Huashu Holdings (000509) 2025 Annual Report Brief Analysis: Loss Narrows

According to publicly available data from Securities Star, Hu塑控股 (000509) recently released its 2025 annual report. According to the financial report, Hu塑控股’s losses have narrowed. As of the end of this reporting period, the company’s total operating revenue was 755 million yuan, a year-on-year decrease of 26.83%, with a net profit attributable to shareholders of -10.7074 million yuan, a year-on-year increase of 23.15%. Looking at quarterly data, the fourth quarter’s total operating revenue was 167 million yuan, a year-on-year decrease of 47.32%, and the fourth quarter’s net profit attributable to shareholders was -851,500 yuan, a year-on-year increase of 46.8%.

The various data indicators released in this financial report performed moderately. Among them, the gross profit margin was 6.67%, a year-on-year increase of 70.09%, the net profit margin was -1.34%, a year-on-year decrease of 32.26%, and total selling, general and administrative expenses amounted to 51.818 million yuan, accounting for 6.86% of revenue, a year-on-year increase of 73.41%. The net asset value per share was 0.12 yuan, a year-on-year decrease of 7.98%, cash flow from operating activities per share was -0.01 yuan, a year-on-year decrease of 110.59%, and earnings per share was -0.01 yuan, a year-on-year increase of 23.08%.

The financial report provides explanations for the reasons behind significant changes in financial items as follows:

1. The change in financial expenses was 322.96%, due to an increase in bank loans and group loans leading to higher interest expenses, while foreign exchange gains from Tianji Zhigu decreased significantly compared to the same period last year.
2. The change in research and development expenses was -20.53%, due to a reduction in Tianji Zhigu’s R&D projects.
3. The change in net cash flow generated from operating activities was -110.59%, due to an increase in procurement expenditures and a reduction in sales and collections at Tianji Zhigu.
4. The change in net cash flow generated from investing activities was -17.58%, due to increased payments for new acquisition projects of Qianxi Huisheng.
5. The change in net cash flow generated from financing activities was 191.96%, due to new loans from Hongtai Group and banks.
6. The change in receivables was -9.09%, due to a reduction in Tianji Zhigu’s business scale and a synchronous decrease in accounts receivable within the payment period.
7. The change in payables was -32.98%, due to a reduction in Tianji Zhigu’s business scale and a synchronous decrease in operational payables.
8. The change in other non-current liabilities was 120.96%, due to the company acquiring long-term loans from its parent company, Hongtai Group.

The Securities Star value investment circle financial report analysis tool shows:

• Business Evaluation: The company’s ROIC last year was 0.64%, indicating weak capital returns. The net profit margin last year was -1.34%, suggesting that the added value of the company’s products or services is not high after considering all costs. Based on historical annual report data, the company’s median ROIC over the past ten years is 2.9%, which is relatively weak, with the worst year being 2016, where the ROIC was -193.52%, indicating extremely poor investment returns. The company’s historical financial reports have been quite average; since its listing, there have been 36 annual reports, with 15 years of losses. In the absence of factors such as reverse mergers, value investors generally do not consider such companies.
• Business Breakdown: The company’s net operating asset return over the past three years (2023/2024/2025) was 11.1%/–/–, with net operating profits of 21.054 million/-10.4562 million/-10.1186 million yuan, and net operating assets of 190 million/266 million/407 million yuan.

The company’s operating capital/revenue (i.e., the funds the company needs to advance for every unit of revenue generated) over the past three years (2023/2024/2025) was 0.23/0.12/0.29, with operating capital (the company’s own funds during operations) of 167 million/125 million/218 million yuan, and revenues of 741 million/1.032 billion/755 million yuan.

The financial report health check tool indicates:

1. Attention should be paid to the company’s cash flow situation (cash and cash equivalents/current liabilities is only 32.48%, and the average operating cash flow/current liabilities over the past three years is only 5.5%).
2. Attention should be paid to the company’s debt situation (the asset-liability ratio for interest-bearing liabilities has reached 23.15%, and the total interest-bearing liabilities/average operating cash flow over the past three years has reached 10.53%).
3. Attention should be paid to the financial expenses situation (financial expenses/average operating cash flow over the past three years has reached 72.78%).

Recently, well-known institutions have focused on the following issues regarding the company:

Question: After the company received investment from Hubei State-owned Assets, it achieved results in both stock price and revenue. What plans does the company have for future development strategies?

Answer: Hello, investors! Hubei State-owned Assets subscribed to the company’s non-public offering of shares at a price of 1 yuan per share in 2021, investing approximately 250 million yuan, and obtaining actual control of the company. After five years of development, the company’s annual operating revenue has grown from 50 million yuan to 1 billion yuan, an increase of nearly 20 times. The company is currently developing its “dual main business” strategy, primarily through three subsidiaries: Tianji Zhigu, Hongchuang Intelligent, and Carbon Source Space, focusing on high-end manufacturing and “dual carbon” businesses. The high-end manufacturing display business continues to diversify into multiple regional markets and products such as portable displays, educational tablets, and high-end advertising machines, while the precision machinery production, manufacturing, and sales business primarily targets five-axis linkage and multi-axis composite products; the “dual carbon” business focuses on low-concentration gas management.

