Wansheng Co., Ltd. Accrues Nearly 1.1 Billion Yuan in Asset Impairment Loss; Revenue Increased Last Year but Net Profit Attributable to Parent Company Turned from Profit to Loss

After the market close on March 23, Wansheng Co., Ltd. (SH603010, stock price 10.49 RMB, market value 6.185 billion RMB) disclosed its 2025 annual report. The report shows that the company achieved operating revenue of 3.378 billion RMB in 2025, a year-on-year increase of 13.98%; net profit attributable to shareholders was -960 million RMB, turning from profit to loss.

This significant contrast was mainly caused by an asset impairment loss of 1.097 billion RMB. The company stated that the Shandong Weifang base was affected by capacity adjustments, relocations, and other factors, resulting in current capacity operations unable to cover the investment scale of the entire base. Impairment testing confirmed signs of asset impairment.

While recognizing impairment losses for the Weifang base in Shandong, the company’s project for producing 32,000 tons of phosphorus ester flame retardants annually in Thailand is progressing smoothly.

According to Wansheng Co., Ltd.’s 2025 annual report, the company’s performance shifted from profit to loss, with net profit attributable to shareholders at -960 million RMB, compared to a profit of 103 million RMB in the same period last year. The company explained that the drastic change in performance was mainly due to “provision for impairment of long-term assets with impairment signs.”

Data from the financial report shows that this impairment provision was substantial. In 2025, the total asset impairment loss was 1.097 billion RMB, compared to 84.2727 million RMB in the same period last year. Among these, impairment provisions for fixed assets, construction in progress, and intangible assets totaled 964 million RMB.

Regarding this large impairment, Wansheng pointed to its production base in Shandong. The company stated in the annual report that it adjusted the product structure and capacity layout of some bases in a timely manner based on industry competition and development trends.

Additionally, to avoid international trade barriers and promote its global strategy, the company relocated some of the capacity for flame retardants from the Shandong Weifang base to Thailand. Due to capacity reductions, relocations, ramp-up issues, and declining product gross margins, the existing capacity’s performance could not cover the investment scale of the entire base, and impairment testing confirmed signs of asset impairment.

Although net profit attributable to shareholders showed a huge loss, Wansheng’s operating revenue in 2025 achieved double-digit year-on-year growth. This growth mainly came from the full-year contribution of Guangzhou Sengneng Innovation Materials Co., Ltd., a subsidiary consolidated from November 2024, in 2025.

Excluding the consolidation factor, the profitability of the company’s core business faces challenges. Polymer functional additives, as the company’s core business, achieved revenue of 2.23 billion RMB in 2025, a year-on-year increase of 15.77%, accounting for 66.02% of total revenue. The gross profit margin for this business was 23.30%, roughly the same as last year, indicating strong and stable profitability.

However, the annual report also noted that the market supply and demand for the company’s main product, flame retardants, has changed, leading to a decrease in gross profit per ton.

Furthermore, facing fierce domestic market competition and challenges from international trade barriers, Wansheng is accelerating its global capacity deployment. The company explicitly stated in the financial report that it is relocating some capacity from the Shandong Weifang base to Thailand to avoid trade barriers. Currently, the construction of the Thai production base is progressing well, with the main project of producing 32,000 tons of phosphorus ester flame retardants nearly completed, core production equipment installed, and expected to start trial production in the first half of 2026 to meet demand in the U.S. and European markets.

In its 2026 operational plan, management emphasized “ensuring the smooth commissioning of the Thailand base” and positioned it as a strategic foothold for market expansion. The success or failure of this strategic pivot could be crucial in determining whether Wansheng can escape its current profitability difficulties.

(Source: Daily Economic News)