Zhongtai Chemical reports a loss of 289 million yuan again, with a cumulative loss of over 4.1 billion yuan over three years. The 25.4 billion yuan interest-bearing debt looms overhead.

Image source: Visual China

Blue Whale News, March 26 (Reporter Wang Xiaonan) On the evening of March 25, Sinopec Chemical (002092.SZ) released its 2025 annual report, revealing a net loss attributable to shareholders of 289 million yuan, a decrease of 70.43% year-on-year. Although losses narrowed due to the recovery of the chlor-alkali chemical profitability, Sinopec Chemical has accumulated losses of 4.131 billion yuan over the past three years. Amid this dismal performance, the financial pressure on Sinopec Chemical has been increasing year by year, with a debt-to-asset ratio exceeding 60% for consecutive years. Despite having cash and cash equivalents of 5.838 billion yuan, its interest-bearing liabilities reached 25.457 billion yuan. At this time, the strategic investment introduced for its subsidiary six years ago has reached its expiry, and Sinopec Chemical also had to spend 1.2 billion yuan at the end of last year to buy back equity.

Another loss of 289 million yuan in 2025, with a total loss of over 4.1 billion yuan in three years

On the evening of March 25, Sinopec Chemical released its 2025 annual report, stating that the company’s revenue was 28.696 billion yuan, a decrease of 4.74% year-on-year; the net loss attributable to shareholders was 289 million yuan, a decrease of 70.43% year-on-year.

Regarding the reduction in net loss, Sinopec Chemical stated that the profitability of chlor-alkali chemicals has recovered, the textile industry has improved, and asset impairments and investment losses have significantly narrowed year-on-year.

In 2025, new domestic PVC capacity from the ethylene method is set to be concentrated, resulting in a net increase in overall capacity. Meanwhile, new housing construction continues to decline, leading to a decrease in domestic demand for PVC. However, the PVC export market continues to grow rapidly, filling some of the gaps created by insufficient domestic demand, while market prices continue to maintain a low consolidating trend.

Data shows that Sinopec Chemical has two main businesses: chlor-alkali chemicals and viscose textiles. The company’s main products include polyvinyl chloride resin (PVC), ion-exchange membrane caustic soda, viscose fiber, viscose yarn, and methanol, supported by a circular economy industrial chain that includes cogeneration, anthracite, calcium carbide, and cement from carbide slag. Sinopec Chemical went public on the A-share market in December 2006.

According to the 2025 annual report, the core product PVC from the chlor-alkali chemicals sector contributed nearly 40% of the company’s revenue. It is reported that PVC is mainly used in the manufacturing of profiles and pipes. Affected by the contraction in downstream market demand primarily driven by real estate and the continuous release of industry capacity, domestic PVC prices have gradually fallen since 2022, leading to losses for production enterprises. According to Futures Daily, since 2025, PVC futures prices have hit a nearly decade-low due to factors such as increased supply and reduced demand and the weakness of the real estate industry.

In terms of operating performance, Sinopec Chemical had not experienced an annual loss in the 16 years from its listing until 2022. In 2021, the company reported revenue of 62.463 billion yuan, with a record net profit of 2.703 billion yuan. In 2022, Sinopec Chemical’s performance showed early signs of decline, with operating revenue and net profit attributable to shareholders of 51.662 billion yuan and 776 million yuan, respectively, down 17.86% and 71.75% year-on-year, both showing significant declines.

2023 marked a turning point for Sinopec Chemical’s operating performance, as the company faced its first major loss. That year, Sinopec Chemical achieved operating revenue of 37.118 billion yuan, a decrease of 28.15% year-on-year; the net loss attributable to shareholders was 2.865 billion yuan, a staggering drop of 469.07% year-on-year. At that time, Sinopec Chemical explained that due to the impact of the industry cycle, the sales prices of its main products PVC, caustic soda, viscose fiber, and viscose yarn declined to varying degrees compared to the same period last year, resulting in a notable decrease in product profitability. In 2023, the company recognized an asset impairment loss of 668 million yuan, and losses from joint ventures increased, leading to an investment loss of 412 million yuan.

Since then, Sinopec Chemical has entered a continuous loss mode, reporting a further loss of 977 million yuan in 2024, bringing the company’s total losses to 4.131 billion yuan over three years.

While both revenue and net profit have declined, Sinopec Chemical’s operating cash flow has also decreased. In 2025, the net cash flow from operating activities was 3.249 billion yuan, down 44.77% year-on-year, which the company attributed to a decline in sales prices of its main products during the reporting period, leading to reduced cash inflows from operating activities.

