A look into Luben Chemical’s 2025 performance: attributable net profit attributable to the parent drops by more than 80%, yet the chairman and other senior executives take the lead in salary increases?

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Reporter | Peng Fei Editor | Xu Shaohang

Shandong-based state-owned holding old-listed chemical company Lubao Chemical (SH600727, stock price 7.65 yuan, market value 4.04B yuan) released its 2025 annual report on the evening of March 30.

Data shows that the company experienced a severe performance slump over the past year, with net profit attributable to parent dropping 85.34% to 38.27 million yuan, and non-recurring net profit decreasing by more than 90%. However, amid the bleak backdrop of all main business lines under pressure and profits approaching the loss line, some senior executives of the company saw salary increases of 100k to 300k yuan.

A capital market insider believes that this abnormal phenomenon of severe performance and salary inversion runs counter to the regulatory focus on “aligning directors and senior management compensation with company performance and individual achievements.”

A reporter from Daily Economic News noted that while many senior executives’ salaries are rising, Lubao Chemical’s key information disclosure officer’s 2025 annual salary is only about 270k yuan, ranking at the bottom among senior management. In response, the company’s secretary stated that his “salary is a special case, there’s nothing to say.”

Non-recurring profit down over 90%, main business lines under pressure

Lubao Chemical’s latest 2025 performance report shows that the company’s profitability is under great downward pressure.

According to the 2025 financial report, during the reporting period, Lubao Chemical achieved operating revenue of 100k yuan, down 11.43% year-on-year; total profit was 152 million yuan, down 64.07% year-on-year; net profit attributable to parent was 38.27 million yuan, a decline of 85.34%. Additionally, the “net profit attributable to shareholders after deducting non-recurring gains and losses,” which reflects the company’s true profitability, was only 26.47 million yuan, a 90.13% decrease from 2024.

The sharp decline in performance is directly attributed to the pressure on two core main businesses—titanium dioxide and methyl chloride.

The annual report shows that titanium dioxide, as Lubao Chemical’s largest pillar, accounts for 65.06% of main business revenue, but its sales revenue decreased by 16.65% year-on-year in 2025; the second-largest business, methyl chloride, saw a 30.79% decline in sales revenue.

Lubao Chemical explained the “reasons for changes in operating income” as: “Mainly due to the decrease in revenue from titanium dioxide and methyl chloride products during this period”; and in the “reasons for changes in operating costs,” it also pointed out: “Mainly due to the decrease in sales volume of titanium dioxide and methyl chloride products during this period.”

In terms of specific production and sales, Lubao Chemical’s titanium dioxide sales volume in 2024 was 260.7k tons, down 5.67% year-on-year; methyl chloride sales volume was 392.2k tons, a sharp drop of 18.96%.

Behind this is the adjustment of the macro industry pattern. According to statistics released by the Titanium Dioxide Industry Technology Innovation Strategic Alliance, from 2019 to 2025, China’s titanium dioxide industry’s total output increased from 3.18 million tons to 4.72 million tons, with a compound annual growth rate of 6.8%; among them, the total industry output in 2025 slightly declined by 1.0% year-on-year, marking the first annual negative growth in nearly two decades. Additionally, the number of companies with full-process production capacity shrank to 36, a reduction of 9 from 2024, accelerating industry consolidation and increasing market concentration.

The methyl chloride industry in 2025 shows a “surplus supply, deep price decline, and passive export growth” trend, with supply-demand contradictions offsetting the benefits of falling raw material methanol and liquid chlorine prices, squeezing corporate profits. Under this environment, Lubao Chemical’s main business is under pressure, leading to a significant shrinkage in net profit.

Profits plummet, management salaries rise? Some executives received over 300k yuan in raises

Despite an 80% drop in net profit and bleak main business, the salary changes among Lubao Chemical’s senior management appear to show a “reverse growth” phenomenon.

According to the “Compensation of Directors and Senior Management” section of Lubao Chemical’s 2025 annual report, compared to the company’s performance in 2025, the senior management’s salaries are “secure”: Chairman Chen Shuchang’s salary in 2025 was 1.1811 million yuan, an increase of nearly 100k yuan from 1.0846 million yuan in 2024; General Manager Feng Xiangyi’s salary was 1.0228 million yuan, up 100.5k yuan from 922.3k yuan in 2024; Director, CFO, and Vice President Ma Wenju’s salary increased from 507.6k yuan in 2024 to 816.5k yuan in 2025, an increase of over 300k yuan.

