Zhongtai Chemical reports a loss of 289 million yuan again, with a cumulative loss of over 4.1 billion yuan over three years. The 25.4 billion yuan interest-bearing debt looms overhead.

Image source: Visual China

Blue Whale News, March 26 (Reporter Wang Xiaonan) On the evening of March 25, Zhongtai Chemical (002092.SZ) released its 2025 annual report, showing a net profit loss attributable to shareholders of 289 million yuan, a year-on-year narrowing of 70.43%. Although the loss narrowed due to the recovery of chlor-alkali chemical profitability, Zhongtai Chemical has accumulated losses of 4.131 billion yuan over the past three years. Amidst the underwhelming performance, Zhongtai Chemical’s financial pressure has been increasing year by year, with the debt-to-asset ratio exceeding 60% for consecutive years. Despite having 5.838 billion yuan in cash, its interest-bearing liabilities have reached 25.457 billion yuan. At this time, the strategic investment introduced for its subsidiary six years ago has reached its term, and Zhongtai Chemical also had to spend 1.2 billion yuan to buy back equity at the end of last year.

Loss of 289 million yuan in 2025, cumulative losses exceed 4.1 billion yuan over three years

On the evening of March 25, Zhongtai Chemical released its 2025 annual report, reporting revenue of 28.696 billion yuan, a year-on-year decrease of 4.74%; net profit loss attributable to shareholders was 289 million yuan, a year-on-year narrowing of 70.43%.

Regarding the reduction in net profit loss, Zhongtai Chemical stated that the recovery of chlor-alkali chemical profitability, improvement in the textile industry operations, and significant narrowing of asset impairments and investment losses contributed to this result.

In 2025, new domestic PVC production capacity was concentrated in operation, resulting in a net increase in overall capacity. However, the area of newly constructed housing continued to decline, leading to a decrease in domestic PVC demand. Nevertheless, the PVC export market maintained a high growth trend, filling some of the gap caused by insufficient domestic demand, while market prices continued to stabilize at low levels.

According to data, Zhongtai Chemical has two main industries: chlor-alkali chemicals and viscose textile. The company mainly produces five products: polyvinyl chloride resin (PVC), ion-exchange membrane caustic soda, viscose fiber, viscose yarn, and methanol, supporting a circular economy industrial chain that includes cogeneration, anthracite, calcium carbide, and cement production from carbide slag. Zhongtai Chemical was listed on the A-share market in December 2006.

According to the 2025 annual report, the core PVC product of Zhongtai Chemical’s chlor-alkali chemical sector contributed nearly 40% of the company’s revenue. It is reported that PVC is mainly used in the manufacturing of profiles and pipes. Due to a contraction in demand from the downstream real estate market and continuous release of industry capacity, domestic PVC prices have gradually declined since 2022, leading to losses for production enterprises. According to Futures Daily, since 2025, PVC futures prices have hit a near ten-year low due to increased supply and reduced demand, and the weak real estate industry.

From an operational performance perspective, Zhongtai Chemical had never reported an annual loss in the 16 years from its listing until 2022. In 2021, the company achieved revenue of 62.463 billion yuan, with a historical high net profit attributable to shareholders of 2.703 billion yuan. In 2022, Zhongtai Chemical’s performance showed initial signs of decline, with annual revenue and net profit attributable to shareholders of 51.662 billion yuan and 777 million yuan, respectively, down 17.86% and 71.75% year-on-year, both showing significant declines.

2023 marked a turning point for Zhongtai Chemical’s operating performance, as the company reported a significant loss for the first time. That year, Zhongtai Chemical achieved revenue of 37.118 billion yuan, a year-on-year decrease of 28.15%; net profit attributable to shareholders experienced a staggering drop of 469.07%, resulting in a loss of 2.865 billion yuan. At that time, Zhongtai Chemical explained that due to the industry cycle, the selling prices of the company’s main products—PVC, caustic soda, viscose fiber, and viscose yarn—had declined to varying degrees compared to the previous year, leading to a significant decrease in product profitability. In 2023, the company recognized an asset impairment loss of 668 million yuan; losses from joint ventures increased, leading to an investment loss of 412 million yuan.

Since then, Zhongtai Chemical has entered a continuous loss mode, losing another 977 million yuan in 2024, summing up to a total loss of 4.131 billion yuan over three years.

While both revenue and net profit have declined, Zhongtai Chemical’s operating cash flow has also decreased. In 2025, the net cash flow from operating activities was 3.249 billion yuan, a year-on-year decrease of 44.77%. The company explained that this was mainly due to a decline in selling prices of major products, resulting in a decrease in cash inflow from operating activities.

