Yinghe Technology 2025 Annual Report Analysis: Operating Cash Flow Increased by 2899.42%, Sales Expenses Rose by 57.72%

Core Profitability Indicator Interpretation

Operating Revenue: Up 10.81% year-over-year; lithium battery equipment drives growth

In 2025, the company achieved operating revenue of RMB 9.445 billion, up 10.81% year over year. By product, revenue from lithium battery-specific production equipment was RMB 6.427 billion, up significantly by 29.81% year over year, increasing its share of operating revenue from 58.09% in 2024 to 68.05%, becoming the core driver of revenue growth. Other business revenue was RMB 3.018 billion, down 15.52% year over year, mainly due to volatility in overseas markets for the e-cigarette business. By region, revenue from within China was RMB 5.599 billion, up 31.72% year over year, while overseas revenue was RMB 3.845 billion, down 10% year over year; the expansion in the domestic market has been notably effective.

Net Profit: Attributable net profit of RMB 538 million, up 6.96% year over year

In 2025, the company’s net profit attributable to shareholders of listed companies was RMB 538 million, up 6.96% year over year. Among them, the lithium battery equipment segment’s profitability contribution continued to improve steadily. Although the e-cigarette segment’s revenue declined, profitability performance was optimized through cost management, and the overall scale of profitability grew steadily.

Non-recurring profit (loss) adjusted net profit: RMB 526 million, up 6.01% year over year

After deducting non-recurring gains and losses, net profit was RMB 526 million, up 6.01% year over year, slightly lower than the net profit growth rate. This was mainly because non-recurring gains and losses contributed RMB 11.90011 million in the current period, including government grants of RMB 31.0154 million and losses from the disposal of non-current assets of RMB 15.5369 million, among others.

Earnings per Share: Basic EPS of RMB 0.84 per share

Basic earnings per share were RMB 0.84 per share, up 7.69% year over year. After excluding non-recurring items, earnings per share were RMB 0.82 per share, up 6.01% year over year. EPS growth basically matched net profit growth, reflecting the stable quality of the company’s earnings.

In-Depth Analysis of Expense Structure

Total Expenses: Up 19.23% year over year; internationalization and R&D increase spending

In 2025, the sum of the company’s four expense items—selling, administrative, R&D, and finance costs—was RMB 1.239 billion, up 19.23% year over year from RMB 1.039 billion in 2024. The increase in expenses exceeded the revenue growth rate, mainly due to the company’s internationalization initiatives and increased R&D investment.

Selling Expenses: Overseas expansion drives a doubling-style growth

Selling expenses increased sharply by 57.72%. Among them, labor costs rose from RMB 66.1263 million to RMB 100.7255 million, transportation and travel expenses rose from RMB 37.7660 million to RMB 85.5152 million, and advertising expenses rose from RMB 18.9490 million to RMB 59.5174 million. All were directly driven by overseas market expansion. The company’s products are exported to multiple countries such as those in Europe, the U.S., and Japan, and the buildup of overseas marketing networks has increased related expenses.

Administrative expenses: Dual drivers from talent and system building

Administrative expenses grew by 17.87%, mainly due to talent reserves and strategic management capacity building. Recruitment fees rose from RMB 1.0326 million to RMB 6.2739 million, and intermediary fees rose from RMB 17.3943 million to RMB 36.1244 million, reflecting an increased need for senior talent and professional services. At the same time, internal digital and intelligent management system development also increased related investment.

R&D expenses: Focused on high-end product R&D

R&D expenses increased by 15.70%. The company’s total R&D investment for the year was RMB 646 million, accounting for 6.84% of operating revenue, up 0.63 percentage points from 2024. Key efforts included advancing the development of RTC6 control card laser cutting software, the cell closed-loop leveling technology, and the new-generation 46 slitting-and-coating high-speed all-in-one machine, among other projects. Of these, multiple projects have been completed and reached internationally leading levels. For example, the RTC6 control card achieved an ultra-narrow kerf tab cutting speed of 90 meters per minute, far exceeding the industry requirement of 70 meters per minute.

Finance costs: The contraction of foreign exchange gains is the main cause

Finance costs were -RMB 31.7503 million, decreasing by RMB 20.0796 million year over year. This was mainly because, in 2025, the fluctuation range of the RMB exchange rate was smaller than in 2024, causing the foreign exchange gains generated by overseas business to decline year over year. At the same time, interest expense increased from RMB 7.3055 million to RMB 11.5482 million, further compressing the earnings scale of finance costs.

R&D Team and Personnel Overview

R&D headcount up 37.10% year over year

In 2025, the number of R&D personnel reached 2,546, up 37.10% from 1,857 in 2024. However, the proportion of R&D personnel to total employees fell from 25.77% to 21.16%, mainly because the company’s total headcount increased from 7,206 to 12,033 and the production-side workforce expanded faster. In terms of education structure, R&D personnel with undergraduate and above qualifications increased from 816 to 1,292, up 58.33%; master’s degree R&D personnel increased from 71 to 111, up 56.34%, indicating that the reserve of high-end R&D talent has continued to strengthen. In terms of age structure, R&D personnel under 30 increased from 806 to 1,451, up 80.02%, showing a clear trend toward a younger R&D team and an increase in innovation vitality.