In a scenario where net profit attributable to parent is only about 300k yuan, the entire management team still maintains an overall salary and individual salary increase trend. In the “Changes in Shareholdings and Salary of Directors and Senior Management during the Reporting Period” section, 13 people received a total pre-tax salary of 6.4062 million yuan, compared to 270k yuan for the same 13 people in 2024, an increase of 173.2k yuan.

When interviewed by Daily Economic News, a market insider familiar with Lubao Chemical said: “As a state-owned enterprise, with such poor performance, this level of salary is actually not bad.” He further stated that the China Securities Regulatory Commission has clear requirements for the salary system of directors and senior management of listed companies, linking it to performance—“If profits decline and salaries still go up, it’s hard to justify.”

In October 2025, the CSRC revised and issued the “Code of Corporate Governance for Listed Companies,” effective from January 1, 2026. The code explicitly states that in “improving the incentive and restraint mechanisms for listed companies,” the salaries of directors and senior management should be aligned with company performance and individual achievements. If a listed company turns from profit to loss or its losses expand compared to the previous fiscal year, and the performance-based compensation of directors and senior management does not decrease accordingly, the reasons must be disclosed.

On the morning of March 31, regarding the decline in company performance and the salary increases of senior executives, a Daily Economic News reporter contacted Lubao Chemical, and a relevant person responded: “Last year’s operations were relatively normal. Although performance declined, management’s work was still qualified, and their salaries did not increase significantly.” The person also emphasized that performance and executive salaries are “based on the workload in their respective areas and their work performance,” and believed that “the overall increase is not large.”

It is worth noting that Lubao Chemical’s 2025 annual report states: “During the reporting period, the company’s assessment of senior management combines quantitative and qualitative methods, with differentiated indicators for different positions… The incentive mechanism for senior management mainly involves performance-based compensation… Annual performance-based compensation is based on annual business objectives, and is determined according to the company’s operational benefits and individual work performance during the assessment period.”

However, given the objective facts that “operational benefits” declined by 80% year-on-year and non-recurring net profit fell over 90%, the fact that senior management’s performance-based pay increased instead of decreased raises questions about the so-called “quantitative assessment” and its linkage to “business goals.”

High risk of duty performance but low salary? Secretary responds “special circumstances”

While Chairman and some senior executives enjoy salary increases of over 100k yuan, the company’s Secretary of the Board, who is a key node in information disclosure and compliance governance, shows a different situation.

Lubao Chemical’s 2025 financial report shows that the Secretary of the Board, Lin Hongbo, who took office on May 9, 2025, received only 269.7k yuan in total salary for the year, ranking at the bottom among senior management.

According to Sina Finance’s “2024 A-Share Secretary Data Report,” the average annual salary of secretaries in A-share listed companies in 2024 was about 754.3k yuan. The Daily Economic News found that compared to Lubao Chemical, the secretaries of other listed companies in Binzhou City have much higher salaries. For example, the secretary of Bohai Automotive earned 902.6k yuan in 2024, Binzhou Chemical’s secretary earned 819.2k yuan, and Sanyuan Biological’s secretary earned 600k yuan.

It is noteworthy that as the legally mandated senior management personnel under the “Company Law of the People’s Republic of China” and the “Code of Corporate Governance for Listed Companies,” the Secretary of the Board bears core statutory responsibilities such as information disclosure, investor relations management, and daily board operations, and is directly responsible for the truthfulness, accuracy, and completeness of periodic reports.

With ongoing regulatory pressure in 2025 on information disclosure violations, the requirements for the Secretary’s disclosure duties have become increasingly strict, with penalties ranging from hefty fines to market bans. According to data from iFinD of Tonghuashun, over 200 listed companies in 2025 were under investigation for suspected disclosure violations, covering main board, ChiNext, and STAR Market companies.

On March 17, 2026, the Shenzhen Securities Regulatory Bureau took regulatory measures against two companies, Yahui Long (rights protection) and Yingji Xin (rights protection). Both companies were penalized for the same reason—using the hot topic of brain-machine interfaces to conduct illegal information disclosure. The secretaries of these companies were fined 1.5 million yuan and faced proposed penalties of 800k yuan, respectively.

If we consider Lubao Chemical’s secretary’s 2025 salary level, should the company face regulatory penalties due to issues with 2025 annual report or other disclosures, the secretary could face huge fines, which might significantly impact him personally.

Regarding the “low pay but high responsibility” issue, the Daily Economic News asked Secretary Lin Hongbo about the risks faced by secretaries with low salaries since regulatory penalties have intensified since last year. He responded: “My salary is a special case, there’s nothing to say.” He added: “Although there are considerations in this regard, I believe the management recognizes the secretary’s performance, and there will be relevant considerations in this area.”