Haichang New Materials 2025 Annual Report Analysis: Operating Cash Flow Drops 37.19%, Net Profit Excluding Non-recurring Gains Decreases 23.19%

Operating Revenue Analysis

In 2025, Haichang New Materials achieved operating revenue of 267,042,742.85 yuan, a 10.22% decrease compared to 297,427,206.81 yuan in the same period last year. From the revenue structure:

• Electric tool component revenue was 209,843,766.39 yuan, accounting for 78.58% of total revenue, down 14.72% year-on-year, remaining the company’s core income source but showing a significant decline.
• Automotive component revenue was 45,969,234.59 yuan, accounting for 17.22%, up 15.24% year-on-year, becoming the main driver of revenue growth.
• Metal Injection Molding (MIM) product revenue was 32,689,612.28 yuan, a 29.24% increase year-on-year, with the proportion rising to 12.25%, demonstrating good development potential.

Net Profit and Non-Recurring Profit Analysis

2. Net Profit: In 2025, net profit attributable to shareholders of the listed company was 55,224,078.48 yuan, a 22.47% decrease from 71,225,797.26 yuan last year, with a decline greater than revenue, indicating increased pressure on profitability.
3. Non-Recurring Net Profit: Net profit after deducting non-recurring gains and losses was 49,304,330.05 yuan, down 23.19% year-on-year, with a larger decline than net profit, suggesting that the decrease in core business profitability is the main reason for profit reduction, and non-recurring gains and losses have limited support for profits.

| Profit Indicators | | — | — | — | — | | 2025 (Yuan) | 2024 (Yuan) | YoY Change | | — | — | — | — | | Net profit attributable to parent | 55,224,078.48 | 71,225,797.26 | -22.47% | | Non-recurring net profit attributable to parent | 49,304,330.05 | 64,188,239.20 | -23.19% |

Earnings Per Share Analysis

2. Basic Earnings Per Share: In 2025, it was 0.2214 yuan/share, compared to 0.2855 yuan/share in the same period last year, a 22.45% decline, consistent with the net profit decrease.
3. Non-recurring EPS: Non-recurring EPS was 0.1976 yuan/share, significantly lower than last year’s 0.2572 yuan/share (calculated from non-recurring net profit divided by share capital), reflecting a larger decline in profitability per share after excluding non-recurring items.

Cost and Expense Analysis

In 2025, the company’s total period expenses (sales + management + R&D + financial expenses) were 28,690,746.69 yuan, an increase from 24,651,521.40 yuan last year, mainly due to higher R&D expenses.

Sales Expenses

Sales expenses were 4,322,207.79 yuan, down 8.90% from 4,744,325.95 yuan last year, mainly due to possible adjustments in sales strategies or reduced related costs due to lower revenue scale.

Management Expenses

Management expenses were 15,840,949.96 yuan, a slight decrease of 2.57% from 16,259,537.70 yuan last year, remaining relatively stable. Notably, intermediary agency fees increased from 1,330,297.75 yuan to 2,340,243.96 yuan, a significant rise, possibly related to the company’s acquisitions and capital operations such as communications.

Financial Expenses

Financial expenses were -6,875,139.20 yuan, compared to -11,250,035.21 yuan last year, an increase of 38.89% (expenses becoming less negative). The main reasons are increased exchange losses and decreased interest income. In 2025, interest income was 7,740,786.51 yuan, down 1,710,321.93 yuan from last year’s 9,451,108.44 yuan; foreign exchange gains/losses were 801,551.60 yuan, compared to -1,882,510.78 yuan last year, with exchange gains turning into losses, significantly impacting financial expenses.

R&D Expenses

R&D expenses were 15,401,728.14 yuan, up 3.38% from 14,897,692.96 yuan last year. Regarding composition, personnel costs increased from 7,388,208.24 yuan to 8,406,350.64 yuan, a 13.78% rise, indicating increased investment in R&D personnel; material and direct input costs decreased from 5,178,564.22 yuan to 4,374,157.36 yuan, down 15.53%. The company carried out multiple R&D projects, such as high-strength lightweight steel mobile phone hinges based on injection molding technology and face gear design technology, some of which have completed R&D and achieved sales.

