Performance Growth Fails to Mask Cash Flow Pressure: Rongje Share's 2025 Operating Cash Flow Declines Over 30%

(Source: Economic Information Daily)

Recently, Rongjie Co., Ltd. (referred to as “Rongjie Co.” or stock code 002192.SZ) released its 2025 annual report. During the reporting period, the company achieved total operating revenue of 840 million yuan, a year-on-year increase of 49.71%; net profit attributable to shareholders was 279 million yuan, a year-on-year increase of 29.52%.

During the period, Rongjie Co.'s lithium concentrate production and sales increased, along with higher net profits from its joint ventures, becoming the main drivers of the company’s revenue and profit growth. However, the annual report also disclosed that the production and sales of non-ferrous metal processing and smelting industries, which have a lower revenue share, both decreased year-on-year. Additionally, due to factors such as reduced government subsidies, the company’s net cash flow from operating activities decreased by 31.12% year-on-year.

Lithium Concentrate Products Drive Performance Growth

Rongjie Co.'s main businesses include lithium ore mining, lithium salt processing and smelting, and lithium battery equipment manufacturing. Its main products include lithium concentrates, battery-grade lithium salts, and lithium battery equipment. During the reporting period, the company’s lithium battery cathode and anode material projects are still in construction and preliminary planning stages, with no products yet produced.

From a product layout perspective, Rongjie Co.'s core businesses are located in the upper and middle reaches of the new energy lithium battery industry chain. End applications include new energy vehicles, energy storage stations, and consumer electronics. Among these, new energy vehicles and energy storage are the primary application fields and growth sources for lithium batteries.

Against this background, Rongjie Co.'s performance changes generally align with the development trend of the new energy lithium battery industry. The annual report shows that during the period, the company achieved simultaneous growth in total revenue and net profit. By the end of the reporting period, total assets reached 4.924 billion yuan, an increase of 13.80% from the beginning of the year; net assets attributable to shareholders of the listed company were 3.531 billion yuan, an increase of 5.15% from the beginning of the year.

The main drivers of Rongjie Co.'s performance growth are the increased production and sales of lithium concentrate products and higher net profits from its joint venture Chengdu Rongjie Lithium Industry. During the period, the company’s lithium concentrate (6% grade) production volume reached 185,600 tons, a 174.83% increase from the previous year. The main product, lithium concentrate, was transported externally, doubling production and significantly boosting revenue.

In terms of revenue composition, the non-ferrous metal mining and dressing industry, which includes lithium concentrate products, accounted for 91.25% of total revenue, with a year-on-year growth of 92.54%. In contrast, the non-ferrous metal processing and smelting industry, which includes lithium salts, accounted for only 0.53%, a decrease of 93.10% year-on-year. Despite the low proportion, the company’s output and sales in the non-ferrous metal processing and smelting industry decreased by 37.68% and 47.18%, respectively, mainly due to market conditions and technological upgrades in production lines, leading to reduced product output and sales.

Regarding revenue from the non-ferrous metal processing and smelting industry, Rongjie Co. stated in the annual report that the lithium salt capacity within the company’s consolidated scope is currently small; the joint venture Chengdu Rongjie Lithium Industry plans to have a capacity of 40,000 tons per year, with 20,000 tons already in operation. During the period, the company’s large increase in lithium resource output ensured full capacity utilization of the joint venture lithium salt plant. Once Chengdu Rongjie Lithium Industry’s planned capacity is fully built, it will further enhance the company’s overall market competitiveness and profitability.

Operating Cash Flow Decreases by 31.12% Year-on-Year

Rongjie Co.'s annual report shows that at the end of the period, the company’s asset-liability ratio was 27.10%, an increase of 6.20 percentage points from the end of the previous year. During the period, the company’s net cash flow from operating activities per share was 1.20 yuan, a decrease of 0.54 yuan from the previous year; net cash flow from operating activities decreased by 31.12% compared to the same period last year; the operating cash ratio was 36.94%, down 43.35 percentage points from the previous year.

The company explained that this was mainly due to a decrease in government subsidies received compared to the previous year, and an increase in deposits and guarantees paid, which significantly reduced net cash flow from operating activities, leading to a substantial decline in the operating cash ratio.

Rongjie Co. also disclosed its main business plans for 2026. In lithium mining and selection, the company will continue to promote the implementation of the new 350,000-ton-per-year ore processing capacity project at the original mine site, as well as the expansion of other capacity projects. In lithium battery materials, the company plans to advance the construction of the Guangzhou Rongjie Power Nansha cathode material project, aiming for mass production in the second half of the year; additionally, a 50,000-ton-per-year lithium-ion battery anode material project will be built. In new energy operations, Rongjie Co. intends to establish a holding subsidiary to develop new energy operation-related businesses, focusing on large-scale energy storage operations to cultivate new growth points.

Regarding funding sources for new projects and investments, Rongjie Co. stated that the company has accumulated substantial cash over the past six years of continuous profitability, and its operating cash flow has been positive for five consecutive years. The company has the financial strength to maintain current operations and continue project development. Currently, the company’s operations are stable, and it has strong banking financing capabilities. Additionally, the board has approved and authorized the company and its subsidiaries to apply for a total credit line of 1.4 billion yuan from banks, effectively broadening its funding channels.