The stock price hits new highs again! This non-ferrous metal company’s dividend payout needs improvement, and brokerages recommend buying.

Does a Low-Dividend Strategy Signal Optimization of the Financial Structure?

Written by | Hui Kai

Edited by | Cheng Cheng

Guocheng Mining turned losses into profits in 2025. Brokerages are optimistic about the expansion of its molybdenum-lithium business, while the titanium dioxide segment is expected to improve.

Benefiting from the rising prices of products such as non-ferrous metals, Guocheng Mining achieved a turnaround from loss to profit in 2025 net profit, and its share price has continued to hit record highs. In its annual report, Guocheng Mining disclosed that it will use 14% of its profits for cash dividends, while retained profits will be used to replenish capital. This decision helps enhance the company’s debt repayment capacity.

This image may be AI-generated

Turnaround from loss to profit

Most of the profits retained to replenish capital

Benefiting from the rapid development of industries such as new energy and AI, in recent years the prices of non-ferrous metals and lithium-mining products have continued to rise, and the performance and share prices of listed companies in related sectors have both improved. Guocheng Mining (000688.SZ) is among them.

According to publicly available information, Guocheng Mining’s main businesses are the mining, selection, and processing of non-ferrous metals and resource recycling and integrated utilization. Its products include molybdenum concentrate, zinc concentrate, lead concentrate, silver concentrate, copper concentrate, and titanium dioxide, among others. As disclosed in its 2025 annual report, in 2025 the company achieved operating revenue of 48.06 billion yuan, up 17.13% year over year; achieved net profit attributable to the parent company of 10.76 billion yuan, with an adjusted year-over-year increase of 138.48%; and basic earnings per share of 0.97 yuan, up 134.76% year over year.

In 2024, Guocheng Mining posted a loss of 1.13 billion yuan. The successful turnaround to net profit attributable to the parent in this instance is largely attributable to its completion of the acquisition of 60% of the equity interest in Guocheng Industrial and the sale of its equity interest in Chifeng Yubang Mining in 2025. According to the performance forecast released by Guocheng Mining on January 24 this year: it is expected to achieve net profit of 11 billion yuan to 12 billion yuan in 2025. The company completed the sale of 65% of the equity interest in Chifeng Yubang Mining and recognized the corresponding investment income, which is expected to affect net profit attributable to shareholders of the listed company by approximately 6.58 billion yuan.

Along with the disclosure of its 2025 annual report, Guocheng Mining also disclosed the Announcement on the Failure to Meet the Assessment Indicators for the Third Unlock Period of the 2022 Employee Shareholding Plan. According to its 2022 Employee Shareholding Plan, the unlock periods are 18 months, 30 months, and 42 months, corresponding to unlock ratios of 40%, 30%, and 30%, respectively. The company’s assessment years are 2023-2025. For the third batch’s unlock requirement, the net profit in 2025 must be no less than 18 billion yuan, or cumulative net profit over three years must be no less than 36 billion yuan. In fact, Guocheng Mining’s net profit attributable to the parent company in 2025 was 10.76 billion yuan, which is below the unlock requirement. The company said, “Since the company-level performance assessment indicator for the third unlock period of the employee shareholding plan has not been met, the shares held by all holders corresponding to the third unlock period—amounting to 30% of the employee shareholding plan—may not be unlocked.”

Based on the successful turnaround in 2025 performance, Guocheng Mining decided to implement cash dividends for 2025. As disclosed in the annual report, the company plans to distribute a cash dividend of 1.30 yuan for every 10 shares to all shareholders (including tax), with a total cash dividend payout of 1.54 billion yuan, and any remaining undistributed profits will be carried over to the next year. According to calculations, this cash dividend payout represents 14.31% of the total net profit attributable to the parent company of Guocheng Mining.

In recent years, Guocheng Mining’s capital pressure has continued to increase. Its asset-liability ratio rose from 45.14% at the end of 2021 to 69.55% at the end of 2025. The 2025 annual report disclosed that the company’s long-term borrowings increased from 8.93 billion yuan at the beginning of 2025 to 22.8 billion yuan at the end of 2025, and its short-term borrowings increased from 2.25 billion yuan at the beginning of 2025 to 11.18 billion yuan at the end of 2025. With the continuous increase in its debt ratio, Guocheng Mining’s interest expenses also rose from 1.29 billion yuan in January 2024 to 1.6 billion yuan in January 2025. By choosing to retain more profits this time, the company can help optimize its balance sheet, replenish capital, and improve its debt repayment ability.

There is room for improvement in information disclosure evaluation

The information disclosure evaluation results released by the exchange show that Guocheng Mining’s information disclosure evaluation results for 2023-2024 and 2024-2025 are D and C, respectively. The Shenzhen Stock Exchange’s Guidelines for Self-Regulation of Listed Companies No. 11—Evaluation of Information Disclosure Work (2025 Revision) stipulate that A is excellent, while C and D correspond to qualified and unqualified, respectively. Lower rating results indicate that the company has substantial room for improvement in key areas such as the completeness of its organizational structure, the frequency and quality of investor performance briefings and the convening of general meetings of shareholders, financial quality, and information disclosure.

According to the annual report data of Guocheng Mining, the company organized 5 activities in 2024 such as research, communication, and interviews, while in 2025 it organized only 3 such activities. In addition, the company’s announcements show that in January 2025, its Chairman Wu Cheng, General Manager Zhu Shengli, and its then Chief Financial Officer Guo Wei, among others, received warning letters issued by the Sichuan Securities Regulatory Bureau. The warning letter pointed out that Guocheng Mining’s accounting and auditing work had problems such as errors in the business assessment of whether obtained assets constitute a business, which led to incorrect presentation of balance sheet line items, resulting in inaccurate information disclosure in the 2021-2023 annual reports. It required the listed company and directors and senior executives including Chairman Wu Cheng to complete rectification.

