Ke Chuang New Materials 2025 Annual Report Analysis: Net profit up 86.23%, Operating cash flow turns profitable

Core Profitability Metrics Surge Significantly

Operating Revenue: Up 21.13% Year over Year

In 2025, the company achieved operating revenue of 139,439,898.86 yuan, up 21.13% year over year from 115,115,265.61 yuan in 2024. By product segment, revenue from silicon carbide composite materials surged 240.02% year over year, becoming a key driver of growth. Revenue from functional refractory materials fell slightly by 0.18% year over year, but the gross margin increased by 3.22 percentage points. Revenue from shaped refractory materials dropped sharply by 60.81%, due to the company’s active adjustment of its product structure. By region, revenue in the Southwest increased 432.87% year over year, while revenue in the Northwest grew 171.16%. The expansion in emerging regional markets has shown notable results.

Net Profit: Up 86.23% Year over Year

Net profit attributable to shareholders of the listed company was 17,696,303.26 yuan, up significantly by 86.23% year over year from 9,502,495.47 yuan in 2024. The growth in net profit was mainly driven by: a decline in raw material prices, which boosted gross margin to 34.02%, an increase of 3.25 percentage points from the prior year; the release of production capacity for new products, which drove rapid growth in revenue; and a substantial decrease in finance costs, which reduced cost outlays.

Non-GAAP Net Profit: Up 84.06% Year over Year

Non-GAAP net profit, after deducting non-recurring gains and losses, was 15,341,891.12 yuan, up 84.06% year over year from 8,335,378.63 yuan in 2024. The growth rate is slightly lower than that of net profit, mainly because during the period the company received non-recurring benefits such as a listing subsidy of 2.3 million yuan from the Finance Bureau of Xin’an County.

Earnings per Share: Both Basic and Non-GAAP Rise Sharply

Basic earnings per share is consistent with the growth rate of net profit. The increase in non-GAAP earnings per share is slightly lower, aligning with the growth pattern of non-GAAP net profit, reflecting a significant improvement in the company’s core profitability.

Improved Cost Structure, with R&D Spending Stepped Up

Total Expenses: Growing in Tandem with Revenue Scale

In 2025, the company’s total period expenses were 26,286,634.28 yuan (selling + administrative + R&D + finance costs, with finance costs being negative), up 17.35% year over year from 22,399,280.96 yuan in 2024. The growth rate is lower than the revenue growth of 21.13%, indicating that expense management has delivered results.

Selling Expenses: Up 18.30% Year over Year

Selling expenses were 9,006,548.59 yuan, up 18.30% year over year from 7,613,197.00 yuan in 2024. As a share of revenue, selling expenses declined from 6.61% to 6.46%. The increase was mainly due to higher market promotion expenses and travel expenses, which matches the company’s strategy of expanding emerging regional markets and promoting new products.

Administrative Expenses: Up 17.25% Year over Year

Administrative expenses were 10,088,042.11 yuan, up 17.25% year over year from 8,604,013.72 yuan in 2024. As a share of revenue, administrative expenses declined from 7.47% to 7.23%. The increase was mainly due to higher employee compensation, intermediary service fees, and consulting fees, reflecting that the company has increased investment in talent attraction and internal management standardization.

Finance Costs: Down Sharply by 284.81%

Finance costs were -529,186.57 yuan, down 284.81% year over year from -137,520.03 yuan in 2024. This was mainly because the company optimized its debt structure, and the interest rate on newly added borrowings was lower. At the same time, interest income increased, resulting in a large net benefit from finance costs.

R&D Expenses: Up 22.16% Year over Year

R&D expenses were 7,721,230.15 yuan, up 22.16% year over year from 6,320,590.27 yuan in 2024. As a share of revenue, R&D spending increased from 5.49% to 5.54%. R&D investments were mainly used for staff labor and direct materials. During the reporting period, the company was granted 5 newly authorized patents, including 1 invention patent. As of the end of 2025, the company cumulatively held 50 valid patents, with its technical reserves continuing to grow.

R&D Personnel: Team Structure Optimized

At the end of 2025, the R&D team had 22 employees, down 3 from 25 at the beginning of the period. The proportion of R&D personnel in total employees decreased from 14.61% to 12.79%. However, the number of R&D personnel with a bachelor’s degree or above increased from 12 to 13, while those with junior college education or below decreased from 13 to 9. The R&D team’s educational structure was optimized, and overall quality improved.