Regarding the possibility of turning a profit in 2026, Sinopec Chemical seems to be quite “confident.” The company stated that although the planned new domestic PVC capacity has decreased, and some non-competitive capacity may be shut down, the PVC capacity concentrated in the fourth quarter of 2025 will be released in the first half of 2026, maintaining a high supply level. The domestic real estate market is still in a deep adjustment cycle, with traditional pipe and profile consumption decreasing, while demand in packaging, automotive, and pharmaceutical sectors still has significant growth potential. Influenced by changes in international circumstances, international crude oil prices have risen significantly, highlighting the cost advantage of calcium carbide method PVC compared to ethylene method PVC.

With financial pressure remaining high, interest-bearing liabilities have reached 25.457 billion yuan

In recent years, facing performance pressures, the chemical giant Sinopec Chemical has had its share of difficulties, officially “removing the hat” in May 2025.

In March 2024, Sinopec Chemical and its controlling shareholder Sinopec Group were both investigated by the China Securities Regulatory Commission within a month. Two months later, regulators imposed corresponding penalties, with the “Administrative Penalty Decision” determining that to meet the revenue targets set by the controlling shareholder Sinopec Group, Sinopec Chemical and its subsidiaries inflated their revenue and costs by a total of 4.248 billion yuan in 2022. Additionally, in 2021 and 2022, Sinopec Chemical and its subsidiaries engaged in non-operational fund occupation related transactions with Sinopec Group and its affiliates, totaling 7.718 billion yuan.

As a result, the listed company, controlling shareholders, and related responsible persons were all punished, with Sinopec Chemical and Sinopec Group each fined 5 million yuan; at the same time, the company’s stock abbreviation was changed from “Sinopec Chemical” to “ST Sinopec,” until May 20 last year when the company officially “removed the hat,” and the stock abbreviation was restored to “Sinopec Chemical.”

After three years of not emerging from the loss predicament, Sinopec Chemical’s financial pressure has been increasing day by day.

In recent years, Sinopec Chemical’s debt-to-asset ratio has remained above 60%, reaching 65.75% in 2025. Although the company had cash and cash equivalents of 5.838 billion yuan at the end of 2025, its corresponding interest-bearing liabilities were as high as 25.457 billion yuan, including short-term interest-bearing liabilities of 12.202 billion yuan, indicating significant repayment pressure. At the end of 2025, Sinopec Chemical’s financial costs amounted to 1.004 billion yuan.

At this time, Sinopec Chemical also had to spend 1.2 billion yuan to buy back equity from six years ago when it introduced strategic investments for its subsidiary.

To broaden financing channels and reduce Sinopec Chemical’s overall debt-to-asset ratio, in December 2019, Sinopec Chemical’s holding subsidiary Huatai Company collaborated with “Agricultural Bank of China Investment,” investment plans, and Shanxi Jin Asset Management, with the latter investing 500 million yuan, 200 million yuan, and 500 million yuan in Huatai Company through capital increase and share expansion, with an investment duration of six years.

According to the exit clauses in the capital increase agreement signed at that time, on December 26, 2025, Sinopec Chemical planned to spend 1.2 billion yuan to acquire a total of 15.173% equity held by Agricultural Bank of China Investment, investment plans, and Shanxi Jin Asset Management in Huatai Company. After this buyback, Sinopec Chemical’s shareholding in Huatai Company will increase to 99.732%, maintaining its status as the controlling shareholder.

Data shows that Huatai Company was established on January 16, 2004, and is a production enterprise focused on the chlor-alkali chemical field, with core businesses including the production and sales of polyvinyl chloride resin and ion-exchange membrane caustic soda. In 2024 and 2025, Huatai Company achieved operating revenues of 4.568 billion yuan and 4.264 billion yuan, with corresponding net profits of 100.17 million yuan and 244 million yuan, demonstrating a significant improvement in profitability in 2025.

It is worth mentioning that around the chlor-alkali chemical main business, Sinopec Chemical is also expanding its industrial chain through equity acquisitions and new project investments, leveraging business synergies. However, these expenditures have further increased the company’s financial pressure.

In June 2024, to enhance control and achieve integration in the chlor-alkali industry, Sinopec Chemical further acquired equity in the affiliated company Shengxiong Energy, planning to spend 951 million yuan to acquire a total of 157.7 million shares held by 23 shareholders. In the following month, Shengxiong Energy became a controlled subsidiary and was included in the consolidated financial statements, with Sinopec Chemical’s shareholding increasing from 18.55% to 55.69%. Data shows that Shengxiong Energy’s main businesses include the production and sales of polyvinyl chloride resin, ion-exchange membrane caustic soda, and calcium carbide, with operating revenues of 5.137 billion yuan and net profits of 324 million yuan in 2025.