Dongjiang Environmental Protection, over 3.2 billion yuan loss in 4 years

On the evening of March 27, Dongjiang Environmental Protection released its 2025 annual report. The company achieved a parent-attributable net profit of -1.232 billion yuan, a year-on-year decrease of 53.14%; losses continued to widen. It also recorded a non-recurring net profit of -1.137 billion yuan, a year-on-year decrease of 40.38%.

In 2022, 2023, 2024, and 2025, Dongjiang Environmental Protection’s operating performance continued to post losses, with cumulative losses exceeding 3.2 billion yuan. According to data from Tonghuashun, as of March 27, Dongjiang Environmental Protection closed at 4.88 yuan per share, with a latest market cap of about 4.8 billion yuan.

Operating performance continues to incur losses

The annual report shows that in 2025, Dongjiang Environmental Protection achieved operating revenue of 3.457 billion yuan, basically in line with the previous year. In 2022, 2023, 2024, and 2025, Dongjiang Environmental Protection’s parent-attributable net profit was -502 million yuan, -750 million yuan, -804 million yuan, and -1.232 billion yuan, respectively; over 4 years, the cumulative losses were about 3.288 billion yuan.

Image source: company announcement

In its annual report, Dongjiang Environmental Protection stated that in 2025, the competitive landscape in the hazardous waste industry did not improve significantly, and the industry as a whole still faced considerable operating pressure. The continued decline in prices for its harmless disposal business led to a year-on-year decrease in gross margin, resulting in losses in net profit. According to the annual report, in 2025, Dongjiang Environmental Protection’s gross margin for its industrial waste treatment and disposal business was -12.12%, and the gross margin for its recycling and utilization of rare and precious metals business was -7.58%.

Dongjiang Environmental Protection said it will take various measures to prevent problems before they occur, continuously optimize its asset structure, accelerate cash recovery, and strive to improve its profitability. Through technological upgrades and technological innovation, it will build core competitiveness. While actively cultivating new businesses, it will continue to look for high-quality M&A targets and build new profit growth points through acquisitions.

Subsidiary was administratively penalized for environmental violations

Dongjiang Environmental Protection’s 2025 annual report also disclosed that due to ecological and environmental violations by its subsidiary Mianyang Dongjiang Environmental Protection Technology Co., Ltd., the subsidiary was subject to an administrative penalty on January 21, 2025; the company was fined 210,300 yuan.

According to the “Administrative Penalty Decision” issued by the Mianyang Municipal Ecological Environment Bureau, during an investigation on May 30, 2024, the Mianyang Municipal Ecological Environment Bureau found that Mianyang Dongjiang committed the following ecological and environmental violations: it did not conduct testing of the landfilled hazardous wastes, alkylmercury and cyanide, as required by the environmental impact assessment documents.

In its annual report, Dongjiang Environmental Protection stated that Mianyang Dongjiang had commissioned third-party experts to demonstrate the impact on the landfill environment caused by the untested alkylmercury and small-batch untested cyanide, and obtained a demonstration report indicating that there would be no impact on the landfill environment. At the same time, it strictly tested every indicator for each solidified product one by one as required to ensure that unqualified solidified products would be reworked and re-produced, and it also increased the frequency of monitoring the landfill environment and the frequency of testing for characteristic pollutant factors.

Image source: company announcement

Accounting and financial reporting are not standardized

Subject to regulatory discussion measures

Dongjiang Environmental Protection’s annual report further disclosed that on December 27, 2025, due to situations involving non-standard financial and accounting record-keeping and non-standard corporate governance, the Shenzhen Securities Regulatory Bureau issued to Dongjiang Environmental Protection the “Decision of the Shenzhen Securities Regulatory Bureau on Taking Regulatory Talk Measures against Dongjiang Environmental Protection Co., Ltd.”

According to the decision, for certain projects of Dongjiang Environmental Protection, revenue exists in cross-period recognition and the rare and precious metals recycling and utilization business and the landfill gas power generation business involve price-setting transactions; revenue recognition is not compliant. In addition, the accounting policy basis for revenue recognition of the anode slime sales business is insufficient, and cost accounting is also not compliant; the basis for the amortization period for certain items of franchise and operating license rights is not sufficient; capitalization of interest on loans for the heavy metal sludge workshop is not compliant. The company also has issues such as incomplete internal controls related to revenue, including that in 2022, the recognition basis for asset groups related to goodwill is inconsistent with the annual report disclosure.

In addition, Dongjiang Environmental Protection also has issues such as non-standard operation of the company’s “three meetings” and non-standard registration and management of insiders’ information inquiry records, violating relevant provisions such as the “Rules for Meetings of Shareholders of Listed Companies,” among others.

In its annual report, Dongjiang Environmental Protection stated that relevant personnel have already accepted regulatory talks in accordance with requirements from the Shenzhen Securities Regulatory Bureau. Going forward, the company will comprehensively sort out and hold research discussions through a system, among other steps, to identify and examine non-standard issues and risk points in areas such as corporate governance, internal controls, and accounting record-keeping, strengthen rectification and optimization in terms of management awareness, institutional system building, process setup, management tools, and so on, continue to implement regulatory requirements, and improve the company’s compliance management, accounting record-keeping, and internal control levels.

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