Shanghai Belling 2025 Annual Report Analysis: Net profit attributable to parent company down 40.28%, operating cash flow up 168.98%

Core Profitability Indicator Interpretation

Operating Revenue: Revenue grows steadily; semiconductor materials and accessories drive most of the incremental increase

In 2025, Shanghai Belling achieved operating revenue of RMB 3.174 billion, up 12.59% year over year. By product, revenue from integrated circuit products was RMB 2.060 billion, up 9.77%; revenue from semiconductor materials and accessories was RMB 1.081 billion, up 19.66%, becoming the main driving force behind revenue growth. By region, domestic sales were RMB 3.091 billion, up 14.38%; overseas sales were RMB 0.049 billion, down 36.00%, indicating weak performance in overseas business.

Net Profit Attributable to the Parent: Profit declines sharply; support from non-recurring gains narrows

In 2025, the company achieved net profit attributable to shareholders of listed companies of RMB 236.22 million, down 40.28% year over year. Net profit after deducting non-recurring items was RMB 177.88 million, down 37.12% year over year. Non-recurring gains and losses for this period were RMB 58.34 million, down RMB 54.29 million year over year. Of this, gains from the disposal of trading financial assets were RMB 66.61 million, down RMB 55.53 million from the same period last year. The supporting role of non-recurring gains and losses for profitability is clearly weaker.

Earnings Per Share: Profitability indicators decline in tandem

Basic earnings per share were RMB 0.33/share, down 41.07% year over year. Basic earnings per share after deducting non-recurring items were RMB 0.25/share, down 37.50% year over year. The decline is broadly consistent with the decreases in net profit and net profit after deducting non-recurring items, reflecting an overall decline in the company’s profitability level.

Expense Structure Analysis

Total Expenses: Expense scale continues to expand; R&D investment grows significantly

In 2025, the company’s total expenses (sales + administration + R&D + finance) totaled RMB 670.97 million, up 12.07% year over year. Among them, sales expenses, administrative expenses, and R&D expenses all increased. Finance expenses narrowed the loss due to lower interest income.

Sales Expenses: Higher growth driven by labor costs

Sales expenses increased 30.66% year over year, mainly due to an increase in labor costs during the period. In terms of structure, employee compensation expenses were RMB 74.68 million, up 30.84%, which is the core factor behind the growth in sales expenses. This reflects that the company increased investment in its sales team to expand the market.

Administrative Expenses: Both labor and property costs rise

Administrative expenses increased 20.35% year over year, mainly affected by higher labor costs and property management fees. Employee compensation expenses were RMB 68.07 million, up 25.35%; property management fee expenses were RMB 5.04 million, up 97.47%. Together, the two items pushed administrative expenses higher.

Finance Expenses: Loss narrows due to lower interest income

Finance expenses were -RMB 18.33 million, narrowing the loss compared with -RMB 32.96 million in the same period last year. This was mainly because interest income decreased during the period. Interest income for the period was RMB 29.58 million, down RMB 2.78 million year over year; interest expense was RMB 1.88 million, down RMB 0.03 million year over year. The combined effect of interest income and expense led to changes in finance expenses.

R&D Expenses: Ongoing high investment to strengthen technical competitiveness

R&D expenses increased 14.46% year over year, with an investment amount of RMB 493 million. By structure, employee compensation expenses were RMB 357.74 million, up 19.42%; materials expenses were RMB 80.42 million, up 17.41%. The company continues to increase R&D personnel and direct R&D investment for new product development and technology upgrades. During the reporting period, it launched 1,051 new products; it also has 5,501 products available for sale, with its technical reserves continuously enriched.

R&D Staff Profile: R&D team continues to expand; structure optimized

As of end-2025, the company had 593 R&D personnel, accounting for 67.62% of the company’s total headcount, up 15.09% from the same period last year. In terms of educational background, there were 12 PhD candidates, 260 Master’s candidates, and 284 undergraduate students, with the proportion of high-education talent exceeding 90%. In terms of age structure, there were 248 employees under 30 and 210 employees aged 30–40; the proportion of younger R&D personnel exceeded 77%, showing a clear trend toward a younger team, providing sustained momentum for technological innovation.

Cash Flow Analysis

Overall cash flow: Net cash flows turn from negative to positive; operating cash flow provides the core incremental contribution

In 2025, the net increase in cash and cash equivalents was RMB 214.17 million, compared with RMB 45.97 million in the same period last year, showing a substantial improvement in cash flow. Of this, net cash flow from operating activities was RMB 251.68 million, up 168.98%; net cash flow from investing activities was RMB 101.72 million, up 79.10%; net cash flow from financing activities was -RMB 133.77 million, down 26.61% year over year.

