Shengmei Shanghai (688082) 2025 Annual Report Brief Analysis: Revenue and net profit both increased year-over-year, accounts receivable rose

According to publicly available data compiled by Securities Star, Shengmei Shanghai (688082) recently released its 2025 annual report. As of the end of this reporting period, the company’s total operating revenue was 6.786 billion yuan, up 20.8% year-over-year, and net profit attributable to shareholders was 1.396 billion yuan, up 21.05% year-over-year. Looking at quarterly data, in Q4, total operating revenue was 1.64 billion yuan, a slight decrease of 0.08% year-over-year, and net profit attributable to shareholders was 130 million yuan, a decline of 67.12% year-over-year. During this period, Shengmei Shanghai’s accounts receivable increased, with a year-over-year growth rate of 48.16%.

This data fell below most analyst expectations, as analysts generally anticipated a net profit of around 1.555 billion yuan for 2025.

The financial results announced this time show good performance indicators. Among them, gross profit margin was 48.32%, a decrease of 1.12 percentage points year-over-year; net profit margin was 20.56%, an increase of 0.17 percentage points; total selling, administrative, and financial expenses amounted to 840 million yuan, accounting for 12.38% of revenue, a slight increase of 0.1%; net assets per share were 28.05 yuan, up 60.55% year-over-year; operating cash flow per share was 0.5 yuan, down 82.05%; and earnings per share were 3.1 yuan, an increase of 17.42%.

The explanations for significant changes in financial items in the financial statements are as follows:

1. Sales expenses increased by 30.57% due to an increase in sales and after-sales service personnel, along with higher wages and bonuses driven by performance growth, as well as increased commissions and marketing expenses aligned with revenue growth.
2. Management expenses decreased by 14.3%, mainly because of reduced share-based payment expenses related to restricted stock grants to management.
3. R&D expenses increased by 37.64%, driven by product improvements, process development, new product and process development, increased consumption of R&D materials, and higher personnel costs for R&D staff.
4. Financial expenses surged by 221.03%, mainly due to increased foreign exchange losses.
5. Net cash flow from operating activities decreased by 80.36%, due to increased production demand from order growth, leading to higher raw material procurement and inventory buildup, increased payments for goods and services, higher employee-related payments, and increased corporate income tax payments, along with slower collection of accounts receivable.
6. Net cash flow from investing activities decreased by 473.53%, mainly because of increased investment in fixed-term deposits from funds raised through stock issuance.
7. Net cash flow from financing activities increased by 1163.62%, driven by funds raised from issuing A-shares to specific investors in 2024 and increased bank borrowings.
8. Changes in monetary funds increased by 82.02%, due to the proceeds from A-share issuance in 2024.
9. Changes in trading financial assets increased by 80.72%, due to fair value changes in external investments.
10. The change in notes receivable is due to a change in collection methods.
11. Accounts receivable increased by 48.16%, correlating with increased revenue.
12. Prepaid expenses increased by 51.35%, due to strategic inventory buildup.
13. Other receivables increased by 91.39%, mainly due to increased export tax rebates receivable.
14. Contract assets increased by 41.7%, mainly due to higher amounts receivable for warranty deposits.
15. Other current assets increased by 1230.44%, mainly due to increased fixed-term deposits.
16. Long-term equity investments increased by 216.35%, mainly due to the transfer of pre-paid investments into long-term equity investments.
17. Fixed assets increased by 57.62%, mainly due to completion and capitalization of the Lingang construction project.
18. Construction in progress decreased by 94.47%, mainly because of the completion and capitalization of the Lingang project.
19. Right-of-use assets increased by 69.57%, due to new large leases with lease terms exceeding one year.
20. Intangible assets increased by 46.47%, mainly because of internal development expenses capitalized as intangible assets.
21. Development expenditures increased by 104.67%, due to ongoing investments in development projects.
22. Deferred tax assets increased by 39.14%, mainly because of increased deductible temporary differences.
23. Other non-current assets decreased by 87.47%, mainly due to transfer of pre-paid investments into long-term equity investments and maturity of fixed-term deposits.
24. Short-term borrowings increased by 120.43%, reflecting increased funding needs due to expanded business scale.
25. Accounts payable increased by 50.28%, driven by increased raw material procurement and inventory buildup due to higher sales orders.
26. Contract liabilities decreased by 33.32%, as efficient acceptance work led to recognition of revenue from previous period’s contract liabilities.
27. Taxes payable decreased by 48.98%, mainly due to increased prepayment of corporate income tax.
28. Current portion of non-current liabilities increased by 56.54%, as per the Ministry of Finance’s April 17, 2025, guidelines, which include estimated liabilities for quality guarantees expected to be settled within one year or one operating cycle.
29. Other current liabilities decreased by 50.86%, mainly due to a reduction in output VAT payable.
30. Long-term borrowings increased by 39.57%, due to increased funding needs from expanded operations.
31. Lease liabilities increased by 40.65%, mainly due to new large leases with lease terms exceeding one year.
32. Estimated liabilities decreased by 75.67%, as per the April 17, 2025, guidelines, which include estimated liabilities for quality guarantees expected to be settled within one year or one operating cycle. The reasons for the company’s lack of profitability and its impact are noted.
33. Operating revenue increased by 20.8%, driven by strong demand in the Mainland China market, the company’s differentiated technology advantages, successful market opportunities, and a substantial order backlog; efficient delivery and commissioning; ongoing product platform development; continuous improvement in product technology and performance; expanding product series; and increasing market recognition, all supporting revenue growth.
34. Operating costs increased by 22.09%, in line with revenue growth.

