Organic silicon product prices continue to fluctuate downward, combined with an unexpected accident, causing significant performance challenges for one of China's leading organic silicon industry companies - Shandong Dongyue Silicone Material Co.,Ltd. (300821.SZ, stock price 9.24 yuan, market cap 110.88 billion yuan) in the first three quarters of this year.
On the evening of October 13, Shandong Dongyue Silicone Material Co.,Ltd. released its performance forecast for the first three quarters of 2025, showing that the company expects its net profit attributable to parent company shareholders to decline by 96.27% to 97.40% year-on-year, with profit scale plummeting from 88.59 million yuan in the same period last year to between 2.3 million yuan and 3.3 million yuan.
Behind the performance decline lies a double blow from market performance and unexpected accidents. A fire accident that occurred on July 20 this year directly caused the suspension of production at the company's core production unit - Synthesis Phase III Bed B, which involves 300,000 tons of organic silicon monomer capacity, accounting for half of the company's total capacity.
**Q1-Q3 Net Profit Expected to Drop Over 96% Year-on-Year**
As early as in Shandong Dongyue Silicone Material Co.,Ltd.'s 2025 interim report, the company revealed the industry's difficult situation. The company stated that in the first half of 2025, affected by multiple factors including concentrated release of new capacity from the previous year and weak downstream terminal demand, the organic silicon industry showed complex supply-demand relationships, fluctuating downward prices, and declining corporate profitability.
It was noted that in 2025, China's organic silicon industry, after experiencing rapid capacity expansion in previous years, faced severe market challenges. Industry supply-demand imbalance, continuously fluctuating product prices, and widespread corporate profit pressure became evident. As Shandong Dongyue Silicone Material Co.,Ltd.'s core product, organic silicon DMC saw its average price in the first half decline by approximately 12% compared to the same period last year.
Shandong Dongyue Silicone Material Co.,Ltd.'s performance forecast for the first three quarters of 2025 shows further deterioration in the company's operational performance.
According to the announcement data, in the first three quarters of 2025, the company expects net profit attributable to listed company shareholders to be between 2.3 million yuan and 3.3 million yuan, representing a staggering decline of 96.27% to 97.40% compared to 88.59 million yuan in the same period last year.
The performance forecast shows that non-GAAP net profit for the first three quarters is expected to be between 11.3 million yuan and 12.3 million yuan, also showing a massive decline of 87.10% to 88.14% compared to 95.32 million yuan in the same period last year.
Notably, during the reporting period, Shandong Dongyue Silicone Material Co.,Ltd. expects the impact of non-recurring gains and losses on net profit to be approximately 9 million yuan, mainly from non-current asset disposal gains and losses and government subsidies.
It was noted that Shandong Dongyue Silicone Material Co.,Ltd. emphasized in its announcement that this performance forecast is a preliminary calculation result from the finance department, not audited by accounting firms, but the company has conducted pre-communication with accounting firms regarding matters related to the performance forecast, and there are no disagreements between the two parties.
**Industry "Winter" Continues, Core Equipment Hit by Fire "Circuit Breaker"**
Regarding the sharp decline in performance for the first three quarters, Shandong Dongyue Silicone Material Co.,Ltd. disclosed two core factors: persistently weak market conditions and a sudden fire accident.
The company clearly stated in its performance change explanation: "During the reporting period, affected by market environment, organic silicon product prices fluctuated downward. Affected by this, the company's main product sales revenue and gross margin declined compared to the same period last year."
A review of Shandong Dongyue Silicone Material Co.,Ltd.'s 2024 financial report reveals that as a leading enterprise in China's organic silicon industry, Shandong Dongyue Silicone Material Co.,Ltd. has an annual production capacity of 600,000 tons of organic silicon monomers, with products widely used in new energy vehicles, photovoltaic, construction and other fields. 2024 data shows that its main products 107 adhesive and silicone oil contributed 54.33% and 13.93% of revenue respectively, together accounting for over 60% of total revenue.
In July this year, company staff had indicated that "this year's organic silicon price performance has not been very good, compared to previous years, this year is considered a relatively poor year."
Against this backdrop, even leading enterprises in China's organic silicon industry inevitably face impact. If persistent market weakness is a "chronic disease," then the fire accident in July may be the direct cause that caused the company's performance to go into "shock."
According to the announcement, on July 20, 2025, a fire accident occurred at Shandong Dongyue Silicone Material Co.,Ltd.'s Synthesis Phase III Bed B, causing the equipment to suspend production.
It was noted that the workshop involved in the accident was not insignificant marginal capacity, but one of the core production units of the fundraising project "300,000 tons/year organic silicon monomer and 200,000 tons/year organic silicon downstream product deep processing project" when the company went public, involving organic silicon monomer capacity that accounts for half of the company's total capacity.
After the fire, the equipment immediately shut down and has not resumed operation to this day. Shandong Dongyue Silicone Material Co.,Ltd. acknowledged in its performance forecast that "the resulting shutdown losses have had adverse effects on third quarter operational performance." To enhance safety levels, the company has formulated a systematic rectification plan and plans to promote implementation of safety and process improvement projects for monomer synthesis equipment.
According to the latest plan, Shandong Dongyue Silicone Material Co.,Ltd. "plans to complete renovation and resume production before the end of 2025." This means that this core capacity was in a shutdown state during the third quarter.
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