Ruifeng New Materials 2025 Annual Report Analysis: Operating Cash Flow Increased by 71.40%, Financial Expenses Rose by 154.24% Year-over-Year

Interpretation of Operating Revenue

In 2025, Ruifeng New Materials achieved an operating revenue of 35.083 billion yuan, a year-on-year increase of 11.11%, with revenue scale continuously expanding. By industry, the chemical industry revenue was 35.042 billion yuan, accounting for 99.88% of total revenue, with a year-on-year growth of 11.14%, being the core pillar of the company’s revenue; by product, lubricant additive revenue was 34.018 billion yuan, accounting for 96.96% of total revenue, with a year-on-year growth of 10.71%, being the company’s primary source of income; by region, domestic sales revenue was 10.810 billion yuan, a year-on-year increase of 16.01%, while foreign sales revenue was 24.273 billion yuan, a year-on-year increase of 9.06%, with both domestic and foreign sales achieving growth, and domestic sales growing faster; in terms of sales model, the newly added distribution model generated revenue of 990 million yuan, accounting for 2.82% of total revenue, while direct sales model revenue was 34.094 billion yuan, a year-on-year increase of 7.98%, further enriching the sales channels.

Interpretation of Net Profit

In 2025, the net profit attributable to shareholders of the listed company was 7.364 billion yuan, a year-on-year increase of 1.92%, with the net profit growth rate significantly lower than the revenue growth rate, primarily due to the decline in non-recurring net profit and changes in expenses. From the quarterly data, net profit for the first quarter was 1.949 billion yuan, for the second quarter was 1.753 billion yuan, for the third quarter was 2.042 billion yuan, and for the fourth quarter was 1.620 billion yuan, with a noticeable decline in fourth-quarter net profit, which placed a certain drag on the annual profit growth.

Interpretation of Non-Recurring Net Profit

The non-recurring net profit attributable to shareholders of the listed company was 6.683 billion yuan, a year-on-year decrease of 1.80%, which is the core drag on profit. Total non-recurring gains and losses amounted to 681 million yuan, mainly from government subsidies of 455 million yuan and gains from changes in the fair value of financial assets and disposals of 385 million yuan. The decline in non-recurring net profit reflects the pressure on the company’s main business profitability.

Interpretation of Basic Earnings per Share

The basic earnings per share was 2.50 yuan/share, a year-on-year decrease of 0.79%, a relatively small decline, primarily due to slight growth in net profit but an increase in share capital due to share incentive vesting (the share capital increased by 4.1453 million shares in 2025), diluting the earnings per share.

Interpretation of Non-Recurring Earnings per Share

Non-recurring earnings per share were not disclosed separately, but in conjunction with the decline in non-recurring net profit and the increase in share capital, non-recurring earnings per share also faced downward pressure, reflecting a decrease in the company’s main business earnings per share level.

Interpretation of Expenses

In 2025, the company’s total period expenses amounted to 4.821 billion yuan, a year-on-year increase of 14.38%, with the expense growth rate exceeding the revenue growth rate, leading to a certain erosion of profits. Among them, sales expenses, management expenses, and R&D expenses all increased to varying degrees, and financial expenses shifted from net income in the previous year to net expenditure, with changes in expense structure significantly impacting profits.

Interpretation of Sales Expenses

Sales expenses were 746 million yuan, a year-on-year increase of 35.09%, with the growth rate significantly higher than revenue. This was mainly due to the increase in employee numbers leading to higher employee compensation, as well as the need for additional labor personnel for business development causing an increase in labor costs, reflecting the company’s increased investment in sales to expand the market.

Interpretation of Management Expenses

Management expenses were 1.771 billion yuan, a year-on-year increase of 16.39%, with growth mainly driven by increases in employee compensation, office expenses, travel expenses, entertainment expenses, as well as increases in depreciation and amortization of intangible assets, indicating that the expansion of the company’s operational scale has led to increased management costs.

Interpretation of Financial Expenses

Financial expenses were 98 million yuan, compared to -180 million yuan in the same period last year, a year-on-year increase of 154.24%, shifting from net income in the previous year to net expenditure. The main reason was the increase in exchange losses due to currency fluctuations compared to the same period last year, while interest income decreased and borrowing increased, leading to higher interest expenses, with exchange rate fluctuations and changes in financing scale significantly impacting financial expenses.

Interpretation of R&D Expenses

R&D expenses were 1.606 billion yuan, a year-on-year increase of 10.96%, with the growth rate roughly in line with revenue growth. Throughout the year, the company advanced multiple R&D projects, including the development of API SL gasoline engine oil compounds and GF-7 gasoline engine oil compounds, with several projects completed and achieving industrial production, ensuring continuous R&D investment to maintain the company’s technological competitiveness.

Interpretation of R&D Personnel Situation

By the end of 2025, the number of R&D personnel in the company was 206, a year-on-year increase of 4.57%, with R&D personnel accounting for 13.82%, up 0.31 percentage points year-on-year. In terms of educational background, the number of undergraduates, master’s, and doctoral personnel increased by 15.25%, 30.67%, and 100%, respectively, while the number of personnel with an associate degree or below decreased by 38.10%, indicating a significant improvement in the educational level of the R&D team; in terms of age structure, R&D personnel under 30 increased by 19.59%, accounting for more than half, showing a clear trend of team youthfulness, injecting vitality into the company’s R&D innovation.

