Liquidity Crisis Draws Regulatory Attention: Former Paint Giant Asia Paint Facing Cyclical Difficulties

Daily Economic News Reporter: Huang Hai Daily Economic News Editor: Bi Luming

163 accounts frozen due to litigation matters, expected 2025 revenue to decline by 77%, annual net loss up to 1.29 billion yuan… Former coating giant Asia Pacific Coatings (Yashi Chuangneng) has attracted attention due to liquidity crisis.

After the earnings forecast was disclosed, the Shanghai Stock Exchange issued a regulatory letter to Yashi Chuangneng, requiring the company to respond to issues such as significant revenue decline, frozen accounts, and ongoing operational capacity.

On the evening of March 14, Yashi Chuangneng disclosed a reply letter. Regarding the sharp decline in performance, Yashi Chuangneng stated that firstly, the real estate and construction industries are undergoing deep adjustments, which have significantly impacted the company’s business; secondly, the company’s credit sales policies have tightened; thirdly, due to the maturity of bills, large reductions in loan balances from certain financial institutions, and other reasons, the company’s liquidity has become difficult.

Expected annual revenue to fall by 77%, multiple factories have ceased production

Yashi Chuangneng is currently facing liquidity difficulties.

Public information shows that from 2021 to 2024, Yashi Chuangneng’s net profit attributable to the parent company after non-recurring items was -645 million yuan, 36 million yuan, 10 million yuan, and -358 million yuan respectively, with the company’s net assets at the end of 2024 reaching 1.309 billion yuan. According to the company’s disclosed earnings forecast, the loss in 2025 will significantly increase, with a projected net loss of 890 million to 1.29 billion yuan. Based on the maximum loss forecast, the company’s net assets at the end of 2025 are expected to be only 19 million yuan, approaching negative territory.

Yashi Chuangneng’s latest announcement also shows that for the full year of 2025, the company’s operating revenue is 477 million yuan, down 76.77% from the same period last year.

Regarding the significant decline in revenue and large net losses in 2025, as well as liquidity issues, Yashi Chuangneng cited three main reasons: firstly, deep adjustments in the real estate and construction industries leading to revenue decline and increased accounts receivable credit impairment; secondly, rapid expansion of new capacity in recent years requiring large capital investment, heavy financial costs, low capacity utilization, and significant depreciation, amortization, and asset impairment; thirdly, substantial reductions in loan balances from some financial institutions.

Daily Economic News noted that among the accounts receivable impairment list disclosed by Yashi Chuangneng, many former top 100 real estate companies such as China Evergrande, China Fortune Land Development, Greenland Holdings, Blue Light Development, Risesun Development, and Kaisa Group have been fully impaired at 100%.

While performance has declined, by 2025, Yashi Chuangneng’s subsidiaries in Chongqing, Shijiazhuang, and Chuzhou waterproof factories have ceased operations. The company has overdue debts and is involved in multiple lawsuits, with some assets seized and frozen.

According to Yashi Chuangneng, the Chuzhou and Xinjiang factories are the company’s main production bases. From 2022 to 2024, products produced by the Chongqing, Shijiazhuang, and Chuzhou waterproof factories accounted for 11.95%, 24.07%, and 30.12% of the company’s revenue, respectively.

Yashi Chuangneng believes that the shutdown of these factories will not severely impact the company’s production and operations. “Currently, the company’s business scale and revenue are relatively small. The capacity of the Chuzhou and Xinjiang factories can ensure supply, and the shutdown of the Chongqing, Shijiazhuang, and Chuzhou waterproof factories is conducive to reducing overall operational costs and improving efficiency.”

Company: Currently facing temporary difficulties

With significant performance decline and multiple debt defaults, the regulatory letter from the Shanghai Stock Exchange requires Yashi Chuangneng to clarify whether there are material uncertainties regarding the company’s ability to continue as a going concern.

In response, Yashi Chuangneng stated that regarding the company’s ability to continue as a going concern, it believes that preparing financial statements on a going concern basis is appropriate.

The company provided several reasons: firstly, in 2025, revenue will still reach 477 million yuan, and the main production bases in Chuzhou and Xinjiang are operating normally; secondly, under the guidance of the Supreme People’s Court’s “good-faith and civilized enforcement concept,” the ongoing lawsuits, preservation, and enforcement actions have not fundamentally affected normal operations; thirdly, under the principle of “not blindly stopping or reducing loans,” most of the company’s bank loans have not been subject to suspension, reduction, or withdrawal; fourthly, the company has been deeply engaged in this industry for nearly 30 years, with strong brand influence, a solid market foundation, innovative capabilities, and a stable core team.

Yashi Chuangneng views that the current difficulties are temporary. “The company is actively implementing multiple measures to resolve the challenges, including business transformation and efficiency improvement, disposal of idle or low-efficiency assets, proactive negotiations with creditors to resolve debts, and engaging potential strategic investors. As the real estate and construction markets gradually recover, and with the growth of urban renewal and other existing market segments, the company’s efforts to overcome difficulties are gradually taking effect, and operational quality will recover in an orderly manner.”

Daily Economic News observed that by the end of 2025, the company and its approximately 40 subsidiaries have opened a total of 211 settlement accounts, of which 48 are currently operational, 163 accounts are frozen due to litigation, with a total frozen amount of 77.315 million yuan. As of December 31, 2025, the company’s cash balance was 98.2875 million yuan, with the frozen amount accounting for 78.66% of end-of-period cash.

Additionally, Yashi Chuangneng disclosed that there are currently 485 unresolved cases involving the company as defendant or enforcement party, including ongoing and unresolved judgments, totaling 1.259 billion yuan. Among these, 37 cases involve amounts over 3 million yuan. Assuming the maximum risk exposure based on the plaintiff’s claims and enforcement requests, and estimating the debt repayment date as December 31, 2026, with interest calculated to the expected repayment date, the maximum risk exposure is approximately 1.188 billion yuan.

Daily Economic News