Luoyang Xinqianglian 2025 Annual Report Analysis: Net profit attributable to parent company increases by 1151.44%, operating cash flow drops by 95.86%

Core Profitability Metrics Interpretation

Operating Revenue: Year-on-Year Increase of 57.11%, Wind Power Business Contributes Major Increment

In 2025, the company achieved operating revenue of 4.628 billion yuan, a substantial year-on-year increase of 57.11%. By product, wind power products generated revenue of 3.580 billion yuan, a year-on-year increase of 72.69%, accounting for 77.36% of total revenue and being the core driver of revenue growth; the revenue from slewing bearing business was 3.731 billion yuan, a year-on-year increase of 64.65%, with a gross profit margin of 29.97%. By region, domestic revenue was 4.551 billion yuan, a year-on-year increase of 57.06%, while overseas revenue was 76.7805 million yuan, a year-on-year increase of 60.40%, with both domestic and overseas markets achieving rapid expansion.

Net Profit Attributable to Shareholders: Year-on-Year Surge of 1151.44%, Significant Contribution from Non-Recurring Gains and Losses

In 2025, the net profit attributable to shareholders was 818 million yuan, a significant year-on-year increase of 1151.44%. The net profit excluding non-recurring items was 712 million yuan, a year-on-year increase of 377.56%. In terms of profit composition, non-recurring gains and losses contributed 106 million yuan, mainly from changes in the fair value of trading financial assets and other non-current financial assets, which generated a gain of 110 million yuan, along with government subsidies of 17.6858 million yuan. The high growth of net profit excluding non-recurring items benefited from increased sales volume, improved gross profit margin, and optimized cost control.

Earnings Per Share: Both Basic and Excluding Non-Recurring Items Significantly Increased

Basic earnings per share were 2.13 yuan/share, a year-on-year increase of 1083.33%; earnings per share excluding non-recurring items were 1.80 yuan/share, a year-on-year increase of 377.56%, consistent with the growth trend of net profit, reflecting a significant enhancement in the company’s profitability.

Expense Control Analysis

Selling Expenses: Year-on-Year Increase of 9.83%, Expense Ratio Continues to Decline

In 2025, selling expenses amounted to 13.3449 million yuan, a year-on-year increase of 9.83%, mainly due to increases in bidding fees, business entertainment expenses, and other costs resulting from the expansion of business scale. The selling expense ratio was 0.29%, further declining from 0.41% the previous year, indicating continuous improvement in the company’s sales efficiency.

Administrative Expenses: Year-on-Year Increase of 30.76%, Scale Expansion Drives Cost Up

Administrative expenses were 102 million yuan, a year-on-year increase of 30.76%, mainly due to increased employee compensation and depreciation expenses, reflecting the rise in management costs associated with the company’s business scale expansion. The administrative expense ratio was 2.21%, down from 2.66% the previous year, with overall management efficiency remaining stable.

Financial Expenses: Year-on-Year Decrease of 2.96%, Interest Expenses Reduced

Financial expenses were 92.3791 million yuan, a year-on-year decrease of 2.96%. Among these, interest income was 7.8299 million yuan, significantly down from 23.6305 million yuan the previous year; interest expenses were 97.1443 million yuan, decreased from 116.2478 million yuan the previous year, mainly due to the company’s optimization of debt structure, which reduced financing costs.

R&D Expenses: Year-on-Year Increase of 35.31%, Continued Investments in Technology

R&D expenses were 156 million yuan, a year-on-year increase of 35.31%, mainly due to the company increasing R&D investment to advance multiple technology R&D projects. The R&D expense ratio was 3.36%, slightly down from 3.90% the previous year, but still maintains a high level of investment, supporting the company’s technological innovation and product upgrades.

R&D Personnel Situation

In 2025, the company had 362 R&D personnel, a decrease of 2 from the previous year, with R&D personnel accounting for 15.22%, down from 20.88% the previous year, but the proportion of R&D personnel with a bachelor’s degree or above increased, including 78 bachelor’s degree holders, a year-on-year increase of 9.86%; 7 master’s degree holders, a year-on-year increase of 40%. The overall educational structure of the R&D team has been optimized, which is beneficial for enhancing R&D efficiency and innovation capability.

Cash Flow Depth Analysis

Net Cash Flow from Operating Activities: Year-on-Year Plunge of 95.86%, Increased Working Capital Occupation

The net cash flow from operating activities was 18.3844 million yuan, a significant year-on-year decrease of 95.86%. The main reason was the cash paid for purchasing goods and accepting services of 2.735 billion yuan, a year-on-year increase of 83.82%, along with an increase in inventory and operating receivables, resulting in a substantial rise in working capital occupation. The divergence between operating cash flow and net profit indicates a decline in profit quality.

Net Cash Flow from Investing Activities: Year-on-Year Increase of 52.68%, Increased Investment Recovery

The net cash flow from investing activities was -285 million yuan, a year-on-year increase of 52.68%. Among these, cash received from investment recoveries was 346 million yuan, a year-on-year increase of 167.95%; cash paid for purchasing and constructing fixed assets was 449 million yuan, a year-on-year decrease of 12.00%, mainly due to the company recovering funds from some investment projects while reducing fixed asset investments.

Net Cash Flow from Financing Activities: Year-on-Year Increase of 247.65%, Expanded Borrowing Scale

The net cash flow from financing activities was 394 million yuan, a year-on-year increase of 247.65%. This was mainly due to increased borrowing by the company, with cash received from loans amounting to 1.606 billion yuan, a year-on-year increase of 24.99%, while cash paid for repaying debts was 1.182 billion yuan, a year-on-year decrease of 1.63%, indicating an overall expansion in financing scale.

Executive Compensation Situation

• Chairman Xiao Zhengqiang: Total pre-tax compensation received from the company during the reporting period was 886,800 yuan, unchanged from the previous year.
• General Manager Xiao Gaoqiang: Total pre-tax compensation was 886,800 yuan, consistent with the previous year.
• Vice General Manager Kou Congmei: Total pre-tax compensation was 486,800 yuan, a slight increase from the previous year, mainly due to her additional roles as the financial director and board secretary, expanding her responsibilities.
• Financial Director Kou Congmei: Total compensation combined with the vice general manager was 486,800 yuan, matching the compensation level with the company’s performance growth.

Risk Warning

2. Policy Risk: Changes in wind power industry policies may lead to fluctuations in market demand, affecting the company’s product sales and prices.
3. Raw Material Price Fluctuation Risk: Price fluctuations of main raw materials such as continuous casting billets and steel ingots may impact the company’s production costs and profitability.
4. Product Price Decline Risk: Increased market competition may lead to a decline in product prices, compressing the company’s profit margins.
5. Management Risk: The rapid expansion of the company’s assets and business scale demands higher management levels and risk control capabilities.
6. Market Development Underperformance Risk: The long verification cycle for new products may affect the company’s performance release if market development does not meet expectations.
7. Goodwill Impairment Risk: The goodwill formed from the acquisition of Haozhi Machinery is 374 million yuan; if Haozhi Machinery’s operating performance does not meet expectations, there may be a risk of goodwill impairment.
8. Safety Production Risk: The high-temperature production process at the subsidiary Shengjiu Forging has safety production risks; if a safety incident occurs, it will affect production operations.
9. Accounts Receivable Recovery Risk: The scale of accounts receivable is large; if the business conditions of clients deteriorate, it may lead to increased bad debt losses.

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Editor: Xiao Lang Quick Report