Rongsheng Environmental Protection (603165) 2025 Annual Report Brief Analysis: Revenue increases but profits do not grow; the company's accounts receivable are relatively large.

According to financial data compiled from publicly available information by Securities Star, Rongsheng Environmental Protection (603165) released its 2025 annual report recently. As of the end of this reporting period, the company’s total operating revenue was 2.253 billion yuan, up 0.81% year over year; its net profit attributable to shareholders was 224 million yuan, down 21.86% year over year. Judging by single-quarter data, in the fourth quarter the company’s total operating revenue was 644 million yuan, up 12.4% year over year; the net profit attributable to shareholders in the fourth quarter was 52.8315 million yuan, up 40.64% year over year. During this reporting period, Rongsheng Environmental Protection had a relatively large amount of accounts receivable; the accounts receivable, as a share of the latest annual report’s net profit attributable to shareholders, reached 114.73%.

This figure is below most analysts’ expectations. Previously, analysts generally expected that the company’s 2025 net profit would be around 333 million yuan.

All the key performance indicators disclosed in this financial report are average. Among them, the gross margin was 12.07%, down 19.33% year over year; the net profit margin was 9.93%, down 22.49% year over year. Selling expenses, administrative expenses, and financial expenses totaled 131 million yuan; the “three expenses” as a proportion of operating revenue was 5.8%, up 94.96% year over year. Net assets per share were 7.82 yuan, down 4.66% year over year. Net cash flow from operating activities per share was -2.12 yuan, down 619.75% year over year. Earnings per share were 0.86 yuan, down 19.63% year over year.

The notes in the financial statements explaining the reasons for financial items with large changes are as follows:

1. The change in financial expenses was 483.62%. Reason: Interest income on deposits decreased in this period.
2. The net change in cash flow from operating activities was -603.19%. Reason: The cash received from discounting bank acceptance bills that are not of high credit standing was included in financing activities; the paper waste suppliers’ party changed from a legal entity to an individual, and the payment method mainly shifted from acceptance to cash remittance, as well as the impact of accounts payable bills issued in the prior period maturing and being settled in this year.
3. The net change in cash flow from investing activities was -226.67%. Reason: Cash paid for investments increased in this period.
4. The net change in cash flow from financing activities was -18.24%. Reason: The amount of cash dividends and share repurchases distributed in this period increased.
5. The change in cash and cash equivalents was -97.97%. Reason: Purchases of trading financial assets with cash increased in this period.
6. The change in trading financial assets was 144.16%. Reason: The company increased purchases of wealth management products in this period.
7. The change in other receivables was 1281.81%. Reason: Government subsidies receivable increased.
8. The change in other current assets was -43.91%. Reason: The input VAT credit amount carried forward by a subsidiary decreased.
9. The change in construction in progress was 185.83%. Reason: New projects were added this period, including intelligent co-generation and heat-power energy-saving and carbon-reduction upgrades, and a smart slitting workshop for paper products.
10. The change in bills payable was -63.32%. Reason: The paper waste suppliers changed from legal entities to individuals; the payment method mainly shifted from acceptance to cash remittance; usage of bills payable decreased; and bills payable balances from the prior period matured and were paid in the current reporting period.
11. The change in contract liabilities was 36.9%. Reason: Prepayments for product sales increased.
12. The change in non-current liabilities due within one year was 241.98%. Reason: Long-term borrowings due within one year increased.
13. The change in other current liabilities was 108.45%. Reason: The amount of non-high-credit-standing bank acceptance bills that were endorsed but not yet due and that were not terminated for recognition increased.
14. The reasons for the change in long-term borrowings: A new stock repurchase loan was added this period.
15. The change in deferred income was 32.8%. Reason: Additional government subsidies related to assets were added.
16. The change in other comprehensive income was -92.36%. Reason: Other comprehensive income of the associate invested by a subsidiary decreased.

Securities Star’s financial report analysis tool for stock-price investment circle shows:

• Business evaluation: Last year’s ROIC was 6.81%, and the capital return rate was average. Last year’s net profit margin was 9.93%; after accounting for all costs, the value-added of the company’s products or services was average. Based on statistics from historical annual report data, the company’s median ROIC since listing was 14.53%, and investment returns were also relatively good; among the worst years, the ROIC in 2025 was 6.81%, with average investment returns. The company’s historical financial reports were relatively good (Note: The company has been listed for less than 10 years; the longer the listing time, the greater the reference significance of the financial average).

• Debt-paying ability: The company’s cash assets are very healthy.

• Business breakdown: In the past three years (2023/2024/2025), the return on net operating assets was 22.7%/24.4%/18.5% respectively. The net operating profits were 271 million yuan/286 million yuan/224 million yuan respectively. The net operating assets were 1.195 billion yuan/1.173 billion yuan/1.208 billion yuan respectively.

  In the past three years (2023/2024/2025), the company’s working capital/operating revenue (i.e., the funds the company needs to advance for producing and operating one unit of revenue) were 0.13/0.15/0.22 respectively. Meanwhile, the company’s working capital (money paid out by the company itself during its production and operation) was 308 million yuan/329 million yuan/499 million yuan respectively, and the operating revenue was 2.291 billion yuan/2.235 billion yuan/2.253 billion yuan respectively.

The financial report health check tool shows:

1. Recommend paying attention to the company’s cash flow situation (average operating cash flow over the past 3 years / current liabilities is only -3.7%)
2. Recommend paying attention to the company’s debt situation (interest-bearing asset-liability ratio has reached 44.84%, and the average operating cash flow over the past 3 years is negative)
3. Recommend paying attention to the situation of financial expenses (the average net amount of cash flow generated by operating activities over the past 3 years is negative)
4. Recommend paying attention to the company’s accounts receivable situation (accounts receivable / profit has reached 114.73%)

The above content has been compiled by Securities Star based on publicly available information and generated by an AI algorithm (Internet Information Security Filing No. 310104345710301240019). It does not constitute investment advice.