Profit and Revenue Growth Struggle to Conceal Debt Repayment Pressure; Success of Kingfa Sci & Tech's High-End Strategy Yet to Be Seen

In the first half of 2025, the chemical industry was still undergoing a significant adjustment. Kingfa Sci. & Tech. Co., Ltd. (600143.SH), a leading company in modified plastics, defied the trend and delivered a performance report showing increases in both revenue and net profit. The financial report indicates that in the first half of the year, the company achieved a revenue of 31.636 billion RMB, an increase of 35.50% year-on-year; the net profit attributable to shareholders was 597 million RMB, an increase of 54.12% year-on-year.

Securities Star has noted that Jinfa Technology, while experiencing improved performance, also faces some concerns. On one hand, the business structure is imbalanced; although the revenue share of the green petrochemical sector, which the company has heavily invested in, is increasing, it continues to incur losses. On the other hand, the high-end medical consumables business, which once significantly boosted both performance and market value, is shrinking in scale due to weakened demand. Additionally, there is considerable short-term debt repayment pressure and high inventory, which requires further attention.

Behind the increase in both revenue and profit, there is significant short-term debt repayment pressure.

Jinfat Technology focuses on the research, development, production, and sales of new chemical materials. Its business includes four major sectors: modified plastics, green petrochemicals, new materials, and medical health. The main products cover nine categories, including modified plastics, environmentally friendly high-performance recycled plastics, biodegradable plastics, special engineering plastics, carbon fibers and composite materials, light hydrocarbons and hydrogen energy, polypropylene resin, styrene-based resins, and high molecular materials for medical health. Its products are widely used in various fields such as automotive, home appliances, electronics, consumer electronics, new energy, rail transit, high-end equipment, and medical health.

 

Despite the increase in both revenue and profit, Kingfa Sci & Tech Co., Ltd. still faces debt repayment pressure, and the effectiveness of its high-end strategy remains to be seen.

Since the second half of 2022, the downturn cycle in the chemical industry has lasted for nearly three years. According to statistics from Chemical Online, from the second half of 2022 to the end of the reporting period, the price index of Chinese chemical products has cumulatively decreased by approximately 27%. Although the industry is facing triple pressures of overcapacity, weak demand, and trade frictions, positive signs of change have emerged, and differentiation at the bottom of the cycle has appeared.

The leading enterprise in the industry, Jinhua Technology, has shown impressive performance in the first half of the year. According to the financial report, the company achieved a revenue of 31.636 billion yuan in the first half of the year, a year-on-year increase of 35.50%; net profit reached 597 million yuan, with a year-on-year growth of 54.12%; the gross profit margin was 12.29%, a slight decrease of 0.98% year-on-year.

Kingfa Sci & Tech attributes its performance growth to three aspects: firstly, the continuous optimization of the product structure of modified plastics, increased efforts in new product development, enhanced market share, and accelerated globalization efforts to drive growth in overseas business; secondly, the enhancement of the industrial chain synergy between the green petrochemical segment and modified plastics to achieve cost reduction and efficiency improvement; thirdly, benefiting from the increased demand for independent and controllable domestic industrial chains, the expansion of applications of specialty engineering plastics in fields such as high-frequency communication and AI equipment has led to a significant increase in customer penetration and product gross margin.