Tianma Intelligent Control 2025 Annual Report Analysis: Net profit excluding non-recurring gains and losses down 73.52% year-over-year; net operating cash flow decreased by 42.31%

Interpretation of Operating Revenue

During the reporting period, Tianma Intelligent Control achieved operating revenue of 1,618.2977 million yuan, a year-on-year decrease of 13.03%. From the business structure perspective, the company’s main business revenue was 1,610.2836 million yuan, a year-on-year decrease of 13.09%, accounting for 99.51% of total revenue and being the core component of revenue. By product, the revenue from unmanned intelligent mining control system solutions was 1,075.0047 million yuan, a year-on-year decline of 13.82%, which was the main drag on revenue; spare parts revenue was 357.8057 million yuan, a year-on-year decline of 11.77%; operation and maintenance services and other revenue was 149.4367 million yuan, a year-on-year decline of 14.93%; only intelligent manufacturing revenue was 28.0365 million yuan, achieving a year-on-year growth of 15.66%, but due to its small scale, it had limited impact on overall revenue.

By region, revenue in the eastern region was 512.8496 million yuan, a year-on-year increase of 4.31%, being the only region to achieve growth; revenue in the central, Shaanxi-Mongolia, Shanxi, Northwest, and Southwest regions decreased by 11.22%, 21.32%, 32.10%, 17.39%, and 5.08% year-on-year, respectively, with Shanxi region experiencing the largest decline. In terms of sales model, direct sales revenue was 1,477.2853 million yuan, a year-on-year decline of 6.48%; distribution model revenue was 132.9983 million yuan, a significant year-on-year drop of 51.34%, mainly due to the company’s increased emphasis on direct sales and reduced cooperation with some distributors.

Interpretation of Net Profit

In 2025, Tianma Intelligent Control’s net profit attributable to the shareholders of the listed company was 97.8353 million yuan, a year-on-year decrease of 71.19%. The significant drop in net profit was mainly affected by revenue shrinkage, rising costs, and limited effectiveness of expense control. On one hand, revenue decreased by 13.03% year-on-year, while operating costs increased by 9.04% year-on-year, leading to a substantial compression of gross profit space; on the other hand, although sales expenses, management expenses, and R&D expenses all decreased to varying degrees, the decline was not as steep as the drop in revenue, and financial expenses decreased due to reduced interest income, weakening the positive contribution to profits. Meanwhile, the support of non-recurring gains and losses for net profit also decreased, with non-recurring gains and losses amounting to 15.5021 million yuan in 2025, a decrease of 45.87% compared to 28.6376 million yuan in 2024.

Interpretation of Net Profit Excluding Non-Recurring Gains and Losses

The net profit attributable to the shareholders of the listed company, excluding non-recurring gains and losses, was 82.3333 million yuan, a year-on-year decrease of 73.52%, with a decline greater than that of net profit. This was mainly due to the year-on-year decrease in non-recurring gains and losses, while the decline in the company’s main business profitability after excluding non-recurring items was more pronounced. During the reporting period, the gross profit margin of the company’s main business dropped from 44.25% in 2024 to 30.06%, a decrease of 14.19 percentage points, with the gross profit margin of unmanned intelligent mining control system solutions dropping from 38.16% to 21.35%, a decrease of 16.81 percentage points; the gross profit margin of intelligent manufacturing dropped from 47.12% to 18.53%, a decrease of 28.59 percentage points, making the significant decline in the main business profitability the core reason for the larger decline in net profit excluding non-recurring items.

Interpretation of Basic Earnings Per Share

Basic earnings per share were 0.23 yuan/share, a year-on-year decline of 70.51%. The decline in earnings per share is directly related to the significant decrease in net profit, with the company’s net profit declining by 71.19% year-on-year in 2025, while the total share capital remained unchanged at 43.3 million shares, thus the earnings per share dropped sharply in line with the net profit.

Interpretation of Earnings Per Share Excluding Non-Recurring Gains and Losses

Earnings per share excluding non-recurring gains and losses were 0.19 yuan/share, a year-on-year decline of 73.61%, a decline greater than basic earnings per share. This corresponds to the larger decline in net profit excluding non-recurring gains and losses compared to net profit, with net profit excluding non-recurring gains and losses decreasing by 73.52% year-on-year. With the share capital unchanged, the earnings per share excluding non-recurring gains and losses saw a greater decline, more directly reflecting the deterioration of the company’s main business profitability.