Interpretation of Cash Flow

In 2025, the company’s net increase in cash and cash equivalents was 3.615 billion yuan, compared to -7.167 billion yuan in the same period last year, indicating a significant improvement in cash flow conditions. Among them, net cash flow from operating activities increased significantly, net cash outflow from investing activities narrowed, and cash flow from financing activities shifted from net outflow to net inflow, with all three activities jointly driving the increase in cash reserves.

Interpretation of Net Cash Flow from Operating Activities

Net cash flow from operating activities was 7.468 billion yuan, a year-on-year increase of 71.40%, with the growth rate far exceeding that of net profit. This was mainly due to an increase in sales collections compared to the same period last year, with cash inflows from operating activities increasing by 19.07%, while cash outflows only increased by 10.61%, with revenue growth and improved collection efficiency jointly driving the improvement in operating cash flow.

Interpretation of Net Cash Flow from Investing Activities

Net cash flow from investing activities was -4.185 billion yuan, compared to -9.083 billion yuan in the same period last year, with the scale of net outflow narrowing by 53.93%. On one hand, cash net inflow from the investment in financial products increased compared to the same period last year, while on the other hand, cash payments for the purchase and construction of long-term assets decreased compared to the same period last year, along with an increase in the amount invested in Changzhou Xinjin Ruiying Venture Capital Partnership, indicating an adjustment in the structure of investment activities.

Interpretation of Net Cash Flow from Financing Activities

Net cash flow from financing activities was 305 million yuan, compared to -2.535 billion yuan in the same period last year, shifting from net outflow to net inflow. This was mainly due to the large cash payment for repurchasing company shares in the same period last year, while there were no share repurchases in the current period, and cash net inflow from borrowings increased, with cash inflows from financing activities growing by 37.49% and outflows decreasing by 12.56%.

Interpretation of Potential Risks

2. Product R&D and Certification Risk: The R&D of high-end lubricant additives and the high-level certifications such as API and OEM have high thresholds and long cycles. If R&D encounters bottlenecks or certifications fail, it will affect the progress of product high-end upgrades. The company responds by forming special teams and strengthening communication with third-party institutions.
3. Raw Material Price and Supply Risk: Raw materials are downstream products of crude oil, with prices subject to large fluctuations due to international oil prices and geopolitical influences. If prices rise or supplies become tight, production costs will increase. The company responds by expanding suppliers, stocking in advance, signing long-term agreements with upstream suppliers, and increasing the self-sufficiency rate of core single agents.
4. Capacity Project Construction Risk: Domestic technological transformation and expansion, as well as the construction of joint production bases in Saudi Arabia, may be affected by macroeconomic environment, engineering progress, and local business environment, with risks of delays and cost overruns. The company responds through specialized management, locking in suppliers in advance, and relying on local resources from partners.
5. International Policy and Geopolitical Risk: With a high proportion of overseas business, if trade barriers in target markets increase or geopolitical conflicts escalate, it will affect overseas expansion and project operations. The company responds through risk monitoring, localized capacity, and adjusting market layout.
6. Exchange Rate Risk: Export business is mainly settled in foreign currencies, and appreciation of the yuan will lead to exchange losses. The company responds through natural hedging, optimizing settlement methods, and using hedging tools.
7. Safety Production Risk: Fine chemical production involves flammable and explosive materials. If operations are improper or management is inadequate, safety accidents can easily occur. The company responds through standardized operations, safety training, equipment upgrades, and emergency plans.
8. Market Competition Intensification Risk: With the acceleration of domestic substitution, competition among domestic companies is fierce, and leading international companies are also increasing market binding. If the company cannot continue to enhance competitiveness, market share may be squeezed. The company responds through high-end product R&D, upgrading customer structure, cost control, and globalization layout.

Interpretation of Pre-Tax Compensation Total Received by the Chairman During the Reporting Period

During the reporting period, Chairman Guo Chunxuan received a total pre-tax compensation of 8.082 million yuan from the company, the highest among the company’s directors and supervisors, which is in line with his identity as the core manager of the company and corresponds with the company’s performance scale and industry standards.

Interpretation of Pre-Tax Compensation Total Received by the General Manager During the Reporting Period

The general manager is concurrently held by Chairman Guo Chunxuan, whose total pre-tax compensation is 8.082 million yuan, consistent with the chairman’s compensation, reflecting the salary level corresponding to his dual responsibilities as both chairman and general manager.

Interpretation of Pre-Tax Compensation Total Received by Vice Presidents During the Reporting Period

The pre-tax compensation of several vice presidents in the company is as follows: Shang Qingchun 2.5441 million yuan, Li Wanying 2.502 million yuan, Zheng Tianjiao 2.5414 million yuan, Fan Jinfeng 1.502 million yuan, Ma Zhenfang 0.5197 million yuan, departing Chen Ligong 0.2399 million yuan, Wang Shaohui 0.5347 million yuan. The differences in vice president compensation are mainly related to the scope of responsibilities, performance contributions, and tenure, with the core vice presidents’ compensation levels being generally consistent with similar companies in the industry.

Interpretation of Pre-Tax Compensation Total Received by the Financial Director During the Reporting Period

Financial Director Shang Qingchun concurrently serves as vice president and board secretary, with a total pre-tax compensation of 2.5441 million yuan, a relatively high salary level that matches his multiple responsibilities in finance, capital operations, and board secretary roles.

Executive Compensation Comparison Table

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