Huabao Co., Ltd. 2025 Annual Report Analysis: Net profit turns profitable with a 128.28% increase; Operating cash flow halved, down 50.72%

Operating Revenue: Slight Decrease of 1.4%, Significant Product Structure Differentiation

In 2025, Huabao Holdings achieved operating revenue of 1.338 billion yuan, a slight decrease of 1.40% compared to 1.357 billion yuan in 2024. By product, the company’s three core businesses showed significant differentiation:

• Revenue from the food flavoring business was 677 million yuan, a substantial decrease of 20.67% year-on-year, which was the main drag on revenue;
• Revenue from the food ingredients business was 474 million yuan, a substantial increase of 30.36% year-on-year, becoming the main driver of growth;
• Revenue from the daily flavoring business was 156 million yuan, a year-on-year increase of 25.62%, maintaining rapid growth.

By region, domestic revenue was 1.253 billion yuan, a year-on-year decrease of 5.26%; overseas revenue was 85 million yuan, a substantial increase of 147.37%, indicating the initial success of internationalization efforts.

Profitability Indicators: Successfully Turned Losses into Profits, Profit Quality Needs Improvement

Net Profit: Turned Losses into Profits, Year-on-Year Increase of 128.28%

In 2025, the net profit attributable to shareholders of the listed company was 83.8035 million yuan, turning around from a loss of -296.3354 million yuan in 2024, with a significant year-on-year increase of 128.28%. The turnaround in net profit was mainly due to the company’s focus on core businesses and optimization of product structure, along with improved profitability in some subsidiaries.

Net Profit Excluding Non-Recurring Items: Also Turned Losses into Profits, Year-on-Year Increase of 119.50%

The net profit attributable to shareholders of the listed company, excluding non-recurring gains and losses, was 75.2997 million yuan, turning around from a loss of -386.1816 million yuan in 2024, with a year-on-year increase of 119.50%. The positive turnaround in net profit excluding non-recurring items indicates a recovery in the profitability of the company’s main business, but the absolute value remains relatively low, and there is still room for improvement in profit quality.

Earnings Per Share: Turned from Negative to Positive, Basic Earnings Per Share 0.14 Yuan/Share

In 2025, the basic earnings per share were 0.14 yuan/share, turning from -0.48 yuan/share in 2024, a year-on-year increase of 129.17%; the earnings per share excluding non-recurring items were 0.12 yuan/share, also turning from -0.63 yuan/share in 2024, corresponding to a growth of 119.05%. The improvement in earnings per share is directly related to the turnaround in net profit, reflecting the recovery of the company’s per-share profitability level.

Expense Analysis: Both Sales and Management Expenses Increased, Financial Expenses Decreased Significantly

In 2025, the company’s total period expenses amounted to 5.315 billion yuan, an increase of 9.23% compared to 4.866 billion yuan in 2024. The specific changes in various expenses are as follows:

R&D Personnel Situation: Stable Team, Optimized Structure

As of the end of 2025, the number of R&D personnel in the company was 302, a slight increase of 0.33% compared to 301 in 2024, with the proportion of R&D personnel being 23.30%, a slight decrease from 24.57% in 2024. In terms of educational structure, the number of R&D personnel with a bachelor’s degree or above has increased: 130 bachelor’s degree holders, a year-on-year increase of 12.07%; 47 master’s degree holders, a year-on-year increase of 9.30%; and 6 doctoral degree holders, a year-on-year decrease of 14.29%. In terms of age structure, there were 93 R&D personnel under 30 years old, a year-on-year increase of 10.71%, showing a trend towards a younger R&D team, which helps enhance innovation vitality.

Cash Flow Analysis: Operating Cash Flow Halved, Investment Cash Flow Turned Negative

In 2025, the company’s net increase in cash and cash equivalents was -711 million yuan, a significant decrease of 182.72% compared to an increase of 859 million yuan in 2024. All three cash flows showed significant changes:

Risk Warning: Multiple Risks Still Need Attention

Macroeconomic Volatility Risk

The global economic recovery process is difficult and tortuous, with insufficient growth momentum, which may impact the consumption demand and cost structure in core downstream sectors such as food, beverages, tobacco, and daily chemicals, suppressing terminal demand and squeezing profit margins in the industry chain.

Goodwill Impairment Risk

As of the end of 2025, the company’s goodwill book value was 718 million yuan, with a provision for impairment of 590 million yuan. If there are significant changes in the macroeconomic environment, market conditions, or regulatory policies in the future, relevant asset groups or combinations of asset groups may still experience impairment, leading to a significant decline in the company’s operating performance.

Core Technology and Formula Leakage Risk

The company’s core technology and flavoring formulas mainly rely on a confidentiality system for maintenance. With the acceleration of R&D internationalization and increased mobility of technical personnel, there is a potential risk of technology leakage, which may affect market competitive advantages.

Raw Material Price Volatility Risk

The main raw materials for the company’s products include natural flavors, synthetic flavors, solvents, agricultural product raw materials, and functional raw materials. Raw material prices are influenced by geopolitical situations, commodity price transmissions, and climate factors, with increased frequency and magnitude of fluctuations, posing challenges to the company’s cost control capabilities.

Exchange Rate Volatility Risk

As the scale of overseas market sales expands, exchange rate fluctuations may lead to increased foreign exchange gains and losses, impacting the company’s profitability.

Food Safety Risk

The company’s food flavoring and food ingredients businesses have a high proportion. Although a strict food safety control system has been established, the long industrial chain and multiple links mean that any lapse in control at any node may trigger food safety risks, affecting corporate operations and brand reputation.

Executive Compensation: Some Executives’ Salaries Increased Linked to Business Expansion

In 2025, the total compensation for the company’s directors, supervisors, and senior executives was 14.2321 million yuan, with some executives’ salaries increasing mainly due to the business expansion of food ingredients, daily flavorings, and related internationalization, with specific core executive compensation as follows:

• Chairman Xia Liqun received a total pre-tax compensation of 1.0599 million yuan from the company during the reporting period;
• President Yuan Xiaoqin received a total pre-tax compensation of 1.4922 million yuan from the company during the reporting period;
• Vice President Li Xiaojun received a total pre-tax compensation of 2.1874 million yuan from the company during the reporting period;
• Vice President Han Pengliang received a total pre-tax compensation of 2.7414 million yuan from the company during the reporting period;
• Vice President Yuan Qiudong received a total pre-tax compensation of 2.8096 million yuan from the company during the reporting period;
• Chief Financial Officer Ren Yujin received a total pre-tax compensation of 471,000 yuan from the company during the reporting period.

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