Shandong Molong Petroleum Machinery Company Limited released its unaudited 2026 third-quarter report, highlighting strong top-line momentum but a sharp swing to loss on higher costs, financing charges and credit impairments.
Revenue accelerates yet losses deepen • July–September turnover reached RMB 0.52 billion, up 29.88% year on year, driven by a larger order book and higher output. • The quarter closed with a net loss attributable to shareholders of RMB 99.39 million versus a profit of RMB 7.9 million a year earlier. • For the nine months to September, revenue jumped 48.05% to RMB 1.77 billion, but the company reported a RMB 95.18 million net loss, reversing a RMB 5.13 million profit in the prior-year period. Basic and diluted loss per share stood at RMB 0.1184.
Cost inflation and impairments pressure margins • Operating costs rose 50.79% to RMB 1.62 billion, broadly tracking the surge in sales. • Financial expenses climbed 43.34% to RMB 94.59 million, reflecting higher borrowings and exchange losses. • Credit-impairment losses widened to RMB 54.89 million from a gain of RMB 5.38 million a year earlier, largely due to provisions on receivables from former subsidiaries. Inventory impairment charges expanded to RMB 2.74 million. • Net operating cash outflow reached RMB 132.68 million, reversing an inflow of RMB 223.95 million in the same period last year, mainly because the prior-year base included sizeable repayments of “passive financial assistance” funds.
Balance-sheet expansion funded by short-term debt and new equity • Total assets grew 6.22% since year-end 2025 to RMB 2.85 billion, lifted by a 50.83% rise in fixed assets and an 80.53% rise in intangible assets following asset acquisitions under a debt-restructuring agreement. • Inventories increased 30.73% to RMB 0.74 billion on higher production volumes. • Short-term borrowings climbed 7.1% to RMB 1.45 billion, while notes payable rose 74.35% to RMB 116.10 million. • Shareholders’ equity expanded 21.16% to RMB 603.22 million, supported by two H-share placings that raised aggregate gross proceeds of approximately HKD 235 million and lifted issued share capital to 857.14 million shares.
Key corporate actions 1. Debt restructuring: Completion of a tripartite agreement whereby a related party transferred land, buildings and equipment valued at RMB 361.85 million to settle an equivalent debt owed to Shandong Molong. 2. Recovery of financial assistance: The bankruptcy of former subsidiary Shouguang Baolong led to an additional RMB 60.15 million impairment on outstanding receivables; the remaining exposure stands at roughly RMB 292 million. 3. H-share placings: New issues in July (25.68 million shares at HKD 4.58) and September (33.62 million shares at HKD 3.50) diluted the controlling shareholder’s stake from 29.53% to 27.49%.
Liquidity and leverage Despite a modest net increase of RMB 1.98 million in cash and equivalents during the period, operating cash burn and higher debt weigh on liquidity. Non-current liabilities rose slightly to RMB 67.49 million, while current liabilities totalled RMB 2.18 billion, underpinned by growing short-term borrowings and trade payables.
Bottom line Shandong Molong’s robust sales recovery has yet to translate into profitability as rising costs, financing burden and asset impairments offset revenue gains. Management is seeking balance-sheet relief through asset swaps, recovery of legacy receivables and equity financing, but sustained earnings improvement will depend on cost controls, working-capital discipline and progress on receivable collection.
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