Company Quick Review | Net profit declines for seven consecutive years combined with negative operating cash flow, Daya Shengxiang urgently needs to reconstruct its growth logic

Du Yu | Edited by Edited by

Edited by Du Yu

On March 30, Da Ya Sheng Xiang (SZ000910) released its 2025 annual report. During the reporting period, the company achieved operating revenue of RMB 4.575 billion, down 14.49% year over year; net profit attributable to shareholders of listed companies was only RMB 13.337 million, down 90.41% year over year. This performance has pushed the “flooring king” to the brink of delisting risk warning, and it has also led investors to seriously question its ability to sustain operations.

Da Ya Sheng Xiang’s decline has not been a sudden turn. Of note is that its net profit has fallen for seven consecutive years; from 2019 to 2025, it declined by 0.72%, 13.07%, 4.86%, 29.38%, 20.84%, 58.22%, and 90.41%, respectively, showing an accelerating deterioration trend.

The cash flow situation is even more worrying. During the reporting period, the company’s net cash flow from operating activities was -RMB 34.5476 million, down 104.70% year over year. Meanwhile, four of the company’s subsidiaries fell into losses. The core wholly owned subsidiary, Sheng Xiang Group, recorded a net profit loss of RMB 133 million, with a year-over-year decline of 825.16%, becoming the main burden dragging down performance.

An imbalanced business structure and a contraction in R&D spending have formed a vicious cycle. By product, revenue from the core wood flooring business was RMB 2.751 billion, down 16.11% year over year; revenue from medium- to high-density boards was RMB 1.123 billion, down 18.26% year over year. Although the wood doors and wardrobe segment grew 96.63%, its scale is still small and has not been able to reverse the downturn. To cope with falling sales, the company reduced R&D expenses year over year by 29.08% to RMB 72.5639 million, while management expenses increased against the trend by 10.75% to RMB 612 million, highlighting contradictions in cost and expense control.

Da Ya Sheng Xiang is currently caught in a dual predicament of performance shrinkage and cash flow depletion: weak growth in its traditional main business, an expanding loss area among subsidiaries, operating cash flow turning from positive to negative, and a passive contraction in R&D investment. Whether the company can arrest the streak of declines over seven years, restore its self-sustaining “cash-generating” ability, and revitalize the competitive strength of the “Sheng Xiang” brand remains to be further tested through subsequent adjustments to its business structure, governance of loss-making subsidiaries, and the effectiveness of cost and expense control. Investors should closely monitor the progress in restoring the company’s main business and improvements in cash flow, and prudently assess investment risks.

The author believes that, in the face of multiple challenges including an industry downturn and internal management pressures, Da Ya Sheng Xiang urgently needs to adopt systematic measures to break the deadlock. First, the company should decisively optimize its subsidiary layout, implement business restructuring or strategic transformation for entities with continuous losses such as Sheng Xiang Group, and stop bleeding and reduce losses to alleviate performance drag. Second, it needs to rebuild its cost and expense control system, compress the proportion of management expenses, direct resources toward R&D and innovation, and avoid “cutting costs” that inadvertently harms core competitiveness. In addition, it should accelerate the cultivation of growth drivers such as wood doors and wardrobe products, optimize the product mix, reduce reliance on a single flooring business, and at the same time strengthen the management of accounts receivable to improve operating cash flow, ensuring a safety cushion for the company’s operations.

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