ST Chenming Announces Full Resume of Production at Five Manufacturing Bases, Overall Production Capacity Recovered to 100%

On the evening of March 13, ST Morning Star (000488) announced that as of the disclosure date, the company’s five major production bases located in Shouguang, Zhanjiang, Huanggang, Jiangxi, and Jilin have fully resumed production, with overall capacity restored to 100%. Recently, the company’s stock price also experienced a significant rebound, with multiple daily limit-ups.

Looking back at recent developments, ST Morning Star has fallen into operational difficulties. Financial data shows that since 2023, the company’s profitability has been under continuous pressure, with a cumulative net loss attributable to shareholders of 6.008 billion yuan from Q1 to Q3 2025. The asset-liability structure is also under stress. As of the end of Q3 2025, the company’s total assets amounted to 52.855 billion yuan, total liabilities reached 47.511 billion yuan, and shareholders’ equity was only 5.344 billion yuan, indicating significant debt repayment pressure.

According to ST Morning Star’s 2025 earnings forecast, the company expects a net loss of 8.2 to 8.8 billion yuan for the full year, compared to a loss of 7.411 billion yuan in the same period last year; it also forecasts a non-recurring net loss of 7.55 to 8.15 billion yuan, compared to a loss of 7.202 billion yuan last year.

Due to industry downturn, fluctuations in raw material prices, and internal operational adjustments, some of the company’s production bases previously experienced temporary shutdowns or underutilization of capacity, further exacerbating cash flow pressures.

ST Morning Star stated that in 2025, the Huanggang base will operate normally, while the Shouguang, Jiangxi, and Jilin bases will be largely shut down from Q1 to Q3, and the Zhanjiang base will be shut down for the entire year. During this period, shutdown losses and maintenance costs increased year-over-year, and sales volume declined significantly, impacting revenue and profit. Additionally, affected by shutdowns, the company has made impairment provisions for some assets, further impacting current profits. To focus on its main pulp and paper business, the company divested all assets related to leasing in Q4 and no longer engages in any leasing activities. According to accounting standards, the company conducted impairment tests on lease customers’ credit status during the reporting period and made provisions for bad debts on some leasing assets.

Furthermore, ST Morning Star indicated that in 2025, with strong support from government authorities and financial institutions at all levels, the company actively implemented measures to reduce costs and increase efficiency across the entire process and develop new products comprehensively. First, it steadily promoted full resumption of work and production, with the operation rate of production lines and capacity utilization significantly improving compared to previous years. Second, it optimized procurement processes, strengthened process management, and notably reduced raw material procurement and logistics costs. Third, it enhanced communication with financial institutions, implemented interest rate reduction and extension arrangements, and achieved a substantial decrease in financial expenses year-over-year.

The full resumption of production at the five major bases is seen as an important signal of the company’s gradual recovery from operational difficulties. ST Morning Star stated that this comprehensive restart will effectively improve the company’s operating cash flow and gradually restore its self-sustaining capabilities. Moving forward, the company will strengthen cost reduction and efficiency improvements across all processes and develop new products in all directions, continuously enhancing profitability and market competitiveness, effectively managing debt risks, and promoting sustainable, stable, and healthy development.

Data shows that ST Morning Star is a modern large-scale enterprise group mainly engaged in pulp and paper manufacturing. Its mechanism paper products include over 200 varieties across seven series such as cultural paper, coated paper, white cardboard, copying paper, industrial paper, specialty paper, and household paper. The five major production bases also produce core products like cultural and packaging paper.

Positive changes in production have also been reflected in the capital markets. Recently, ST Morning Star’s stock price surged rapidly. Market data indicates that since the low point in early February this year, the company’s stock price has increased by approximately 30%, with multiple daily limit-ups, and closed at 2.76 yuan per share on March 13, with a total market value of 8.12 billion yuan.

From an industry perspective, since 2025, the overall profitability of the paper industry has been weak, with a supply-demand surplus pattern. Raw material prices, such as pulp, have shown a “V” shape, experiencing a short-term rise followed by a decline to bottom levels. As of March 13, the main contract price of pulp on the Shanghai Futures Exchange was about 5,280 yuan per ton. Recent overall fluctuations have been limited, somewhat easing cost pressures for paper companies.

Regarding supply and demand, the paper industry maintained growth in output in 2025, but the prices of finished paper generally declined, indicating a clear oversupply pattern. Since 2026, with policy-driven consumption expectations strengthening, industry demand is expected to recover gradually, with slight increases in sales volume. However, the release of new capacity will sustain a loose supply-demand balance, and paper prices are still under pressure.

Institutional analysis suggests that in 2026, the prices of key raw materials like pulp will fluctuate at the bottom, and the energy price center will remain roughly stable. China’s high dependence on imported wood pulp is unlikely to change significantly, and overseas demand and supply chain conditions may still impact pulp prices. For companies within the industry, cost reduction, efficiency enhancement, product upgrading, and debt management are key to breaking through.