VC Price Increase, Q1 Net Profit Expected to Surge Over 22 Times - Can Fuxiang Pharmaceutical Sustain Such Performance?

In the first quarter of 2026, net profit is expected to increase by over 22 times. How did Fuxiang Pharmaceutical (SZ300497, stock price 14.17 yuan, market value 7.633 billion yuan) achieve this? The answer is the rising trend in VC (Vinyl Carbonate) prices.

On March 23, Fuxiang Pharmaceutical disclosed its 2025 performance brief and first-quarter 2026 earnings forecast. In Q1 2026, the company’s net profit is projected to be between 52 million and 75 million yuan, a year-on-year increase of 2222.67% to 3250.01%.

Fuxiang Pharmaceutical stated that benefiting from the continuous improvement in the new energy industry, steady growth in the demand for power batteries, and rapid explosion in the demand for energy storage batteries, upstream lithium battery materials demand has continued to rise. The company’s lithium battery electrolyte additive business is performing well, with core products like VC and FEC (Fluorinated Ethylene Carbonate) increasing in both volume and price, driving significant year-over-year growth in performance.

Electrolyte additive business has been unprofitable for three consecutive years

Originally, Fuxiang Pharmaceutical’s main business was the research, development, production, and sales of raw materials and intermediates for anti-infection drugs. A few years ago, the company entered the lithium battery electrolyte additive field. In 2021, Fuxiang Pharmaceutical also began investing in VC.

According to the 2021 annual report, during the reporting period, Fuxiang Pharmaceutical’s subsidiary Weifang Aotong invested in the “Annual Production of 6,000 Tons of Lithium Battery Additives Project.” Once completed, this project will produce 5,000 tons of VC and 1,000 tons of FEC annually. Additionally, its subsidiary Jingdezhen Fuxiang invested in the “Annual Production of 10,000 Tons of VC and 2,000 Tons of FEC Project.” After full completion, the company will have an annual capacity of 15,000 tons of VC and 3,000 tons of FEC.

However, as the VC shortage and price surge ended, Fuxiang Pharmaceutical’s electrolyte additive business, including VC, fell into annual losses.

In 2022, the electrolyte additive business revenue was 147 million yuan, accounting for 8.95% of the company’s total revenue, with a gross profit margin of -31.93%.

In 2023, revenue from this business was 275 million yuan, with a gross profit margin of -6.76%; in 2024, revenue was 253 million yuan, with a gross profit margin of -8.39%. In the first half of 2025, revenue was 122 million yuan, with a gross profit margin of -0.34%.

Industry research firm Xinluo Lithium believes that over the past two to three years, VC market prices have remained low, with the lowest price reaching 43,000 yuan/ton, causing widespread losses among manufacturers. During this period of low prices, small factories could no longer sustain excessive losses and shut down, while large factories remained at full capacity.

Performance is heavily influenced by VC prices

After three consecutive years of losses, Fuxiang Pharmaceutical persisted in producing VC and gradually became a major VC producer. According to Xinluo Lithium, in the global lithium battery additive VC market in 2025, Shandong Geyuan, Huasheng Lithium, and Suzhou Huayi are the top three players. Fuxiang Energy and Fuxiang Pharmaceutical rank fourth and fifth.

With the rise in VC prices, the performance forecast shows that Fuxiang Pharmaceutical will turn profitable in 2025. In that year, the company’s revenue is expected to reach 1.185 billion yuan, a slight increase of 0.61% year-on-year, with a net profit of -53.07 million yuan. Meanwhile, the company expects net profit in Q1 2026 to be between 52 million and 75 million yuan, a year-on-year increase of 2222.67% to 3250.01%.

Fuxiang Pharmaceutical explained that in the new energy lithium battery electrolyte additive business, driven by the continuous growth in demand for power batteries and the rapid surge in energy storage batteries, upstream lithium battery materials demand has increased, leading to a significant rise in the prices of VC and FEC in Q4 2025.

It is evident that the company’s performance in 2025 and the first quarter of 2026 is greatly affected by VC prices. So, what is the future supply and demand outlook for VC?

Xinluo Lithium published on January 13 that in 2026, VC market demand will significantly increase, with an expected output of 100,000 tons, a 45% year-on-year increase.

From the perspective of market supply and demand balance and operating rates, in 2025, the VC market’s operating rate will reach as high as 86%. As demand increases in 2026, effective production capacity will also grow, but the growth rate of capacity will surpass demand, leading to a slight decrease in the operating rate. In 2027, demand will continue to rise, but the growth of effective capacity will slow down, and the operating rate will slightly increase to 79%.

(Source: Daily Economic News)