Interpretation of Expenses

In 2025, the company’s total period expenses were 4,002.4910 million yuan, a decrease of 14.05% compared to 4,656.8254 million yuan in 2024. Overall, expenses decreased, but the decline was not as steep as the revenue drop of 13.03%, causing the expense ratio to rise from 25.02% in 2024 to 24.73%, still putting certain pressure on profits. By type of expense, sales expenses, management expenses, and R&D expenses all decreased year-on-year, while financial expenses increased year-on-year due to reduced interest income.

Interpretation of Sales Expenses

Sales expenses were 124.7701 million yuan, a year-on-year decrease of 15.28%. In terms of composition, employee compensation was 50.4354 million yuan, a year-on-year decline of 31.98%, which was the main reason for the decrease in sales expenses; travel expenses were 28.3084 million yuan, a year-on-year increase of 11.33%, as the company increased travel spending to expand the market and maintain customer relationships; labor costs were 20.7418 million yuan, a year-on-year decrease of 5.68%; and business promotion expenses were 9.0135 million yuan, a year-on-year decrease of 3.97%. Overall, the company’s sales expense management achieved certain results, but to maintain market share, some expenses still had rigid expenditures.

Interpretation of Management Expenses

Management expenses were 181.7282 million yuan, a year-on-year decrease of 10.00%. Among them, employee compensation was 99.4692 million yuan, a year-on-year decline of 23.65%, being the core factor for the decline in management expenses; outsourced labor spending was 18.2625 million yuan, a year-on-year increase of 10.89%; professional service fees were 13.2836 million yuan, a year-on-year decrease of 6.64%; depreciation expenses were 14.7207 million yuan, a year-on-year increase of 34.02%, mainly due to increased depreciation from newly acquired fixed assets; and office expenses were 14.2047 million yuan, a year-on-year increase of 36.62%, possibly related to the company’s digital office and increased daily operational needs.

Interpretation of Financial Expenses

Financial expenses were -29.6381 million yuan, an increase from -38.2948 million yuan in 2024 (loss decreased). Among them, interest income was 30.2985 million yuan, a year-on-year decrease of 25.85%, which was the main reason for the change in financial expenses, mainly due to a decrease in the company’s cash reserves, leading to reduced interest income; interest expenses were 1.3138 million yuan, a year-on-year decrease of 20.71%; and handling fees were 0.3375 million yuan, a year-on-year decrease of 1.99%. Although financial expenses still yield a net gain, their positive contribution to profits has weakened.

Interpretation of R&D Expenses

R&D expenses were 124.3888 million yuan, a year-on-year decrease of 19.64%. In terms of composition, employee compensation was 76.2069 million yuan, a year-on-year decrease of 11.94%, which was the main reason for the decline in R&D expenses; material costs were 21.8833 million yuan, a year-on-year decrease of 32.00%; entrusted R&D spending was 9.6482 million yuan, a year-on-year decrease of 3.63%; travel expenses were 5.1534 million yuan, a year-on-year decrease of 20.24%; and testing and processing fees were 5.7427 million yuan, a year-on-year increase of 38.51%. The company’s R&D expenses have decreased, but it still maintains certain investments, with the total R&D investment in 2025 accounting for 7.69% of operating revenue, a decrease of 0.63 percentage points from the previous year. The company’s investment in technological innovation has weakened somewhat, but it remains at a high level.

Interpretation of R&D Personnel Situation

During the reporting period, the number of R&D personnel in the company was 235, a decrease of 11 from the previous year, accounting for 39.23% of the total number of employees, a slight decrease from 39.94% in the previous year. The total compensation for R&D personnel was 76.2069 million yuan, a year-on-year decrease of 11.94%, with the average compensation for R&D personnel being 324.3 thousand yuan, a decrease of 27.5 thousand yuan from 351.8 thousand yuan in the previous year. In terms of educational structure, there were 21 doctoral researchers and 153 master’s researchers, accounting for a total of 74.04% of the R&D personnel, maintaining a high level of highly educated R&D personnel, providing talent support for the company’s technological innovation. In terms of age structure, there were 123 R&D personnel aged 30-40, accounting for 52.34%, being the core strength of the R&D team, which is relatively young and possesses strong innovative vitality.

