Boya Advanced Materials Co., Ltd. (hereinafter "Boya") has recently responded to the exchange's inquiry letter, advancing its ChiNext IPO process. The company aims to raise RMB 1.884 billion to fund capacity expansion, R&D center projects, and working capital replenishment.

However, the utilization rate of its core products has declined sharply for two consecutive years. In 2025, the capacity utilization of scintillation crystals fell below 55% even as overall capacity was reduced. Against this backdrop, the company's plan to expand related product capacity by over 60% appears logically inconsistent.

On the sales front, Boya's revenue from its largest customer, United Imaging Healthcare, exceeded 50% of total revenue in two of the past three years, and approached 50% in the remaining year, constituting a material dependence on a single customer. Additionally, the company's related party, the "Sanyi Group," serves as both a customer and a supplier, forming a complete related-party transaction loop that raises questions about pricing fairness and transactional necessity.

Where the expansion logic falls short

According to the prospectus, Boya specializes in the R&D, production, and sales of inorganic non-metallic crystal materials. Its products include scintillation crystals, laser optical crystals, silicon carbide single crystals, and precision optical components, applied in high-end nuclear medicine imaging, optical communications, and high-energy physics.

From 2023 to 2025, Boya's revenue stood at RMB 230 million, RMB 159 million, and RMB 306 million, respectively. Net losses attributable to the parent company were RMB 115 million, RMB 77 million, and RMB 23 million, while non-GAAP net losses were RMB 124 million, RMB 127 million, and RMB 43 million. Cumulative losses over the three-year period reached RMB 216 million, with non-GAAP cumulative losses of RMB 294 million.

Revenue volatility is striking: a 30% decline in 2024 was followed by a 92% surge in 2025. Despite three consecutive years of losses, the company plans to raise RMB 1.8 billion.

The IPO proceeds of RMB 1.884 billion are allocated to a rare earth functional materials production project (RMB 1.625 billion), an R&D center construction project (RMB 269 million), and working capital (RMB 300 million). The production project is further divided into three sub-projects: an AI-focused rare earth functional crystal materials production facility targeting 4,200 kg of yttrium vanadate crystals annually; a capacity expansion in Yingjing and Jiajiang for rare earth functional crystal materials adding 6,900 kg of yttrium vanadate crystals per year; and a high-performance rare earth scintillation crystal production facility in Jiajiang County for nuclear medicine detection, adding 17,500 kg of lutetium yttrium silicate crystals annually.

Yet the capacity utilization of scintillation crystals, the company's core product, has been on a persistent decline: 85.28% in 2023, 68.16% in 2024, and 54.91% in 2025. By the end of 2025, scintillation crystal capacity had already been reduced by 28.37% from the end of 2023, approaching a 30% cut.

Notably, the Jiajiang County project targets lutetium yttrium silicate, which falls under the scintillation crystal category. This means that despite a 30% capacity reduction at the end of 2025, the IPO project plans to add 17,500 kg of new capacity—a 63% increase over the 2025 year-end level. The rationale for such expansion is difficult to justify.

Scintillation crystals accounted for 88.99%, 80.92%, and 67.41% of revenue in 2023, 2024, and 2025, respectively, underscoring their role as the company's absolute core product.

A heavy reliance on one client

Between 2023 and 2025, sales to United Imaging Healthcare were RMB 171 million, RMB 78 million, and RMB 158 million, representing 74.28%, 49.21%, and 51.71% of total revenue, respectively—exceeding 50% in two of the three years. Boya acknowledges this constitutes material dependence.

Revenue from the top five customers accounted for 88.26%, 75.46%, and 81.25% of total revenue over the same period, compared to industry averages of 40.12%, 38.09%, and 41.94% for comparable listed companies.

Boya attributes this concentration to differences in product mix, market structure, and downstream applications relative to peers, claiming it is reasonable. While there is some merit to this explanation, heavy reliance does not equate to safety. Any shift in United Imaging's procurement strategy could have a significant impact on Boya.

The risk materialized in 2024: sales to United Imaging plunged by over 54% from RMB 171 million to RMB 78.46 million, dragging total revenue down 30.73% from RMB 230 million to RMB 159 million. This deep entanglement highlights the vulnerability of single-customer dependence.

When related parties are both buyer and seller

According to the prospectus, Boya has no controlling shareholder; Wang Yu serves as the actual controller. Wang controls three limited partnerships as their executive partner, and has signed a concerted action agreement with Li Shuwen and Sun Yan, making Li, Sun, and Sun's controlled entity Xianyang Sanyi concerted actors of the actual controller.

The related-party transactions with the "Sanyi Group" form a complete business loop. Boya purchases substantial iridium products from Xianyang Sanyi and Shaanxi Sanyi, while also selling iridium scrap or commissioning remelting services to them. The actual controller of these Sanyi entities is Sun Yan, who holds 51.78% of Xianyang Sanyi Youyuan as its controlling shareholder.

From 2023 to 2025, Boya's purchases of iridium/platinum products and crucible processing from Xianyang Sanyi and Shaanxi Sanyi Youyan totaled RMB 65.57 million, RMB 7.56 million, and RMB 11.65 million, respectively. In 2024, the company sold iridium powder to Shaanxi Sanyi Youyan worth RMB 120.71 million; in 2025, sales reached RMB 37.04 million.

The "Sanyi Group," controlled by Sun Yan—a concerted actor of Wang Yu—acts as both supplier and customer, raising legitimate concerns about pricing fairness and transaction necessity.

Even more striking are the post-report-period figures. In the first half of 2026, related-party purchases from the Sanyi Group surged to RMB 709 million in just six months—more than double Boya's full-year 2025 revenue of RMB 306 million.

In H1 2026, Boya generated revenue of RMB 292 million, up 224.77% year-over-year. When half-year procurement from a single related party exceeds total revenue for the same period, the legitimacy of such related-party transactions warrants serious scrutiny.