China National Materials International 2025 Annual Report Interpretation: Revenue increased by 7.53% to 49.6B yuan, operating cash flow decreased by 22.14%

Interpretation of Core Profitability Indicators

Steady Growth in Operating Revenue

In 2025, China National Materials International achieved an operating revenue of 49.6B yuan, a year-on-year increase of 7.53%, with revenue scale continuing to expand. From a business structure perspective, the three main segments—engineering technical services, high-end equipment manufacturing, and production operation services—all saw growth, with engineering technical services generating 29.21B yuan, up 7.68%, remaining the core pillar of revenue; high-end equipment manufacturing revenue reached 6.96B yuan, up 11.98%, with strong growth momentum; production operation services earned 27.16B yuan, up 3.78%, highlighting business stability. Regionally, overseas revenue totaled 22.12B yuan, a significant increase of 21.98% year-on-year, accounting for 55% of total revenue, making overseas business an important growth engine. Domestic revenue was 2.86B yuan, down 6.44%, indicating some pressure in the domestic market.

Net Profit Slightly Declined Year-on-Year

Net profit attributable to shareholders of the listed company was 2.6B yuan, down 4.06% year-on-year; net profit after deducting non-recurring gains and losses was 4.75B yuan, down 4.42%. The decline in net profit was mainly due to a decrease in gross profit margin, with the company’s overall gross profit margin in 2025 at 18.25%, down 1.17 percentage points from the previous year. Specifically, engineering technical services had a gross margin of 14.32%, down 1.65 percentage points; high-end equipment manufacturing gross margin was 20.75%, down 2.07 percentage points; only production operation services maintained a gross margin of 22.46%, up 0.98 percentage points. Regarding non-recurring gains and losses, the total was 261 million yuan in 2025, roughly the same as 2024, exerting minimal impact on net profit.

Per-Share Earnings Also Declined

Basic earnings per share were 1.09 yuan, down 4.39% year-on-year; earnings per share after deducting non-recurring items were 0.99 yuan, down 4.81%, consistent with the trend of net profit. The weighted average return on net assets was 13.10%, a decrease of 1.86 percentage points; the weighted return after deducting non-recurring items was 11.90%, down 1.75 percentage points, indicating a slight decline in profitability efficiency.

In-Depth Analysis of Expense Structure

Overall Expense Situation

In 2025, the company’s total period expenses amounted to 1.78B yuan, an increase of 1.32%, with expense growth slower than revenue growth, indicating initial results of expense control. The specific changes in various expenses are as follows:

Selling Expenses Declined Year-on-Year

Selling expenses were 540 million yuan, down 2.11%, mainly due to the company’s optimization of sales channels and reduction of expenses related to overseas market expansion. Overseas sales expenses accounted for over 60%; in 2025, overseas sales expenses decreased by 3.2% year-on-year, while domestic sales expenses remained roughly flat. The sales expense structure continued to optimize as the proportion of overseas business increased.

Management Expenses Slightly Increased

Management expenses totaled 2.56 billion yuan, up 7.83%, mainly driven by increased management personnel salaries, higher office rental costs, and increased management expenses of overseas subsidiaries due to exchange rate fluctuations. The management expense ratio was 5.16%, a slight increase of 0.01 percentage points, indicating relatively stable management efficiency.

Financial Expenses Turned Negative

Financial expenses were -143 million yuan, a significant decrease of 152.05%, reflecting large gains mainly from euro appreciation generating exchange gains. In 2024, exchange losses were caused by depreciation of currencies like the Egyptian pound. The change in exchange gains and losses was the core reason for the large fluctuation in financial expenses. Additionally, the company’s interest income was 360 million yuan, up 27.27%, while interest expenses were 193 million yuan, down 21.09%. The increase in net interest income also contributed to the improvement in financial expenses.

Steady Increase in R&D Expenses

R&D expenses were 41.41B yuan, up 1.13%, with the company continuously investing in R&D. R&D investment accounted for 3.66% of operating revenue, roughly the same as the previous year. R&D projects focused on green low-carbon and digital intelligent technologies, such as oxy-fuel combustion, alternative fuels, and industrial AI, laying a technological foundation for the company’s long-term development.

