With the continuous warming of the A-share main board and Growth Enterprise Market (GEM) market sentiment, BSE has also experienced a major outbreak in the market. The Securities Times app observed that the BeiZheng 50 index rose from 593.92 on September 13 to 1389.01 on October 25, with the largest increase of 131.81% in just 24 trading days, and even produced star stocks like Airong Software (830799) that rose more than 10 times in just 15 trading days.

The continuous sharp rise in the BeiZheng 50 index indicates a significant recovery in the valuations of listed companies in the BSE market. Therefore, subsequent IPOs, especially those with outstanding performance, are worth investors' attention, as these new stocks may experience a valuation increase combined with performance growth expectations, driving a market phenomenon known as the 'Davis Double-click'.

In such a market sentiment, Tenggong shares, known as a leader in the consumer electronics industry in the field of titanium and titanium alloy materials with explosive performance growth, have investors full of expectations, as the company will have its second review on November 1.

Titanium alloy is a national strategic emerging industry, with a high probability of passing the second review.

Tenggong shares applied for IPO on the BSE as early as December 29, 2023, and entered the inquiry stage on January 26, 2024. During the IPO review on August 30, it was postponed for deliberation. At this time, the listing committee raised three main points concerning Tenggong shares: firstly, requesting clarification on whether the explosive performance growth can be sustained; secondly, asking for an explanation of the necessity of establishing Tenggong Solomon and the reasonableness of not recognizing Changzhou Solomon as an associated party, and demonstrating the issuer's advantages from aspects such as application scenarios, technology route, and competitors; thirdly, requesting the sponsoring institution to issue a profit forecast report for Tenggong shares from 2024 to 2026.

Industry insiders indicate that the first and third points in the above opinions mainly predict the future performance development trends to fully alert investors of risks, while the second point might be the key to determining whether Tenggong shares can be successfully listed. From the relevant documents submitted by Tenggong shares on October 25, it is evident that detailed responses have been provided to the opinions raised during the postponement by the listing committee, with a full explanation and clarification given for the second point as well.

Tiangong Corporation stated that the reason for establishing Tiangong Soloman is because the company is very optimistic about the future application of titanium materials in the consumer electronics field, and therefore it cooperated with Changzhou Soloman to jointly establish a subsidiary through a joint venture, to participate in the research and trial production of titanium materials for consumer electronics. At the beginning of its establishment, Tiangong Soloman mainly cooperated and assisted Changzhou Soloman and the company in jointly developing titanium materials for consumer electronics.

After the initial landing of the first-generation titanium material project for consumer electronics, in order to further meet downstream customers' demand for supply chain integrity and supply stability of titanium materials, to ensure the large-scale and high-quality production of titanium alloy silver bright materials, Tiangong Corporation and Changzhou Soloman negotiated and both parties planned to make Tiangong Soloman the main body for silver bright material processing business. Therefore, Tiangong Corporation increased its capital to Tiangong Soloman, increasing its shareholding to 55%. This is in line with the basic principles of ensuring supply chain integrity and optimizing industry chain division of labor, with comparable companies such as Baoji Titanium Industry and Shaanxi Tiancheng also having corresponding silver bright material processing procedures.

The reasons for not recognizing Changzhou Soloman as a related party are threefold. First, Tiangong Soloman is not involved in core business processes, does not have financial significance (in 2023, its revenue, net income, and total assets accounted for 5.72%, 6.80%, 5.05% of Tiangong Corporation respectively), therefore Tiangong Soloman is not an important subsidiary of the issuer, and as a shareholder of the subsidiary, Changzhou Soloman naturally does not need to be recognized as a related party of Tiangong Corporation.

Secondly, there is no cross-investment or employment between Tiangong Corporation and Changzhou Soloman's controlling shareholders, actual controllers, directors, executives, and their affiliated parties, and none of them have control or significant influence over each other. Thirdly, the cooperation between Tiangong Corporation and Changzhou Soloman has a genuine transaction background and the transaction price is fair. Based on the above three points, Tiangong Corporation did not disclose Changzhou Soloman as a related party in accordance with relevant regulations, and the transactions with Changzhou Soloman do not constitute related-party transactions.

At the same time, the reply also specifically elaborated on the advantages of Tiangong Corporation. In terms of application scenarios, compared to competitors, Tiangong Corporation focuses more on the consumer electronics field, therefore having a relatively strong competitive advantage and technological strength in the field of titanium materials for consumer electronics. Under the same application scenarios in the consumer electronics field, the cost and overall performance of the products are better than competitors.

