Hunan Haili 2025 Annual Report Analysis: Revenue down 26.74% Year-over-Year, Net Operating Cash Flow Drops 33.51%

MaticHoleFiller · 2026-04-01T07:48:23+00:00

In 2025, the company's operating revenue and net profit declined significantly, mainly due to cyclical adjustments in the pesticide industry and weak demand. Net profit excluding non-recurring gains and losses dropped sharply, while R&D investment remained stable, and cash flow came under pressure. At the same time, industry policies, market competition, and operational risks intensified, with executive compensation linked to performance.

MaticHoleFiller

2026-04-01 07:48:23

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In-Depth Interpretation of Core Revenue and Profitability Metrics

Operating Revenue: Scale Contraction Under Industry Cyclicality

In 2025, the company achieved operating revenue of RMB 1.81 billion, a sharp decrease of 26.74% year over year from RMB 2.471 billion in 2024. Judging from business segments, external revenue from the agricultural pesticide segment was RMB 1.598 billion, the lithium battery materials segment was RMB 0.127 billion, and other segments totaled RMB 0.085 billion. The decline in revenue mainly stems from cyclical adjustments in the pesticide industry, coupled with weak downstream demand. As a result, the company’s order volume decreased year over year, and some product prices also fell back, leading to an overall contraction in revenue scale.

Net Profit: Non-Recurring Items Backstop Earnings

Net profit attributable to shareholders of listed companies was RMB 244 million, down 8.20% year over year; net profit after deducting non-recurring gains and losses was RMB 183 million, down 25.94% year over year. Non-recurring gains and losses in the company during the year totaled RMB 61.00 million, mainly including gains from disposal of non-current assets of RMB 47.55 million, government subsidies of RMB 14.29 million, and funds occupation fees of RMB 15.19 million, among others. To a certain extent, these offset the decline in earnings from the core business.

Earnings Per Share: Profit Shrinkage Transmitted Directly

Basic earnings per share were RMB 0.4394 per share, down 7.49% year over year. EPS after deducting non-recurring items was RMB 0.3295 per share, down 25.35% year over year. It fully synchronizes with the large drop in net profit after deducting non-recurring items, reflecting that the contraction in core business profitability is directly transmitted to the shareholders’ earnings per share level.

Expense Structure: A Coexistence of Tightened Control and New Investments

In 2025, the company’s total period expenses were RMB 347 million, down 6.47% year over year. The various expense line items showed divergence:

Expense line item
2025 amount (RMB ten thousand)
2024 amount (RMB ten thousand)
Year-over-year change
Reason for change
—
Selling expenses
3051
3531
-13.61%
Revenue scale decline, with market promotion and personnel-related expenses correspondingly reduced
Administrative expenses
17986
16089
11.79%
Mainly due to retroactive payout of previous term incentive plans, compensation for newly appointed senior executives being in place, and increased investment in digital system construction
Finance expenses
-936
-2326
59.77%
A decrease in foreign exchange gains of RMB 39.50 million and a decrease in deposit interest income of RMB 45.30 million, resulting in a significant narrowing of financial income
R&D expenses
14660
14256
2.83%
Maintain stable investment, focusing on green process innovation and new product R&D

R&D Investment: Continuing to Strengthen Technical Barriers

R&D Resource Allocation

In 2025, total R&D investment was RMB 153 million, accounting for 8.43% of operating revenue. Of this, expense-based R&D expenditures were RMB 147 million, while capitalized R&D expenditures were RMB 5.93 million. The capitalized project was “R&D and application of the process for synthesizing methylpyridine alcohol via recovery of pyridine alcohol from methylpyridine phosphorus wastewater.” It achieved dual breakthroughs in process optimization and cost reduction.

R&D Personnel Team

The company had 244 R&D personnel in total, accounting for 12.12% of total headcount. By education level: 8 PhDs, 90 Master’s degree holders, and 110 Bachelor’s degree holders; the share of high-education talent exceeded 85%. By age distribution, the group is mainly 30–50 years old, accounting for 71.31%, forming an R&D echelon team that combines experience and innovative vitality.

Cash Flow: Pressure on Operating “Blood Generation” Capability

In 2025, the company’s net decrease in cash and cash equivalents was RMB 45.83 million. The three major cash flow categories showed different trends:

Cash flow item
2025 amount (RMB ten thousand)
2024 amount (RMB ten thousand)
Year-over-year change
Reason for change
—
Net cash flow from operating activities
24678
37113
-33.51%
Cash received from selling goods decreased by RMB 11.435 million year over year; meanwhile, spending on purchases of raw materials increased by RMB 4.199 million. This led to contraction in operating cash inflows and an increase in outflows
Net cash flow from investing activities
-19500
-16715
16.67%
Mainly due to increased construction investment for the Ningxia and Yongxing base projects; full-year expenditures for purchasing and constructing long-term assets were RMB 230 million, up RMB 22.95 million year over year
Net cash flow from financing activities
-9768
-20814
-53.07%
RMB 53.30 million received from equity incentive subscription payments and RMB 29.35 million from minority shareholders’ paid-in investment, while dividends paid to minority shareholders by subsidiaries decreased by RMB 43.61 million year over year, narrowing the scale of net cash outflow

Key Risk Alerts

Industry Policy Risk

Regulation in the pesticide industry is becoming stricter. New rules such as “one certificate for one product” are accelerating the elimination of outdated capacity. If the company cannot keep up with policy requirements in time, it may face risks of production reduction or shutdown. At the same time, if tax preferential policies for high-tech enterprises or export tax rebate policies change, it will directly affect the company’s profitability level.

Market Competition Risk

The pattern of excess capacity in the pesticide industry has not been changed, and low-price competition continues. In the lithium battery materials industry, there is an evident trend toward consolidation at the top. Since the company’s lithium battery business is relatively small in scale, it faces the risk of having its market share squeezed by leading enterprises. Core pesticide products face substitution pressure, and demand for carbamate products is showing a downward trend.

Operating and Financial Risks

Fluctuations in raw material prices directly affect production costs, and some raw material purchases are seasonal. If the inventory preparation strategy is misjudged, it will lead to higher costs. Production involves hazardous chemicals, so safety production risks always exist. Labor costs rise year by year, while there is also the risk of losing core technical talent. Exchange rate fluctuations have a significant impact on profitability from export business: for every 10% appreciation of the RMB against the USD, the company’s net profit will decrease by approximately RMB 8.68 million.

Executive Compensation and Incentive Situation

The company’s core executive compensation and equity incentive situation in 2025 is as follows:

Chairman Xiao Zhiyong: Pre-tax compensation of RMB 72,000. His compensation is mainly paid by the shareholder unit, and he does not receive the full compensation from the company.
General Manager Liu Hongbo: Pre-tax compensation of RMB 936,000, and at the same time granted 320,000 restricted shares, with a grant price of RMB 3.27 per share.
Vice General Manager: Jiang Zuxue pre-tax compensation of RMB 907,100; Huang Yonghong RMB 733,300; Yang Sha RMB 873,100; Liu Lingbo not separately disclosed (combined with compensation for employee-representative directors); and Ning Jianwen RMB 691,700. All received 270,000 restricted shares.
Financial Director Ning Jianwen: Pre-tax compensation of RMB 691,700, and at the same time, as Vice General Manager, was granted 270,000 restricted shares.

Overall, the company binds core executives and the company’s interests through a combination of compensation plus equity incentives. Executive compensation is linked to company performance, and the equity incentive unlocking conditions are closely related to the company’s future performance targets, which helps motivate the management team’s initiative.

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