Interpretation of Cash Flow

In 2025, the company’s net increase in cash and cash equivalents was -91.3825 million yuan, a year-on-year decrease of 111.3639 million yuan, indicating a decline in cash reserves. The net cash inflow from operating activities was 211.4569 million yuan, while the net cash outflow from investing activities was 156.4642 million yuan, and the net cash outflow from financing activities was 146.3752 million yuan, leading to an overall net cash outflow as operating cash flow could not cover the cash outflows from investing and financing activities.

Interpretation of Net Cash Flow from Operating Activities

The net cash flow from operating activities was 211.4569 million yuan, a year-on-year decrease of 42.31%. In terms of cash flow composition, cash received from sales of goods and services provided was 1,196.7874 million yuan, a year-on-year decrease of 18.65%, consistent with the revenue decline trend; tax refunds received were 6.5865 million yuan, a year-on-year decrease of 38.59%; and cash received from other operating activities was 144.3227 million yuan, a year-on-year increase of 37.28%, mainly due to increases in government subsidies and interest income. In terms of expenditures, cash paid for purchasing goods and services was 500.6116 million yuan, a year-on-year decrease of 2.75%; cash paid to employees and for employee benefits was 359.9828 million yuan, a year-on-year increase of 6.03%; and cash paid for various taxes was 66.4715 million yuan, a year-on-year decrease of 55.99%, mainly due to decreased income tax payments resulting from profit declines. Overall, the decline in revenue leading to a decrease in cash received from sales of goods is the main reason for the decline in net cash flow from operating activities.

Interpretation of Net Cash Flow from Investing Activities

The net cash flow from investing activities was -156.4642 million yuan, a significant decrease from -392.6473 million yuan in 2024. During the reporting period, cash received from investment recoveries was 300.0000 million yuan, mainly from recovering the principal of large-denomination certificates of deposit; cash paid for the purchase of fixed assets, intangible assets, and other long-term assets was 41.4725 million yuan, a year-on-year decrease of 9.17%; and cash paid for investments was 415.0000 million yuan, mainly for purchasing large-denomination certificates of deposit. The recovery of the principal of large-denomination certificates of deposit led to a substantial increase in cash inflow from investing activities, while the cash paid for investments decreased compared to the previous year, collectively resulting in a narrowing of the net cash outflow from investing activities.

Interpretation of Net Cash Flow from Financing Activities

The net cash flow from financing activities was -146.3752 million yuan, a decrease in cash net outflow scale from -176.6075 million yuan in 2024. The main reason was the reduction in dividends paid during the reporting period, with cash paid for dividends, profits, or interest payments being 142.8900 million yuan, a year-on-year decrease of 17.49%; cash paid for other financing-related activities was 3.4852 million yuan, remaining roughly the same as the previous year. The company had no new financing, and cash outflows from financing activities were mainly for dividend payments, with the reduction in dividend payments leading to a decrease in net cash outflow from financing activities.

Interpretation of Potential Risks

Risk of Significant Decline or Loss in Performance

In 2025, the company experienced a year-on-year decline of 71.19% in net profit and a 73.52% decline in net profit excluding non-recurring gains and losses, indicating a significant drop in performance. If the cyclical adjustments in the coal industry continue, and the acceleration of energy structure transformation leads to further tightening of customer capital expenditures, coupled with intensified industry competition making it difficult for the company to maintain market share with its pricing strategy, the company may face further declines in performance or even losses.

Risk of Core Competitiveness

With the deep integration of new digital technologies such as 5G, big data, and artificial intelligence with mining technology, the pace of technological iteration in the field of unmanned intelligent mining is accelerating. If the company fails to accurately grasp the direction of technological development and cannot timely launch new products and technologies that meet industry demands, or if core professional technical talent is lost, the company’s technological and product competitiveness will decline, posing a risk to its core competitiveness.

Risk of Declining Market Competitiveness

Currently, domestic and foreign manufacturers are accelerating their layout in the coal mine intelligent equipment market, further intensifying industry competition. If the company cannot continue to consolidate its advantages in technology, products, and services, and cannot consistently improve product quality and timely respond to customer needs, it may lead to customer attrition, a decline in market share, and weakened market competitiveness.

