Breaking Down Kaishan Group Co., Ltd. Financial Health: Key Insights for Investors

Curious whether Kaishan Group (300257.SZ) is a turnaround story or a balance-sheet cautionary tale? The company posted a modest top-line rise to CNY 4.23 billion in 2024 (up 1.64% year-over-year) with a five-year CAGR near 6%, driven by rotary screw air compressors (~60% of sales) and a 25% jump in international revenue - while the drilling rig market it serves is forecast at $99.66 billion in 2025 and the firm has committed to capacity expansion (a $11 million Loxley, Alabama investment). Profitability shows strain: net income was CNY 320 million in 2024 (net margin ~7.6%), operating margin 16.9%, EBITDA margin 25.8%, but net margin fell ~19.7% YoY and interest expense surged 77.3% to CNY 191.89 million, worsening interest coverage. The balance sheet reveals leverage and liquidity pressure - total liabilities rose ~7.5% to CNY 3.85 billion, non-current liabilities eased to CNY 1.87 billion, yet as of June 30, 2025 the company reported net current liabilities of CNY 61.95 billion, net liabilities of CNY 41.81 billion (up ~31.7%), total assets less current liabilities of CNY 24.84 billion, and total equity attributable of CNY 6.27 billion, while EPS slid to CNY 0.32 from CNY 0.44 and the stock has shown volatile moves (a recent CNY 775 million market-cap surge and a 9.2% weekly gain) with 57% held by Kaishan Holding Group - ready to dive into the detailed breakdown and what these numbers mean for investors?

Kaishan Group Co., Ltd. (300257.SZ) - Revenue Analysis

Kaishan Group reported revenue of CNY 4.23 billion in 2024, a 1.64% increase versus 2023. Revenue has shown steady expansion with an approximate five‑year CAGR of 6% driven primarily by the rotary screw air compressor business and accelerating international demand.

• 2024 total revenue: CNY 4.23 billion (▲1.64% YoY).
• Five‑year CAGR (≈2019/2020-2024): ~6%.
• Primary revenue driver: rotary screw air compressors - ~60% of total sales (~CNY 2.54 billion in 2024).
• International sales rose ~25% in 2024, notably in Southeast Asia and Europe, strengthening global footprint.
• Strategic capital deployment: $11 million expansion of Loxley, Alabama facility to raise U.S. manufacturing capacity and market penetration.
• Relevant market context: global drilling rig market estimated at $99.66 billion in 2025, where Kaishan holds a significant position.

Revenue composition and segment contributions (2024 estimates):

• Rotary screw air compressors: ~60% (~CNY 2.54 billion).
• Parts & after‑sales services: ~20% (recurring revenue, margin support).
• Drilling rigs & related equipment: ~15% (exposed to global drilling market dynamics).
• Other industrial compressors and accessories: ~5%.

International expansion metrics and strategic investments:

• International sales growth: +25% YoY in 2024, with strongest demand from Southeast Asia and Europe.
• Manufacturing footprint expansion: $11M investment in Loxley, Alabama to boost U.S. capacity and reduce lead times for North American customers.
• Market opportunity: drilling rig market projected at $99.66B in 2025 - an addressable market supporting Kaishan's drilling‑equipment segment scale‑up.

For further corporate context, see: Mission Statement, Vision, & Core Values (2026) of Kaishan Group Co., Ltd.

Kaishan Group Co., Ltd. (300257.SZ) - Profitability Metrics

• 2024 net income: CNY 320.0 million (net profit margin ~7.6%).
• Operating profit margin: 16.9% in 2024, indicating margin pressure versus prior years.
• EBITDA margin: 25.8% in 2024 - a slight decrease year-over-year.
• Interest expense: CNY 191.89 million in 2024, up 77.3% YoY.
• Net profit margin declined by ~19.7% YoY.
• Interest coverage ratio has deteriorated, signaling increased debt-servicing pressure.

• Margin profile: Operating margin (16.9%) and EBITDA margin (25.8%) show underlying operating strength, but the nearly 20% drop in net margin points to rising non-operating costs or one-off impacts.
• Debt servicing: With interest expense jumping 77.3% to CNY 191.89m and an interest coverage near 3.7x, the company faces higher leverage-related risk and less headroom for shocks.
• Cash-flow context: EBITDA of ~CNY 1,086.3m provides operating cash-generation, but increased financing costs compress net returns to equity.
• Investor focus areas: monitor financing costs, refinancing timelines, and whether operating margins can be stabilized or improved to restore net margin.

Kaishan Group Co., Ltd. (300257.SZ) - Debt vs. Equity Structure

• Total liabilities: CNY 3.85 billion in 2024 (≈ +7.5% year-over-year).
• Non-current liabilities: CNY 1.87 billion in 2024 (≈ -3.8% year-over-year).
• Interest expense: CNY 191.89 million in 2024 (≈ +77.3% year-over-year).
• Debt-to-equity: elevated (company characterized as highly leveraged).
• Debt-to-assets: indicates a significant share of assets funded by debt.
• Interest coverage: deteriorated, signaling increased strain on ability to service debt.

