2025, Sun Group’s R&D expenses were 45.2232 million, 57.6028 million, 45.4903 million, and 20.319 million, respectively, accounting for 0.22%, 0.32%, 0.29%, and 0.34% of the operating revenue during those periods. Additionally, it is worth mentioning that as of the end of the first half of 2025, nearly 80% of the R&D staff at Sun Group had diplomas at the associate degree level or below.

The prospectus indicates that by the end of June 2025, the number of R&D personnel increased from 96 at the end of 2024 to 127, with the number of employees holding master’s degrees or above dropping from 1 to 0; the number of employees with bachelor’s degrees decreased from 38 to 28; and employees with associate degrees or below increased to 99, with their proportion rising from 59.38% to 77.95%.

“Regarding the educational background distribution characteristics of R&D personnel in the coking industry, the situation where nearly 80% are at the associate degree level or below is a clear industry commonality,” said Yuan Shuai, deputy secretary-general of the Zhongguancun Internet of Things Industry Alliance, to a reporter from Beijing Business Today. However, maintaining an extremely low proportion of high-end talent for a long time may indicate the company’s weakness in original innovation and disruptive technology reserves. As the industry evolves toward greening and intelligence, the core driving force of R&D has shifted to molecular-level material design, green process development, and complex system integration, which have a hard demand for theoretical reserves from high-educated talents.

Actual Controllers Control Over 80% of Shares

In terms of equity structure, the controlling shareholder and actual controllers of Sun Group are Xue Dianmin and his son Xue Guofei, with Xue Dianmin holding 81.28% of the company’s shares and serving as chairman, while Xue Guofei holds 0.6% of the shares and serves as director and general manager. Together, Xue Dianmin and Xue Guofei control 81.88% of the company prior to this issuance.

For this IPO attempt, Sun Group plans to raise approximately 4 billion, which will be invested in a 3.69 million tons/year coking project with a carbonization chamber height of 6.78 meters, a coke oven gas to liquefied natural gas and ammonia synthesis project, a coal preparation system, and a coke storage and transportation system renovation project, and a 220kV power transmission and transformation project.

It is worth noting that according to the company’s initial prospectus disclosed in February 2023, the original intended fundraising amount for this IPO was 6 billion; however, in the prospectus disclosed in December 2024, the intended fundraising amount was reduced to the current 4 billion.

As a veteran coking enterprise, Sun Group’s safety production violations and rectification status have also become key issues of market concern. The prospectus shows that from January 1, 2022, to the date of signing the prospectus, the company and its subsidiaries have received 4 administrative penalties related to safety production and experienced 4 general production safety accidents that resulted in fatalities.

Regarding related issues, a reporter from Beijing Business Today sent an interview request to Sun Group but had not received a response from the company by the time of publication.

Beijing Business Today Reporter Wang Manlei