Risk of Accounts Receivable

As of December 31, 2025, the company’s accounts receivable book value was 1,333.1831 million yuan, accounting for 27.98% of current assets. Although the company’s main clients are large coal enterprises with good credit conditions, if future fluctuations in industry prosperity lead to operational difficulties for customers, or if the company’s accounts receivable management mechanisms are inadequate and collection efforts are insufficient, it may result in accounts receivable not being collected on time and in full, leading to bad debt losses and adversely affecting the company’s cash flow and profitability.

Risk of Cyclical Fluctuations in the Coal Industry

The coal industry is a cyclical industry, and its prosperity is greatly influenced by domestic and international political and economic environments. The company’s business is highly correlated with the capital expenditures of coal enterprises. If the coal industry experiences unfavorable cyclical fluctuations in the future, leading to a slowdown in the pace of intelligent construction by coal enterprises, it will directly impact the company’s main business revenue and adversely affect its operating performance.

Risk of Macroeconomic Environment

The rapid and continuous development of the new energy industry is gradually showing its substitution effect on coal, while the volume of coal imports remains at a certain scale. The supply-demand pattern of the domestic coal market is adjusting, and coal prices are returning to reasonable ranges, which may impact the operational efficiency of coal enterprises. If coal enterprises reduce their investments in intelligent construction due to declining efficiency, it will directly adversely affect the company’s operating performance.

Risk of Industrial Development

The company is actively expanding into emerging industries, but new industries face challenges such as long market cultivation cycles and difficulties in technology adaptation, with complexities in the investment and acquisition segments. If the development progress of new industries does not meet expectations, and the construction and benefit release of raised investment projects do not meet expectations, it will affect the company’s long-term development strategy and potential for profit growth.

Interpretation of the Total Pre-Tax Compensation Received by the Chairman During the Reporting Period

During the reporting period, Chairman Liu Zhiguo received a total pre-tax compensation of 1.8295 million yuan from the company. This compensation level is consistent with the overall compensation system for senior management, reflecting the company’s recognition of the chairman’s contributions to strategic planning and operational management. Although the company’s performance sharply declined in 2025, the chairman’s compensation remains at a high level, and the company needs to pay attention to the alignment between compensation and performance, ensuring that the compensation mechanism effectively motivates senior management to improve company performance.

Interpretation of the Total Pre-Tax Compensation Received by the General Manager During the Reporting Period

During the reporting period, General Manager Li Mingzhong received a total pre-tax compensation of 1.5938 million yuan from the company. Li Mingzhong started serving as the general manager in August 2025, concurrently holding the position of company director and core technical personnel. His compensation comprehensively considers managerial responsibilities and technical contributions. Against the backdrop of declining company performance, this level of compensation needs to be linked with the company’s operational performance improvement goals to incentivize the general manager to lead the team in enhancing the company’s operational performance.

Interpretation of the Total Pre-Tax Compensation Received by the Deputy General Manager During the Reporting Period

During the reporting period, Deputy General Manager Huang Zenghua received a total pre-tax compensation of 1.5323 million yuan, Pang Qi received 1.4676 million yuan, and Yang Fan received 839.8 thousand yuan (Yang Fan assumed the position of deputy general manager in August 2025). Different deputy general managers have varying compensation levels due to differences in tenure and scope of responsibilities. Huang Zenghua and Pang Qi, as core management members of the company, their compensation reflects their important roles in the company’s operational management. In light of the company’s performance decline, deputy general managers need to assume corresponding operational responsibilities and drive performance improvements through optimizing business layout and enhancing operational efficiency. The compensation mechanism should be closely linked to performance assessments to ensure the incentivizing effect of compensation.

Interpretation of the Total Pre-Tax Compensation Received by the CFO During the Reporting Period

During the reporting period, CFO Bi Tieying received a total pre-tax compensation of 1.0022 million yuan from the company. Bi Tieying assumed the position of CFO in October 2024, responsible for the company’s financial management and capital operations. In the context of tight cash flow and declining profits, the CFO needs to enhance the company’s financial health by optimizing capital management and cost control. Their compensation should be linked to the improvement of financial indicators and the security of funds to incentivize them to better fulfill their financial control responsibilities.

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