Regarding whether it can turn profitable in 2026, Zhongtai Chemical seems to have some “confidence.” The company stated that although planned new domestic PVC production capacity has decreased, and some non-competitive capacities may be shut down, the PVC that concentrated production in the fourth quarter of 2025 will be released in the first half of 2026, and the supply will remain high. The domestic real estate market is still in a deep adjustment cycle, while the demand in packaging, automotive, and pharmaceutical sectors still has considerable growth potential; affected by changes in international circumstances, international crude oil prices have risen significantly, which highlights the cost advantage of calcium carbide PVC compared to ethylene PVC.

Financial pressure remains high, with interest-bearing liabilities reaching 25.457 billion yuan

In recent years, facing performance pressure, the chemical industry leader Zhongtai Chemical has not had an easy time, and only in May 2025 did the company officially “remove its special treatment.”

In March 2024, Zhongtai Chemical and its controlling shareholder Zhongtai Group were both investigated by the China Securities Regulatory Commission within a month. Two months later, the regulator imposed corresponding penalties, determining that to meet the revenue targets set by the controlling shareholder Zhongtai Group, Zhongtai Chemical and its subsidiaries had inflated revenue by 4.248 billion yuan and inflated costs by the same amount in 2022. In addition, in 2021 and 2022, Zhongtai Chemical and its subsidiaries engaged in non-operational fund occupation related party transactions with the controlling shareholder Zhongtai Group and its affiliates, totaling 7.718 billion yuan.

In response, the listed company, its controlling shareholder, and relevant responsible persons were all penalized, with both Zhongtai Chemical and Zhongtai Group fined 5 million yuan each. Meanwhile, the abbreviation of the listed company’s stock was changed from “Zhongtai Chemical” to “ST Zhongtai,” until May 20 of last year when the company officially “removed its special treatment,” restoring the stock abbreviation to “Zhongtai Chemical.”

Zhongtai Chemical, which has not yet emerged from its loss predicament over three years, is also facing increasing financial pressure.

In recent years, Zhongtai Chemical’s debt-to-asset ratio has remained above 60%, reaching 65.75% in 2025. Although Zhongtai Chemical had 5.838 billion yuan in cash at the end of 2025, its corresponding interest-bearing liabilities were as high as 25.457 billion yuan, including 12.202 billion yuan in short-term interest-bearing liabilities, resulting in significant repayment pressure for the company. By the end of 2025, Zhongtai Chemical’s financial expenses reached 1.004 billion yuan.

At this time, Zhongtai Chemical also had to spend 1.2 billion yuan to buy back equity from the strategic investment introduced for its subsidiary six years ago.

To broaden financing channels and reduce Zhongtai Chemical’s overall debt-to-asset ratio, in December 2019, Zhongtai Chemical’s controlling subsidiary Huatai Company collaborated with “Agricultural Bank Investment,” investment plans, and Shan Jin Asset Management, with the latter investing 500 million yuan, 200 million yuan, and 500 million yuan in Huatai Company through capital increase and share expansion, with an investment period of six years.

According to the exit clauses in the capital increase agreement signed by all parties at that time, on December 26, 2025, Zhongtai Chemical intends to acquire a total of 15.173% equity of Huatai Company held by Agricultural Bank Investment, investment plans, and Shan Jin Asset Management for 1.2 billion yuan. After this buyback, Zhongtai Chemical’s equity stake in Huatai Company will rise to 99.732%, maintaining its position as the controlling shareholder of Huatai Company.

Data shows that Huatai Company, established on January 16, 2004, is a production enterprise focused on the chlor-alkali chemical field, with core businesses covering the production and sales of polyvinyl chloride resin and ion-exchange membrane caustic soda. In 2024 and 2025, Huatai Company’s revenue was 4.568 billion yuan and 4.264 billion yuan, respectively, with corresponding net profits of 100.17 million yuan and 244 million yuan, showing a significant improvement in profitability in 2025.

It is worth mentioning that around its core chlor-alkali chemical business, Zhongtai Chemical has also expanded its industrial chain through equity acquisitions and new project investments, leveraging business synergy, and these expenditures have further increased the company’s financial pressure.

In June 2024, to enhance control and achieve integration in the chlor-alkali industry, Zhongtai Chemical further acquired equity in the associate company Shengxiong Energy, intending to spend 951 million yuan to acquire a total of 1.577 billion shares held by 23 shareholders of Shengxiong Energy. The following month, Shengxiong Energy became a wholly-owned subsidiary and was included in the consolidated financial statements, with Zhongtai Chemical’s stake increasing from 18.55% to 55.69%. Data shows that Shengxiong Energy’s main business includes the production and sales of polyvinyl chloride resin, ion-exchange membrane caustic soda, and calcium carbide, with revenue of 5.137 billion yuan and net profit of 324 million yuan in 2025.