Kunming Chuanjinno 2025 Annual Report Analysis: Net profit attributable to parent increased by 157.77% to 454 million yuan, operating cash flow doubled to 298 million yuan

Operating Revenue: Up 27.04% Year-over-Year to 4.075 Billion, Phosphoric Acid as Core Growth Driver

In 2025, the company achieved operating revenue of 4.075 billion yuan, a 27.04% increase year-over-year, with revenue continuing to expand. By business segment, phosphoric acid contributed 2.346 billion yuan, a 48.55% surge, becoming the main growth driver, mainly due to the rebound in the new energy industry boosting industrial raw phosphoric acid demand and stable market demand for food-grade purified phosphoric acid; feed-grade phosphate business revenue was 1.032 billion yuan, up 48.51%, benefiting from steady development of downstream feed industries and increased product demand; phosphate fertilizer revenue was 605 million yuan, down 29.13%, mainly due to product structure adjustments reducing low-margin phosphate fertilizer sales.

Net Profit Attributable to Shareholders: Up 157.77% YoY to 454 Million Yuan, Significant Improvement in Profit Quality

In 2025, net profit attributable to shareholders reached 454 million yuan, a substantial increase of 157.77% year-over-year, with profit scale leaping forward. After deducting non-recurring gains and losses, net profit was 443 million yuan, up 164.65%, indicating high profit quality with minimal impact from non-recurring items. The sharp profit growth was mainly due to: 1) volume and price increases in core products like phosphoric acid and feed-grade phosphate, driven by market recovery; 2) effective cost control through process optimization and raw material procurement strategies, offsetting some raw material price increases; 3) reasonable management of period expenses, with expense ratios decreasing YoY.

Earnings Per Share: Basic EPS of 1.65 Yuan, Doubling YoY

In 2025, the company’s basic earnings per share was 1.6510 yuan/share, a 157.77% increase year-over-year; after deducting non-recurring gains and losses, basic EPS was 1.6104 yuan/share, up 164.65%. EPS growth closely followed net profit, significantly increasing shareholder returns.

Period Expenses: R&D Expenses Drop 63.12%, Financial Expenses Increase 40.63%

In 2025, total period expenses were 184.17 million yuan, down 50.54% YoY. Specifically:

• Selling expenses: 30.127 million yuan, up 16.91%, mainly due to increased salaries and market expansion costs.
• Management expenses: 126.932 million yuan, up 12.23%, mainly from higher management salaries and pre-investment costs for Egypt projects.
• Financial expenses: 9.516 million yuan, up 40.63%, mainly due to exchange rate fluctuations reducing exchange gains.
• R&D expenses: 18.638 million yuan, down 63.12%, mainly because of reduced R&D expense capitalization and more projects moving to capitalized R&D.

R&D Investment and Personnel: Stable R&D Spending, Growing R&D Team

In 2025, R&D expenditure was 154 million yuan, roughly unchanged from 2024, accounting for 3.78% of revenue, maintaining steady R&D investment. R&D personnel numbered 248, a 23.38% increase, with R&D staff representing 11.92% of total employees, supporting technological innovation and product upgrades. During the year, the company obtained 5 new patents, with a total of 34 invention patents and 30 utility model patents, reflecting fruitful R&D results.

Cash Flow: Operating Cash Flow Doubles, Cash Reserves Significantly Increase

In 2025, net cash increase was 475 million yuan, turning negative to positive, with cash reserves greatly expanded.

• Net cash from operating activities: 29.879 million yuan, up 108.59%, mainly due to increased sales of phosphoric acid and other core products, with higher cash receipts from sales and improved cost management.
• Net cash from investing activities: 13.846 million yuan, a significant turnaround from -38.829 million yuan in 2024, mainly due to recovering funds from stable financial investments and reduced capital expenditures.
• Net cash from financing activities: 3.288 million yuan, compared to -10.501 million yuan in 2024, mainly from increased borrowings and financing inflows.

Risks: Facing Risks in Overseas Projects and Market Fluctuations

The company faces multiple risks:

1. Environmental and safety risks: Production involves hazardous chemicals; stricter domestic environmental standards and local policies in Egypt may increase compliance costs.
2. Supply chain risks: Dependence on overseas raw material imports, with potential impacts from shipping costs and geopolitical factors.
3. Overseas investment risks: Large, long-term investments in Egypt may face policy changes, construction delays, or cost overruns, affecting returns.
4. Exchange rate risks: Nearly 60% of overseas revenue exposes the company to RMB exchange rate fluctuations, which could impact profits.

Executive Compensation: Core Executives Earn Between 700,000 and 800,000 Yuan

In 2025, key executive compensation was as follows:

• Chairman Liu Meng received a pre-tax total of 799,200 yuan;
• General Manager Wei Jiaqui received 749,600 yuan;
• Vice Presidents Li Lei and Huang Qiuhan received 718,300 yuan and 739,100 yuan respectively;
• CFO Huang Hai received 687,700 yuan.

Executive compensation is linked to company performance, reflecting alignment of incentives with operational results.

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