In terms of technological route, Tiangong Corporation's process is shorter than that of competitors, optimizing multiple process links to significantly shorten the product production cycle, and the quality performance of the products in terms of defects and cracking is better than competitors, thereby gaining recognition from downstream customers and obtaining a larger market share.

In terms of technological advantages, relying on technological advantages such as purification smelting and short process, Tiangong Corporation's products are superior to competitors in terms of cost and overall performance. The sponsoring institution SWHY stated that as long as there are no major changes in the main production processes of titanium materials for consumer electronics, Tiangong Corporation's technological advantages can be expected to be sustainable for a period of time.

After providing detailed responses to the opinions raised by the listing committee, the probability that Tiangong Corporation will pass the second review is relatively high. After all, titanium and titanium alloy materials are advanced basic materials with extremely wide applications. In addition to being used in industries such as consumer electronics and medical fields, they are also key materials in aviation, aerospace, defense technology, and ocean engineering fields. Moreover, the titanium alloy industry has been included in the category of national strategic emerging industries. With its leading position in the consumer electronics field using titanium materials, technological strength, management capabilities, and market influence, Tiangong Corporation's development will also receive policy support.

The consumer electronics boom continues, and titanium alloy materials are accelerating their penetration into the market.

Compared with the previously listed companies on the BSE, Tiangong shares have excellent fundamentals. As a leading industry player benefiting from the penetration of titanium alloy materials into the consumer electronics field, Tiangong shares have achieved continuous rapid growth in recent years.

According to the prospectus, from 2021 to 2023, Tiangong's revenue was 0.283 billion yuan, 0.383 billion yuan, and 1.035 billion yuan, with year-on-year growth rates of 55.23%, 35.65%, and 170.05%, respectively. During the period, the company's net income attributable to shareholders was 20.343 million yuan, 69.981 million yuan, and 0.17 billion yuan, with year-on-year growth rates of 67.87%, 244%, and 142.57%, respectively. It achieved explosive growth in revenue and net income.

Based on the continuous recovery of the consumer electronics industry and the ongoing penetration of titanium alloy materials into various products of major brands, the high growth of Tiangong shares is clearly not over in the long term.

In terms of the consumer electronics industry, there has been a clear trend of recovery this year. According to IDC data, in the first quarter of 2024, global smartphone shipments increased by 7.8% year-on-year to reach 0.2894 billion units. This marks the third consecutive quarter of growth in global smartphone shipments, a strong indicator that the recovery is proceeding smoothly.

IDC predicts that global smartphone shipments will increase by 4.0% in 2024, reaching 1.21 billion units. By 2025, the market will continue to recover with a growth rate of 2.3%. Subsequently, for the remaining time in the forecast period, it will maintain low single-digit growth, with a five-year compound annual growth rate of 2.3%. This implies that the global smartphone industry will continue to grow steadily in the coming years.

As the consumer electronics industry continues to recover, major brand manufacturers have accelerated the use of titanium alloy materials in their products to enhance their competitiveness. Apple has been using titanium alloy frames in its 15 Pro series since 2023, and both the iPhone 16 Pro and iPhone 16 Pro Max released on September 10 this year feature titanium alloy frames. According to Counterpoint Research data, sales of the Pro and Pro Max models have increased by 44% compared to similar products from last year.

Samsung's first-generation titanium frame phone, S24 Ultra, released in January 2024, was well-received, and the S25 Ultra expected to be released in January 2025 will continue to use a titanium frame. According to South Korean consumer electronics media TheElec, Samsung is expected to produce more than 30 million units of the S25 series phones in 2015, which is similar to the production volume of the S24 series in 2024.

Xiaomi released the Xiaomi 14 Ultra series phone on February 22 this year, including a special titanium metal version with a titanium alloy mid-frame. It is worth noting that Huawei's high-end brand in the Mate 70 series phones to be released in the fourth quarter of this year may use titanium metal for the first time, which means Huawei will accelerate competition with Apple and Samsung. As a leader in the domestic consumer electronics industry, Huawei not only has a huge market scale, but also serves as an industry trendsetter. Its first use of titanium metal materials in phones will inevitably drive the accelerated penetration of titanium alloy products into the smartphone market, benefiting TianGong's acceleration in expanding its domestic market customer base.