R&D Personnel Overview

In 2025, the company had 49 R&D personnel, a 4.26% increase from 47 last year. The proportion of R&D staff rose from 14.46% to 15.91%. The educational structure remained stable with 32 undergraduates and 2 master’s degree holders, supporting the company’s technological innovation.

| R&D Personnel Indicators | | — | — | — | — | | 2025 | 2024 | Change Rate | | — | — | — | — | | Number of R&D personnel (people) | 49 | 47 | 4.26% | | R&D personnel proportion | 15.91% | 14.46% | 1.45% | | Undergraduates | 32 | 32 | 0.00% | | Master’s degree | 2 | 2 | 0.00% |

Cash Flow Analysis

Net Cash Flow from Operating Activities

In 2025, net cash flow from operating activities was 49,968,631.98 yuan, a significant decrease of 37.19% from 79,553,077.30 yuan last year. The decline is much larger than revenue and net profit. The main reasons include a drop in cash received from sales of goods from 256,269,568.05 yuan to 255,045,467.91 yuan, and a sharp decrease in tax refunds received from 12,611,254.26 yuan to 6,906,689.70 yuan. Although cash paid for purchasing goods decreased, the reduction was less than inflows. This indicates a weakened ability to generate cash from operations, possibly due to slower accounts receivable collection and declining downstream customer payment capacity.

Net Cash Flow from Investing Activities

Investing cash flow was 17,274,649.35 yuan, turning positive from -74,522,473.27 yuan last year, a 123.18% increase. The main reason is a significant reduction in cash outflows for investments, from 602,314,920.52 yuan to 349,903,564.96 yuan, with investment payments decreasing from 593,300,000.00 yuan to 216,000,000.00 yuan, while cash recovered from investments remained at 359,000,000.00 yuan.

Net Cash Flow from Financing Activities

Financing cash flow was -30,509,986.40 yuan, compared to -39,451,809.08 yuan last year, a 22.67% decrease. The main reason is a reduction in cash outflows for financing activities, from 41,083,363.84 yuan to 32,668,454.09 yuan. Dividends paid increased from 20,063,935.41 yuan to 30,001,544.33 yuan, while other outflows decreased significantly.

| Cash Flow Indicators | | — | — | — | — | | 2025 (Yuan) | 2024 (Yuan) | Change Rate | | — | — | — | — | | Net cash flow from operating activities | 49,968,631.98 | 79,553,077.30 | -37.19% | | Net cash flow from investing activities | 17,274,649.35 | -74,522,473.27 | 123.18% | | Net cash flow from financing activities | -30,509,986.40 | -39,451,809.08 | -22.67% |

Potential Risks Analysis

2. Major Customer Concentration Risk: The top five customers account for 69.19% of main business revenue. High customer concentration means that if key customers’ demand declines or relationships change, it could significantly impact the company’s performance.
3. Market Concentration Risk: Nearly 80% of revenue comes from electric tool components. A downturn in the downstream electric tool industry could directly affect the company’s results. Although the company is expanding into automotive and new energy sectors, these require time to develop.
4. Macroeconomic Fluctuation Risk: Increased global macroeconomic uncertainty, trade frictions, and geopolitical conflicts may slow down global economic growth, affecting downstream demand and orders.
5. Exchange Rate Risk: Over 50% of sales are overseas, with a high proportion settled in USD and other foreign currencies. Exchange rate fluctuations can impact foreign exchange gains/losses and product competitiveness. In 2025, exchange gains turned into losses, affecting financial expenses.
6. Labor Cost Increase Risk: Domestic labor costs continue to rise, potentially squeezing profit margins. Although automation investments help, long-term pressure remains.
7. Acquisition and External Investment Risks: In 2025, the company acquired a 51% stake in Xinwei Communications and established subsidiaries in Singapore and Vietnam. Risks include integration challenges, changes in overseas policies and legal environments. Poor integration could impact performance.
8. Commodity Price Fluctuation Risks: Rising prices of raw materials like copper increase production costs. In 2025, copper price increases have already pressured gross profit margins, and future volatility will continue to affect cost control.

Executive and Senior Management Compensation Analysis

• Chairman Zhou Guangrong: Pre-tax remuneration during the reporting period was 44.61 thousand yuan.
• General Manager Xu Jiping: Pre-tax remuneration was 88.32 thousand yuan, the highest among senior executives.
• Vice Presidents: Ding Wei received 62.84 thousand yuan; She Xiaojun 22.39 thousand yuan; Huang Yanyu 24.85 thousand yuan; You Jinming 31.93 thousand yuan. There are some differences in vice presidents’ compensation.
• Chief Financial Officer Xu Weihong: Pre-tax remuneration was 24.01 thousand yuan.

Overall, in 2025, Haichang New Materials faces challenges such as declining revenue, shrinking profits, and a significant reduction in operating cash flow. While business segments like automotive components and MIM products show growth potential, core business pressures remain. The company’s investments in R&D and overseas expansion also carry risks. Investors should closely monitor the progress of business transformation and the effectiveness of risk mitigation measures.

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Editor: Xiaolang Kuaibao