Shen Textile A's net profit decreased by over 23% last year, ending six consecutive years of growth, with significant improvement in cash flow.

Ask AI · Why is cash flow rising despite a decline in Net Profit for Shenfang Textile A?

On March 30, Shenfang Textile A (000045.SZ) released its 2025 annual report. During the reporting period, the company achieved operating revenue of 3.24B yuan, down 2.82% year over year; it recorded attributable net profit of 68.4187 million yuan, down 23.44% year over year, ending the prior streak of net profit growth for six consecutive years. Despite pressure on earnings, the company’s net cash flow from operating activities reached 348 million yuan, up 50.39% year over year.

Core business pressure, cash flow improves significantly

As a leading domestic polarizer film enterprise, the polarizer film business is Shenfang Textile A’s main source of revenue. In 2025, it generated revenue of 3.07B yuan, accounting for 94.66% of total revenue, down 2.97% year over year. The annual report shows that the polarizer film business has seen “volume growth with declining prices.” Due to intensified industry competition and insufficient orders for high-end OLED polarizer films, the average selling price of products fell, dragging down overall performance.

On the profitability side, during the reporting period, Shenfang Textile A’s gross margin was 14.96%, down 1.21 percentage points year over year; its net margin was 2.95%, down 1.34 percentage points year over year. Looking at a single quarter, Q4 revenue reached 776 million yuan, down 4.53% year over year; attributable net profit was 8.9734 million yuan, down 14.29% year over year.

In contrast to the decline in earnings, Shenfang Textile A’s cash flow performance is strong. In 2025, its net cash flow from operating activities was 348 million yuan, up 50.39% year over year, mainly benefiting from improved collection efficiency and optimization of accounts receivable. By year-end, the company’s accounts receivable totaled 762 million yuan, down 11.80% year over year; monetary funds were 450 million yuan, up 31.97% year over year, indicating sufficient cash reserves.

On the balance sheet, Shenfang Textile A’s asset-liability ratio was 20.82%, staying at a relatively low level, with a sound financial structure. The company said it will continue to推进 non-core business divestment, scale back the textile apparel business, and concentrate resources on the polarizer film main business; at the same time, it will revitalize idle assets, divest equity participations, and improve asset operating efficiency.

Overseas business surges, capacity expansion accelerates

By region, in 2025, Shenfang Textile A’s overseas business generated revenue of 369 million yuan, up 127.91% year over year, becoming an important growth driver for performance. The company has become a qualified supplier for leading panel makers such as China Star Optoelectronics, BOE, and LGD. With the expansion of overseas markets and the release of high-end capacity, it is expected to ease competitive pressure in the domestic market.

In terms of R&D investment, Shenfang Textile A’s R&D expenses in 2025 were 104 million yuan, up only 0.16% year over year, basically in line with 2024. R&D spending is mainly used for polarizer film-related technology research, including projects such as the Super-Generation VA TV high-optical product and AMOLED high-definition炫屏 products, among others.

Even though both revenue and profit declined, Shenfang Textile A said that after careful study, it decided to invest in and build the No. 8 line project. Currently, the project has already obtained land-use rights, and all construction work is being advanced in an orderly manner. The No. 8 line will build one production line with a web width of 1.49 meters and a planned capacity of about 18 million square meters per year of polarizer film production lines for LCD and OLED, with an estimated total investment of 1.33B yuan.

Shenfang Textile A said that this production line will help the company consolidate its technological advantages, meet future production demand for OLED and LCD products, and enhance its supply capability for high value-added products. In the future, the company will focus on quality improvement and upgrading of the polarizer film main business, accelerate construction of the No. 8 line, strengthen R&D and innovation, and increase the proportion of high-end products.

Byline: Nandu · Bay Finance and Economics Society reporter Qiu Moshān