In recent years, regulators have encouraged leading companies in the industry and central state-owned enterprises to accelerate ESG development and disclose ESG reports. As a large enterprise in the non-ferrous metals industry, although Guocheng Mining disclosed social responsibility reports in 2022 and 2023, it did not continue to do so in 2024.

Guocheng Mining’s secretary of the board of directors is Ma Chong. According to the company’s announcement, Ma Chong previously served as Investment Director at Fosun High-Tech Group and Assistant General Manager at Jin Hui Co., Ltd., among other roles. He only started serving as Guocheng Mining’s board secretary in 2024, with just 2 years of experience in the role.

A subsidiary—Guocheng Titanium Industry—awaits a turnaround

While the parent company’s performance surged, some of Guocheng Mining’s subsidiaries performed rather flatly. According to Guocheng Mining’s announcement, the wholly owned subsidiary Inner Mongolia Guocheng Titanium Industry Co., Ltd.’s main product is titanium dioxide. Because the titanium dioxide product price is at a low level, it has had a significant impact on the net profit of the listed company. The annual report shows that Guocheng Titanium Industry’s revenue was 4.14 billion yuan in 2024, with a net profit of -2.61 billion yuan; in 2025, revenue was 15.57 billion yuan, with a net profit of -2.43 billion yuan.

In the A-share market, although announcements from listed companies related to the titanium dioxide industry show that 2025 performance declined, no leading company suffered losses. Among them, the performance report of Baotai Co., Ltd. (600456.SH) shows that in 2025 its net profit attributable to the parent company was 4.15 billion yuan, down 28% year over year; Longbai Group (002601.SZ) reported that in the first three quarters of 2025 its net profit attributable to the parent company was 16.74 billion yuan, down 34.68% year over year.

On the Shenzhen Stock Exchange investor interaction platform, in September 2025 an investor asked Guocheng Mining about its titanium dioxide business, saying, “After the industry’s ‘anti-overcompetition’ self-discipline in the second half of the year, will the net profit of your titanium dioxide business improve?” In response, Guocheng Mining’s board secretary Ma Chong replied, “We will continuously optimize production processes, effectively reduce production costs, actively expand diversified sales channels, and gradually enhance our market competitiveness, laying a solid foundation for our future development.”

Guocheng Mining’s financial report also disclosed that Guocheng Titanium Industry incurred a loss of 1.22 billion yuan in the first half of 2025, and a full-year loss of 2.43 billion yuan. As of the end of 2025, Guocheng Titanium Industry’s total assets were 33.7 billion yuan, its net assets were 3.48 billion yuan, and its asset-liability ratio was close to 90%. In addition, according to Qichacha data, the currently paid-in capital of Guocheng Titanium Industry is 9 billion yuan.

Analysts are bullish and give a Buy rating

For Guocheng Titanium Industry, Guocheng Mining provides a large amount of financing guarantees. According to Qichacha data, since 2025, Guocheng Mining has provided more than 10 guarantees to Guocheng Titanium Industry. For example, in August 2025, Guocheng Mining provided a joint and several liability guarantee for a financing of 7.8 billion yuan to Guocheng Titanium Industry.

Previously, Guocheng Mining disposed of loss-making subsidiaries. For instance, in 2025 it sold 65% of its holding in Yubang Mining. According to the company’s announcement, since its acquisition, Yubang Mining has been in the construction stage and in recent years has not contributed to the listed company’s profitability. And by selling Yubang Mining, “it realized the preservation and appreciation of the investment in Yubang Mining, which is conducive to increasing the company’s available funds, optimizing the company’s asset-liability structure, and having a positive impact on the company’s financial position.” The transaction consideration of 16 billion yuan also significantly improved Guocheng Mining’s 2025 performance.

As for Guocheng Titanium Industry, which is loss-making, whether the listed company will consider disposing of it in the future: we consulted the listed company through channels such as the information disclosure email, but as of the time of publication we have not received a response.

It is worth noting that since 2026, titanium dioxide prices have entered a round of price increases. Public information shows that multiple titanium dioxide companies, including Longbai Group (002601.SZ), announced price hikes in March. According to statistics from the Buyi Plastics Research Institute, driven by rising prices of raw materials such as sulfuric acid and titanium ore, in the past month domestic titanium dioxide prices cumulatively increased by 1,700 yuan/ton to 2,000 yuan/ton, while international markets cumulatively increased by about 300 USD/ton to 350 USD/ton, setting new records in recent years for the frequency and magnitude of monthly pricing adjustments. With titanium dioxide prices rising, the performance of Guocheng Titanium Industry is expected to improve.

Despite the above challenges, analysts focus more on the growth potential of its core resource business. Analysts Wu Jinkai, Wang Qinyang, and Jin Yuntao from Guojin Securities pointed out that Guocheng Mining’s molybdenum mine equity output still has substantial room for growth: the company plans to expand its mining permit from 5 million tons/year to 8 million tons/year, and it is currently handling the procedures for changing the mining area. Guojin Securities expects that Guocheng Mining’s revenue in 2026-2028 could reach 58.73 billion yuan, 64.10 billion yuan, and 183.48 billion yuan, respectively, and net profit attributable to the parent company will be 19.70 billion yuan, 34.45 billion yuan, and 53.03 billion yuan, respectively. The growth rate of net profit attributable to the parent in 2026 is expected to exceed 80%. They give a “Buy” rating.

(The individual stocks mentioned in the article are only for illustrative analysis and do not constitute investment advice.)