Sichuan Hongda Co., Ltd. 2025 Annual Report Interpretation: Non-GAAP Net Profit Plummets 764.87% Year-over-Year; R&D Expenses Surge 925.92%

Core Profitability Indicators Analysis

Operating Revenue: Up 11.25% Year-over-Year, Metallurgy Industry as Main Growth Driver

In 2025, the company achieved an operating revenue of 3.793 billion yuan, an increase of 11.25% year-over-year, with steady expansion in revenue scale. By industry, metallurgy revenue was 1.722 billion yuan, a significant increase of 28.12%, becoming the main growth engine; chemical industry revenue was 1.889 billion yuan, a slight decrease of 2.96%; hotel industry revenue was 15.19 million yuan, down 11.05% year-over-year.
From the product perspective, zinc metal and by-products revenue was 1.722 billion yuan, up 28.12%, mainly driven by increased sales volume; phosphate series products revenue was 1.191 billion yuan, up 4.65%; compound fertilizer revenue was 499 million yuan, down 9.83%; synthetic ammonia revenue was 191 million yuan, down 20.60%.

Net Profit: Turned from Profit to Loss, Loss of 74.3087 Million Yuan

In 2025, net profit attributable to shareholders of the listed company was -74.3087 million yuan, turning from profit to loss compared to a profit of 36.11 million yuan in the same period last year. The main reasons include: zinc product market prices under pressure, processing fees for zinc concentrates declining, increasing raw material costs, and losses in zinc smelting; intensified competition in synthetic ammonia market leading to lower selling prices, significant losses in natural gas chemical business; in the phosphate chemical sector, both volume and price of compound fertilizer declined, while a sharp rise in sulfur prices increased phosphate production costs, resulting in a year-over-year profit decline.

Deducting Non-Recurring Gains and Losses Net Profit: Loss of 87.2036 Million Yuan, Down 764.87% YoY

Net profit attributable to shareholders after deducting non-recurring gains and losses was -87.2036 million yuan, a sharp decrease of 764.87%, indicating significant pressure on core business profitability. The substantial decline in non-recurring profit is mainly due to rising raw material prices and product price pressures, greatly weakening core business profitability.

Basic Earnings Per Share and Non-Recurring EPS

In 2025, basic earnings per share was -0.0318 yuan/share, down 278.65%; non-recurring EPS was -0.0373 yuan/share, down 673.85%. The significant decline in EPS reflects a marked deterioration in the company’s profitability.

In-Depth Analysis of Expense Structure

Overall Expenses: R&D Expenses Surge, Financial Expenses Drop Significantly

In 2025, total expenses were 215.4959 million yuan, up 12.03% year-over-year, with notable changes in expense structure. R&D expenses increased sharply, while financial expenses decreased significantly due to debt repayment; selling and administrative expenses slightly decreased.

R&D Expenses: YoY Surge of 925.92%, Expansion of R&D Projects

In 2025, R&D expenses reached 14.9301 million yuan, a substantial increase of 925.92%. The company carried out multiple R&D projects including efficiency improvements and consumption reduction in electrolytic zinc systems, NOx reduction in rotary kiln flue gases, upgrades to wet-process phosphoric acid systems, new fertilizer product development, harmless treatment of phosphogypsum, and recovery of valuable metals from zinc concentrates, significantly increasing R&D investment.

R&D Personnel: Stable Team Size, Over 70% Aged 50-60

As of the end of 2025, the company had 103 R&D personnel, accounting for 4.2% of total staff. Education structure: 5 master’s degree, 38 bachelor’s, 46 college diploma, 14 high school or below. Age distribution: 4 under 30, 6 between 30-40, 19 between 40-50, 74 between 50-60, with 71.84% aged 50-60, indicating an overall older R&D team.

Cash Flow and Capital Structure Analysis

Overall Cash Flow: Large Net Inflow from Financing, Operating Cash Flow Turns Negative

In 2025, net increase in cash and cash equivalents was 1.066 billion yuan, a significant rise of 599.99%, mainly driven by a large net inflow from financing activities.

Operating Cash Flow: From Positive to Negative, Cash Outflows Significantly Increased

Operating cash outflow was 4.926 billion yuan, up 43.83%, mainly due to shift from bank acceptance bills to cash payments for procurement, and settlement of previous payables, leading to a large increase in cash outflows. Net operating cash flow changed from a net inflow of 2.51 billion yuan last year to a net outflow of 3.23 billion yuan.

Investing Cash Flow: Larger Outflows, Increased Fixed Asset Investment

Investing cash outflow was 97.3719 million yuan, up 69.12%, mainly used for equipment upgrades, environmental improvements, and other project investments. The net cash outflow from investing activities increased by 45.8714 million yuan compared to last year.

Financing Cash Flow: Targeted Private Placement Significantly Boosts Net Inflow

Financing cash inflow was 3.753 billion yuan, with 2.835 billion yuan from targeted private placement to specific investors such as Shudao Group; outflows were 2.267 billion yuan mainly for debt repayment and profit distribution. The net inflow from financing activities turned from a net outflow of 48.5996 million yuan last year to a net inflow of 1.486 billion yuan, greatly strengthening the company’s capital base.

Key Management Compensation

In 2025, total compensation for key management was 4.8184 million yuan, down 46.30%, mainly due to the company’s losses in 2025, leading to performance-linked salary adjustments.

• Chairman Qiao Shengjun: Received pre-tax remuneration of 769,500 yuan during the reporting period, and increased holdings of 96,300 shares via centralized bidding.
• General Manager Huang Jianjun: Received pre-tax remuneration of 766,700 yuan, and increased holdings of 78,200 shares via centralized bidding.
• Executive Vice President Shuai Wei: Received pre-tax remuneration of 714,600 yuan, and increased holdings of 32,000 shares via centralized bidding.
• CFO Tang Chunyun: Appointed in February 2026, did not receive salary during the reporting period; compensation paid by related parties.

Main Risk Warnings

Macroeconomic and Industry Cyclicality Risks

The company’s main businesses in chemical and non-ferrous metals zinc smelting lack supporting phosphate and zinc mines, making raw material costs highly influenced by macroeconomic and industry policies. Phosphating involves high phosphate ore prices and sulfur costs, impacting production costs; downstream agricultural product prices are low, and extreme weather affects fertilizer demand. Zinc smelting faces capacity releases and demand segmentation, with high volatility in zinc prices and raw material costs.

Market Competition Risks

In the phosphate chemical sector, high-end product competition is fierce, and demand for ammonium phosphate fluctuates with new energy industry trends; synthetic ammonia market is squeezed by coal-based production cost advantages, with ongoing risks of uneven natural gas supply; zinc smelting industry capacity expansion and competition for high-value products pose challenges to market share and profitability.

Environmental and Safety Production Risks

All production units are key environmental regulatory entities, facing high environmental and safety risks. Insufficient environmental investment or inadequate safety management could lead to penalties or accidents, affecting operations.

Resource Guarantee and Phosphogypsum Disposal Risks

The company relies entirely on external procurement of phosphate and zinc concentrates, making raw material supply stability and price fluctuations critical. Phosphogypsum disposal is a key factor limiting sustainable development of phosphate chemical operations; if disposal channels are not smooth, it will impact normal production.