In pursuit of a second growth engine, Haitian Water Group Co.,Ltd. (603759.SH) ventured into the solar photovoltaic sector, expanding into new energy and materials. However, the recently disclosed 2025 annual report and 2026 first-quarter report reveal that this strategic shift has not yielded the anticipated benefits. Instead, the company is grappling with a situation of rising revenue but declining profits.
Financial data shows that for the full year 2025, the company achieved operating revenue of 3.219 billion yuan, a sharp increase of 111.94% year-over-year. However, net profit attributable to shareholders was 177 million yuan, a decrease of 42.00% compared to the previous year. This trend continued into 2026. First-quarter revenue reached 1.514 billion yuan, surging 366.88% year-over-year, while net profit attributable to shareholders was only 3.8684 million yuan, a dramatic plunge of 92.25%.
The company's revenue has expanded multifold, yet profitability has declined. This divergence stems from the fact that the new energy materials business has not delivered high-quality growth. Instead, it has introduced multiple challenges, including deteriorating operating cash flow and rising debt ratios, placing the company's transformation path under severe strain.
**1. Low-Margin Solar Business Drags Performance as Traditional Core Environmental Business Weakens**
Founded in 2008 and listed on the Shanghai Stock Exchange in 2021, Haitian Water Group was originally a private environmental enterprise based in Southwest China, focusing on water supply, sewage treatment, and solid waste management. The traditional environmental business, characterized by stable cash flow and high margins, formed the company's performance foundation. In 2025, aligning with the "dual carbon" strategy, the company pursued a dual-drive model of "environmental protection + new energy & new materials," aiming to establish a development pattern of "dual core, diversified, and internationalized."
During the reporting period, the company completed two key acquisitions: the former Heraeus Photovoltaic Silver Paste business unit and the Dazhou waste-to-energy project. These moves formally entered the company into the new energy and materials sector. Financially, the most direct impact of these acquisitions was a significant boost to revenue scale. In 2025, operating revenue reached 3.219 billion yuan, a 111.94% increase. In Q1 2026, the new energy and materials business remained the primary growth driver, propelling total revenue up 366.88% year-over-year. Judging solely by revenue growth, the transformation appeared to start smoothly.
In terms of revenue composition for 2025, the new energy and materials business contributed 1.737 billion yuan, accounting for 53.96% of total revenue. During the same period, sewage treatment revenue was 860 million yuan (26.72%), water supply revenue was 344 million yuan (10.69%), solid waste revenue was 141 million yuan (4.4%), and engineering and other core business revenue was 99.0518 million yuan (5.7%).
The company's revenue has grown by leaps and bounds, but profitability has been on a continuous downward trajectory, intensifying the "rising revenue without rising profits" dilemma. In 2025, net profit attributable to shareholders was 177 million yuan, down 42.00% year-over-year.
In 2025, the gross margin for the new energy and materials business, which supports over half of the revenue, was only 6.95%, far below the over 40% level of the traditional environmental segment. This indicates that more than half of the company's revenue contribution yields a very limited profit margin.
Simultaneously, the original environmental business failed to maintain its foundational position. In 2025, sewage treatment revenue decreased by 6.88% year-over-year, with its gross margin dropping by 8.62 percentage points. Water supply revenue fell by 11.30%, with a gross margin decrease of 2.29 percentage points. Engineering business revenue declined by 19.29%, with a sharp gross margin reduction of 19.62 percentage points. The comprehensive downturn in traditionally advantageous businesses has made the company's overall profit structure more fragile.
For the full year 2025, the company's overall gross margin dropped from 48.94% in 2024 to 21.99%. In Q1 2026, the gross margin further declined to 10.54%, hitting a new low for the same period since its listing.
Regarding the expense structure, in 2025, the company's R&D expenses soared from 2.264 million yuan in 2024 to 67.065 million yuan, a staggering increase of 2861.96%, primarily for R&D investment in the new energy and materials business. Sales expenses grew by 76.68%, financial expenses by 46.85%, and administrative expenses by 25.23%. The comprehensive rise in various expenses further squeezed profit margins.
**2. Negative Cash Flow and Soaring Debt Ratio Strain Liquidity**
More concerning than the profit decline is the chain reaction from the cross-sector transformation: the company's operating cash flow turned negative, the debt ratio increased, and liquidity pressure intensified.
The deterioration in operating cash flow stems from the specific settlement model of the photovoltaic silver paste business. According to industry practice, the company must prepay the full amount to silver powder suppliers with a very short payment cycle. Conversely, it must grant longer credit terms to downstream solar customers, who often settle via commercial bills. Consequently, the collection pace significantly lags behind the payment rhythm. In 2025, net cash flow from operating activities plummeted from 457 million yuan the previous year to -55 million yuan. By Q1 2026, this figure further worsened to -411 million yuan, indicating sustained net cash outflow.
Meanwhile, accounts receivable have been expanding. By the end of 2025, accounts receivable increased by 46.19% year-over-year to 1.434 billion yuan; notes receivable surged by 141.37% to 41.3521 million yuan. The company attributed these increases to the new energy and materials business. By the end of Q1 2026, accounts receivable had further climbed to 1.822 billion yuan.
Looking at the overall financial structure, as of the end of 2025, total assets reached 8.467 billion yuan, up 28.05% year-over-year. Total liabilities amounted to 5.292 billion yuan, pushing the asset-liability ratio up to 62.50%, an increase of 7.58 percentage points from the same period last year. By the end of Q1 2026, the asset-liability ratio rose again to 66.28%, adding another 3.78 percentage points in just three months.
Short-term debt pressure is particularly acute. As of the end of Q1, the company had 1.322 billion yuan in monetary funds on its books. However, short-term borrowings stood at 1.406 billion yuan, and current portion of non-current liabilities was 420 million yuan, bringing total short-term debt to a substantial 1.826 billion yuan. Existing monetary funds alone are insufficient to cover the short-term debt. Additionally, the company carries 2.514 billion yuan in long-term borrowings.
To alleviate the liquidity crunch, the company publicly issued 8.01 million convertible corporate bonds in February, raising 801 million yuan, which began trading on March 12. On April 30, the company proposed applying for registration of a super short-term financing program with a quota not exceeding 1 billion yuan (inclusive).
In the short term, Haitian Water Group's cross-sector transformation has yet to deliver its expected value. Instead, the company faces multiple pressures from profitability, cash flow, and debt. Going forward, whether the new energy business can improve quality and efficiency, whether the traditional core business can stabilize and recover, and whether liquidity risks can be effectively mitigated will likely directly determine if Haitian Water Group can navigate out of its current predicament. Its transformation journey remains fraught with uncertainty.
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