Liangmianzhen 2025 Annual Report Analysis: Net profit down 87.86% year-over-year, operating cash flow surges by 327.26%

Operating Revenue: Slight Increase of 0.90%, Business Trade Sector Shows Growth Bright Spot

In 2025, Liangmianjian achieved operating revenue of 1.063 billion yuan, a mere 0.90% increase year-over-year, with revenue staying roughly flat. Looking at business segments:

• Daily chemical products remain the main revenue driver, earning 933 million yuan, up slightly by 0.42% YoY, but gross profit margin decreased by 0.39 percentage points to 13.45%, indicating that this segment is experiencing revenue growth but profit pressure is emerging.
• Pharmaceutical segment revenue was 103 million yuan, a slight decline of 1.11% YoY, but gross profit margin increased by 2.32 percentage points to 42.23%, showing effective cost control.
• The trade and commerce sector became a growth highlight, with revenue reaching 12.72 million yuan, a significant increase of 62.09% YoY, and gross profit margin rose by 7.91 percentage points to 14.89%, becoming the main contributor to revenue growth.

Regionally, overseas revenue reached 66.73 million yuan, a substantial increase of 54.53%, with gross profit margin up by 7.65 percentage points, indicating initial success in expanding overseas markets; meanwhile, domestic revenue was 981 million yuan, down 1.59% YoY, with a slight decrease of 0.23 percentage points in gross profit margin, reflecting some pressure in the domestic market.

Net Profit and Non-Recurring Net Profit: Both Decline Significantly, Impacted by Non-Operating Items

In 2025, net profit attributable to shareholders of the listed company was 9.846 million yuan, a sharp decrease of 87.86% YoY; non-recurring net profit was 4.28 million yuan, down 52.17% YoY.

Compared to 2024, the company’s fair value change gains in 2025 were -4.43 million yuan, versus 87.74 million yuan in 2024, mainly due to a significant decrease in the fair value of holdings in CITIC Securities, which is the core reason for the large drop in net profit. The smaller decline in non-recurring net profit compared to net profit indicates that the company’s core operating profitability declined less than overall net profit, with non-operating items having a substantial impact.

Earnings Per Share: Also Declined Sharply Along with Net Profit

In 2025, basic earnings per share (EPS) was 0.0179 yuan/share, down 87.86% YoY; non-recurring EPS was 0.0078 yuan/share, down 52.15%, matching the decline in net profit and non-recurring net profit, reflecting that the company’s earnings per share shrank proportionally with profitability.

Expenses: Overall Stable, R&D Expenses Grow Against the Trend

Total operating expenses in 2025 were 1.80 billion yuan, with minor changes from the previous year, maintaining overall stability. Details are as follows:

Selling Expenses: Slight YoY Decrease, Still at High Level

Selling expenses decreased by 4.29% to 108.18 million yuan, mainly due to slight reductions in wages, advertising, and promotional costs. However, terminal service costs remain high at 47.63 million yuan, accounting for 44.03% of selling expenses, indicating continued significant resource investment in terminal channels, keeping overall scale high.

Management Expenses: Basically Flat

Management expenses slightly increased by 0.33% to 84.04 million yuan, with employee compensation up 0.83% YoY, and depreciation and amortization rising by 12.26%. Expenses such as office costs and utilities declined slightly, maintaining overall stability.

Financial Expenses: Reduced Income, Still in Net Profit State

Financial expenses were -3.13 million yuan, still resulting in net income, but decreased compared to previous year, mainly because interest income fell from 40.72 million yuan to 34.45 million yuan, while interest expenses slightly increased from 2.36 million yuan to 2.37 million yuan, leading to reduced net interest income.

R&D Expenses: Growing Against the Trend, Increased R&D Investment

R&D expenses increased by 10.24% to 19.10 million yuan, with employee compensation rising by 13.32%, and service fees up 41.97%, indicating increased R&D staffing and external technical cooperation. R&D expenditure accounted for 1.80% of operating revenue, up from 1.64% in 2024, showing ongoing increased investment in R&D.

R&D Personnel: Stable Team, Young Profile

In 2025, R&D staff numbered 133, accounting for 8.06% of total employees. The team size remained stable. In terms of education, 20 hold master’s degrees or above (15.04%), and 70 hold bachelor’s degrees (52.63%), indicating a relatively high overall education level. Age-wise, 52 are under 30 (39.10%), and 41 are aged 30-40 (30.83%), showing a young R&D team that provides vitality for technological innovation.

Cash Flow: Operating Cash Flow Surges, Investment and Financing Cash Flows Under Pressure

In 2025, net increase in cash and cash equivalents was 19.63 million yuan, turning positive after previous deficits. Details:

Operating Cash Flow: Significant YoY Increase, Stronger Cash Generation

Net cash from operating activities was 610.12 million yuan, up 327.26%, mainly because cash paid for purchasing goods and services decreased from 891 million yuan to 811 million yuan, a reduction of 80.63 million yuan. Although cash received from sales declined slightly, the overall gap between inflows and outflows narrowed significantly, greatly enhancing the company’s cash-generating capacity.

Investing Cash Flow: Larger Outflows, Reduced Investment Returns

Net cash used in investing activities was -32.27 million yuan, with increased outflows mainly due to higher payments for fixed assets (from 29.77 million to 48.26 million yuan) and decreased investment income received (from 23.35 million to 15.99 million yuan). The increased capital expenditure and reduced investment returns jointly led to a larger net outflow.

Financing Cash Flow: Narrowed Outflows, Still Under Pressure

Net cash from financing activities was -861,182 yuan, a narrower outflow compared to previous year, mainly because proceeds from borrowings increased from 95 million to 102 million yuan, while debt repayments decreased from 87 million to 90 million yuan, and dividend or interest payments decreased from 18.76 million to 17.98 million yuan. Although pressure remains, the cash outflow has eased somewhat.

Potential Risks: Multiple Challenges Require Active Response

Market Competition Intensifies

The daily chemical industry has entered a mature stage with high segmentation. Continuous entry of cross-industry investors, numerous brands and product categories, and increasing consumer demand for personalized, high-quality products intensify competition across price, R&D, and service, increasing pressure.

Channel Structure Changes

The retail channel landscape in China is evolving rapidly, with new channels emerging. The company must continuously optimize channel layout to adapt to changing consumer habits. Failure to expand channels timely or meet expectations could negatively impact sales.

Raw Material Price Fluctuations

Raw material prices are highly volatile due to various factors. Significant increases could directly raise procurement costs and hurt gross margins.

Investment Risks

The fair value changes of holdings in listed companies significantly impact net profit. The 2025 decline was directly related to CITIC Securities stock fair value changes. Future market fluctuations could cause large swings in net profit.

Management and Directors’ Compensation: Stable, Chairman Not Disclosed

During the reporting period, the chairman Zhou Yunxiang’s pre-tax remuneration was not disclosed; General Manager Gong Huiquan’s pre-tax pay was 370,500 yuan; Vice Presidents Yang Ling and Xiong Jianfeng received 379,700 yuan and 202,000 yuan respectively; CFO Wang Weimin (resigned) received 239,000 yuan. Overall, management compensation remains reasonable and stable relative to company performance.

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