Liquidity Crisis Draws Regulatory Attention: Former Paint Giant Asia Paint Facing Cyclical Difficulties

Jiemian Reporter | Huang Hai Jiemian Editor | Bi Luming

A total of 163 accounts have been frozen due to litigation matters, with an expected revenue decline of 77% in 2025 and an annual pre-loss of up to 1.29 billion yuan… Former coating giant Asia CreaTech has attracted public attention due to its liquidity crisis.

After disclosing the performance forecast, the Shanghai Stock Exchange issued a regulatory letter to Asia CreaTech, requiring the company to respond to issues such as significant performance decline, account freezes, and ongoing operational capacity.

On the evening of March 14, Asia CreaTech disclosed a reply letter. Regarding the sharp decline in performance, Asia CreaTech stated that firstly, the deep adjustment in the real estate and construction industries has significantly impacted its business; secondly, the company’s credit sales policies have tightened; thirdly, reasons such as the maturity of bills payable, large reductions in loan balances from certain financial institutions, etc., have led to liquidity difficulties.

Asia CreaTech is currently facing liquidity problems.

Public information shows that from 2021 to 2024, Asia CreaTech’s net profit attributable to the parent company after non-recurring items was -645 million yuan, 36 million yuan, 10 million yuan, and -358 million yuan respectively. As of the end of 2024, the company’s net assets were 1.309 billion yuan. According to the performance forecast disclosed by Asia CreaTech, the loss in 2025 will significantly increase, with a projected net loss of 890 million to 1.29 billion yuan. Based on the maximum loss forecast, the company’s net assets by the end of 2025 are expected to be only 19 million yuan, approaching negative territory.

The latest announcement from Asia CreaTech also shows that in 2025, the company’s total revenue will be 477 million yuan, a decrease of 76.77% compared to the same period last year.

Regarding the significant decline in revenue, large losses in net profit, and liquidity difficulties in 2025, Asia CreaTech cited three main reasons: first, the deep adjustment of the real estate and construction industries has led to revenue decline and increased credit impairment of accounts receivable; second, in recent years, the company’s new capacity expansion was too rapid and large, requiring substantial capital investment, resulting in heavy financial costs, low capacity utilization, and significant depreciation, amortization, and asset impairment; third, some financial institutions have significantly reduced their loan balances.

Jiemian reporters noted that among the accounts receivable impairment list disclosed by Asia CreaTech, many former top 100 real estate companies, including China Evergrande, China Fortune Land Development, Greenland Holdings, Blue Light Development, Ronsheng Development, and Kaisa Group, have been fully impaired at 100%.

While performance has declined, in 2025, the Chongqing factory, Shijiazhuang factory, and Chuzhou waterproofing factory under Asia CreaTech are already shut down. The company has overdue debts and is involved in multiple lawsuits, with some assets seized and frozen.

According to Asia CreaTech, the Chuzhou and Xinjiang factories are the company’s main production bases. From 2022 to 2024, the sales revenue generated by products from the Chongqing, Shijiazhuang, and Chuzhou waterproofing factories accounted for 11.95%, 24.07%, and 30.12% of the company’s revenue, respectively.

In Asia CreaTech’s view, the shutdown of these factories will not cause serious impact on the company’s production and operations. “Currently, the company’s business scale and revenue are relatively small. The capacity of the Chuzhou and Xinjiang factories can ensure supply, and the shutdown of the Chongqing, Shijiazhuang, and Chuzhou waterproofing factories is conducive to reducing overall operating costs and improving efficiency.”

With significant performance decline and multiple debt defaults, the regulatory letter from the Shanghai Stock Exchange requires Asia CreaTech to clarify whether there are major uncertainties regarding the company’s ongoing viability.

In response, Asia CreaTech stated that regarding its ability to continue as a going concern, the company believes it is appropriate to prepare its financial statements on a going concern basis.

Asia CreaTech provided several reasons: first, in 2025, revenue will still reach 477 million yuan, and the main production bases in Chuzhou and Xinjiang are operating normally; second, under the guidance of the “Good Faith and Civilized Enforcement” concept by the Supreme People’s Court, the current lawsuits, preservation, and enforcement actions have not fundamentally affected normal operations; third, under the principle of “not blindly stopping or reducing loans,” most of the company’s bank lenders have not taken measures to suspend or reduce loans; fourth, the company has been deeply engaged in this industry for nearly 30 years, with strong brand influence, a solid market foundation, robust innovation capabilities, and a stable core team.

In Asia CreaTech’s view, the current difficulties are temporary. “The company is actively implementing multiple measures to resolve the crisis, including business transformation to improve quality and efficiency, disposal of idle or low-efficiency assets, proactive negotiations with creditors to resolve debts, and engaging potential strategic investors. As the real estate and construction markets gradually recover, and with the growth of stock market businesses such as urban renewal, the company’s crisis measures will gradually take effect, and operational quality will recover in an orderly manner.”

Jiemian reporters noted that by the end of 2025, the company and approximately 40 subsidiaries have opened a total of 211 settlement accounts. Of these, 48 are currently operational, while 163 accounts have been frozen due to litigation, with a total frozen amount of 77.315 million yuan. As of December 31, 2025, the company’s cash balance was 98.2875 million yuan, with the frozen amount accounting for 78.66% of the end-of-year cash.

According to Asia CreaTech’s disclosures, as of now, there are 485 unresolved cases involving the company as defendant or enforcer, including ongoing and unresolved judgments, with a total amount of 1.259 billion yuan. Among these, 37 cases involve amounts over 3 million yuan. Assuming the maximum risk exposure based on the plaintiff’s claims and enforcement requests, and assuming the debt repayment date is December 31, 2026, with interest calculated to the expected repayment date, the maximum risk exposure is 1.188 billion yuan.

Cover image source: Jiemian Media Library