Sihui Fushi 2025 Annual Report Analysis: Revenue increased by 36.69% to 1.932 billion yuan, operating cash flow dropped by 37%

Breakdown of Core Revenue and Profitability Metrics

Operating Revenue: Structural Support Behind High Growth

In the reporting period, Zihui Fushi achieved operating revenue of 193,173.02 million yuan, a substantial year-over-year increase of 36.69%. The growth was mainly driven by three core segments: industrial control, automotive electronics, and communications equipment. The combined revenue share of the above segments exceeded 80%.

By quarter, revenue showed a pattern of quarter-by-quarter growth. Both the third and fourth quarters surpassed 535.0 million yuan. The balance and sustainability of the full-year revenue structure highlighted continued growth:

In terms of growth momentum, the AI server business became the core engine. At the same time, multiple industry tailwinds—such as upgrades to industrial intelligence, increased penetration of new energy vehicles, and the development of digital infrastructure—stacked together. Combined with the reputational advantage of the company’s high-quality PCBs, this supported steady growth across all segments. In addition, the Thailand plant achieved revenue of approximately 176 million yuan, and PCBA business revenue grew 167% year over year, becoming a new growth driver.

Net Profit: Pressure from Growing Revenue Without Growing Profit

The company recorded net profit attributable to shareholders of listed companies of 12,812.28 million yuan, a year-over-year decrease of 8.67%. Net profit after excluding non-recurring gains and losses was 11,338.60 million yuan, a year-over-year decrease of 6.80%, showing a clear “higher revenue but not higher profit” phenomenon.

The main drag factors include: (1) international precious metal prices rose, causing a sharp increase in procurement prices for key raw materials such as copper-clad laminates and copper foil, which increased raw material costs and led to a 2.38 percentage-point decline in net profit margin; (2) an increase in provisions for asset impairment losses in the current period, which resulted in a 0.74 percentage-point decline in net profit margin; and (3) the Thailand plant being in a capacity ramp-up phase, with fixed costs concentrated in allocation, leading to phased losses that further eroded profit.

Earnings Per Share: An Intuitive Decline in Profitability

Basic earnings per share were 0.88 yuan per share, a substantial year-over-year decrease of 21.43%. Diluted earnings per share excluding non-recurring items also declined in parallel, consistent with the changes in net profit and net profit excluding non-recurring items, directly reflecting a significant drop in the company’s earnings per share.

Deep Dive into Expense Structure

Overall Change in Period Expenses

In the reporting period, the company’s period expenses showed structural changes under the influence of business expansion, capacity planning, and external environmental factors. Overall, cost control faced dual pressures from rising raw material prices and new base investments.

Selling Expenses: Reasonable Spending Matched to Revenue Growth

As the company’s revenue scale expanded and the efforts to expand domestic and overseas customers intensified, selling expenses increased accordingly. They were mainly used for market promotion, customer retention, and overseas business layout. The selling expense growth matched the revenue growth rate of 36.69%, providing support for increasing market share.

Administrative Expenses: Rigid Costs for a Globalized Layout

Administrative expenses increased somewhat year over year. This was mainly due to higher operating management costs brought by the production commissioning of the Thailand plant, increased personnel compensation, and rising costs for global supply-chain control. This represents a phase of rigid investment during the company’s progress in implementing its globalization strategy. In the future, as overseas base capacity is released, economies of scale may gradually dilute this cost component.

Financial Expenses: Dual Impact of Financing and Exchange Rates

For financial expenses, on one hand, the conversion of the convertible bonds optimizes the capital structure and reduces interest expense. On the other hand, exchange-rate fluctuations related to the operations of overseas subsidiaries, as well as the capital occupation costs arising from increased raw material inventory procurement, create some offset to financial expenses. Overall, financial expenses remain within a reasonable range.

R&D Expenses: Continued Building of a Technological Moat

The company continues to advance R&D innovation. In the reporting period, R&D investment was focused on directions such as high-multilayer boards for AI servers, PCBs for 800G/1.6T optical modules, and high-precision products for humanoid robots. The company added 2 invention patents during the year, bringing the cumulative total to 19 invention patents. It has already developed the capability to produce high-multilayer boards above 80 layers at scale. Continued R&D investment not only consolidates the company’s technical advantages in the high-end PCB field, but also provides technological support for entering core links of the AI industry chain.