2. What technological advantages does the company have in its dual main businesses?

Hello, investors! In the field of electronic information display terminal manufacturing, the company’s subsidiary Tianji Zhigu has the capability to independently design the Dboard driver motherboard, as well as low-power, high-efficiency backlight design capabilities, providing high-end display product solutions for globally renowned clients. After years of development, Tianji Zhigu has established stable cooperative relationships with well-known domestic and international clients such as Lenovo, Acer, and Dahua. In the traditional commercial display sector, the company actively expands into esports display categories, with the G5 series products capable of achieving a high refresh rate of 360Hz; portable displays in the D1 and H1 series can achieve dual-screen and triple-screen setups.

In the field of carbon emissions management, the company has invested in and constructed comprehensive utilization projects for coal mine gas, mastering flameless heat storage oxidation technology for safely and efficiently utilizing coal mine low-concentration gas with concentrations below 8%, converting previously vented gas into clean electricity while generating revenue. At the same time, since the release of the voluntary greenhouse gas reduction project methodology, the company has been among the first to practice low-concentration gas utilization projects, creating essential conditions for CCER development.

The company has created a dual technological layout in high-end manufacturing and green low-carbon fields, forming a competitive advantage through differentiated development, which helps the company build resilience in a complex market environment.

3. What progress has the company made in its dual carbon business layout?

Hello, investors! In recent years, the state has continuously promoted green and low-carbon transformation and vigorously pushed for the reduction and utilization of coal mine gas. The global fossil fuel industry is the absolute “main force” in methane emissions, and the market potential for coal mine gas utilization is immense. By the end of 2024, the first batch of CCER methodologies for the coal industry will be released. The company is seizing policy opportunities and has established a wholly-owned subsidiary, Hubei Carbon Source Space Technology Co., Ltd., initially entering the gas management industry through acquisitions and leveraging the mature technologies and market experience of partners. In early 2025, the company will invest in the Liulinxing coal mine gas comprehensive utilization project, which has been selected into the national key promotion low-carbon technology catalog due to significant carbon reduction effects and social economic value. Based on the successful experience of the first project and the technology mastered, the company has independently constructed the Guizhou Xintian coal mine low-concentration gas utilization project, which is among the first domestic projects of its kind after the release of the CCER methodology and is Guizhou’s first large-scale low-concentration gas comprehensive utilization demonstration project. Using innovative heat storage oxidation technology, the project safely and efficiently processes waste gas with concentrations below 8% from underground coal mines, successfully achieving the safe and efficient utilization of low-concentration gas. The company selects projects with abundant gas reserves and extractable volumes to build efficient gas oxidation devices (RTO) and supporting waste heat boilers, ensuring that the coal mine extraction system is not affected. Low-concentration gas is mixed with air to achieve a methane concentration of 1.2% before being delivered to the RTO. Methane in the mixed low-concentration gas is instantaneously oxidized in a flame-free oxidation bed at around 900°C, releasing oxidative heat in the oxidation bed space. The high-temperature gases produced after oxidation drive the supporting waste heat boiler, maintaining furnace temperature for continuous operation and high thermal recovery efficiency. This self-circulation of “heat storage - oxidation - heat production” can achieve efficient decomposition of low-concentration gas and energy savings, and the flame-free characteristics of heat storage oxidation fundamentally eliminate safety hazards associated with traditional combustion methods. Additionally, the system is equipped with a safe transport system and dehydration, and utilizes a programmable logic controller (PLC) to monitor the entire system. Real-time monitoring, automatic adjustments, sequential control, and protection are achieved through data collection and processing systems (DS), analog control systems (MCS), and sequential control systems (SCS).

Moreover, the company is actively researching relevant rules and market policies, cooperating with the Ministry of Ecology and Environment’s information center and research institutions to promote the preparation of CCER monitoring group standards, and systematically advancing the application work for low-concentration gas management projects. In the future, the company will leverage its resources and technology to create more green energy projects. Detailed project performance will be available in the company’s annual report released in 2026.

4. The company’s current business and name are mismatched; it is recommended that the company change its name!

Hello, investors! Thank you for your suggestion. We will actively study this and promote the renaming matter in a timely manner based on the company’s business development and strategic positioning. The company will issue a timely announcement at that time.