• Higher interest expense (+77.3%) raises near-term cash interest burden and compresses operating cash flow available to equity.
• Rising total liabilities (+7.5%) against declining non-current liabilities (-3.8%) suggests shifting maturity profile or increased short-term borrowings.
• Deteriorating interest coverage increases refinancing and default risk if operating performance weakens or rates remain elevated.
• Equity holders face higher leverage risk; any operational setback could amplify downside given the company's debt-heavy funding mix.

Kaishan Group Co., Ltd. (300257.SZ) Liquidity and Solvency

As of June 30, 2025, Kaishan Group's balance-sheet position shows material liquidity and solvency stress, driven by large net current liabilities and a widening deficit.

• Net current liabilities: CNY 61.95 billion (30 June 2025)
• Total assets less current liabilities: CNY 24.84 billion (30 June 2025)
• Net liabilities / total deficit: CNY 41.81 billion (30 June 2025)
• Total equity attributable to shareholders: CNY 6.27 billion (30 June 2025)
• Net liabilities increased ~31.7% year‑over‑year (implying prior period net liabilities ≈ CNY 31.75 billion)

Key implications for creditors and investors:

• Liquidity pressure: net current liabilities of CNY 61.95 billion indicate short‑term obligations significantly exceed current assets.
• Solvency constraints: total assets less current liabilities of CNY 24.84 billion versus a CNY 41.81 billion deficit suggest limited buffer to absorb shocks.
• Equity weakness: shareholder equity of CNY 6.27 billion contrasts with the size of the deficit, limiting internal capital support.
• Worsening trend: a ~31.7% rise in net liabilities year‑over‑year signals deteriorating leverage and increased rollover or refinancing risk.

For context on the company's broader strategic positioning and stated goals, see: Mission Statement, Vision, & Core Values (2026) of Kaishan Group Co., Ltd.

Kaishan Group Co., Ltd. (300257.SZ) Valuation Analysis

• Market listing: Shenzhen Stock Exchange (300257.SZ)
• Major shareholder: Kaishan Holding Group Co., Ltd. - 57% ownership
• Shareholder base: Primarily held by private companies

• EPS contraction: Earnings per share declined from CNY 0.44 to CNY 0.32, a ~27.3% decrease, which directly pressures valuation if price does not decline proportionally.
• Market-cap volatility: A recent one-week surge added CNY 775 million to market capitalization, reflecting short-term flows and speculative interest.
• P/E visibility: The P/E ratio is unspecified in public sources; investors should compute implied multiples using market price and EPS or seek company disclosures for trailing/forward earnings.
• Concentrated ownership: With 57% held by Kaishan Holding Group, free float and liquidity are constrained, which can amplify price moves on limited trading volume.

Kaishan Group Co., Ltd. (300257.SZ) - Risk Factors

• Profitability pressure: net profit margin declined by nearly 19.7% year‑over‑year, signaling reduced earnings efficiency and margin compression.
• Rising financing costs: interest expense surged 77.3% to CNY 191.89 million, increasing fixed cash outflows.
• Debt servicing strain: the interest coverage ratio has deteriorated, indicating reduced ability to cover interest from operating profits.
• Working capital deficit: net current liabilities stood at CNY 61.95 billion as of June 30, 2025, pointing to short‑term liquidity stress.
• Equity erosion: total deficit increased to CNY 41.81 billion as of June 30, 2025, reflecting capital depletion and potential constraints on raising equity.
• Market volatility: the stock has shown recent price swings, including a 9.2% gain in a single week, underscoring investor uncertainty.

• Potential implications for investors:
  • Higher interest expense and weakened interest coverage increase default and refinancing risk.
  • Large net current liabilities may force asset sales, covenant breaches, or urgent capital raises.
  • Total deficit limits flexibility for dividends, share buybacks, or equity financing without dilution.
  • Price volatility suggests heightened sensitivity to news, earnings, and liquidity events.

Kaishan Group Co., Ltd. (300257.SZ) - Growth Opportunities

• International market expansion: sales in Southeast Asia and Europe increased by 25% year-over-year, reflecting stronger export demand and channel penetration.
• Targeted capacity investments: an $11 million expansion of the Loxley, Alabama facility to boost North American manufacturing and after-sales support.
• Technology leadership: focus on wellhead module technology for geothermal - offering flexibility and cost efficiencies for modular geothermal power plants.
• Automation and R&D: deployment of intelligent tunneling drills and rock drilling robots enhances product differentiation and operating margins.
• Vertical integration: in-house manufacturing across critical components provides cost control, faster time-to-market, and quality management advantages.
• Diverse product and geographic mix: compressors, drilling rigs, wellhead modules and related equipment sold across Asia, Europe, and the Americas.

• Commercial implications: modular wellhead solutions reduce installation time and capex for customers in geothermal projects, improving Kaishan's tender competitiveness.
• Operational implications: robotics and intelligent drilling reduce labor intensity and can raise throughput and service margins over time.
• Market positioning: combined technology and vertical integration create barriers to entry for lower-cost competitors and enable tailored solutions for large EPC and energy customers.