Fund Utilisation Update

On 24 April 2026, the company announced the progress of its plan to invest idle funds into structured deposits. The disclosure, published on Xueqiu, includes a formal notice detailing the investment strategy and the expected returns. The company’s board approved the use of surplus cash for structured deposits, a move that aims to optimise the utilisation of idle liquidity while maintaining a conservative risk profile.

Profitability Challenges Highlighted in the 2025 Annual Report

The 2025 annual report, released by Wanhua Chemical Group (ticker 600309.SH), shows a continued decline in net profitability despite revenue growth. Key points from the report include:

  • Revenue Growth vs. Profit Decline

  • Total revenue reached 203.24 billion CNY, an 11.63 % year‑over‑year increase.

  • Net profit attributable to the parent company fell to 12.53 billion CNY, a 3.88 % decrease from 2024, and 74.6 % lower than the 2021 peak.

  • Adjusted net profit (excluding non‑recurring items) declined by 9.10 % to 12.14 billion CNY.

  • Impact of Capital Expenditure

  • Fixed assets rose by 38.08 billion CNY to 156.91 billion CNY.

  • Ongoing construction projects reached 34.6 billion CNY, signalling sustained capital deployment that will increase depreciation charges and pressure gross margins.

  • Government Subsidies and Fair‑Value Adjustments

  • Fair‑value gains and losses were 2.66 billion CNY in 2025, compared with a 0.76 billion CNY loss in 2024.

  • Government subsidies decreased to 4.74 billion CNY, down from 5.18 billion CNY in 2024 and 7.56 billion CNY in 2023.

  • Segment Performance

  • Polyurethane: Revenue of 75.06 billion CNY, a slight 1.04 % decline; gross margin improved to 26.88 %.

  • Petrochemical: Revenue of 84.20 billion CNY, a 16.11 % increase; gross margin contracted to 0.58 %, dragging the overall gross margin to 13.61 %.

  • Battery Materials: Revenue of 33.19 billion CNY, 17.39 % growth; gross margin fell to 10.53 %. The battery‑material subsidiary posted an operating loss of 342 million CNY and a net loss of 174 million CNY, reflecting early‑stage investment.

Strategic Context

Wanhua’s core business remains polyurethane production, with substantial capacity for MDI (380 t/yr) and TDI (147 t/yr). However, domestic MDI market prices fell 19.61 % in 2025 due to U.S. tariff actions and increased domestic supply. The petrochemical arm’s low margin reflects the broader downturn in hydrocarbon derivatives, while the battery‑material line is still in the capital‑intensive development phase.

Outlook

The company’s management acknowledges that profitability will be squeezed in the short term as capital expenditures and restructuring costs mount. The shift toward battery materials and other high‑value chemicals is expected to take time before generating positive cash flows. Investors should note that the company’s market cap remains substantial (≈ 274 billion CNY), but the price‑earnings ratio of 20.89 reflects the market’s expectation of future earnings pressure.