In 2025, net profit surged by 280%, and Fangda Special Steel distributed nearly half of its profits as dividends, "maintaining an open attitude toward overseas acquisition opportunities."

In 2025, Fangda Special Steel Technology Co., Ltd. (“Fangda Special Steel” for short) (600507.SH) recorded total operating revenue of RMB 18.23B, down 15.43% year over year. However, in the same period, the company’s net profit attributable to shareholders surged 280.18% year over year, showing a stark contrast of “revenue declining while net profit grows significantly.” Meanwhile, the company plans to implement a RMB 453 million dividend, with the dividend amount accounting for 48.04% of net profit.

At an online earnings briefing held in the afternoon of March 31, regarding issues such as the logic behind profit growth, the reasons for the high dividend payout, product structure planning, and overseas market strategy, a reporter from the Huaxia Times asked Fangda Special Steel’s Chairman Liang Jianguo questions.

Liang Jianguo stated that the company’s 2025 performance growth came externally mainly from the “scissor gap” effect caused by a larger decline in upstream raw fuel and materials prices than the decline in downstream steel product prices. Internally, it came mainly from the reduction in unit manufacturing costs. In particular, spring flat steel effectively supported the company’s performance. In 2026, the company will carry out overseas business based on its own product structure, and will remain open to opportunities for acquisitions abroad. Also, according to Wu Aiping, Secretary to the Board of Directors of Fangda Special Steel, the company’s production and operations in the first quarter of 2026 remained stable, maintaining a “full production and full sales” status.

Spring flat steel gains momentum

According to the annual report, Fangda Special Steel belongs to “Manufacturing—Ferrous metal smelting and rolling processing,” with its main business including the processing of metallurgical raw materials and fuels, the manufacture and sale of ferrous metal smelting and its rolling-processed products and their by-products. In 2025, the company achieved operating revenue of RMB 18.23B, down 15.43% from the same period of the previous year, mainly due to lower prices of steel products. However, in the same period, Fangda Special Steel’s net profit attributable to shareholders of listed companies was RMB 942 million, up significantly by 280.18% year over year; after excluding non-recurring gains and losses, net profit attributable to shareholders was RMB 792 million, up 349.49% year over year.

Regarding the situation where revenue fell but net profit rose sharply, Liang Jianguo attributed it to the dual effect of “external cost tailwinds and internal management optimization.” Among them, externally it was mainly due to the scissor gap effect formed by the decline in upstream raw fuel and materials prices exceeding the decline in downstream steel product prices; internally, it mainly came from the company’s continuous refined management and optimization measures in areas such as raw material procurement, production processes, and energy utilization, thereby lowering unit manufacturing costs. It is understood that in 2025 the company’s operating cost was RMB 16.31B, down 19.96% year over year.

“Especially in terms of spring flat steel, the company has leveraged its advantages along the industrial chain, continuously solidified existing market share, expanded into incremental markets, and seized market opportunities, effectively supporting the company’s performance,” Liang Jianguo said.

The financial report shows that Fangda Special Steel’s main products include rebar, high-wire rods, spring flat steel, automotive leaf spring plates, iron concentrate fines, and so on. Among these product categories, spring flat steel has become the core support for earnings growth.

In 2025, spring flat steel performed strongly on both production and sales. It generated revenue of RMB 2.04B for the full year, up 29.61% year over year; gross margin was 17.67%, up 5.50 percentage points year over year. Production was 600.3 thousand tons, up 23.54%; sales were 594.2 thousand tons, up 21.99%. It is known that spring flat steel is mainly used in automotive steel leaf spring plates or air suspension guide arms. In 2025, China’s commercial vehicle market saw a modest recovery; heavy truck sales reached 600.3k units, up 27% year over year, providing strong support for demand for spring flat steel. Liang Jianguo said that the company will continue to increase R&D efforts for high-efficiency products like spring flat steel and actively expand the market.

By contrast, revenue from the company’s traditional businesses declined to some extent. For example, as the company’s largest source of performance, during the reporting period, rebar recorded revenue of RMB 594.2k, down 12.16% year over year; gross margin was 4.65%, up 3.39 percentage points year over year. Another main business, high-wire rods, recorded revenue of RMB 1.15M, down 8.17% year over year; gross margin was 6.48%, up 2.38 percentage points.

It is worth noting that although revenue declined, the gross margins of all the company’s steel products increased year over year. “Among them, the production and sales volumes of spring flat steel, automotive leaf spring plates, and high-wire rods, which have higher gross margin levels, are all increasing, while the production and sales volumes of rebar, which has a lower gross margin level, are declining. This indicates that the company has continuously optimized, adjusted, and upgraded its product structure,” a research report from Western Securities said.

On the basis of simultaneous improvements in performance and profitability, Fangda Special Steel also rolled out a high proportion dividend plan. For 2025, it proposed distributing RMB 2 cash dividend per 10 shares (including tax), with a total dividend amount of RMB 453 million. Liang Jianguo said that the increase in the company’s profit distribution ratio for 2025 was mainly because the company’s and the steel industry’s profit situation in 2025 showed some recovery. In the future, the company will continue to determine the specific profit distribution plan by taking a comprehensive view of the company’s profitability and development needs, from the perspective of safeguarding shareholders’ interests—especially those of minority shareholders—and actively return value to investors.