R&D Personnel Status

In 2025, the company had 3,687 R&D personnel, accounting for 24.25% of the total workforce. The R&D team size remained stable. In terms of educational background, there were 47 doctoral researchers, 916 master’s degree holders, and 2,155 undergraduates, with those holding a bachelor’s degree or above accounting for 84.5%. The overall educational level of the R&D team was high. Age-wise, there were 1,294 R&D personnel aged 30-40, and 1,115 aged 40-50, totaling 65.3%, mainly middle-aged and young professionals with both experience and innovation capacity, supporting technological innovation.

Cash Flow Situation Analysis

Overall Cash Flow

In 2025, the company’s net increase in cash and cash equivalents was 278 million yuan, a significant improvement, mainly due to the shift from net cash outflow to net inflow in investing activities. The three major cash flows changed as follows:

Operating Cash Flow Declined

Net cash flow from operating activities was 32.43B yuan, down 22.14%, mainly due to longer collection cycles for engineering projects and increased raw material procurement costs. Cash received from sales of goods and services was 1.4B yuan, up 12.45%, but cash paid for purchases and services was 5.62B yuan, up 19.02%. The faster increase in cash outflows led to a decrease in net operating cash flow.

Investment Cash Flow Turned Positive

Net cash flow from investing activities was 20 million yuan, a sharp improvement from -14 billion yuan in 2024, mainly because the previous year included large payments for China National Materials Cement investments, whereas in 2025, there were no major investment outlays and some long-term investments were recovered. The company made new external equity investments of 122 million yuan, mainly for overseas mining projects, with steady expansion in investment scale.

Reduced Cash Outflows from Financing Activities

Net cash flow from financing activities was -1.58 billion yuan, narrower than -2.17 billion yuan in 2024. The reduction was mainly due to the company’s optimization of debt structure, repaying 5.64B yuan in debt, a 10.05% decrease, and receiving 1.99M yuan in new borrowings, up 35.95%, leading to a more reasonable financing structure.

Potential Risk Warnings

Risks in Strategic Implementation

2026 marks the beginning of the 14th Five-Year Plan; the effectiveness of strategy execution will directly impact the company’s development over the next five years. If strategic decomposition is inadequate, resource allocation is unreasonable, or external expansion underperforms, it may hinder the achievement of strategic goals and affect long-term development.

Operational Quality Risks

Cash flow is the “lifeline” of enterprise operation. In 2025, the decline in operating cash flow, coupled with poor management of “two funds” (accounts receivable and contract assets), could lead to increased capital occupation, further pressure on profitability, and instability of the capital chain.

Overseas Business Risks

With overseas business accounting for over 55%, the company faces complex challenges from international political situations, diplomatic policies, local economic and social environments, and legal standards. Geopolitical conflicts, exchange rate volatility, and local policy adjustments could adversely affect overseas revenue and profits.

Investment and M&A Risks

Mergers and acquisitions are key to the company’s transformation and supply chain strengthening. However, risks include overvaluation of targets, integration difficulties, and less-than-expected synergies, potentially leading to lower-than-expected returns or investment losses.

Management and Directors’ Compensation

Chairman’s Pre-Tax Compensation

Chairman Yin Zhishong received a pre-tax total of 2.3113 million yuan during the reporting period. His compensation is linked to company performance and personal assessments. Due to a slight decline in net profit in 2025, his remuneration decreased compared to 2024.

General Manager’s Pre-Tax Compensation

Former General Manager Zhu Bing received a pre-tax total of 1.987 million yuan. Zhu Bing stepped down in December 2025; Yin Zhishong assumed the role of acting CEO, and the general manager’s compensation reflects his full-year performance.

Vice Presidents’ Pre-Tax Compensation

Executive Vice President Liu Renyue earned 2.1592 million yuan; Vice President Guo Zhengyong earned 2.1588 million yuan; Vice President Zeng Xuan earned 905.6k yuan. Compensation varies based on the scope of responsibilities and performance contributions.

Chief Financial Officer’s Pre-Tax Compensation

CFO Yin Ling received 677.1k yuan, with compensation linked to financial control and capital management performance.

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