Xuefeng Technology's Net Profit Declines in 2025 but Surges in Q4, Controlling Shareholder Makes Large-Scale Increase in Holdings Following Annual Report Release

Ask AI · Is the major increase in holdings by the controlling shareholder optimistic about industry consolidation opportunities?

Everyday Economic News Reporter: Yan Fengfeng Edited by: Wu Yongjiu

After releasing its 2025 annual report showing a 24.65% year-over-year decline in net profit, Xuefeng Technology saw a large increase in holdings by its controlling shareholder. Guangdong Hongda, the company’s controlling shareholder, plans to increase its stake by between 150 million and 300 million yuan within 12 months starting March 20, 2026. As of March 20, Guangdong Hongda had already increased its holdings by 1%, amounting to 93.3 million yuan.

The Daily Economic News found that although Xuefeng Technology’s full-year net profit declined in 2025, its net profit in the fourth quarter of 2025 increased significantly, possibly due to a recovery in gross profit margin. The company’s industry—civil explosives—also has expectations of supply-side concentration.

Full-year net profit declined but Q4 showed clear growth; major shareholder increased holdings after annual report release

According to Xuefeng Technology’s March 19 disclosure of its 2025 annual report, the company achieved an operating revenue of 5.564 billion yuan for the year, down 8.81% year-over-year; net profit attributable to shareholders was 504 million yuan, down 24.65%; and net profit after deducting non-recurring gains and losses was 484 million yuan, down 25.24%.

The company explained that the decline in performance was mainly due to continued downward pressure on the market prices of its main chemical products and fluctuations in raw material procurement costs, leading to lower gross margins.

Despite the overall performance pressure, the company’s net profit in the fourth quarter performed well. Data shows that in Q4 2025, the company achieved a net profit attributable to the parent of 110 million yuan, up 65.31% year-over-year; and non-recurring net profit of 99.72 million yuan, up 48.83%. However, revenue in Q4 was 1.381 billion yuan, down 10.36% year-over-year.

One reason for the significant increase in net profit in Q4 2025 may be the rise in gross profit margin. Wind数据显示，公司2025年第四季度的销售毛利率为22.92%，较2024年第四季度的16.88%上升6.04个百分点。

It is noteworthy that shortly after the company released its 2025 annual report, its controlling shareholder made a substantial purchase, indicating a sense of urgency.

On March 20, Xuefeng Technology received a notice of its controlling shareholder Guangdong Hongda’s plan to increase holdings. Guangdong Hongda intends to buy between 150 million and 300 million yuan worth of shares at a price not exceeding 9.60 yuan per share from March 20, 2026, to March 19, 2027.

By March 20, Guangdong Hongda had already increased its holdings by 10.717 million shares through centralized bidding, accounting for 1% of the total share capital, with an investment of 93.34 million yuan. After the increase, Guangdong Hongda’s shareholding rose to 236 million shares, increasing its stake from 21% to 22%. According to the company’s announcement, this increase reflects confidence in the company’s future sustainable and stable development and recognition of its long-term investment value.

Looking back to December 2024, Xuefeng Technology’s former controlling shareholder, Xinjiang Agricultural and Animal Husbandry Investment (Group) Co., Ltd., signed a share transfer agreement with Guangdong Hongda, transferring 21% of its shares. In February 2025, the transfer was completed, and Guangdong Hongda officially took control of Xuefeng Technology. The company’s actual controller changed from Xinjiang State-owned Assets Supervision and Administration Commission to Guangdong State-owned Assets Supervision and Administration Commission’s Guangdong Environmental Protection Group. Guangdong Hongda had promised that within three years of controlling change, it would transfer no less than 150,000 tons of explosive production capacity to Xuefeng Technology, and within 3-5 years, it would inject all civilian explosive assets.

Industry expects supply-side concentration

Public information shows that Xuefeng Technology specializes in “civil explosive + energy chemical” dual main businesses, and is the only ammonium nitrate producer in Xinjiang. Relying on a complete “natural gas → synthetic ammonia → ammonium nitrate → civilian explosive products → blasting services” industrial chain, it achieves deep integration and mutual enhancement of its civilian explosive and energy chemical businesses. The core operations focus on the full industry chain of civilian explosives, chemical product R&D and manufacturing, and supporting services, with a footprint rooted in Xinjiang and radiating to surrounding areas.

In 2025, chemical products accounted for 38.5% of revenue, blasting services 36.3%, and civilian explosive products 8.4%. Wind数据显示，公司主营利润超过一半来自爆破服务和民爆产品。

Public sources indicate that the civilian explosive industry is under strict regulation by the state, with rigorous access mechanisms and full-process safety management forming core industry barriers. According to the 2025 annual report, both supply and demand sides in the civilian explosive industry are expected to optimize.

On the supply side, in February 2025, the Ministry of Industry and Information Technology issued the “Implementation Opinions on Accelerating the Transformation and Upgrading of the Civil Explosive Industry,” which proposes that by the end of 2027, industry concentration will further increase, forming 3 to 5 large civilian explosive enterprises (groups) with strong international competitiveness, with optimized product structures and capacity layouts; product quality assurance and effective supply capacity will be significantly enhanced. Under this background, industry competition is gradually shifting toward orderly development.

Changes on the supply side are also reflected in the company’s operations. The 2025 annual report shows that Xuefeng Technology acquired 51% of Nanchang Yongsheng and 51% of Shengshi Putian, adding 26,000 tons and 45,000 tons of industrial explosive capacity respectively, increasing total industrial explosive capacity from 119,500 tons to 190,500 tons.

On the demand side, in 2025, domestic demand for civilian explosives remained stable, with production and sales of industrial explosives at 4.3646 million tons and 4.3626 million tons, respectively, down 3.08% and 3.11% year-over-year; and industrial detonators at 688 million and 684 million units, respectively, up 2.38% and 4.06%. In the short term, increased coal production will continue to support demand; in the long term, recovery in non-coal mining in China and rising industry prosperity will drive steady growth in civilian explosive demand.

Guosen Securities believes that under China’s resource environment of abundant coal and scarce oil, the economics of coal chemical industry are highly correlated with oil prices. Recent oil price fluctuations have been significant, and the strategic importance of coal chemicals may outweigh their economic benefits, potentially accelerating approval of related projects. Compared to coal chemicals, the civilian explosive industry has a “seller’s market,” following the “coal chemical → coal mine → civilian explosive” transmission logic.

So, what are the reasons behind the large year-over-year increase in net profit in Q4 2025? In the context of changing industry competition patterns, is there an upward trend expected in the company’s gross profit margin? Are there expectations of product price increases? The Daily Economic News reporter called the company and sent interview emails, but multiple attempts to reach them were unsuccessful. As of press time, no reply has been received.