Breaking Down Jiangsu Eastern Shenghong Co., Ltd. Financial Health: Key Insights for Investors

Jiangsu Eastern Shenghong's recent numbers tell a compelling story for investors: Q3 2025 revenue fell to ¥31.25 billion, dragging trailing twelve-month revenue to ¥121.53 billion (a 16.22% decline year-over-year), while Q3 net profit attributable to shareholders plunged to a loss of ¥-259.83 million (an 85.05% drop), even as Q1 2025 net income recorded a rebound to ¥341 million (+38.19% y/y); the balance sheet reveals heavy leverage with a debt-to-asset ratio of 83.92% and total liabilities of ¥174.6 billion, short-term pressures shown by a current ratio of 44.73% and quick ratio of 24.26%, but operating cash flow improved-Q3 up 39.14% to ¥2.81 billion-while market valuation sits at a ¥61.42 billion market cap (share price ¥9.29) with a P/S of 0.53 and negative EPS, and strategic growth bets include expanding photovoltaic-grade EVA capacity to 500,000 tons/year as the company pivots toward new energy and advanced materials.

Jiangsu Eastern Shenghong Co., Ltd. (000301.SZ) - Revenue Analysis

Jiangsu Eastern Shenghong reported continued top-line pressure through 2025 driven by weaker petrochemical demand and price softness. Key headline figures:

• Q3 2025 revenue of ¥31.25 billion represents an 11.91% YoY decline, signaling persistent soft demand in core petrochemical products.
• TTM revenue fell 16.22% as of September 2025, a sharper contraction versus the -1.97% decline recorded for 2024, indicating accelerating revenue weakness.
• Despite top-line pressure, operational improvements or one-off items contributed to a stronger Q1 2025 net income (¥341 million, +38.19% YoY), suggesting margin resilience in parts of the business.
• Revenue per employee of roughly ¥4.12 million highlights capital-intensity and scale: a large workforce relative to revenue during the downturn.
• Market cap of ¥61.42 billion (Dec 12, 2025) implies investor valuation reflecting revenue contraction and sector headwinds.

Primary drivers behind the decline:

• Lower demand across petrochemical end markets, reducing volumes sold.
• Price pressure within commodity chemicals compressing average selling prices.
• Potential inventory and product mix effects where higher-margin specialties underperformed versus bulk products.

For investor context and holders analysis see: Exploring Jiangsu Eastern Shenghong Co., Ltd. Investor Profile: Who's Buying and Why?

Jiangsu Eastern Shenghong Co., Ltd. (000301.SZ) - Profitability Metrics

• Q3 2025 net profit attributable to shareholders: ¥-259.83 million (year‑over‑year decrease of 85.05%).
• Q3 2025 net profit margin: negative (loss-making period).
• Q3 2025 earnings per share (EPS): negative, reflecting the period loss.
• Q1 2025 net profit attributable to shareholders: increased 38.19% year‑over‑year (improvement earlier in the year).
• Gross profit margin: under pressure from high fixed costs and insufficient capacity utilization.
• Primary drivers of profitability decline: volatility in crude oil prices and weak downstream demand.

• Operational leverage: high fixed costs amplify margins' sensitivity to volume shortfalls-low utilization reduces absorption of fixed overheads and drags gross margin.
• Commodity exposure: swings in crude oil feedstock costs compress spreads when downstream prices lag, directly hurting margins and leading to the reported Q3 loss.
• Demand environment: weak downstream demand reduces sales volume and exacerbates per‑unit fixed cost burden.

Jiangsu Eastern Shenghong Co., Ltd. (000301.SZ) - Debt vs. Equity Structure

• Debt-to-asset ratio: 83.92% (as of September 2024) - indicates assets are predominantly financed by liabilities rather than equity.
• Total liabilities: ¥174.6 billion - includes substantial short-term obligations.
• Current liabilities: ¥92.47 billion - signals heavy near-term cash outflow pressure.
• Interest coverage ratio: 1.0289 (Q3 2025) - limited buffer to service interest from operating earnings.
• Long-term credit rating: AA+ (stable outlook) per the 2025 Tracking Rating Report - reflects creditworthiness despite leverage, likely supported by asset base, business scale, or state-related factors.

• Liquidity risk: Current liabilities of ¥92.47 billion require near-term funding or cash generation; refinancing risk if markets tighten.
• Interest-service vulnerability: Interest coverage near 1.03 means small declines in operating profit or rising rates could push the company into negative coverage.
• Leverage sensitivity: High debt-to-asset ratio magnifies earnings volatility and increases downside for equity holders.
• Credit rating context: AA+ helps lower borrowing costs relative to lower-rated peers but does not remove short-term rollover or liquidity risks.
• Operational drivers: Aggressive expansion strategies have expanded debt load; monitoring capex discipline and asset monetization is critical.

• Quarterly interest coverage trend (watch if it falls below 1.0).
• Changes in current liabilities and short-term borrowings each quarter.
• Equity injections, asset disposals, or convertible instruments that could materially alter capital structure.
• Refinancing terms and maturity schedule for large debt tranches.

Jiangsu Eastern Shenghong Co., Ltd. (000301.SZ) - Liquidity and Solvency

Key liquidity and solvency indicators for Jiangsu Eastern Shenghong as of mid-2025 show improved operating cash generation alongside conservative debt service performance.

