Huijin Tong 2025 Annual Report Analysis: Net profit down 33.39% year-over-year, non-recurring net profit down 39.14%

Core Profitability Indicator Interpretation

Operating Revenue: Decline in both volume and price leads to a 9.44% drop in revenue

In 2025, the company achieved operating revenue of 4.182 billion yuan, a decrease of 9.44% compared to 4.619 billion yuan in the same period last year. Specifically, the sales volume of main products decreased by 6.09% year-on-year, and the average selling price decreased by 6.96%, with both factors dragging down the revenue performance:

• On the sales volume side: The sales volume of angle steel towers was 499,000 tons, a year-on-year decrease of 4.43%; the sales volume of steel pipe towers was 47,500 tons, a significant year-on-year decrease of 31.96%; only the sales volume of other steel structures and contact network supports was 45,300 tons, an increase of 30.56% year-on-year.
• On the price side: The selling price of angle steel towers decreased by 7.22% year-on-year, the selling price of steel pipe towers decreased by 6.03% year-on-year, and the selling price of other steel structures and contact network supports decreased by 2.74% year-on-year.

Net Profit: Year-on-year decrease of 33.39%, significant profit pressure

In 2025, the net profit attributable to shareholders of the listed company was 103 million yuan, a decrease of 33.39% compared to 155 million yuan in the same period last year. This was mainly affected by declining revenue, narrowing gross profit margins of main products, and reduced other income:

• The decline in the selling price of main products (6.96%) was greater than the decline in raw material prices (6.69%), resulting in a decrease of 0.61 percentage points in the gross profit margin of main business compared to the same period last year.
• Other income for the current period was 33.536 million yuan, a decrease of 22.88% compared to the previous period, mainly due to a reduction in the income from the additional deduction of value-added tax.

Net Profit Excluding Non-Recurring Items: Decline greater than net profit, weakening of main business profitability

The net profit attributable to shareholders of the listed company, excluding non-recurring gains and losses, was 82.416 million yuan, a year-on-year decrease of 39.14%, with a decline greater than that of net profit. The performance after excluding non-recurring items further declined, indicating prominent profitability pressure in the main business. Although the income from the sale of idle properties of 9.2608 million yuan somewhat cushioned the decline in profitability, the trend of weakening profitability in the main business still needs to be monitored.

Earnings Per Share: Declining in line with profitability

The basic earnings per share for the company in 2025 was 0.3038 yuan/share, a decrease of 33.41% compared to 0.4562 yuan/share in the same period last year; the net profit excluding non-recurring items was 0.2430 yuan/share, a decrease of 39.14% compared to 0.3993 yuan/share in the same period last year. The changes in earnings per share were completely consistent with the trends in net profit and net profit excluding non-recurring items.

Expense Structure Analysis

Overall Expenses: Slight year-on-year decrease, clear structural differentiation

In 2025, the total period expenses of the company were 4.108 billion yuan, a year-on-year decrease of 8.59% from 4.494 billion yuan in the same period last year, with differentiated performance across various expenses:

Selling Expenses: Year-on-year increase of 15%, bidding and promotion costs rise

Selling expenses increased by 15% year-on-year, primarily due to increased bidding fees and promotional expenses during the reporting period compared to the same period last year. Specifically, bidding fees rose from 13.1966 million yuan to 18.8753 million yuan, and promotional expenses increased from 7.8780 million yuan to 11.7640 million yuan. The total of these two items increased by 9.5647 million yuan year-on-year, becoming the core driving factor for the growth in selling expenses.

Management Expenses: Slight decrease of 1.48%, business entertainment expenses shrink

Management expenses decreased slightly by 1.48% year-on-year, mainly due to a decrease in business entertainment expenses during the reporting period, from 6.1883 million yuan to 4.2302 million yuan, a reduction of 1.9581 million yuan, which offset the slight growth in other management expenses.

Financial Expenses: Significant decrease of 24.42%, financing cost optimization

Financial expenses decreased by 24.42% year-on-year, mainly due to the company optimizing its financing structure and the overall financing interest rate level declining. The interest expense for this period was 96.3632 million yuan, a decrease of 30.8036 million yuan from 127.1668 million yuan in the previous year, with a decline of 24.22%, which was the main reason for the significant decrease in financial expenses.

R&D Expenses: Year-on-year decrease of 8.31%, project structure optimization

R&D expenses decreased by 8.31% year-on-year, mainly due to the company’s optimization of R&D project structure, improved project maturity, and effective lean management. In 2025, the company’s total R&D investment was 170.9178 million yuan, all of which was expensed, with the total R&D investment accounting for 4.09% of operating revenue.

R&D Personnel Situation

As of the end of 2025, the number of R&D personnel in the company was 491, accounting for 14.70% of the total number of employees. In terms of educational background, only 58 personnel had a bachelor’s degree or higher, accounting for 11.81%; personnel with an associate degree or lower accounted for 88.19%, including 258 individuals with a high school education or lower, accounting for 52.55%. The overall educational level of R&D personnel needs to be improved.

