Xiamen Songlin Technology 2025 Annual Report Analysis: Net profit down 53.99% year-over-year, operating cash flow halved

Interpretation of Core Profitability Indicators

Operating Revenue: Year-over-year decline of 13.10%, with clear divergence in business structure

During the reporting period, the company achieved operating revenue of RMB 2.620 billion, representing a year-over-year decline of 13.10% compared with RMB 3.015 billion in the same period last year. By product, the intelligent kitchen and bath business—serving as a cornerstone—generated revenue of RMB 2.262 billion, a year-over-year decline of 10.66%, and remains the main driver of revenue. The health-focused software and hardware business generated revenue of RMB 278 million, with a year-over-year decline of 22.43%, showing a significant drop. Other businesses generated revenue of RMB 79 million, a year-over-year sharp decline of 35.95%. By region, overseas revenue was RMB 2.079 billion, down 8.17% year over year, while domestic revenue was RMB 541 million, down sharply by 27.97%, indicating weak performance in the domestic market.

Net Profit: Sharp year-over-year decline of 53.99%, with limited support from non-recurring gains and losses

The company’s 2025 net profit attributable to shareholders of listed companies was RMB 205 million, a significant year-over-year decline of 53.99% from RMB 446 million in the same period last year. Net profit after deducting non-recurring gains and losses was RMB 179 million, with a year-over-year decline of 57.01%, and profitability quality also declined in tandem. Non-recurring gains and losses contributed RMB 27 million in the current period, including government grants of RMB 21.5632 million and gains related to financial assets of RMB 25.0846 million, but still could not offset the substantial contraction in profit from the core business.

Earnings Per Share: Basic EPS cut in half, with significant dilution

Basic earnings per share were RMB 0.48 per share, down 56.36% year over year from RMB 1.10 per share in the same period last year. Earnings per share after excluding non-recurring items were RMB 0.42 per share, down 58.82% year over year. The substantial decline in earnings per share is partly due to the near-halving of net profit, and partly due to the increase in share capital resulting from the conversion of convertible bonds during the period. By period-end, the company’s share capital increased by 4.6667 million shares compared with period-beginning, further diluting earnings per share.

Expense Side: Management expenses increase significantly, with R&D investment continuing to ramp up

Selling expenses: Slight year-over-year decline, with optimized expense structure

Selling expenses decreased by 6.71% year over year, mainly due to reduced commissions and sample fees. Commission spending fell from RMB 12.0691 million to RMB 10.3092 million, and sample fees decreased from RMB 3.6299 million to RMB 2.0795 million, showing the company’s effectiveness in cost control on the sales front.

Administrative expenses: Up 17.87% year over year, driven by scale expansion and equity incentives

Administrative expenses increased by 17.87% year over year, mainly because staff compensation and share-based payment expenses rose. Staff compensation increased from RMB 173 million to RMB 204 million in the current period, and share-based payment expenses rose from RMB 25.0456 million to RMB 20.7139 million. At the same time, the administrative expense increase is also attributable to the expansion of administrative scale brought by the company’s new business layout.

Finance costs: From profit to loss, with a sharp reduction in foreign exchange gains

Finance costs were RMB 6.737 million in the current period, compared with RMB -23.1127 million in the same period last year. This was mainly due to the appreciation of the RMB during the year, which caused foreign exchange gains to decline significantly year over year. Meanwhile, the company added short-term borrowings of RMB 93.0388 million this period, increasing interest expense.

R&D expenses: Up 9.76% year over year, with continued ramp-up of technology reserves

R&D expenses increased by 9.76% year over year, with an investment amount reaching RMB 247 million. The spending was mainly for increased personnel costs and direct inputs. Personnel costs increased from RMB 125 million to RMB 140 million in the current period, and direct inputs rose from RMB 53 million to RMB 54 million. During the full year, the company added 218 patent application filings and obtained 249 authorized patents, continuously strengthening its technological barriers.

R&D personnel: Stable team size, with a younger workforce structure

The company had 878 R&D personnel, accounting for 15.89% of the company’s total headcount. Based on educational background, there were 595 R&D personnel with bachelor’s degree or above, representing 67.77%. Based on age structure, there were 365 R&D personnel under 30, accounting for 41.57%; 355 R&D personnel aged 30–40, accounting for 40.43%. Overall, the R&D team shows younger and higher-education characteristics, providing talent support for technological innovation.

Cash Flow: Operating cash flow halved, with cash outflows from investing and financing activities shrinking

Cash flow from operating activities: Down 52.37% year over year, due to both profit decline and increased inventory for preparation

Net cash flow from operating activities decreased by 52.37% year over year. On the one hand, net profit fell significantly, weakening the cash-generating ability of operating profit. On the other hand, the company increased inventory to ensure order delivery. Inventory occupied capital rose from RMB 290 million to RMB 449 million, increasing 55.15% year over year, further squeezing operating cash flow.

Cash flow from investing activities: Cash outflows decreased significantly, with investment in wealth management shrinking

Net cash flow from investing activities improved significantly year over year, mainly because cash outflows for purchasing structured deposits were lower this year. Cash used for investment payments was RMB 3.296 billion in the current period, compared with RMB 4.187 billion in the same period last year. The contraction in wealth-management investment greatly reduced the pressure of cash outflows from investing activities.

Cash flow from financing activities: Reduced cash outflows, with smaller debt service and dividend payments

Net cash flow from financing activities narrowed year over year, mainly because cash paid for other items related to financing activities decreased. The amount was RMB 1.092 billion in the same period last year and RMB 472 million in the current period. Meanwhile, dividend distribution decreased from RMB 187 million to RMB 160 million, and the scale of debt service payments also contracted somewhat.

Compensation of executives and supervisors: Core executive pay remains stable

• Chairman Zhou Hu Song: Total pre-tax remuneration received from the company during the reporting period was RMB 2.7278 million, essentially flat compared with the previous year.
• General Manager Zhou Hu Song: Same person as the chairman; total pre-tax remuneration was RMB 2.7278 million.
• Vice General Manager(s): Chen Bin’s pre-tax remuneration was RMB 1.8170 million; Wei Ling’s pre-tax remuneration was RMB 0.9338 million; Cao Bin’s pre-tax remuneration was RMB 1.3131 million. Overall compensation levels remained stable compared with the prior year, creating some contrast with the company’s performance decline.

Risk Warning: Multiple external pressures in combination, with uncertainty in new business expansion

2. Risk of raw material and exchange rate fluctuations: The company’s raw materials are highly affected by international crude oil and copper prices; price fluctuations directly impact costs. At the same time, fluctuations in exchange rates of settlement currencies such as the U.S. dollar may lead to foreign exchange losses, compressing profit margins.
3. Risk of global macroeconomy and trade friction: Weak demand in overseas markets combined with international trade frictions may lead to a decline in order size and an increase in tariff costs. Although production in the Vietnam base can partially alleviate the impact, uncertainty still remains.
4. Risk of new business expansion: The robotics business is in the market validation stage and has not yet achieved revenue. It faces multiple challenges such as technology iteration and market competition. Whether it can become a new growth curve still needs to be tested over time.
5. Geopolitical and shipping risks: Geopolitical conflicts may raise the prices of bulk commodities, while risks related to navigation routes such as the Red Sea may increase, affecting supply-chain efficiency and raising logistics costs.

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