• Current ratio (as of 2025-06-30): 44.73%
• Quick ratio (as of 2025-06-30): 24.26%
• Operating cash flow Q3 2025 (YoY change): ¥2.81 billion (+39.14%)
• Cash interest coverage ratio: 2.2169
• Loan repayment ratio: 100%
• Interest repayment ratio: 100%

For additional context on corporate background and capital structure, see: Jiangsu Eastern Shenghong Co., Ltd.: History, Ownership, Mission, How It Works & Makes Money

Jiangsu Eastern Shenghong Co., Ltd. (000301.SZ) - Valuation Analysis

• P/S of 0.53 implies the market values each yuan of Shenghong's revenue at roughly ¥0.53 - a low multiple indicating depressed investor expectations or sector-wide pressure.
• Negative P/E and negative Q3 2025 EPS signal ongoing net losses; valuation cannot be assessed via traditional positive-earnings multiples.
• Market cap ¥61.42 billion and the ¥9.29 share price embed both historical scale and current investor skepticism.

• Primary valuation drivers:
  • Recent profitability deterioration (negative EPS periods).
  • Revenue trends relative to capacity and product demand.
  • Commodity/industry price swings and input-cost pressure.
  • Balance-sheet strength and liquidity position influencing risk premium.
• Key risks reflected in current pricing:
  • Continued net losses suppressing earnings-based multiples.
  • Volatility in stock price due to earnings surprises and market sentiment.
  • Potential dilution or asset write-downs that could affect valuation.

Jiangsu Eastern Shenghong Co., Ltd. (000301.SZ) - Risk Factors

Jiangsu Eastern Shenghong's recent financial profile highlights multiple interlinked risks that investors need to weigh: commodity exposure, weak downstream demand, high leverage, aggressive expansion, impairments and macro-market volatility. Key numeric indicators (most recently reported periods and historic disclosures) illustrate these pressures.

• Commodity price sensitivity: crude oil price swings materially affect feedstock costs and product margins.
• Demand-side weakness: petrochemical downstream demand softness depresses plant utilization and selling prices.
• Capital structure strain: a high debt-to-asset ratio constrains liquidity and solvency flexibility.
• Expansion-driven leverage: rapid capacity additions and capex have increased financial leverage and operational complexity.
• Impairment impacts: substantial asset write-downs have eroded equity and reduced recoverable asset values.
• Market and macro risk: global economic cycles, FX movements and market volatility amplify earnings volatility.

How these risks interact:

• Crude price declines reduce downstream product prices faster than they lower feedstock-linked costs in some periods, squeezing margins and producing negative operating cash flow.
• Lower utilization in petrochemical derivatives reduces revenue per tonne while fixed costs (from expansion and debt service) remain high, exacerbating losses.
• High debt-to-asset and significant short-term liabilities increase refinancing and interest-rate risk, especially in tighter credit markets.
• Asset impairments not only reduce net worth but can signal future write-downs if market conditions worsen, potentially triggering covenant breaches.
• Market volatility and macro uncertainty (global demand shocks, trade frictions, RMB moves) can rapidly alter cash-flow forecasts and valuation assumptions.

Investor considerations and monitoring checklist:

• Track crude oil price trends and crack spreads to anticipate margin direction.
• Watch downstream demand indicators (petrochemical product prices, inventory levels, PMI data) for utilization shifts.
• Monitor quarterly balance sheets for changes in short-term debt, debt maturities and any covenant waivers.
• Review management commentary on capex schedules, project commissioning and integration progress.
• Scrutinize impairment disclosures, assumptions (discount rates, long-term prices) and potential further writedowns.
• Assess free cash flow trajectory and liquidity sources (cash on hand, committed credit lines, asset sales).

For a broader corporate context on history, ownership and business model, see: Jiangsu Eastern Shenghong Co., Ltd.: History, Ownership, Mission, How It Works & Makes Money

Jiangsu Eastern Shenghong Co., Ltd. (000301.SZ) Growth Opportunities

• Photovoltaic-grade EVA capacity expansion to 500,000 tons/year targeted by 2025, prioritizing solar-module raw materials aligned with China's new-energy goals.
• Developing what management describes as the world's largest integrated production base for photovoltaic-grade EVA and recycled fibers, designed to capture volume demand from global PV installation cycles and circular-economy trends.
• Strategic '1+N' layout: a core platform (1) complemented by multiple specialized projects (N) across new energy and new materials to spread technology risk and end-market exposure.
• Transformation emphasis: shift toward high-end materials, intelligent manufacturing and operational digitalization to raise margins and asset turnover.
• Industrial footprint expansion via new chemical-material projects (POSM, polyol units, etc.), consistent with upstream petrochemical integration trends in China.

• Capacity scale: 500,000 t/year EVA positions the company among the largest global EVA producers for PV use - enabling volume contracts with module makers and stronger negotiating power on feedstock purchasing.
• Downstream demand linkage: global PV installations (GW/year) and domestic solar targets imply multi-year EVA demand growth; larger integrated bases reduce per-unit fixed cost.
• Diversification: adding POSM and polyol mitigates cyclicality tied to single-product reliance and opens higher-margin specialty markets (automotive, insulation, coatings, adhesives).
• Integration & circularity: combining recycled fiber production with EVA supports sustainability-driven customer demand and potential premium pricing from green-product certification.

• Capex intensity: large-scale builds require substantial capital - timing of spending and financing mix will affect balance sheet leverage and ROIC.
• Ramp and utilization: margins depend on achieving high utilization quickly; delays or lower run rates compress near-term profit contribution.
• Feedstock volatility: petrochemical feedstock price swings can affect input costs unless hedged or vertically integrated.
• Market competition: competing global and domestic EVA/polyol producers expanding capacity concurrently could pressure prices during demand lulls.