Zhejiang Wansheng Co.,Ltd. (603010.SH), a leading A-share producer of phosphorus-based flame retardants, reported a starkly contrasting annual performance on the afternoon of March 23. According to the company's disclosed 2025 annual report, operating revenue reached 3.378 billion yuan, a year-on-year increase of 13.98%, marking a three-year high. However, net profit attributable to shareholders recorded a loss exceeding 960 million yuan, a drastic plunge of 1028.55% compared to the previous year, resulting in a rare substantial loss since its listing.
The cause behind these sharply divergent figures is a performance "earthquake" triggered by significant asset impairments. Of greater market attention is the fact that prominent investor Guo Guangchang has faced floating losses exceeding 800 million yuan since taking control in 2021.
Public information shows that Zhejiang Wansheng Co.,Ltd. is one of the world's primary producers of organic phosphorus-based flame retardants. The company specializes in the R&D, production, and sales of these retardants, with main products including over 20 varieties across two major categories: polyurethane flame retardants and engineering plastic flame retardants. These are primarily used in aerospace, automotive, electronics, construction, and furniture sectors, with products exported to more than 20 countries and regions including the US, Europe, South America, South Korea, Japan, and Southeast Asia.
The company attributed the massive loss primarily to two factors: changes in the supply-demand dynamics of its main flame retardant products leading to decreased gross profit per ton, and a major asset impairment provision related to the proactive adjustment of production capacity layout, specifically the relocation of operations from the Weifang base in Shandong province to Thailand.
The annual report indicates that the company recorded impairment provisions for long-term assets such as fixed assets, construction-in-progress, and intangible assets totaling a substantial 964 million yuan in 2025. This massive impairment nearly accounts for the entire annual loss, directly causing a single-quarter loss of 1.01 billion yuan in Q4. It is important to note that this is an accounting adjustment under relevant standards and does not involve actual cash outflow.
The Shandong Weifang base bore the brunt of this impairment. The company explained in its performance report: "In response to industry competition and development trends, the company is timely adjusting the product mix and capacity layout of some bases. Concurrently, to mitigate international trade barriers and advance our global strategic layout, we are relocating part of the flame retardant production capacity from the Shandong Weifang base to the Thailand base. The Weifang base was affected by a combination of factors including capacity reduction due to adjustments, relocation, production ramp-up challenges, and declining product gross margins. The operating performance of the remaining capacity could not cover the investment scale of the entire base, and impairment tests confirmed indicators of related asset impairment."
According to company information, the Shandong Weifang production base project was officially launched in November 2021, following board approval for the investment and construction of an integrated project with an annual output of 550,000 tons of functional new materials. Construction began in February 2022. In February 2025, the wholly-owned subsidiary Shandong Wansheng planned an additional investment at the Weifang base to build an integrated project for producing 44,200 tons of high-end new materials annually, with an estimated total investment not exceeding 215 million yuan and a construction period from March 2025 to May 2027.
However, the actual progress of the Weifang base's production output fell short of expectations. The annual report shows that Zhejiang Wansheng Co.,Ltd. has six production bases: Zhejiang Linhai, Jiangsu Taixing, Shandong Jining, Shandong Weifang, Guangdong Zhuhai, and Thailand (under preparation). Excluding the Thailand base under construction, the capacity utilization rates for 2025 were 39.21% for the Shandong Hanfeng plant, 46.93% for the Jiangsu Taixing plant, and 64.17% for the Zhejiang Linhai plant. In stark contrast, the Shandong Weifang base's capacity utilization rate was only 8.40%.
Contrasting sharply with the dismal profit performance was the company's solid revenue performance. In 2025, the company achieved operating revenue of 3.378 billion yuan, a 13.98% year-on-year increase.
The acquisition of Guangzhou Shannon New Materials in November 2024, which was fully consolidated for the entire reporting period in 2025, was a primary contributor to the revenue growth. The annual report stated, "Operating revenue increased by 13.98% compared to the same period last year, mainly due to the inclusion of subsidiary Guangzhou Shannon, acquired in November 2024, which is consolidated for the full reporting period this year (whereas only the last two months were consolidated in the same period last year)."
According to the report, Shannon New Materials achieved revenue of 466 million yuan and a net profit of 80.4 million yuan in 2025, indicating initial signs of integration synergies.
Nevertheless, the revenue growth did not fully translate into profits. Besides the profit erosion from the large impairment and increased depreciation from new capacity, the company explained in its report that changes in the supply-demand dynamics of the main flame retardant products led to a decrease in gross profit per ton. Additionally, selling expenses in 2025 grew by 48.08% year-on-year to 60.67 million yuan, and R&D expenses increased by 28.13% to 140 million yuan, highlighting significant pressure on the cost side.
Although this marks the company's first annual loss since its initial public performance disclosure in 2011, this substantial loss follows four consecutive years of declining net profit. This situation inevitably draws attention to the capital magnate Guo Guangchang, who took over five years ago.
In 2021, control of Zhejiang Wansheng Co.,Ltd. changed hands. Investor Guo Guangchang, through the listed company Nanjing Iron & Steel Co., Ltd. which he controls, took over. The transaction involved share transfer and a private placement, with a total investment of 2.65 billion yuan to acquire 174 million shares (approximately 29.5645% of total shares) and all associated rights.
At the time, this deal was seen as a significant move by the Fosun group into the chemical new materials sector. That same year, Zhejiang Wansheng Co.,Ltd. also invested an additional 110 million yuan in Fujian Zhongzhou, increasing its total stake to 66.56%. Fujian Zhongzhou was then planning to build the "Sanming Lithium-ion Battery Electrolyte Additive and Conductive New Materials Project." Furthermore, a subsidiary of Wansheng had ten-thousand-ton capacity for an intermediate used in lithium battery electrolyte solute lithium hexafluorophosphate. Embracing the new energy sector was widely considered a key reason for Guo Guangchang's takeover of Wansheng.
However, after the takeover, the company's performance did not climb as expected; Guo Guangchang's investment coincided with the peak of Wansheng's performance. Financial reports show that from 2022 to 2025, Zhejiang Wansheng Co.,Ltd.'s net profit attributable to shareholders declined for four consecutive years, recording 365 million yuan, 184 million yuan, 103 million yuan, and finally a loss of -960 million yuan, respectively. Calculated from the pre-takeover peak in 2021 (net profit attributable to shareholders of 824 million yuan, a 109.67% year-on-year increase), the company's profitability has shown a year-on-year declining trend.
Based on the 2023 and 2024 financial reports, factors such as a deteriorating external macro-environment (geopolitical conflicts, inflation, pandemic effects) coupled with industry capacity expansion, leading to declining product volumes and prices and a continuously worsening supply-demand balance, along with the emergence of asset impairments, have been core reasons for the annual decline in company profits.
As of the market close on March 23, Zhejiang Wansheng Co.,Ltd.'s stock price was 10.49 yuan. With a total share capital of 590 million shares, the total market capitalization stands at 6.185 billion yuan. Excluding capital costs and dividends, based on Guo Guangchang's 29.5645% stake in Wansheng held through Fosun High Tech, his corresponding shareholding market value is approximately 1.828 billion yuan. Compared to the transaction price at the time of the takeover, his floating loss on the stake exceeds 800 million yuan.
Although the nearly billion-yuan impairment might help lighten the historical burden on the financial statements for 2026, the financial report indicates that production ramp-up still requires time: "The main construction of the Thailand project for 32,000 tons of phosphate ester flame retardants per year is largely completed. Core production equipment is entering the installation phase progressively, with efforts aimed at achieving trial production in the first half of 2026 and gradually releasing capacity."
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