Cable Technology 2025 Annual Report Interpretation: Net Profit Increased 79.11% Financial Expenses Increased 227.59%

Significant Growth in Core Profitability Metrics and Improved Profit Quality

Steady Increase in Operating Revenue

In 2025, Changlian Technology achieved an operating revenue of 1.44 billion yuan, a 15.97% increase from 1.242 billion yuan in the previous year. By product, transformer insulation oil performed strongly, generating 496 million yuan, a 69.53% year-over-year increase, becoming the main driver of revenue growth. Among cable accessory products, 220kV products earned 179 million yuan, down 11.45% year-over-year, while 1kV to 35kV products earned 250 million yuan, down 13.31%, indicating a divergence in traditional cable accessory business. Regionally, revenue in Northeast China, North China, and Northwest China grew by 40.89%, 34.37%, and 30.09%, respectively. Overseas markets also saw a 59.80% increase, demonstrating effective regional expansion.

Doubled Net Profit and Non-Recurring Profit

Net profit attributable to shareholders of the listed company reached 1.34 billion yuan, a 79.11% increase from 750 million yuan last year. After deducting non-recurring gains and losses, net profit was 1.30 billion yuan, up 88.32%, outpacing net profit growth, indicating improved profitability quality of core business and minimal impact from non-recurring items. Non-recurring gains mainly came from government grants and gains/losses from disposal of non-current assets, totaling 3.48 million yuan, accounting for only 2.60% of net profit.

Per Share Earnings Also Increased

Basic earnings per share were 0.78 yuan, up 90.24% from 0.41 yuan last year. After deducting non-recurring items, earnings per share were 0.76 yuan, also significantly higher, matching the growth rates of net profit and non-recurring profit, reflecting a substantial improvement in shareholder returns.

Significant Decrease in Expenses and Unexpected Rise in Financial Costs

Total Expenses Shrinkage

In 2025, total expenses (sales + management + R&D + financial costs) totaled 272 million yuan, down 25.07% from 363 million yuan last year, highlighting effective expense control as a key factor in profit growth.

Sales Expenses Drop Over 30%

Sales expenses were 105 million yuan, down 32.88%. This decrease mainly due to the termination of employee stock ownership plans, which led to the reversal of previously accrued expenses. Key items include service bidding fees of 4.93 million yuan, down 55.08%, and marketing expenses of 8.79 million yuan, down 42.75%, indicating adjustments in sales strategies and reduced sales investment.

Management and R&D Expenses Decline

Management expenses were 90.13 million yuan, down 22.65%, and R&D expenses were 71.97 million yuan, down 22.49%. Both declines resulted from reversing expenses related to terminated employee stock plans. Core R&D projects continue, such as the development of 800kV series cable accessories in the testing phase, and high-voltage environmentally friendly dry-type insulation composite bushings have entered market promotion, with ongoing R&D maintaining a certain scale.

Financial Expenses Surge 227.59%

Financial costs increased to 4.21 million yuan, up 227.59%, mainly due to reduced interest income and increased interest expenses. Interest expenses were 5.84 million yuan, up 252.33%, while interest income was 2.71 million yuan, down 45.37%. The opposite movement in interest income and expenses caused financial costs to shift from a net income of 3.30 million yuan last year to a net expense this year.

Optimization of R&D Team Structure and Stable Core R&D Team

As of the end of 2025, the company had 311 R&D personnel, a slight decrease of 1.89% from 317 last year. R&D staff accounted for 18.50% of total employees, roughly unchanged. Among educational backgrounds, master’s degree holders increased by 40.74% to 38 people, while undergraduate numbers remained at 169, further optimizing the talent structure. Age-wise, 143 R&D personnel are under 30, up 8.33%, injecting fresh blood into the company’s R&D efforts.

Significant Improvement in Cash Flows from Financing Activities and Overall Cash Flow Structure

Steady Growth in Operating Cash Flows

Net cash flow from operating activities was 1.40 billion yuan, up 9.96%, closely aligned with revenue growth, indicating stable cash generation from core operations. Operating cash inflows reached 14.76 billion yuan, up 15.49%, while outflows were 13.36 billion yuan, up 16.10%, mainly due to a 26.70% increase in payments for purchasing goods and services.

Narrowed Net Outflow from Investing Activities

Net cash flow from investing activities was -84.84 million yuan, a significant improvement from -163 million yuan last year, a 47.91% reduction in net outflow, mainly due to decreased external equity investments. Cash paid for investing in fixed assets, intangible assets, and other long-term assets was 762 million yuan, down 5.57%. Cash paid for acquisitions of subsidiaries and other business units was 158 million yuan, down 85.50%.

Turnaround in Cash Flows from Financing Activities

Net cash flow from financing activities was 155 million yuan, reversing last year’s outflow of 213 million yuan, a 172.68% increase, mainly due to increased external financing. Cash inflows from financing activities totaled 352 million yuan, a 1,686.38% surge, including 260 million yuan from new borrowings (last year none). Other cash received related to financing was 92.40 million yuan, up 367.40%. Cash outflows for financing were 197 million yuan, down 15.23%, mainly from debt repayments of 97.50 million yuan, a 51.25% decrease.

Future Risks Facing the Company

Market Competition Risks

The cable accessory industry’s competitive landscape shows a “pyramid” structure with increasing voltage levels. The mid- and low-voltage markets are highly competitive, while ultra-high-voltage segments, though with high technical barriers, are still dominated by international giants. Although the company’s technology in ultra-high-voltage cable accessories is at an international advanced level, ongoing industry technological advancements may intensify competition, potentially impacting market share and profitability.

Technology R&D Risks

Several high-end products, such as the 800kV series of cable accessories, are still in development. R&D uncertainties could affect product deployment and future competitiveness if development fails or delays. Rapid technological iteration in the industry also poses a risk of falling behind if the company cannot keep pace.

Raw Material Price Fluctuation Risks

Prices of raw materials are influenced by market supply and demand and macroeconomic factors. Significant increases in raw material costs, if not matched by product price adjustments, could squeeze profit margins.

Overseas Market Expansion Risks

The company’s differentiated overseas expansion strategy faces geopolitical, trade barriers, and cultural risks. Uncertainties in establishing overseas factories and market promotion could hinder international growth plans.

Management and Directors’ Compensation

In 2025, Chairman Yu Tao received a pre-tax compensation of 883,000 yuan; General Manager Xie Shilin, 755,000 yuan; Vice President Luo Bing, 809,600 yuan; CFO Huang Ping, 778,800 yuan. Compensation is linked to company performance. Despite significant growth in 2025, some executives’ pay changed compared to last year, mainly due to performance assessments and company results.

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