Relay industry leader Hongfa Technology Co.,Ltd. (SH 600885), with its share price at 28.15 yuan and a market capitalization of 43.565 billion yuan, released its 2025 annual report on the evening of April 1. The report indicates the company holds the top global market share in the relay sector. For the full year 2025, Hongfa Technology achieved operating revenue of 17.202 billion yuan, representing a year-on-year increase of 21.98%. Net profit attributable to shareholders reached 1.758 billion yuan, up 7.76% compared to the previous year.
Despite these seemingly strong results, the profitability of the company's core relay products, considered its mainstay business, weakened in 2025. According to the financial report, relay products contributed 15.703 billion yuan in revenue, accounting for over 90% of the company's total revenue. However, the gross margin for these products was only 35.66%, a decrease of 2.33 percentage points from the previous year. This decline is potentially linked to changes in raw material costs.
Public information shows that the primary raw materials for Hongfa's relay products include copper, silver, enameled wire, and engineering plastics. The company has previously stated that prices for these key materials are influenced by fluctuations in the international commodity markets, and such price volatility directly impacts product profitability and the company's working capital.
In 2025, prices for copper and silver experienced significant increases, a trend that drew investor attention. Regarding the impact of rising raw material costs on gross margins, Hongfa Technology responded on an investor relations platform in late October 2025. The company noted that relay products benefit from strong economies of scale. It stated that the overall business scale achieved good growth in the first three quarters of 2025, which helped partially offset the effects of material price hikes. Furthermore, the company said it is continuously optimizing its products and working proactively with customers to realize cost reductions.
Nevertheless, the 2025 annual report suggests the company's profitability did not show significant improvement. The financial report reveals that in the fourth quarter of 2025, Hongfa's net profit attributable to shareholders fell by 20.42% year-on-year and dropped by 43.09% compared to the previous quarter.
Additionally, regarding accounts receivable, the amount reached 4.144 billion yuan as of the end of 2025. This represents an increase of approximately 26.69% compared to the 3.271 billion yuan recorded at the end of the previous year.
Comments