Earth Bear 2025 Annual Report Analysis: Deducted Non-Recurring Net Profit Increased by 273.71%, Financial Expenses Doubled

Core Profitability Indicators: Strong Growth in Profits After Non-Recurring Items, Marked Improvement in Profit Quality

Operating Revenue: Double Growth in Production and Sales Drives Two-Digit Revenue Growth

In 2025, the company achieved operating revenue of RMB 1.645 billion, up 24.73% year over year. Judging from quarterly data, the company’s revenue increased quarter by quarter over the full year. It recorded revenue of RMB 341 million, RMB 385 million, RMB 460 million, and RMB 459 million in the first, second, third, and fourth quarters, respectively. Revenue in both the third and fourth quarters exceeded RMB 450 million, indicating sustained strong demand in the second half of the year.

From the perspective of business structure, sintered NdFeB magnets remain the core source of revenue. For the full year, the company generated revenue of RMB 1.298 billion from this segment, up 16.17% year over year, accounting for 95.85% of revenue from its main business. Rubber magnet revenue was RMB 36.0314 million, down 0.29% year over year; other magnetic materials revenue was RMB 20.1953 million, up 23.96% year over year.

Net Profit and Profit After Non-Recurring Items: Explosive Growth in Profit After Non-Recurring Items, Improvement in Profit Quality

Net profit attributable to shareholders of listed companies was RMB 57.4044 million, up 80.10% year over year. Profit attributable to shareholders of listed companies after non-recurring items was RMB 26.2545 million, up significantly by 273.71% year over year. The growth rate of profit after non-recurring items far outpaced that of net profit. This was mainly attributable to the company’s growth in product production and sales volume, strengthened cost control, and improved gross margin on product sales. Profit after non-recurring items also showed strong performance by quarter. In the third quarter alone, profit after non-recurring items reached RMB 13.1999 million, the highest for the year.

Earnings Per Share: Earnings Growth Lifts EPS

Basic earnings per share were RMB 0.50 per share, up 78.57% year over year. Earnings per share after non-recurring items were RMB 0.23 per share, up 283.33% year over year. The growth rate of earnings per share after non-recurring items matches the growth rate of profit after non-recurring items, reflecting a significant improvement in the company’s profit growth driving shareholder returns.

Expense Side: Financial Expenses Double, R&D Investment Increases Substantially

Overall Expenses: Total Expenses Grow Clearly, with Financial Expenses Becoming the Main Increment

In 2025, the company’s period expenses totaled RMB 2.379 billion, up 34.45% year over year. Among them, selling expenses declined year over year, while administrative expenses, R&D expenses, and financial expenses all increased to different degrees. In particular, financial expenses doubled, becoming the main change on the expense side.

Selling Expenses: Scale Contracts, Expense Ratio Declines

Selling expenses were RMB 30.2376 million, down 8.08% year over year. The selling expense ratio decreased from 2.49% in 2024 to 1.84% in 2025. This was mainly due to improved efficiency in the company’s market expansion and effective control of certain market-related expenses.

Administrative Expenses: Slight Growth, Expense Ratio Largely Stable

Administrative expenses were RMB 62.3867 million, up 7.88% year over year. The administrative expense ratio rose slightly from 4.39% in 2024 to 4.51% in 2025. This was mainly due to a modest increase in management costs brought by the company’s scale expansion.

Financial Expenses: Doubling Growth; Interest Expenses and FX Translation Losses Are the Main Drivers

Financial expenses were RMB 19.3709 million, up significantly by 130.41% year over year. This was mainly due to an increase in net interest outflows and net foreign exchange losses compared with the prior period. Specifically, interest expenses were RMB 21.1849 million, up 14.74% year over year; foreign exchange losses were RMB 10.6127 million, while foreign exchange gains were RMB 4.3219 million in 2024. The large swing in foreign exchange gains/losses was an important reason for the growth in financial expenses.

R&D Expenses: Substantially Higher Investment, Higher R&D Share of Revenue

R&D expenses were RMB 126.0348 million, up 65.23% year over year. The proportion of R&D investment in operating revenue increased from 5.78% in 2024 to 7.66% in 2025, an increase of 1.88 percentage points. This was mainly because the company undertook national projects, leading to increased R&D spending. In terms of the structure of R&D investment, material, fuel, and power expenses were RMB 92.6216 million, up 88.87%, and were the main component of the growth in R&D expenses.

R&D Personnel: Stable Team, Slight Increase in Compensation

As of end-2025, the company had 179 R&D personnel, down by 3 from the previous year. The proportion of R&D personnel to the company’s total headcount decreased from 11.18% to 10.18%. Total compensation for R&D personnel was RMB 20.9829 million, up 3.83% year over year. The average compensation for R&D personnel increased from RMB 111,000 per person to RMB 117,200 per person. The company stabilized the R&D team by improving compensation benefits. Regarding the education structure of R&D personnel, there were 10 people with master’s degrees or above, 60 undergraduates, 77 junior college graduates, and 32 high school or below. Overall, the education structure remained stable.

Cash Flow: Operating Cash Flow Falls; Investing Cash Flow Turns from Negative to Positive

Overall Cash Flow: Net Cash Turns from Negative to Positive

In 2025, the net increase in cash and cash equivalents was RMB 24.7298 million, while in 2024 it was a net decrease of RMB 40.6680 million, indicating an improvement in cash flow conditions.