From an age perspective, personnel aged 30-40 numbered 202, accounting for 41.14%, forming the core strength of the R&D team; personnel under 30 numbered 108, accounting for 22.00%, bringing fresh blood to the R&D team; personnel aged 40-50 numbered 103, accounting for 20.98%, possessing rich R&D experience, with the overall age structure relatively balanced.

Cash Flow Situation

Overall Cash Flow: Improvement in operating cash flow, investment cash flow turns positive

In 2025, the net increase in cash and cash equivalents of the company was 88.8791 million yuan, a turnaround from -292.1514 million yuan in the same period last year, indicating an improvement in cash flow status.

Net Cash Flow from Operating Activities: Year-on-year increase of 18.87%, effective capital control

The net cash flow generated from operating activities was 2.179256 billion yuan, a year-on-year increase of 18.87%, mainly due to the company’s continued strengthening of accounts receivable collection and capital management. Cash received from selling goods and providing services was 3.348 billion yuan, although it decreased year-on-year, the optimization of procurement payments and expense outflows allowed the net cash flow from operating activities to grow.

Net Cash Flow from Investing Activities: Turned positive, disposal of idle assets contributed positive inflow

The net cash flow generated from investing activities was 544.93 million yuan, while in the same period last year, it was -58.564 million yuan, realizing a turnaround from negative to positive, mainly due to the disposal of idle assets during the reporting period. The cash net amount recovered from the disposal of fixed assets, intangible assets, and other long-term assets was 333.484 million yuan, which drove the net cash flow from investing activities to turn positive.

Net Cash Flow from Financing Activities: Significant narrowing of outflow scale

The net cash flow generated from financing activities was -1.344823 billion yuan, compared to -4.697869 billion yuan in the same period last year, with a significant narrowing of the outflow scale, mainly due to a reduction in the scale of debt repayment, dividend payments, and interest payments during the reporting period. The cash paid for debt repayment this period was 1.789 billion yuan, slightly decreased from 1.811 billion yuan in the previous year, and the scale of dividends and interest paid also decreased.

Possible Risks Faced

Market Competition Risk

There are many enterprises in China’s tower manufacturing industry, and overall competition is becoming increasingly fierce. In the domestic market, if future investment in power grid construction slows down, market competition will further intensify; in the international market, more companies are participating in international market layouts, and the number of competitors is continuously increasing, which will put the company under dual competitive pressure in both domestic and international markets. Countermeasures: Integrate advantageous resources, strengthen efforts to explore domestic and international markets, increase technological innovation and management innovation, continuously optimize product structure, consolidate market position, and enhance market competitiveness.

Raw Material Price Fluctuation Risk

The main raw materials required for the company’s production are bulk commodities such as steel and zinc ingots, which account for a significant portion of costs, and price fluctuations can have a substantial impact on the company’s performance. Countermeasures: Establish a raw material price linkage mechanism with certain customers and sign price locking agreements with certain suppliers to reduce the impact of price fluctuations by preparing materials in advance; track raw material price trends in real time and timely engage in futures hedging; strengthen comprehensive budget management, reasonably arrange inventory, and strictly control production costs.

Tax Incentive Policy Change Risk

The company and some subsidiaries enjoy tax incentives for high-tech enterprises. If tax policies change in the future or related indicators fail to meet the recognition criteria, it will increase the company’s tax burden and affect performance. Countermeasures: Closely monitor tax policy dynamics, promptly assess the impact of policy adjustments, and prepare response plans in advance to reduce adverse effects brought by policy changes.

Exchange Rate Fluctuation Risk

With the deepening of international market layouts, the impact of foreign exchange risk on the company’s operating results is increasing. The long construction cycle of power engineering general contracting projects makes exchange rate fluctuation risk more prominent. Countermeasures: Adopt reasonable hedging tools and engage in foreign exchange hedging measures to reduce the impact of exchange rate fluctuations on the company.

Risks Brought by Company Transformation

The company is actively promoting transformation and upgrading, expanding into the power engineering general contracting field, but lacks relevant project operation management experience. Project contracts have long cycles, large amounts, and complex environments, leading to operational management risks. Countermeasures: Reduce uncertainties in project operation management by leveraging internal reserves and introducing professionals, and steadily promote transformation and upgrading.

Director and Senior Management Compensation Situation

Chairman’s Pre-Tax Compensation: No salary drawn from the company

Chairman Li Mingdong received a total pre-tax compensation of 0 from the company during the reporting period; his compensation is received from related parties.

General Manager’s Pre-Tax Compensation: 37,400 yuan

General Manager Jin Zhijian was appointed on December 2, 2025, and received a total pre-tax compensation of 37,400 yuan from the company during the reporting period.

Vice General Managers’ Pre-Tax Compensation: All exceed 750,000 yuan

• Vice General Manager Cai Weifeng received a total pre-tax compensation of 760,900 yuan during the reporting period;
• Vice General Manager Dong Ping received a total pre-tax compensation of 763,400 yuan during the reporting period;
• Vice General Manager Liu Jie received a total pre-tax compensation of 757,300 yuan during the reporting period.

Chief Financial Officer’s Pre-Tax Compensation: 751,800 yuan

Chief Financial Officer Zhu Guiying received a total pre-tax compensation of 751,800 yuan from the company during the reporting period.

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