On the evening of October 15, Shida Shinghwa Advanced Material Group Co.,Ltd. (SH603026, previous closing price: 57.48 CNY, market capitalization: 13.376 billion CNY) released its earnings forecast for the first three quarters of 2025, indicating expected net losses. The company anticipates a net profit attributable to shareholders of between -49 million and -75 million CNY, a decrease of 602.651 million to 862.651 million CNY compared to the same period last year, reflecting a year-on-year decline of 534.97% to 765.77%. After excluding non-recurring gains and losses, the projected net profit is expected to be between -53 million and -79 million CNY, a reduction of 555.516 million to 815.516 million CNY compared to the previous year, or a decrease of 2177.13% to 3196.10%. This earnings forecast has drawn significant market attention.
Looking at recent performance, Shida Shinghwa's net profit has experienced a continuous decline for three consecutive years. From 2021 to 2024, the company's profit attributable to shareholders was 1.178 billion CNY, 891 million CNY, 19 million CNY, and 16 million CNY, respectively.
The company attributes its losses primarily to intense market competition and a decline in the prices of some of its products compared to the previous year. In response to industry competition, Shida Shinghwa has increased its market investment and R&D efforts, leading to a rise in period expenses and a decrease in operating profit. Concurrently, the company’s accounts receivable surged from 613 million CNY in 2023 to 1.608 billion CNY in the first half of 2025, accounting for over 53% of revenue, which has put considerable pressure on the company's cash flow and profitability. The company is also facing significant pressure from interest-bearing debts, with short-term borrowings amounting to 1.004 billion CNY as of the end of June 2025, current non-current liabilities due within one year of 165 million CNY, long-term borrowings of 1.537 billion CNY, and cash and cash equivalents of only 886 million CNY.
It is noteworthy that Shida Shinghwa's path to private placement has been rather tumultuous. Since the initial disclosure of a 4.5 billion CNY fundraising plan in 2022, the scale of the project has drastically shrunk, with the validity of the placement resolution extended for three consecutive years, ultimately reducing the fundraising amount to 1 billion CNY.
In light of these challenges, Shida Shinghwa urgently needs to implement effective measures to address the current situation. In terms of market competition, the company should optimize its product structure, enhance product added value, and strengthen market competitiveness. Additionally, it needs to improve cost control, optimize production processes, reduce production costs, and enhance operational efficiency. Regarding accounts receivable management, the company must strengthen credit management, optimize customer structure, and mitigate bad debt risks. Financially, it should plan fund utilization appropriately, optimize debt structure, and lower financial risks. Furthermore, the company should enhance information disclosure, promptly communicating its operational status and response measures to the market.