Full-Scope Cash Flow Interpretation

Overall cash flow: Net increase in cash and cash equivalents of RMB 49.6695 million

In 2025, the net increase in cash and cash equivalents was RMB 49.6695 million. Compared with RMB -40.86948 million in 2024, this represents a turnaround from negative to positive, with a significant improvement in the cash flow situation.

Operating cash flow: Net amount surging 28.99 times; strong improvement in cash-generating ability

Net cash flow from operating activities increased from RMB 26.5062 million to RMB 795.0338 million, mainly due to: (1) faster collections after orders in the lithium battery equipment business were delivered; cash received from selling goods was RMB 9.276 billion, up 4.81% year over year; and (2) optimizing the structure of procurement payments. Cash paid for purchasing goods was RMB 6.234 billion, down 12.6% year over year. The ending balance of operating payables increased significantly compared with the beginning balance, increasing the scale of funding occupied from suppliers.

Investing cash flow: Investment contraction leads to a larger net cash outflow

Net cash outflow from investing activities was RMB 227.5392 million. Compared with RMB 63.8443 million net cash outflow in 2024, the net outflow scale expanded. This was mainly because in 2024, the company redeemed prior investments in financial assets totaling RMB 423 million, while in 2025 there was no such redemption. At the same time, new investments in other equity instruments were RMB 29.9999 million, and payments for purchasing and constructing fixed assets were RMB 176 million, which was basically flat compared with 2024.

Financing cash flow: Share repurchase and deposit payments raise net cash outflow

Net cash outflow from financing activities was RMB 506.2337 million, increasing by RMB 129.2027 million compared with 2024. This was mainly due to the company increasing the scale of bill payments to ensure order delivery, with bill deposit guarantee expenses of RMB 1.133 billion, increasing by RMB 186 million year over year. At the same time, the company implemented a share repurchase for equity incentives, with cumulative expenditures of RMB 125 million, further increasing cash outflows from the financing side.

Potential Risk Disclosures

Risk of macroeconomic cycle fluctuations

Demand in the lithium battery equipment industry is highly correlated with capital expenditures by downstream lithium battery manufacturers. If the macro economy declines, the expansion pace of downstream industries such as new energy vehicles and energy storage will slow down, directly affecting the scale of the company’s lithium battery equipment orders. The e-cigarette business is affected by volatility in overseas consumer demand. If major overseas economies weaken, it may impact e-cigarette product sales.

Risk of intensifying industry competition

In the lithium battery equipment sector, competitors continue to increase R&D investment. Product homogenization competition is intensifying. If the company cannot continuously maintain technological leadership, it may lose market share. In the e-cigarette industry, competition in overseas markets is fierce, and changes in the competitive landscape among leading brands may pose a risk. If the company’s brand operation and channel expansion do not meet expectations, it will face risks of performance declines.

Risk of internationalization management

The company’s overseas business is expanding rapidly. Legal and regulatory requirements, cultural differences, and exchange-rate fluctuations across different countries and regions bring challenges to management. If the overseas team’s localization operations capabilities are insufficient or exchange-rate risk management is not adequately handled, it will affect the profitability level of overseas business and may even trigger compliance risks.

Compensation of Directors, Supervisors, and Senior Management

Chairman’s pre-tax compensation: No direct compensation received from the company

Jia Tinggang, the chairman, did not receive any pre-tax compensation directly from the company. His compensation is mainly paid by a related party, Shanghai Electric Group, which is consistent with the remuneration arrangement for related personnel of the controlling shareholder.

President’s pre-tax compensation: RMB 4.1630 million

The total pre-tax compensation received by He Aibin, director and president, from the company was RMB 4.1630 million, up from RMB 3.8920 million in 2024. This aligns with the growth in the company’s performance and the job responsibilities of the president.

Vice President’s pre-tax compensation: Total RMB 11.8967 million for current and former tenures

For the current vice president role, Lu Zeyan received pre-tax compensation of RMB 1.6941 million, Zhang Sa RMB 1.6900 million, Yang Tonghuan RMB 1.1734 million, and Ni Lei RMB 0.1500 million. For former vice president roles, Tang Jinjie received RMB 0.2995 million, Yang Youlin RMB 0.3000 million, and Liu Yongqing RMB 0.5125 million. The total was RMB 11.8967 million. The compensation level is related to job responsibilities and time in the role.

Chief Financial Officer’s pre-tax compensation: Zhu Yeqing receives no compensation in the current period

Vice President and Chief Financial Officer Zhu Yeqing began serving on January 30, 2026. During the 2025 fiscal year, she did not receive any pre-tax compensation from the company.

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Responsible editor: Xiao Lang Express