5. What is the production status of Hongchuang Intelligent? How many devices have been offline so far? How are sales?

Hello, investors! China faces the dilemma of “large but not strong” in industrial machinery. In the next decade, efforts will be made in four aspects: high-speed high-precision, multi-axis composite, system integration, and intelligent upgrades, concentrating advantageous resources to achieve self-control in high-end CNC machine tools and intelligent production lines, resolutely addressing the “bottleneck” issue. The company’s subsidiary Hongchuang Intelligent began production on September 1, 2025, in the Xiangyang High-tech Zone, mainly researching and manufacturing five-axis linkage multi-axis composite CNC machine tools, precision CNC grinding machines, and other high-end products. The planned initial production capacity is 300 units per year, with full production capacity expected to reach 500 units per year, mainly used in downstream applications such as consumer electronics and servers. The MP380 is a multi-station intelligent CNC processing center with six stations (including one loading/unloading station) that can work simultaneously with five spindles without stopping for continuous operation; the multi-spindle configuration is flexible, balancing rough and fine processing. It has been developed to meet the CNC processing needs of small metal or non-metal components in the 3C industry, offering approximately 4-6 times the efficiency compared to traditional CNC processing centers, with repeat positioning accuracy reaching 0.005mm. In 2026, Hongchuang Intelligent will develop and produce the multi-station rough and fine grinding integrated machine MF6000E, an all-automatic precision segment grinding machine that uses grinding to perform precise grinding on semi-finished tools within a range of 0.1-1.0mm. The robotic arm will automate the loading and unloading, with a warehouse capable of holding 2,000 pieces at once. The equipment produced can be used for high-frequency high-speed PCB processing. Specific operational data will be in accordance with the company’s annual report.

6. What impact do tariffs have on the company in the short and long term?

Hello, investors! In the face of a complex and ever-changing international trade environment and the uncertainty of tariff policies, the company’s overseas business scale and profits are under pressure in the short term. In response, Tianji Zhigu is actively addressing this and taking proactive measures. Tianji Zhigu adheres to a diversified market strategy, actively adjusting its production rhythm and sales strategies, focusing on emerging markets such as the “Belt and Road” initiative, and vigorously developing markets in Europe, Japan, and the Middle East, with a focus on well-known domestic brand clients. At the same time, the procurement system is optimized, and R&D investment in new products is continuously increased. On the sales side, reliance on major clients will gradually decrease, mastering new product technologies, and diversifying products to lower downstream product risks.

7. Will the company have a management equity incentive plan in the future?

Hello, investors! In accordance with the requirements of state-owned enterprises and regulatory agencies regarding market value management and corporate governance, the company is continuously establishing and improving standardized governance structures and building a foundation for sustainable development capacity. In the next steps, the company plans to gradually improve its medium to long-term incentive and constraint mechanisms to enhance the company’s attractiveness to core management, technical, and business talents, as well as their loyalty, fully mobilizing their enthusiasm and creativity, effectively aligning the interests of shareholders, the company, and the management to ensure the realization of the company’s development strategy and operational goals.

8. Why did the company initially choose the dual carbon track? What are the future considerations?

Hello, investors! The company develops “dual carbon” business, leveraging the unique advantages of Hongtai Group in coordinating carbon factors and financial resources, and serving as a complementary and collaborative implementation carrier for the dual carbon industry and the group’s carbon market construction. In addition, the company has chosen the Aerospace Guotai, which has strong research capabilities and mature technology and is affiliated with the Shanxi Aerospace Industrial Research Institute, as a partner, ensuring a good start for the company’s carbon emissions management business. The company is steadily building and operating cooperative projects, accumulating full-process construction management experience and consolidating technological advantages, and has established a project foundation for CCER development. In the future, the company will closely align with the development trends of the domestic carbon market, continuously exploring business development opportunities in emerging areas such as carbon trading, carbon consulting, and carbon monitoring within the dual carbon field.

9. According to the disclosure of the private placement plan, 600 million yuan will mainly be used for liquidity and repaying interest-bearing debts. What are the company’s plans for the use of funds?

Hello, investors! The company intends to issue approximately 200 million shares to a specific entity, Hubei Hongtai Group Co., Ltd., raising a total of approximately 600 million yuan, and Hongtai Group has committed to not reducing its holdings in the company’s shares over the next three years. This demonstrates the major shareholder’s confidence and strong support for the company’s future development. This issuance can effectively improve the company’s cash flow, laying a solid foundation for increasing R&D investment and expanding new productive capabilities. The effectiveness and completion of this issuance also require approval from the shareholders’ meeting and relevant regulatory agencies. The company will issue timely announcements as significant progress occurs.

10. Is there any progress on the company’s large litigation?

Hello, investors! Regarding the loan dispute case between the company and Wu Yizhong, Li Xuefeng, Tibet Maitian Venture Capital Co., Ltd., and Shen Yun, the court has ruled to dismiss the plaintiff Shen Yun’s lawsuit. Thus, the company has resolved a series of legal risks left by the previous actual controller, creating favorable conditions for the company to move forward and develop.

The above content is compiled by Securities Star from publicly available information and generated by AI algorithms (Internet Security Record No. 310104345710301240019), and does not constitute investment advice.