$SHANDONG MOLONG (00568.HK)$ Achieving an operational turnaround in 2025, the company recorded its first positive profit after years of consecutive losses, with overseas markets becoming the core driver of the rebound in performance.
The company's annual report shows that net profit attributable to shareholders in 2025 was RMB 5.1556 million, successfully reversing the loss of RMB 43.7 million in 2024. Revenue reached RMB 1.762 billion, a year-on-year increase of 29.88%, and net operating cash flow surged by 630.85% year-on-year to RMB 321 million.
Notably, net profit excluding non-recurring gains and losses remained at -RMB 27.6225 million, indicating that the profitability of the company's core business has not fully returned to normal. Given that distributable profits at both the consolidated and parent company levels were negative, the company announced that no profit distribution would be made for 2025.
Overseas strategy proves effective, with revenue scale expanding significantly.
Overseas markets were the primary driver of this year's performance improvement. The company vigorously advanced its overseas strategy, with revenue from foreign markets increasing by approximately 50% year-on-year, significantly higher than the overall revenue growth rate of the company.
The company's main business focuses on pipe products, including oil pipes, casing pipes, pipeline pipes, boiler pipes, hydraulic support pipes, gas cylinder pipes, ship pipes, and nuclear power pipes, which collectively accounted for over 90% of total revenue.
The company adopts a "production based on sales" model, and during the reporting period, product orders were abundant, with production and sales increasing significantly year-on-year, further improving capacity utilization.
Product gross margins increased significantly year-on-year, combined with ongoing deepening cost control measures, leading to a notable enhancement in the company's profitability. The company stated that lean management initiatives have achieved internal cost reductions and efficiency improvements, comprehensively enhancing operational efficiency and market competitiveness.
Profit quality remains a concern, with core business recovery still underway.
Despite the net profit turning positive, the sustainability of the company's profitability remains uncertain. The loss of RMB 27.62 million in net profit excluding non-recurring items indicates that the positive net profit mainly relied on contributions from non-recurring gains and losses, with the core business still in the loss recovery phase.
The distribution of profits is clearly uneven on a quarterly basis.
Net profits attributable to shareholders of the listed company were RMB 5.42 million and RMB 6.74 million in the first and second quarters, respectively, while losses of RMB 6.73 million and RMB 0.275 million were recorded in the third and fourth quarters, indicating significant pressure on performance in the second half of the year. Operating cash flow also exhibited similar fluctuations, with negative values in both the second and third quarters.
At the parent company level, there are uncompensated losses, which directly result in the company's inability to distribute cash dividends to shareholders.
Expansion of asset scale, concentrated equity structure
As of the end of 2025, the company’s total assets amounted to RMB 2.682 billion, an increase of 10.82% from the beginning of the year; net assets attributable to shareholders of the listed company stood at RMB 498 million, representing a slight growth of 1.14% compared to the start of the year.
In terms of equity structure, Hong Kong Central Clearing and Settlement Agent Co., Ltd. holds 32.08% as the largest shareholder, followed by Shouguang Molong Holding Co., Ltd. with a 29.53% stake. Together, they hold over 60% of the shares, reflecting a highly concentrated ownership structure.
Of the 236 million shares held by Shouguang Molong Holding, approximately 99.35 million shares are pledged.
The company's shares are simultaneously listed on the Shenzhen Stock Exchange and the Hong Kong Stock Exchange. The company previously used the stock abbreviation "ST Molong" but has now reverted to its normal designation, reflecting a phase of operational improvement.
Editor/KOKO