On March 12, Ningxia Baofeng Energy Group Co., Ltd. (600989.SH) released its 2025 annual performance report. Despite cyclical fluctuations in the chemical industry, the company achieved significant growth in both operating revenue and net profit attributable to shareholders, exceeding the 10-billion-yuan mark for the first time. The report indicated a 69.91% year-on-year increase in adjusted net profit attributable to shareholders, while operating cash flow also rose strongly to 16.851 billion yuan, demonstrating resilient profitability through industry cycles and further solidifying its cost advantages as a leader in coal-to-olefins production.
The most direct driver of this performance growth was the full-capacity operation of the Inner Mongolia base’s 3-million-ton-per-year coal-to-olefins project, the largest single-plant facility of its kind globally. This expansion brought the company’s total olefins production capacity to nearly 6 million tons per year, ranking it first in China’s coal-to-olefins sector. As a result, annual production and sales of polyolefins doubled compared to the previous year, with both polyethylene and polypropylene registering triple-digit growth rates, fully unleashing economies of scale.
The combination of capacity expansion and cost control has built a solid core competitive edge for the company. A Shanxi Securities research report noted that the Inner Mongolia project’s unit investment was reduced to 160 million yuan per 10,000 tons of polyolefin output, significantly below the industry average of 200 to 230 million yuan. With coal prices declining in 2025, the advantages of the coal-to-olefins route became more pronounced. Despite narrowing industry margins, the company maintained a per-ton gross profit of 2,500 yuan for olefins, with a gross margin of 38.16%, highlighting its strong anti-cyclical capabilities.
Behind this cost competitiveness lies dual support from technology and integrated supply chains. The company has adopted advanced DMTO-III technology, reducing energy consumption per 10,000 yuan of output value by 9.42% year-on-year. At the same time, its circular economy model enhances flexibility in responding to raw material price fluctuations. According to a First Capital Securities research report, amid a relatively relaxed domestic coal supply-demand balance and favorable international coal prices, the profitability of coal-to-olefins production is expected to expand further, deepening the company’s cost moat.
Having crossed the 10-billion-yuan threshold, Baofeng Energy continues to advance its capacity expansion plans. The fourth olefins project in Ningdong is scheduled to commence operations by the end of 2026, while preparatory work for the Xinjiang project and the second phase of the Inner Mongolia project is steadily progressing. The company is replicating its proven cost-control model and scale advantages across a broader operational footprint. Against the backdrop of the energy transition, Baofeng Energy’s solid performance underscores that genuine cost leadership remains the strongest foundation for sustained growth through market cycles.
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