Securities Star’s valuation analysis tools indicate:

• Business evaluation: The company’s ROIC last year was 11.19%, indicating an average capital return. The net profit margin was 20.56%, reflecting high value-added products/services after all costs. Historically, since listing, the median ROIC is 14.24%, with relatively good investment returns, though the worst year was 2021 at 8.4%. The company’s financials have generally been favorable (note: the company has been listed less than 10 years; the longer the listing, the more meaningful the average financial data).
• Debt-paying ability: The company’s cash assets are very healthy.
• Business breakdown: Over the past three years (2023/2024/2025), net return on operating assets was 19%, 20%, and 14.5%, respectively; net operating profits were 911 million, 1.153 billion, and 1.395 billion yuan; net operating assets were 4.801 billion, 5.766 billion, and 9.595 billion yuan.

The company’s working capital to revenue ratios over these years were 0.85, 0.69, and 0.77, with working capital (funds invested in operations) at 3.322 billion, 3.899 billion, and 5.201 billion yuan, and revenues at 3.888 billion, 5.618 billion, and 6.786 billion yuan.

Financial health check tools recommend monitoring the company’s cash flow (average operating cash flow over the past three years is only 17.19% of current liabilities) and accounts receivable status (accounts receivable to profit ratio is 226.31%).

Analyst tools show that securities analysts generally expect 2026 performance to reach 1.977 billion yuan, with an average EPS of 4.31 yuan.

The largest fund holding Shengmei Shanghai is the Huaxia SSE STAR Market Semiconductor Materials & Equipment Theme ETF, with a scale of 3.677 billion yuan, a latest net asset value of 1.8584 (as of February 27), down 2.5% from the previous trading day. The current fund manager is Yang Siqi.

Recently, well-known institutions have raised the following questions about the company:

Question: According to the announcement disclosed on January 23, 2025, revenue in Q4 declined compared to Q3. What are the specific reasons?

Answer: The data shows some variation mainly due to two reasons: (1) Equipment scheduled for delivery in Q4 2025 may be delayed to Q1 2026; (2) Some sales in 2025 will be recognized in Q1 2026.

This summary is compiled by Securities Star based on publicly available information, generated by AI algorithms (Network Credit Calculation Record 310104345710301240019), and does not constitute investment advice.