Improved Cash Flow Structure, with Increased Investment Intensity

Overall Cash Flow: Net Amount Turns from Positive to Negative

In 2025, the net increase in cash and cash equivalents was -8,732,606.19 yuan, compared with 22,695,441.12 yuan in 2024, turning from positive to negative, mainly due to a significant increase in cash outflows from investing activities.

Cash Flow from Operating Activities: Swing to Profit

Net cash flow from operating activities was 7,254,462.95 yuan, up 210.02% year over year from -6,593,544.06 yuan in 2024, achieving a swing to profitability. This was mainly attributable to the expansion of the new product market, which increased sales collections, as well as receiving large government subsidies during the reporting period, significantly improving the quality of operating cash flow.

Cash Flow from Investing Activities: Net Amount Turns Negative

Net cash flow from investing activities was -14,826,151.13 yuan, down 137.59% year over year from 39,440,401.09 yuan in 2024. This was mainly because in the prior period the company redeemed a large amount of wealth management products investment, while the scale of such investments in the current period was smaller. At the same time, the company continued to advance the construction of its raised-investment projects; cash paid for purchase of fixed assets and construction in progress increased, indicating a stronger investment intensity.

Cash Flow from Financing Activities: Net Amount Improves Significantly

Net cash flow from financing activities was -1,162,417.92 yuan, up 88.55% year over year from -10,151,415.91 yuan in 2024. This was mainly due to an increase in new bank borrowings, which increased financing inflows during the period. Meanwhile, cash paid for dividend distribution decreased by 4.3 million yuan compared with the prior year, reducing financing outflows and easing funding pressure to some extent.

Risk Factors Still Need to Be Kept in Mind

Market Risk

The steel industry is the company’s largest downstream customer. Fluctuations in the steel industry’s business conditions directly affect the company’s performance. If the steel industry continues to remain sluggish in the future, the company’s accounts receivable collection cycle may be extended, creating risks of declines in revenue and gross margin. The company responds by compressing the sales scale of products with low technological content and increasing requirements for customers’ credit ratings, but it still needs to continuously monitor industry developments.

Risk of Raw Material Price Fluctuations

Raw materials account for about 70% of the company’s product costs, and fluctuations in raw material prices have a significant impact on gross margin. The company controls costs through centralized bulk purchasing and a stable supplier system, but large market fluctuations in raw material prices may still create cost pressure.

Risk of Inventory and Accounts Receivable Scale

As of the end of 2025, the carrying value of the company’s inventory was 53.8321 million yuan, accounting for 13.89% of total assets; the carrying value of accounts receivable was 109.0924 million yuan, accounting for 28.15% of total assets. As the business scale expands, inventory and accounts receivable may continue to grow, affecting cash flow turnover efficiency, and there is also risk of impairment and bad debts. The company addresses this through inventory management via the ERP system and strengthening collections of accounts receivable, but it still needs to continuously optimize.

Risk of Raised-Investment Project Benefits Not Meeting Expectations

The company’s raised-investment project, “a silicon carbide composite materials production line for 6,000 tons of annual new energy battery materials,” has been delayed to December 31, 2026. The project implementation faces uncertainties such as market changes and technological shifts, which creates the risk that benefits may not meet expectations. The company responds by increasing market development efforts and optimizing project construction progress, but it still needs to closely monitor project advancement and changes in market demand.

Remuneration of Directors, Supervisors, and Senior Management

Chairman’s Pre-Tax Remuneration: 321,700 yuan

The chairman, Wei Wenxu, reported total pre-tax remuneration received from the company of 321.7 thousand yuan during the reporting period. This is the highest remuneration among the company’s directors and senior management, aligning with his position as the company’s core responsible person.

General Manager’s Pre-Tax Remuneration: 276,200 yuan

The general manager, Zhang Jinyu, reported total pre-tax remuneration of 276.2 thousand yuan during the reporting period. This aligns with the company’s business performance growth and reflects an incentive mechanism that links management remuneration to company performance.

Vice General Manager’s Pre-Tax Remuneration: Up to 269,800 yuan

Yang Zhanpo, executive vice general manager, received 269.8 thousand yuan in pre-tax remuneration. Ma Yongfeng, vice general manager, received 217.4 thousand yuan in pre-tax remuneration. The compensation levels align with job responsibilities and contributions, demonstrating the company’s incentive for its core management team.

Chief Financial Officer’s Pre-Tax Remuneration: 196,300 yuan

Wang Minmin, chief financial officer, reported total pre-tax remuneration of 196.3 thousand yuan during the reporting period, consistent with the role’s value positioning and in line with the company’s overall remuneration system.

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