[Huaxi Textile & Garment] Fuchun Dyeing & Weaving 25-Year Report Review: Turning Point Already Appeared in 25Q4, Optimistic Outlook for 26Q1

HuaXi Textile and Garment

Event Summary

In 2025, the company’s revenue/attributable net profit/non-recurring attributable net profit/operating cash flow were CNY 3.409/0.77/0.56/4.63 billion, respectively, representing year-over-year growth of 11.87%/-39.16%/-49.80% and a turnaround from negative to positive for operating cash flow. Performance met market expectations, and the turning point had already appeared in Q4: for 25Q4, the company’s revenue/attributable net profit/non-recurring attributable net profit were CNY 1.002/0.53/0.44 billion, respectively, up 17%/139%/431% year over year. The main benefits came from improved gross margin, investment income, and other income.

The company plans to distribute cash dividends of CNY 1.04 for every 10 shares, corresponding to a dividend payout ratio of 26% for 2025, and a dividend yield of 0.72%.

Analysis & Judgment:

Color yarn revenue mainly comes from volume growth contribution, with prices staying flat. (1) In 2025, the company’s color yarn/trading yarn/processing fees/other business income were CNY 2.812/0.253/0.132/44M, respectively, up 6.21%/8.28%/5.36%/42.87% year over year; (2) As of 2025, the company has annual production capacity of 132k bobbins of sliver yarn. Its total sales were 115.5k tons, i.e., capacity utilization of 87.5%. Looking at the volume-price split for 2025: color yarn sales rose 6.03% year over year to 97.7 thousand tons; the launch price stayed flat year over year at CNY 28.8 thousand per ton. Sales mix for processing yarn (new product) accounts for 15%. In addition, the company also builds a 30k-ton fiber dyeing project and a 150k-spindle smart precision spinning project. From the perspective of its subsidiaries: for Fuchun Color Spinning, sales were 9,511 tons, with revenue/net profit of CNY 0.202/-34M. (3) By region: in 2025, domestic/overseas revenue was CNY 3.35/132k, up 11.61%/12.67% year over year.

The improvement in Q4 net profit margin came from higher gross margin, increased investment income, and higher other income. (1) In 2025, the company’s gross margin was 9.79%, down 2.47 PCT year over year. Among them, gross margins for color yarn/trading yarn/processing fee businesses were 10.64%/6.27%/6.54%, respectively, with year-over-year changes of -2.5/1.98/-1.35 PCT. In 2025, the company’s attributable net profit margin/non-recurring net profit margin were 2.25%/1.64%, respectively, with year-over-year changes of -1.89/-2.04 PCT. From the perspective of expense ratios: in 2025, selling/administrative/R&D/financial expense ratios were 0.58%/2.17%/3.49%/1.90%, respectively, with year-over-year changes of -0.04/-0.14/-0.4/0.27 PCT. The increase in financial expense ratio was mainly due to the capitalization of convertible bond interest expenses. Other income/revenue was 1.10%, down 0.04 PCT year over year; investment net gains’ share increased 0.23 PCT; fair value change net gains/income declined 0.25 PCT year over year; credit impairment losses/income decreased 0.35 PCT year over year, mainly due to the prior period’s one-time provision for impairment losses on a large other receivable. Income tax/income decreased 0.21 PCT year over year. (2) In 2025 Q4, the company’s gross margin/net profit margin/non-recurring net profit margin were 11.33%/5.33%/4.39%, respectively, up 2.6/2.7/3.5 PCT year over year. The increase in net profit margin exceeded the increase in gross margin mainly due to contributions from investment income and other income (input VAT additional deduction). Other income/revenue increased 1.3 PCT year over year; investment net gains/income increased 4.3 PCT year over year; fair value change net gains/income decreased 6.2 PCT year over year; credit impairment losses/income changed by 0.5 PCT. Non-operating expenses/income changed by -0.28 PCT year over year; income tax/income increased 0.78 PCT year over year.

Inventory is well-stocked. At end of 2025, inventory totaled CNY 115.5k, down 7.7% year over year. Against the backdrop of rising domestic cotton prices, the company’s low-cost raw material inventory is expected to benefit. By structure: raw materials/work in progress/inventories/ goods dispatched/entrusted processing materials/entrusted processing goods were CNY 0.440/0.037/0.728/0.015/0.075/97.7k, respectively, with year-over-year changes of -28.4%/30.7%/1.9%/80.6%/23.7%/61.1%. The company’s inventory turnover days were 163.90 days, up 22.73 days year over year. Accounts receivable were CNY 0.29 billion, down 17% year over year. Average accounts receivable turnover days were 3.38 days, up 0.1 days year over year. Accounts payable were CNY 0.28 billion, down 10% year over year. Accounts payable turnover days were 48.75 days, down 14.25 days year over year.

Investment Recommendation

We analyze that: (1) Benefiting from rising domestic cotton prices, the company is expected to benefit from its low-cost raw material inventory and potential product price increases, thereby driving improvements in net profit per ton; (2) Sales are expected to grow by more than double digits; (3) Projects in the core business such as new yarn products, fiber dyeing, and smart spinning, as well as the construction projects related to the second growth curve—PEEK material humanoid robots for lightweighting and precision injection molding in the semiconductor field—are expected to become new growth drivers. We raise the revenue forecasts for 2026/2027 from CNY 3.875/28.8k to CNY 4.002/30k. We add a 2028 revenue forecast of CNY 150k. We raise the attributable net profit forecasts for 2026/2027 from CNY 0.127/14M to CNY 0.200/25M. We add a 2028 net profit forecast of CNY 1.34B. This corresponds to raising the EPS forecasts for 2026/2027 from CNY 0.66/0.85 to CNY 1.03/1.13, and adding a 2028 EPS forecast of CNY 1.31. The closing price on March 30, 2026 of CNY 14.50 corresponds to PE multiples of 14/13/11X, respectively, and we maintain a “Buy” rating.

Risk Warning: risk of volatility in raw material prices; risk that production ramp-up progress does not meet expectations; systemic risk.

Securities Analyst: Tang Shuangshuang S1120519090002;

Publication Date: 2026-3-31;

“Fuchun Dyeing & Weaving 25 Annual Report Review: The turning point in 25Q4 has appeared, and 26Q1 outlook is optimistic”

Endless news and precise interpretation are all available in the Sina Finance APP