In addition to the accelerated volume of titanium alloy mid-frames, there is also an accelerating trend of titanium alloy materials penetrating the field of smart wearable devices and other consumer electronics. After Apple first used titanium alloy in the Apple Watch Series 6 Edition in 2020, Samsung, Huawei, and others quickly followed suit, all introducing smartwatches with titanium metal casings. Apple's Apple Watch Series 10, released in September 2024, discontinued stainless steel casings in favor of titanium casings, and the Milanese strap material was also upgraded to titanium alloy. Huawei's latest WATCH 4 Pro in 2024 also uses a titanium alloy case. Smartwatches have become an important branch for the penetration of titanium alloy materials in the consumer electronics field.

With the continuous acceleration of the penetration of titanium alloy materials into different types of products from different brands in the industry trend, TianGong, as a leading company in the application of titanium alloy in the field of consumer electronics, is expected to continue to benefit from it.

Actively expanding into new areas to create multiple new growth curves.

However, TianGong is not limited to the consumer electronics field. It has accelerated its expansion into other fields to achieve diversification in industry layout, thereby not only enhancing the company's future growth space but also reducing the potential risks of excessive industry concentration.

Based on the accumulation of technology, experience, capital, talent, and other aspects brought by the titanium material business for consumer electronics, TianGong is actively expanding its business into other high value-added areas such as 3D printing (additive manufacturing) titanium materials, aviation aerospace fasteners titanium materials, and medical titanium materials to form a more robust business structure.

In terms of additive manufacturing, according to the report "Additive Manufacturing Ten-Year Development and Prospects" at the 2023 Additive Manufacturing Industry Annual Conference, estimated at an annual growth rate of 25%, China's 3D printing market size will reach around hundreds of billions of yuan by 2027. According to iiMedia Research data, titanium alloys account for the highest proportion in 3D printing materials, reaching 20%. 3D printing technology circumvents the difficult processing properties of titanium materials on the technical route, which is expected to open up a huge market for titanium materials in the future.

Currently, in the field of additive manufacturing, TianGong has expanded to several well-known international customers such as NOVAMETAL S.A. (Swiss metal product manufacturer), DIRECTED METAL 3D S.L., HERMITH GMBH (a well-known European titanium product manufacturer), AP&C (Canada's AP&C Advanced Powders and Coatings Inc., an additive manufacturing company under GE Group), Tekna (Canada's Tekna Advanced Material Inc.), PYR (Canada's PyroGenese Canada Inc.), and has already supplied in bulk to PYR. From January to June 2024, the company witnessed significant growth in the number of customers and sales scale in the field of additive manufacturing compared to the previous year, and it is reasonably predictable that the company's business of using titanium materials for additive manufacturing will be sustainable in the future.

The aerospace field is the second largest titanium material application field, second only to the chemical industry. Titanium materials are increasingly widely used in the aerospace field due to their excellent performance, with the consumption of titanium materials achieving high-speed growth for many years. By 2023, the consumption of titanium materials in the aerospace field will be close to 0.03 million tons.

Currently, Tiangong Corporation has obtained the EN9100 certification for the production of titanium and titanium alloy materials used in the aviation industry. They have also signed trial production agreements with customers to manufacture titanium materials for aviation and aerospace fasteners. Their titanium business in the aerospace field is steadily progressing.

In the field of medical titanium alloys, as a new type of alloy and carrier material, medical titanium alloys are widely used in limb implants, alternative functional materials, dentistry, medical instruments, and other related fields. The overall consumption of titanium materials in the medical industry in China is increasing, from 884 tons in 2015 to 3,876 tons in 2023, with a compound annual growth rate of 20.29%, indicating a broad future market.

Tiangong Corporation is currently undergoing medical device quality management system certification and is expected to pass the certification by the end of 2024. The company is actively expanding related customers in parallel. Once qualified, they can accelerate their entry into the medical titanium alloy field.

Overall, Tiangong Corporation has benefited from the continuous penetration of titanium and titanium alloy materials into the consumer electronics field, achieving explosive growth in performance. The company has grown to become a leader in the titanium and titanium alloy materials industry in the consumer electronics field. With advantages in technology, products, and scale, Tiangong Corporation will continue to benefit from the ongoing penetration of titanium and titanium alloy materials in the consumer electronics field, with high certainty.

As BSE continues to promote high-quality expansion, it will attract more high-quality enterprises to go public. Tiangong Corporation, with its strong fundamentals and clear planning for future development, is likely to stand out and deserves investors' attention.