Fuda Co., Ltd. 2025 Annual Report Analysis: Net profit attributable to parent increased by 70.87% to 317 million yuan, R&D expenses grew by 12% to over 100 million yuan

Operating Revenue: Driven by New Energy Business, Up 20.66% Year-over-Year

In 2025, the company achieved operating revenue of 1.99B yuan, an increase of 20.66% year-over-year, mainly due to increased demand in the passenger car crankshaft market, especially for hybrid crankshafts during the reporting period. From the perspective of main business revenue composition, by product:

• Crankshaft business revenue of 1.24B yuan, up 19.51%, with a gross profit margin of 34.22%, an increase of 3.97 percentage points year-over-year, serving as the company’s core revenue pillar.
• Gear business revenue of 169 million yuan, a significant increase of 82.29%, but with a gross profit margin of only 5.42%, down 9.02 percentage points year-over-year, mainly due to higher cost increases compared to revenue growth.
• Precision forging business revenue of 232 million yuan, up 16.26%, with a gross profit margin of 28.28%, an increase of 6.73 percentage points, showing strong profitability.
• Clutch and high-strength bolt businesses achieved revenues of 183 million yuan and 54 million yuan, respectively, with relatively stable growth.

Regionally, revenue in Southwest China surged by 148.43% year-over-year, foreign customer revenue grew by 60.44%, indicating breakthroughs in emerging regions and overseas markets; revenue in North China and Northwest China declined, requiring attention to regional market demand changes.

Profitability Indicators: Significant Net Profit Growth, Improved Profit Quality

Net Profit Attributable to Parent: Up 70.87% YoY to 317 million yuan

In 2025, net profit attributable to shareholders of the listed company was 317 million yuan, an increase of 70.87% year-over-year, mainly due to increased gross profit from revenue growth and higher investment income (gains from disposal of long-term equity investments in joint ventures during the period).

Net Profit Excluding Non-Recurring Items: Up 60.86% YoY to 289 million yuan

Net profit after deducting non-recurring gains and losses was 289 million yuan, up 60.86%, with total non-recurring gains and losses of 27.69 million yuan, mainly including gains/losses from disposal of non-current assets (20.77 million yuan), government subsidies (12.18 million yuan), etc. The growth rate of net profit excluding non-recurring items was slightly lower than that of net profit attributable to parent, mainly due to increased contributions from non-recurring gains and losses, but overall profit quality remains high.

Earnings Per Share: Basic EPS Reached 0.50 Yuan

In 2025, basic earnings per share were 0.50 yuan/share, up 72.41% YoY; non-recurring EPS was 0.45 yuan/share, up 60.71%. The increase in EPS outpaced net profit growth, mainly due to share repurchases and cancellation of equity incentives during the period, reducing total share capital.

Cost Analysis: Growth in Sales and R&D Expenses, Decrease in Financial Expenses

Total expenses for 2025 amounted to 242 million yuan, an increase of 8.98%, detailed as follows:

Sales Expenses: Up 25.47% to 25 million yuan

Sales expenses of 25 million yuan, up 25.47%, mainly due to increased warehousing and storage costs compared to the same period last year, reflecting business expansion leading to higher logistics costs.

Management Expenses: Up 5.50% to 93 million yuan

Management expenses of 93 million yuan, up 5.50%, mainly due to increased share-based compensation expenses (this period recognized 7.88 million yuan, compared to 3.17 million yuan last year).

Financial Expenses: Down 4.06% to 17 million yuan

Financial expenses of 17 million yuan, down 4.06%, mainly because of lower loan interest rates this period, with interest expenses decreasing from 18.38 million yuan to 16.10 million yuan.

R&D Expenses: Up 12% to 108 million yuan

R&D expenses of 108 million yuan, up 12%, mainly due to increased investment in R&D projects. The composition includes employee compensation of 44.56 million yuan, material costs of 29.84 million yuan, and depreciation of 12.79 million yuan. The company continues to increase investment in R&D personnel and equipment to support technological innovation.

R&D Personnel: Stable Team Size, Optimized Structure

As of the end of 2025, the company had 467 R&D personnel, accounting for 15.70% of total staff. The team size remained stable. In terms of educational background, 214 held undergraduate degrees or above, accounting for 45.82% of R&D staff; age-wise, 292 were aged 30-50, representing 62.53%, forming a mainly young and middle-aged, highly educated R&D team supporting technological innovation.

Cash Flow Analysis: Operating Cash Flow Declines, Net Investment Cash Flow Narrows

Net Operating Cash Flow: Down 11.43% YoY to 419.2 million yuan

Net cash flow from operating activities was 419.2 million yuan, down 11.43%, mainly due to increased salary and tax payments. Cash received from sales of goods and services was 2.29B yuan, up 40.23%, indicating high cash conversion efficiency; however, cash paid for purchasing goods and services was 1.43B yuan, up 67.31%, and cash paid to employees and for employee wages was 304 million yuan, up 17.61%, leading to a decline in operating cash flow.

Net Investment Cash Flow: -423M yuan, Narrows Compared to Last Year

Net cash flow from investing activities was -423M yuan, compared to -547M yuan in the same period last year, mainly because of increased cash received from the disposal of joint venture equity (97 million yuan this period, none last year). Payments for fixed assets, intangible assets, and other long-term assets totaled 476 million yuan, down 13.75%, indicating a slower pace of fixed asset investment.

Net Financing Cash Flow: Down 39.62% YoY to 73M yuan

Net cash flow from financing activities was 73M yuan, down 39.62%, mainly due to decreased cash received from borrowings and equity incentives. Borrowing proceeds this period were 756 million yuan, compared to 781 million yuan last year; repayments totaled 589 million yuan, up from 493 million yuan, reflecting adjustments in debt scale.

Risks Faced

Industry and Operating Performance Volatility Risks

The company’s main business is highly correlated with the automotive industry cycle. If macroeconomic growth underperforms expectations, industry policies change, or international situations become uncertain, market downturns may occur; additionally, the company’s new energy-related businesses are still in expansion, with uncertain prospects for generating new revenue and profit growth points.

Market Development Risks

Several new projects (such as high-precision gear systems for new energy vehicle electric drives, precision reducer components) are in capacity ramp-up or market expansion stages. Future market supply and demand, product pricing, and technical feasibility are uncertain, which may lead to sales and production shortfalls; furthermore, new business areas face risks of insufficient understanding of market environment and industry policies.

Raw Material Price Fluctuation Risks

The company’s main raw materials are steel and steel products. Significant fluctuations in steel prices could impact operational results.

Fixed Asset Depreciation Risks

Large fixed asset investments mean increased depreciation, which could negatively affect net profit. If future industry conditions are sluggish and output does not meet expectations, depreciation pressures on profits will intensify.

Executive and Director Compensation: Significant Variance in Core Senior Management Salaries

During the reporting period, Chairman Li Fuchao received a pre-tax remuneration of 1.7362 million yuan; General Manager Wang Changshun received no salary (not paid by the company); Vice Presidents Li Bin (0 yuan), Li Feng (960.6k yuan), Fan Fan (1.12M yuan); CFO Zhang Haitao received 1.0508 million yuan pre-tax. The salary differences among core executives mainly relate to their roles, performance assessments, and whether they hold positions with affiliates. Attention should be paid to the rationality and incentive effects of the compensation system.

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