Shengdun Mining 2025 Annual Report Interpretation: Non-GAAP Net Income Increases 38.54% While Investment Cash Flow Net Amount Drops 102.04%

Operating Revenue: Up 16.60% Year-over-Year, Industrial Revenue Accounts for Over 90%

In 2025, Shengtun Mining (Rights Protection) achieved operating revenue of 30.003 billion yuan, a year-over-year increase of 16.60%. Of this, industrial manufacturing revenue was 28.63 billion yuan, accounting for 95.42% of the company’s total revenue, up 20.58% YoY, becoming the main driver of revenue growth. By business segment, energy metals generated revenue of 20.384 billion yuan, up 29.91%; basic metals revenue was 8.245 billion yuan, up 2.40%; non-ferrous metal trading and others totaled 1.373 billion yuan, down 24.46%. The company continues to shrink trading operations and focus on industrial business.

By product, copper products generated 14.071 billion yuan, up 34.20%, with a production volume of 207,400 metal tons, up 17.48%; nickel products earned 4.286 billion yuan, up 13.16%, with a production volume of 49,400 metal tons, up 50.42%; cobalt products brought in 1.011 billion yuan, down 30.64%, with a production volume of 9,200 metal tons, down 30.58%; zinc products reached 6.469 billion yuan, down 1.52%.

Net Profit and Non-Recurring Net Profit: Slight Decrease in Net Profit, Significant Growth in Non-Recurring Net Profit

In 2025, net profit attributable to shareholders of the listed company was 1.961 billion yuan, a decrease of 2.19% YoY; net profit excluding non-recurring gains and losses was 2.529 billion yuan, a significant increase of 38.54%. The decline in net profit was mainly due to non-recurring gains and losses, which totaled -567 million yuan during the reporting period. Excluding effective hedging related to normal operations, the fair value changes of financial assets and liabilities held by non-financial enterprises, and gains/losses from disposal of financial assets and liabilities, amounted to -809 million yuan, significantly dragging down net profit. The growth in non-recurring net profit was driven by strong performance in industrial operations, with improved profitability in energy metals and basic metals segments, especially cobalt products, whose gross margin increased by 10.21 percentage points YoY to 53.76%. Although copper gross margin declined, the large increase in revenue contributed to profit.

Earnings Per Share: Slight Decrease in Basic EPS, Significant Increase in Non-Recurring EPS

In 2025, basic earnings per share (EPS) was 0.6372 yuan, down 0.78% YoY; non-recurring EPS was 0.8215 yuan, up 40.55%, consistent with the trend of net profit and non-recurring net profit, reflecting improved core profitability.

Expenses: Significant Growth in Financial Expenses, Slight Decrease in R&D Expenses

Total operating expenses in 2025 were 1.723 billion yuan, up 12.42%. Breakdown:

• Selling expenses: 35.4858 million yuan, up 7.88%, mainly due to increased operational costs with revenue growth.
• Management expenses: 985 million yuan, up 9.19%, mainly due to expanded business scale, higher personnel salaries, and office costs.
• Financial expenses: 717 million yuan, up sharply by 30.99%, mainly due to increased foreign exchange losses, which amounted to 113 million yuan during the period, compared to foreign exchange gains of 60 million yuan in the same period last year.
• R&D expenses: 52.7593 million yuan, down slightly by 2.56%, mainly invested in direct input, personnel, and process improvements related to mining methods, smelting recovery rates, energy saving, and material upgrades.

R&D Personnel: Stable Team, Diverse Structure

As of the end of 2025, the R&D team comprised 173 personnel, accounting for 1.84% of total staff. Education levels included 10 master’s degree holders, 55 undergraduates, 57 college diploma holders, and 50 high school or below. Age distribution: 41 under 30, 51 aged 30-40, 43 aged 40-50, 36 aged 50-60, and 2 over 60. The team’s diverse educational and age backgrounds support the company’s technological innovation.

Cash Flow: Slight Decrease in Operating Cash Flow, Large Outflow in Investing Cash Flow, Financing Cash Flow Turns Positive

In 2025, net increase in cash and cash equivalents was 1.025 billion yuan, with key changes:

• Net cash from operating activities: 2.592 billion yuan, down 6.19% YoY, mainly due to increased payments for goods, services, and other operating cash outflows, but overall still a net inflow, indicating strong core cash generation.
• Net cash used in investing activities: -2.91 billion yuan, a sharp decrease of 102.04%, mainly due to increased investment in futures hedging, and higher payments for fixed assets, intangible assets, and other long-term assets. Payments for such assets totaled 2.163 billion yuan, up 36.06%, reflecting ongoing project construction and increased long-term asset investments.
• Net cash from financing activities: 1.38 billion yuan, compared to -1.723 billion yuan last year, mainly due to increased financing. Borrowings received amounted to 9.047 billion yuan, up 69.90%, as the company raised funds through debt to support operations and investments.

Potential Risks: Multiple Interwoven Risks Requiring Ongoing Vigilance

2. Metal Price Fluctuation Risk: Prices of copper, cobalt, nickel, zinc, and other metals are heavily influenced by macroeconomic factors, supply and demand, geopolitical issues, etc., directly affecting profitability. While hedging can lock in gains, full risk mitigation is challenging.
3. Overseas Operating Risks: The company’s projects in Congo (DRC), Indonesia, and other regions face risks from cultural differences, legal systems, labor disputes, communication barriers, and management challenges. Political stability and infrastructure conditions also impact operations.
4. Foreign Exchange Risk: Foreign currency settlement for overseas operations exposes the company to FX fluctuations, which can impact performance. Although derivatives are used to hedge some risks, residual exposure remains.
5. Safety and Environmental Risks: Increasing national standards for safety and environmental protection require more resources. Accidents could adversely affect operations.
6. ESG-Related Risks: Extreme weather events like heavy rainfall and droughts may threaten tailings dam safety and logistics; global carbon trading barriers and domestic ecological compensation mechanisms could raise costs; labor rights, biodiversity, and supply chain responsibilities remain challenging in global operations.

Executive and Director Compensation: Chairman Pre-tax Salary of 3.2013 million yuan, New General Manager Salary of 2.8015 million yuan

• Chairman Xiong Bo: Pre-tax total compensation of 3.2013 million yuan during the period.
• General Manager Long Shuang: Pre-tax total compensation of 2.8015 million yuan (appointed as general manager in Nov 2025, previously served as executive vice president).
• Vice Presidents: Weng Xiong received 2.0739 million yuan; Wu Yicong received 1.4888 million yuan (appointed as executive vice president in Nov 2025, previously vice president).
• CFO Zhou Hualin: Pre-tax total compensation of 1.5993 million yuan.

Overall, Shengtun Mining maintained a healthy core business in 2025, with significant growth in non-recurring net profit, though net profit slightly declined due to non-recurring items. The company continues capacity expansion and overseas deployment, with cash flow characterized by operating inflows, large outflows in investing, and net inflows from financing. Risks include metal price volatility and overseas operations, requiring close attention to risk management and sustainable profitability.