In addition, financial data shows that in 2025 the company’s gross margin increased from 4.80% in 2024 to 9.65%, up 4.85 percentage points year over year; net profit margin reached 5.20%, up 4.03 percentage points year over year; and the weighted average return on net assets (ROE) was 9.69%, up 7.01 percentage points year over year. The asset-liability ratio was 46.32%, down 3.87 percentage points year over year, and the financial structure continued to improve. As of the end of 2025, the company’s cash and cash equivalents were RMB 7.38B, accounting for nearly 30% of total assets, providing ample cash flow support for dividends.

Adhering to a “combination of common and specialty” product route

Based on industry development trends and looking ahead to 2026, Fangda Special Steel expects that the global economy will continue to face many uncertainties; factors such as escalating trade frictions and geopolitical conflicts will still affect overseas market demand. Meanwhile, the domestic economy will continue to recover steadily; growth-stabilization policies will continue to be implemented with strength. The steel industry will enter a new development stage characterized by “tight balance, optimized structure, and improved quality,” and the supply-demand pattern, product structure, and competitive landscape will be further optimized.

Based on the above judgments, the company has clearly stated that it will adhere to the “combination of common and specialty” product route, pursue a development path of “low cost, differentiation, and distinctive specialization,” maintain leadership in environmental protection technology, maintain leadership in overall process capability, and maintain industry-leading steel profitability per ton, ensuring the realization of the “two upgrades” strategic tasks.

In terms of production targets, in 2026 the company’s production and operating targets are 4.02 million tons of steel production and sales, with 110.23 thousand tons of plate spring production and 113.25 thousand tons of sales.

At the same time, the annual report also frankly acknowledges multiple risks it still faces. On the market side, structural fluctuations in demand, geopolitical conflicts, and domestic capacity supply pressure may squeeze product prices and export business. On the environmental protection side, as environmental protection standards rise and the “dual control” requirements for energy consumption will continue, environmental protection spending and carbon emissions costs will be continuously pushed up.

Regarding overseas markets, it is reported that Fangda Special Steel has already entered international high-end markets with spring flat steel, and the number of new products added to inventory increased 24.48% year over year. However, overseas revenue in 2025 was only RMB 110 million and decreased 17.29% year over year. The annual report explains that exports mainly go to regions including Southeast Asia, Africa, and the Americas. However, due to global trade protectionism, export business faces pressure.

Despite the current pressure on overseas exports, the company has not given up on overseas布局. Liang Jianguo said that the company will carry out overseas business based on its own product structure. For spring flat steel exports, the company will follow a principle of prioritizing efficiency and benefits rather than overly emphasizing expanding export volume, while remaining open to acquisition opportunities abroad. Fangda Special Steel’s General Manager Zeng Feijun added that recent conflict between the U.S. and Iran has caused shipping in the Strait of Hormuz to be disrupted, but the company’s export regions are mainly in Southeast Asia; in the short term, geopolitical conflicts in the Middle East will not have a significant impact on the company’s export orders and logistics costs. “The company will proactively assess geopolitical risks in business regions and prioritize developing markets in regions with relatively stable political environments,” Zeng Feijun emphasized.

“2026 is a critical window period for overseas expansion by steel companies.” Wang Guoqing, Director of the Lang Steel Research Center, suggested that in terms of overseas expansion, steel companies should abandon low-end relocation, and follow a route of “green steel + high-end + localization + industrial chain synergy.” Optimize the export structure, expand emerging markets along the “Belt and Road,” prioritize deployments in the Middle East, Southeast Asia, and North Africa, and increase the proportion of high-end product exports to respond to trade barriers. In addition, companies should strengthen cost control, deepen industrial chain synergy, jointly develop with downstream manufacturing companies, stabilize supply and demand relationships, and enhance supply-chain resilience.

Of note is that on March 13, Fangda Special Steel disclosed that it plans to sell a 1.62% stake it holds in Donghai Securities Co., Ltd. (“Donghai Securities” for short) to Soochow Securities Co., Ltd. (“Soochow Securities” for short). The transaction corresponds to 30 million shares, with a book cost of RMB 30 million. Fangda Special Steel’s Chief Financial Officer Jian Peng explained that the company’s sale of its stake in Donghai Securities mainly aims to optimize the company’s asset structure, revitalize existing assets, and align with the company’s strategic development plan and the interests of all shareholders. Jian Peng emphasized that the company will continue to focus on its steel business strategy, while closely watching opportunities in the upstream and downstream of the industrial chain and in new productive forces related to its steel main business.

Bai Wenxi, Vice Chairman of the China Enterprise Capital Alliance, believes that the 2026 Two Sessions policy has clearly put the steel industry into a new stage of “deleveraging in volume and optimizing existing capacity.” This cycle will likely last for a considerable period. At present, the steel industry will enter a new normal of “relatively stable operations and break-even profitability.” In a steady range of output, the focus will be on optimizing the structure, moving from “competing on scale” to “competing on technology.” In this round of cycle, companies’ core competitiveness is reflected in three dimensions: high-end product structuring, green and low-carbon transformation capabilities, and industrial chain integration and digitalization levels. “In the future, the steel industry will show a pattern of ‘the winner among the survivors and the strong outcompete the weak,’ and high-quality development will be the only entry ticket.” Bai Wenxi told reporters.

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