Shichang Co., Ltd. experiences a slight decrease in net profit attributable to parent in its first year of listing

（Source: Economic Information Daily）

Hebei Shichang Automotive Parts Co., Ltd. (referred to as “Shichang Shares,” 920022.BJ) recently released its first-year performance report. The annual report shows that in 2025, the company achieved operating revenue of RMB 667 million, up 29.57% year over year; net profit attributable to shareholders of the listed company was RMB 68.8723 million, down 0.53% year over year, showing a situation of “revenue growth but a slight decline in net profit attributable to parent.”

Reporters from Economic Information Daily noted that factors such as a decline in gross margin, an increase in period expenses, and an increase in non-recurring gains and losses jointly squeezed Shichang Shares’ profits. At the same time, the fact that the growth rate of its net profit after deducting non-recurring items was lower than the growth rate of operating revenue has also raised investors’ concerns about the quality of its earnings.

Main business revenue grew by 28%

Shichang Shares is a high-tech enterprise specializing in the R&D, manufacturing, and sales of automotive fuel system products, as well as a “little giant” enterprise in specialized and refined areas. The company’s main products are under-pressure and over-pressure plastic fuel tank assemblies, which are used respectively in conventional fuel vehicles and new energy plug-in (including range-extended) hybrid vehicles.

By product category, Shichang Shares’ operating revenue mainly comes from plastic fuel tank assemblies. In 2025, the company achieved main business revenue of RMB 654 million, up 28% year over year. Among them, revenue from plastic fuel tank assemblies was RMB 627 million, up 25.87%; spare parts revenue was RMB 12.8448 million, up 51.64% from 2024; and other revenue was RMB 14.4839 million, up 214.72% year over year.

In terms of product structure, the increase in operating revenue mainly came from higher sales revenue of over-pressure plastic fuel tanks. The company explained that during the reporting period, the under-pressure plastic fuel tank business remained relatively stable, with sales revenue increasing slightly. Meanwhile, multiple designated projects for over-pressure plastic fuel tanks started mass supply during the reporting period, increasing sales volume; therefore, over-pressure plastic fuel tank sales revenue increased by RMB 90.8658 million from the previous year, a year-on-year increase of 137.43%.

At the same time, Shichang Shares also stated that the main reason for the growth in spare parts revenue was that, as sales volume of plastic fuel tank assemblies increased, according to customer demand, related spare parts sales volume increased. The sharp increase in other revenue was mainly due to an increase in technology development contract revenue recognized during the reporting period and the corresponding cost transfers.

In terms of profit, in 2025, Shichang Shares achieved net profit attributable to shareholders of the listed company of RMB 68.8723 million, down 0.53% year over year; and net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses was RMB 66.5255 million, up 8.69% year over year.

Multiple factors squeezed profits

Although Shichang Shares’ operating revenue in 2025 grew by nearly 30% year over year, its net profit attributable to parent company shareholders was slightly down year over year. Meanwhile, its net profit after deducting non-recurring items increased by only 8.69% year over year, far below the operating revenue growth rate. Judging from changes in the items in the consolidated income statement, factors such as a decline in gross margin, an increase in period expenses, a decrease in government subsidies, and an increase in impairment losses jointly eroded profit margins.

First, regarding gross margin, in 2025 Shichang Shares achieved a gross margin of 22.33%, down 3.15 percentage points from 25.48% in 2024. By product, among the main business products, the plastic fuel tank assembly product, spare parts product, and other products achieved gross margins of 22.36%, 7.68%, and 51.04%, respectively—down 3.34 percentage points, up 5.55 percentage points, and down 2.09 percentage points versus 2024.

The overall decline in gross margin is inseparable from the impact of higher operating costs. In 2025, Shichang Shares’ operating costs were RMB 518 million, up 35.05% year over year; main business costs were RMB 506 million, up 32.90% year over year. Both growth rates were higher than the corresponding growth rates of operating revenue. The company said that for plastic fuel tank assembly products, although revenue grew, due to the impact of annual price decreases by major customers and sales rebates, the extent of cost growth exceeded the extent of revenue growth, causing the gross margin of plastic fuel tank assemblies to decline year over year.

An increase in period expenses further squeezed profit margins. In 2025, the total increase in selling expenses, administrative expenses, and R&D expenses of Shichang Shares was approximately RMB 12.12 million; each of the three items increased by approximately RMB 2.24 million, RMB 4.43 million, and RMB 5.45 million year over year, respectively. Although the company’s finance expenses decreased by RMB 1.35 million due to lower interest expenses resulting from a reduction in bank borrowings, the net increase in period expenses still exceeded RMB 10 million.

A decrease in non-recurring gains and losses also affected the company’s net profit. In 2025, Shichang Shares’ other income was RMB 4.7838 million, down approximately RMB 5.56 million from 2024 and down 53.76% year over year. Among them, government subsidies related to income decreased from approximately RMB 5.34 million in the same period last year to approximately RMB 0.14 million.

In addition, credit impairment losses turned from positive to negative, becoming an important factor squeezing profits. In 2025, Shichang Shares’ credit impairment losses were RMB 2.7086 million; in the same period of the previous year, they were RMB 0.3148 million in income. Structurally, the change in this metric was mainly due to an increase in bad debt losses on accounts receivable. In 2025, the company accrued approximately RMB 2.61 million in bad debt losses on accounts receivable, while in the same period last year the amount was a reversal of approximately RMB 1.14 million.

Net cash flow from operating activities declined

Of note, changes in accounts receivable also affected the net cash flow from operating activities generated by Shichang Shares. In 2025, the net cash flow from operating activities was RMB -7.1896 million, a decrease of RMB 55.9377 million compared with the same period last year, and it turned from positive to negative year over year.

The company explained that, with the increase in procurement scale, cash paid for purchasing goods and receiving labor during the reporting period increased significantly by RMB 62.4867 million compared with the same period last year. At the same time, due to the increase in the balance of accounts receivable, some operating income had not yet been collected, so the cash received from selling goods and providing labor during the reporting period increased by a smaller amount.

At the same time, Shichang Shares stated that it records discounting inflows of bank acceptance bills with lower credit ratings into the “other cash flows related to financing activities” line item. If the cash inflows from this portion for 2024 and 2025 were RMB 35.5511 million and RMB 19.8483 million, respectively, and added to the net cash flow from operating activities, then the adjusted net cash flow from operating activities for 2024 and 2025 would be RMB 84.2992 million and RMB 12.6587 million, respectively.

The company’s explanation regarding accounts receivable can be reflected in the balance sheet. As of the end of 2025, the company’s accounts receivable were RMB 255.7656 million, up 33.81% from the end of the previous year, and accounted for 34.07% of total assets. The company said this was mainly due to the growth in operating revenue during the reporting period and the relatively high proportion of sales revenue in the fourth quarter. At the same time, the company’s accounts receivable turnover rate in 2025 was 2.77, which was higher than the levels in the prior two years.

It is worth noting that in its financial report, Shichang Shares frankly stated that it faces the risk of customers being highly concentrated. In 2025, the sales revenue of its top five customers accounted for 90.94% of revenue for the current period, and the combined annual sales proportion of the top two customers reached about 76.77%. The company said that if major customers in the future face significant risks due to end-consumer market conditions, it may lead to a decline in the company’s sales revenue, which would have an adverse impact on the company’s operating performance.

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