Electrolyte additive prices rebound. Huasheng Lithium Battery was profitable in Q4 last year, but the full-year net profit excluding non-recurring gains and losses still posted a loss | Financial report analysis

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Caixin Finance and News (Caixin) March 30 (Reporter Liu Mengran) Benefiting from a rebound in the prices of electrolyte additives, Huasheng Lithium Battery (688353.SH) turned a loss into a profit for 2025 net profit, but non-recurring net profit remained negative. Caixin Finance and News reporters learned from leading electrolyte manufacturers that overall electrolyte demand in the first quarter was generally favorable, with a slight decline quarter-over-quarter from last year’s Q4, but it is within normal fluctuations. Energy-storage demand offset the slowdown on the power side. Full-year supply is expected to be ample, but some raw materials may see tight supply-and-demand, providing support for product prices.

Huasheng Lithium Battery tonight issued an announcement stating that last year it achieved operating revenue of RMB 869 million, up 72.21% year over year; net profit attributable to shareholders of listed companies was RMB 13.2566 million.

By quarter, the company’s net profits attributable to shareholders were losses in each of the first three quarters, at -RMB 43.08 million, -RMB 29.65 million, and -RMB 30.23 million, respectively. In the fourth quarter, due to increases in market prices of its main products, the company recorded net profit attributable to shareholders of RMB 116 million; non-recurring net profit was -RMB 54.5943 million, and its main business still had not achieved true profitability; the investment income of RMB 70.2668 million was recognized in 2025 from transferring some equity in Huasheng Nanyuan Dunxing.

In addition, as of end-2025, the net cash flow from operating activities was -RMB 257 million, down significantly compared with -RMB 111 million for the same period last year. The company explained that the main reason is that sales revenue increased significantly in the current period, but since the relevant sales revenue has a certain payment/collection period, not all payments have been received yet, and at the same time payments formed from procurement increased significantly.

Huasheng Lithium Battery is mainly engaged in R&D, production, and sales of lithium battery electrolyte materials. Its products vinylene carbonate (VC) and fluoroethylene carbonate (FEC) are core additives in lithium battery electrolytes. According to SMM electrolyte statistics, driven strongly by cost, in 2025 electrolyte prices bottomed out and rebounded, with production expected to grow year over year by about 48%. In the third quarter, affected by momentum from both demand-side and energy-storage “dual-board” initiatives, electrolyte output continued to grow—growing month over month in each month—and carried on in the fourth quarter.

With expanding market demand for new energy materials, VC and FEC prices rose significantly in the fourth quarter. During the reporting period, Huasheng Lithium Battery’s consolidated gross margin was 10.04%, including VC product gross margin of 18.28%; FEC product gross margin was -4.03%. Last year, the company’s consolidated gross margin was -19.41%.

For this year’s Q1 market outlook, a person at a leading electrolyte company told Caixin Finance and News that this year overall electrolyte demand has remained in good shape, but due to the Spring Festival holiday and seasonal adjustments in downstream power battery production schedules, the quarter-over-quarter decline from last year’s Q4 was in the low single-digit percentage range, which is normal seasonal volatility.

As he explained, structurally, energy-storage battery demand has become the core support, and the VC additive proportion in the energy-storage sector is as high as 4%-6%, far higher than in power batteries. In the first quarter, energy-storage installations continued to grow strongly, effectively offsetting the short-term slowdown in demand on the power side. Downstream production scheduling in late March has gradually warmed up; industry inventories are at a low level, and the demand rebound trend in the second quarter is clear.

Based on calculations by institutions, global lithium battery demand in 2026 will reach 3,065 GWh, up 33.7% year over year, corresponding to electrolyte demand of 3.67 million tons. Among this, VC demand is 110,000 tons and FEC demand is 44,000 tons. On the supply side, effective production capacity for VC in 2025 and 2026 is 79,000/114,000 tons, while effective FEC capacity is about 40,000/57,000 tons. Overall, the price center of gravity is expected to remain in the high range of RMB 150,000–200,000 per ton.

However, on the supply side, VC/FEC will see a large number of additional capacity additions. On March 10 this year, Huasheng Lithium Battery announced a plan to list on the Main Board of the Hong Kong Stock Exchange. In the latest disclosed 2026 business plan, the company stated it will provide ample funding support for the implementation of projects under construction such as VC and anode material, technology R&D investment, and internationalization initiatives. The company will speed up the construction progress of projects under construction, including its existing VC capacity of 30,000 tons and an anode material project for lithium batteries with low energy consumption and high performance with an annual capacity of 200,000 tons (Phase 1 of 50,000 tons), among others.

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