Operating Cash Flow: Collection capability improves significantly

Net cash flow from operating activities increased 168.98% year over year, mainly due to an increase in cash collected for receivables during the period. Cash received from the sale of goods and the provision of services was RMB 2.963 billion, up 33.35%; at the same time, cash paid for the purchase of goods and the receipt of services was RMB 2.163 billion, up 27.54%. The growth rate of cash collections was faster than the growth rate of cash payments, driving a substantial improvement in operating cash flow.

Investing Cash Flow: Gains from disposing of financial assets increase

Net cash flow from investing activities increased 79.10% year over year, mainly because gains from the disposal of trading financial assets increased during the period. Cash received from investment returns was RMB 499 million, up 126.49%; cash received from investment recoveries was RMB 668 million, up 101.20%. The increase in investment returns and investment recoveries jointly drove the growth in investing cash flow.

Financing Cash Flow: Larger dividend payments lead to expanded cash outflows

Net cash flow from financing activities decreased 26.61% year over year, mainly because dividend payments increased during the period. Cash paid for distributing dividends, profits, or interest payments was RMB 121 million, up 70.00%. Of this, dividends payable to common shareholders were RMB 121 million, a significant increase from RMB 71 million in the same period last year, resulting in expanded cash outflows from financing activities.

Risk Factor Interpretation

Industry Risks: Dual pressure from industry cycles and market competition

2. Industry Cycle Risk: The integrated circuit industry has clear cyclical characteristics. Factors such as a slowdown in global economic growth and customers’ inventory reduction create substantial pressure in the semiconductor market, and industry competition is fierce. The company needs to proactively expand into new application areas such as automotive electronics and industrial control energy storage, to reduce the impact of price declines in the general-purpose chip market.
3. Market Competition Risk: The domestic chip market is saturated, and development of new markets is slow. Meanwhile, the number of domestic integrated circuit design companies remains at a high level, making product and price competition intense. The company needs to improve product performance and reliability, strengthen in-depth collaboration with strategic customers, optimize product costs, and maintain competitiveness in the industry.
4. Industrial Upgrading Risk: In the industrial control and automotive electronics sectors, technological iteration is fast and design requirements for integrated circuit products are higher, increasing uncertainty. The company needs to strengthen the integration of innovative resources in this field, improve product definition and design capabilities, and accelerate the development and certification process of new products.

Operating Risks: High uncertainty in R&D and market expansion

2. New Product R&D Risk: As the company upgrades into fields such as automotive electronics and high-end industrial control, technical barriers are high and certification cycles are long. If the company misjudges market demand, R&D projects may not be completed on schedule to achieve their targets. The company needs to continue monitoring market trends, strengthen communication with customers, and ensure R&D plans align with market demand.
3. New Product Sales Risk: Product certification in fields such as automotive electronics is stringent. The customer onboarding cycle is long, and there is uncertainty in market promotion. The company needs to improve laboratory equipment, increase the speed of reliability verification for products, deepen customer collaboration mechanisms, and enhance system solution design capabilities.
4. Production and Operations Risk: The company adopts a Fabless model, outsourcing wafer manufacturing and packaging/testing. Fluctuations in raw material prices and tight capacity in the supply chain may lead to higher product costs and lower gross margins. The company needs to optimize inventory management, strengthen cooperation with suppliers, and ensure stable production capacity and pricing.

Compensation Interpretation for Executives and Board Members

Chairman’s Compensation: Pre-tax compensation of RMB 1.2404 million

The chairman, Yang Kun, received a total of RMB 1.2404 million in pre-tax remuneration from the company during the reporting period. The remuneration was obtained through the company’s related parties; compensation levels are somewhat associated with the company’s operating performance.

General Manager’s Compensation: Pre-tax compensation of RMB 1.4019 million

The general manager, Yan Shifeng, had a total pre-tax remuneration of RMB 1.4019 million during the reporting period. He is mainly responsible for the company’s day-to-day operational management, and his compensation reflects his job responsibilities and contributions.

Deputy General Manager’s Compensation: RMB 0.7125–2.6814 million (compensation range)

Deputy general manager Zhang Hongyu had pre-tax compensation of RMB 2.4982 million; Zhao Cong had pre-tax compensation of RMB 2.6814 million; financial officer Wu Xiaojie had pre-tax compensation of RMB 0.7125 million. The differences in deputy general managers’ compensation mainly stem from differences in job responsibilities and performance evaluation results. Among them, Zhao Cong’s compensation is the highest, which is related to the performance of the business segment for which he is responsible.

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