Rongsheng Petrochemical Co., Ltd. (Rongsheng Petrochemical) continued its trend of increasing revenue without increasing profits since 2022. According to the annual report for 2024, the net profit decreased by 37.44% compared to the previous period, hitting a new low since 2016.
In 2024, Rongsheng Petrochemical achieved operating income of 326.475 billion yuan, a growth of 0.42% year-on-year. However, the net profit was only 724 million yuan, marking a significant decline of 37.44% compared to the previous period and reaching a new low since 2016.
Rongsheng Petrochemical is one of the leading privately-owned enterprises in the field of petroleum and chemical industry in China, specializing in the research, production, and sales of various oil products, chemical products, and polyester products.
From 2022 to 2024, Rongsheng Petrochemical saw a continuous increase in operating income, reaching 289.095 billion yuan, 325.112 billion yuan, and 326.475 billion yuan respectively. However, the net profit of the company witnessed a substantial decline, dropping to 33.41 billion yuan, 11.58 billion yuan, and 7.24 billion yuan, with decreases of 74.76%, 65.33%, and 37.44%, respectively.
Regarding the decline in company performance, an employee from the secretariat office of Rongsheng Petrochemical explained to the media that the main reason for the decline in performance in recent years is the decrease in product prices.
Financial reports show a significant decrease in the gross profit margin of Rongsheng Petrochemical products in recent years. The gross profit margin of refining products and chemical products decreased from 37.67% and 37.78% in 2021 to 17.57% and 13.60% in 2024, respectively. PTA (Purified Terephthalic Acid) has been operating at a loss for three consecutive years, and the gross profit margin of polyester filament thin film also decreased from 7.87% in 2021 to 1.68% in 2024.
Additionally, due to the decrease in product prices and gross profit margins, Rongsheng Petrochemical had to write down its inventory. The 2024 financial report shows that the company incurred asset impairment losses of 164 million yuan, all of which were due to inventory markdown losses.
Furthermore, Rongsheng Petrochemical is facing significant debt pressures. In 2024, the company had 14.833 billion yuan in monetary funds but short-term borrowings amounted to 44.091 billion yuan, while non-current liabilities due within a year reached 38.322 billion yuan. In addition, the company had long-term borrowings totaling a substantial 119.518 billion yuan. The high level of debt has resulted in increased interest expenses. From 2022 to 2024, the financial expenses of Rongsheng Petrochemical were 6.031 billion yuan, 8.202 billion yuan, and 7.131 billion yuan, respectively.
Surprisingly, despite the company’s negative profit, high debts, and significant cash flow pressure, the salaries of company executives remain high. The chairman received the highest salary of 4.7152 million yuan before tax, followed by his son-in-law and the current general manager Xiang Jiong with a salary of 2.1772 million yuan, deputy general manager Zhou Xianhe with 1.5187 million yuan, supervisor Xu Yongming with 1.6133 million yuan, secretary Quan Weiying with 0.9315 million yuan, and financial director Wang Yafang with 0.9432 million yuan.
Due to these issues, various institutions have downgraded their profit forecasts for the company. Tianfeng Securities, for example, lowered the net profit forecast for 2025 and 2026 from 6.7 billion yuan and 9 billion yuan to 3.5 billion yuan and 6 billion yuan, respectively.
Huatai Securities expects the company’s net profit for 2025 to 2027 to be 3.1 billion yuan, 4.2 billion yuan, and 4.74 billion yuan, compared to the previous estimates of 4.08 billion yuan and 4.89 billion yuan for 2025 and 2026, resulting in declines of 24% and 14%, respectively.
As of the closing of the A-share market on April 28 at 15:00:00 Beijing time, Rongsheng Petrochemical’s stock price was 8.14 yuan per share, with a total market value of 824.22 billion yuan.