Wansheng Co., Ltd. Accrues Nearly 1.1 Billion Yuan in Asset Impairment Loss; Revenue Increased Last Year but Net Profit Attributable to Parent Company Turned from Profit to Loss

Everbright News Reporter | Wen Duo Everbright Editor | Huang Bowen

After the market close on March 23, Wansheng Co., Ltd. (SH603010, stock price 10.49 RMB, market capitalization 6.185 billion RMB) disclosed its 2025 annual report. The report shows that the company achieved operating revenue of 3.378 billion RMB in 2025, a year-on-year increase of 13.98%; net profit attributable to shareholders was -960 million RMB, turning from profit to loss.

This significant contrast was mainly caused by an asset impairment loss of 1.097 billion RMB. The company stated that the Shandong Weifang base was affected by capacity adjustments, relocations, and other factors, resulting in current capacity operations unable to cover the entire investment scale of the base. After impairment testing, signs of asset impairment were confirmed.

While recognizing impairment losses for the Shandong Weifang base, the company’s project for producing 32,000 tons of phosphorus ester flame retardants annually in Thailand is progressing smoothly.

Impairment Losses for Shandong Weifang Base

According to Wansheng Co., Ltd.’s 2025 annual report, the company’s performance shifted from profit to loss, with net profit attributable to shareholders at -960 million RMB, compared to a profit of 103 million RMB in the same period last year. Regarding this drastic change, the company explained in the financial report that the main reason was “provision for impairment of long-term assets showing signs of impairment.”

Data from the financial report shows that this impairment provision amount is quite remarkable. In 2025, the total asset impairment loss provision reached 1.097 billion RMB, compared to 84.2727 million RMB in the same period last year. Among these, provisions for impairment of fixed assets, construction in progress, and intangible assets totaled 964 million RMB.

For this large impairment, Wansheng Co. pointed to its production base in Shandong. The company stated in the annual report that, based on industry competition patterns and development trends, it adjusted the product structure and capacity layout of some bases in a timely manner.

Meanwhile, to avoid international trade barriers and promote its global strategy, the company relocated part of the capacity for flame retardants from the Shandong Weifang base to its Thailand facility. Due to capacity adjustments, relocations, ramp-up issues, and declining product gross margins, the existing capacity’s operating performance could not cover the entire investment scale of the base. Impairment testing confirmed signs of asset impairment.

Thailand’s New Base Becomes a “Bridgehead” for Market Expansion

Although the net profit attributable to shareholders showed a huge loss, Wansheng Co. achieved double-digit year-on-year growth in operating revenue in 2025. This growth mainly came from the full-year contribution of Guangzhou Entropy New Materials Co., Ltd., a subsidiary consolidated from November 2024, in 2025.

Excluding the consolidation factor, the core profitability of the company’s main business faces challenges. Polymer functional additives, as the company’s core business, generated revenue of 2.23 billion RMB in 2025, a 15.77% increase, accounting for 66.02% of total revenue. The gross margin for this business was 23.30%, roughly the same as the previous year, indicating strong and stable profitability.

However, the annual report also pointed out that changes in the supply and demand landscape for the company’s main product, flame retardants, have led to a decrease in per-ton gross profit.

Additionally, facing fierce domestic market competition and challenges from international trade barriers, Wansheng is accelerating its global capacity deployment. The company explicitly stated in the financial report that part of the capacity at the Shandong Weifang base will be relocated to Thailand to avoid trade barriers. Currently, the construction of the Thailand production base is progressing smoothly; the main project for producing 32,000 tons of phosphorus ester flame retardants annually is nearly complete, with core equipment installed. It is expected to begin trial production in the first half of 2026 to meet demand from the US and European markets.

In its 2026 operational plan, management emphasized “ensuring the smooth commissioning of the Thailand base” and positioned it as a “bridgehead” for market expansion. The success or failure of this strategic pivot could be crucial in determining whether Wansheng can emerge from its current profitability difficulties.

Cover image source: AIGC