Key takeaway

In 2025, the company mitigated the adverse impact of declining prices for its core products on profitability through stable production operations and the completion of multiple new projects. Currently, the prices of cyclical products such as glyphosate and silicones, as well as new energy materials such as lithium iron phosphate, are steadily rising. In the medium to long term, the company is making steady progress on multiple new product projects. Its accelerated expansion in three key transformation sectors—new microelectronic materials, new silicone materials, and new energy materials—is expected to drive the company's strategic shift toward becoming a technology-driven green chemical and advanced materials enterprise.

Event

The company released its 2025 annual report, reporting full-year revenue of 29.30 billion yuan, a year-over-year increase of 3.2%; net profit attributable to shareholders was 1.49 billion yuan, down 6.8% year-over-year; adjusted net profit stood at 1.43 billion yuan, declining 10.6% year-over-year. The company also announced its 2025 profit distribution plan, proposing a cash dividend of 5 yuan per 10 shares, totaling 598 million yuan, with a dividend payout ratio of 40.08%.

Quick Take

From the operational data perspective:

1. In 2025, the company's pesticide/fertilizer/specialty chemicals/silicone series/new energy materials product segments achieved revenues of 5.33/4.04/5.35/2.82/1.61 billion yuan, respectively, with year-over-year (YoY) growth of +2.4%/- 0.2%/+1.4%/+6.6%/+541%. Sales volumes reached 256,000/1,339,000/557,000/311,000/100,000 tons, showing YoY increases of +4.4%/+4.5%/+8.4%/+24.5%/+280.5%. Gross profit margins stood at 15.9%/8.4%/22.9%/-3.7%/-4.3%, with YoY changes of +2.7/-2.5/-4.1/+0.1/+33.3 percentage points. The company's overall gross profit margin/net profit margin was 17.9%/5.5%, down 1.6 percentage points/0.2 percentage point year-over-year, demonstrating relatively stable profitability.

2. Among them, 1) Although the price of glyphosate fluctuated during the year, the company leveraged its scale and technological advantages to improve its gross profit margin against market trends; since March, the price of glyphosate has risen rapidly. According to Baiinfo data, the current average market price has exceeded 30,000 yuan per ton, representing an increase of approximately 7,000 yuan per ton from the low point at the beginning of the year. 2) The production and sales of specialty chemicals have steadily increased, with profit margins remaining at a high level. 3) Although the silicone sector continues to face supply-demand pressures, the company is steadily expanding downstream operations, with profitability expected to gradually improve; 4) The new energy materials segment achieved significant sales growth while further extending its industrial chain. The company has also signed processing agreements with key downstream customers, demonstrating enhanced overall market competitiveness.

Looking solely at Q4 2025, the company reported revenue of 5.52 billion yuan, down 13.0% year-over-year and 39.8% quarter-over-quarter; net profit attributable to the parent company was 174 million yuan, declining 39.5% year-over-year and 70.6% quarter-over-quarter. In Q4, the decline in prices of cyclical products such as glyphosate and silicone, combined with rising cost pressures from raw materials like sulfur, squeezed profit margins. In addition, the company recorded an asset impairment loss of approximately 96 million yuan in Q4, while R&D expenses increased both year-over-year and quarter-over-quarter, further impacting net profit.

Regarding key downstream projects, several initiatives were successfully launched within the year, including Hubei Xingrui's silicone leather and foam production, Hubei Jixing's 53,000-ton yellow phosphorus technology upgrade, 5,000-ton phosphating agent production, and the 20,000-ton capacity expansion for sodium hypophosphite used in data storage components. Additionally, accelerated progress is being made on multiple projects such as phosphorus-based flame retardants and lubricant-grade phosphorus pentasulfide, which are expected to become new profit drivers for the company. On the upstream resource side, the company currently holds mining rights for approximately 625 million tons of phosphate rock reserves, with an annual production capacity of 6.422 million tons. Its resource reserves and production capacity rank among the industry leaders. We are optimistic about the company leveraging its abundant phosphate rock resources and the industrial chain advantages of integrated phosphorus-silicon-sulfur-salt-fluorine development to accelerate its expansion in three key transformation areas: new microelectronic materials, new organic si licon materials, and new energy materials. This will enable the company to gradually transition from a traditional phosphorus chemical industry leader to a technology-driven green chemical and advanced materials enterprise.

Risks:

(1) Risk of unexpected fluctuations in product and raw material prices: The company's core revenue and profit sources include products such as phosphate rock, glyphosate, organic silicon, and new material chemicals. The prices of these bulk chemicals are significantly influenced by global macroeconomic conditions, grain prices, energy costs (such as sulfur and synthetic ammonia), and supply-demand dynamics, demonstrating strong cyclical characteristics. If raw material and product prices fluctuate significantly, it may affect the profitability of certain segments of the company;

(2) Risks of stricter safety and environmental policies: Under China's "Dual Carbon" goals and the Yangtze River ecological protection strategy, environmental standards in the chemical industry continue to tighten. As a key industry under safety and environmental supervision, the phosphorus chemical industry may face impacts from increasingly stringent safety and environmental policies as well as rising compliance costs, potentially affecting operational indicators such as production capacity utilization rates.

(3) Risks of international trade friction and export policy changes: As a leading global exporter of phosphate fertilizers and glyphosate, China faces uncertainties stemming from international geopolitical conflicts, trade barriers (such as tariffs and anti-dumping investigations), and adjustments to domestic fertilizer export inspection policies.