R&D Personnel: Talent Pooling and Training for High-End Talent

The company values building its R&D team, and through a combination of internal training and external recruitment, continuously expands its roster of high-end R&D talent. In particular, in frontier technology areas such as high-frequency high-speed and high-multilayer boards, the company strengthens its talent reserve to provide talent support for upgrading the company’s product structure toward higher value-added directions and keeping pace with emerging technology trends such as AI.

Cash Flow: Pressure at the Operating End and Optimized Financing and Investing Structure

Overall Cash Flow: Clear Structural Differentiation

In the reporting period, the company’s cash flow showed a differentiated pattern of “operating cash flow shrinking, investing cash flow expanding, and financing cash flow improving,” reflecting the company’s funding characteristics during the phases of business expansion and capacity planning.

Operating Cash Flow: A Risk Warning from a Sharp Contraction

Net cash flow from operating activities was 15,342.10 million yuan, a substantial year-over-year decrease of 37.00%. This was mainly affected by two factors: (1) rising raw material prices led to increased procurement funds being tied up; and (2) the expansion of accounts receivable scale driven by revenue growth slowed the pace of cash collection. By quarter, although operating cash flow remained positive in each quarter, the sharp decline in full-year scale imposes higher requirements on the company’s ability to rotate operating funds.

Investing Cash Flow: Capital Investment for a Globalized Layout

Net cash flow from investing activities is in a net outflow position. This was mainly due to increased capital expenditures such as capacity construction for the Thailand plant, upgrades of high-end production lines, and purchases of R&D equipment. These are necessary investments for the company’s global strategy and technology upgrades. In the future, as overseas base capacity is released and high-end products reach mass production, investment returns will be realized step by step.

Financing Cash Flow: Optimization and Adjustment of the Capital Structure

Net cash flow from financing activities improved, mainly attributable to the increase in equity funds resulting from the conversion of convertible bonds, which reduced the scale of interest-bearing liabilities. The company’s overall capital structure became more robust, and financial risk was further reduced.

Risk Factor Disclosures

Risk of Fluctuations in Raw Material Prices

In 2025, international precious metals prices continued to rise, leading to a significant increase in the company’s raw material costs. Although the company responded through optimizing procurement strategies and promoting cost pass-through, it still remains difficult to fully offset cost pressure. If raw material prices continue to stay at a high level or rise further in the future, it will continue to put pressure on the company’s profitability.

Risk of Overseas Base Operations

The Thailand plant is in a capacity ramp-up phase and currently faces issues such as high fixed costs and the need to improve capacity utilization rates. In addition, overseas operations involve uncertainties such as geopolitical risk, exchange-rate volatility, and changes in local policies. If economies of scale cannot be achieved smoothly, it will continue to affect profit in the company’s consolidated financial statements.

Risk of Intensified Industry Competition

The AI-driven PCB industry has entered a stage of structural growth. Industry leaders and new entrants are both increasing their layout in high-end areas. If the company cannot continuously maintain technological leadership and product quality advantages, its market share and profitability may be squeezed.

Risk of Accounts Receivable Collection

Revenue growth expands the scale of accounts receivable. If downstream customers’ operating conditions deteriorate, or if the industry credit environment changes, the company’s risk of accounts receivable collection will increase, thereby affecting the stability of operating cash flow.

Compensation for Directors, Supervisors, and Senior Management

In the reporting period, the compensation of the company’s core management was to a certain extent correlated with the company’s performance:

• The total pre-tax remuneration received by Chairman Liu Tianming from the company was 960,600 yuan;
• The total pre-tax remuneration of General Manager Liu Tianming (the same person as Chairman) was also 960,600 yuan;
• The total pre-tax remuneration of Vice General Managers Liu Jincheng, Chen Qiangxiang, and Huang Zhiwen was 726,200 yuan, 665,700 yuan, and 655,500 yuan, respectively;
• The total pre-tax remuneration of Chief Financial Officer Tan Dan was 542,500 yuan.

Overall, the compensation structure reflects incentives for management as well as matching the company’s current performance situation in which profitability declined, keeping compensation reasonable and constrained.

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Responsible Editor: Xiao Lang Express