Cash Flow from Operating Activities: Scale Declines, Still Maintains Net Inflows

Net cash flow generated from operating activities was RMB 82.7162 million, down 29.43% year over year. This was mainly because cash paid for purchasing goods and receiving services increased during the period. Cash received from selling goods and providing services was RMB 1.454 billion, up 19.93% year over year, but cash paid for purchasing goods and receiving services was RMB 1.268 billion, up 27.50% year over year. The growth rate of procurement payments outpaced the growth rate of sales collections, resulting in a decline in net operating cash flow.

Cash Flow from Investing Activities: Turns from Negative to Positive; Wealth Management Scale Shrinks

Net cash flow generated from investing activities was RMB 9.4648 million, while in 2024 it was a net cash outflow of RMB 194.0 million. This was mainly because purchases of wealth management products and other items decreased during the period. Cash paid for investments in 2025 was RMB 1.428 billion, down 24.25% year over year. Cash received from investment recoveries was RMB 1.544 billion, up 141.92% year over year. The reduction in wealth management scale caused investing cash flow to turn from negative to positive.

Cash Flow from Financing Activities: Net Outflow Scale Expands

Net cash flow from financing activities was RMB -67.5870 million. In 2024, it was a net inflow of RMB 32.5970 million. This was mainly due to a reduction in payments for stock buybacks during the period, while the scale of debt repayments increased. Cash paid for repaying debts in 2025 was RMB 807 million, up 7.68% year over year; cash received from obtaining borrowings was RMB 787 million, down 9.18% year over year. Financing cash outflows exceeded inflows.

Risks Facing the Company: Multiple Risks Still Need to Be Watched

Operating Risks

2. Risk of Fluctuations in Prices of Rare-Earth Raw Materials: The company’s main raw materials for high-performance sintered NdFeB permanent magnet materials include rare-earth materials such as praseodymium-neodymium alloy and dysprosium and terbium. Rare-earth raw materials account for a relatively high proportion of production costs. If rare-earth raw material prices continue to rise significantly, it will directly affect the company’s production costs, inventory management, and product pricing, which may adversely impact the company’s gross margin and operating performance.
3. Risk of Management Challenges During Scale Expansion: As new production capacity is gradually released, the company’s assets and business scale will continue to expand. This will place higher demands on the company’s production and operations, technological R&D, market development, human resources, and internal controls. If the company’s management system, talent reserves, and internal controls cannot be adapted in a timely manner to the needs of scale expansion and business development, it may affect operating efficiency, increase management costs, and thereby adversely affect operating performance.

Financial Risks

Risk of Exchange Rate Fluctuations: The company’s export business is mainly settled in USD and EUR. An increase in the fluctuation range of the RMB exchange rate will directly affect the company’s foreign exchange gains/losses, thereby impacting operating performance to a certain extent. In 2025, the company’s net foreign exchange loss reached RMB 10.6127 million, which has had a clear impact on financial expenses.

Industry Risks

Risk of Intensified Industry Competition: The industry for sintered NdFeB permanent magnet materials in which the company operates is becoming increasingly competitive, showing trends of structural expansion in capacity and continuously increasing market concentration. If the company in the future cannot effectively enhance its overall competitive strengths such as technological R&D, cost control, and market development, it may face risks including intensified industry competition, declining product gross margins, and pressure on market share and profitability.

Macroeconomic Environment Risks

Risk of Export Control Policies for Rare-Earth-Related Items: In April 2025, the Ministry of Commerce and the General Administration of Customs jointly issued the 《Decision on Implementing Export Controls on Certain Medium- and Heavy-Rare-Earth-Related Items》, which imposes export controls on rare-earth-related items such as samarium-cobalt magnet materials and NdFeB permanent magnet materials containing dysprosium and terbium. If in the future export control policies are further tightened or adjusted, it may affect the company’s ability to obtain overseas orders, the export schedule of its products, and delivery cycles, increase compliance costs, and adversely impact the company’s export business.

Compensation for Directors, Supervisors, and Senior Management: Compensation for the Core Management Team Remains Stable

Chairman Compensation

Chairman Xiong Yongfei’s total pre-tax remuneration received from the company during the reporting period was RMB 1.5511 million.

General Manager Compensation

General Manager Xiong Yongfei (also serving as Chairman) received total pre-tax remuneration from the company during the reporting period of RMB 1.5511 million.

Vice General Manager Compensation

Vice General Manager Yi Xiaofei’s pre-tax remuneration was RMB 1.0201 million. Vice General Manager Chen Jingwu’s pre-tax remuneration was RMB 0.8068 million. Vice General Manager Liu Minghui’s pre-tax remuneration was RMB 0.6491 million. Vice General Manager Dong Xuechun’s pre-tax remuneration was RMB 0.6010 million. Upon leaving office, former Vice General Manager Tan Xinbo’s pre-tax remuneration was RMB 0.9455 million.

Chief Financial Officer Compensation

Chief Financial Officer Wang Ziyi’s total pre-tax remuneration received from the company during the reporting period was RMB 0.3496 million.

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