Net profit growth nearly 80%, earning 11.3 billion! The 250 billion coal chemical giant Baofeng Energy made a fortune, Middle Eastern capital increased positions

This article is from Times Weekly, by Song Yiting and Han Xun.

Leading coal chemical company Baofeng Energy (600989.SH) is expected to earn over 10 billion yuan in profit in 2025.

On the evening of March 12, Baofeng Energy announced that in 2025, it will achieve revenue of 48.038 billion yuan, a year-on-year increase of 45.64%; net profit attributable to shareholders is 11.35 billion yuan, up 79.09% year-on-year. The company plans to distribute a cash dividend of 3.055 billion yuan, with small and medium shareholders receiving 0.4921 yuan per share (tax included), and major shareholders receiving 0.3906 yuan per share (tax included).

Baofeng Energy’s core business is coal-based olefin production. By 2025, its Inner Mongolia base’s 3 million tons/year coal-to-olefins project will be fully operational, making the company’s olefin capacity reach 5.2 million tons per year, ranking first in China’s coal-to-olefins industry.

Our reporter found that, despite significant expansion, Baofeng Energy’s gross profit margin increased from 33.15% in 2024 to 35.92%, a rise of 2.77 percentage points year-on-year.

Recently, Huang Aijun, Secretary of the Board of Baofeng Energy, said in an interview that due to recent geopolitical conflicts, crude oil prices have surged sharply, which will directly increase raw material costs for oil-based olefin processes and push up polyolefin product prices. Meanwhile, stable coal prices mean that Baofeng Energy’s production costs are not significantly affected, and the company’s revenue and profits are expected to benefit from rising polyolefin prices.

Regarding performance matters, Times Weekly sent an interview request to Baofeng Energy on March 13. As of press time, no response has been received.

Recently, Baofeng Energy’s stock has continued to rise, up 2.88% on March 13 to 34.70 yuan per share, with a market value of 254.5 billion yuan. The stock price has increased by 76.77% this year.

Image source: Tuchong

Inner Mongolia Base Fully Operational, Annual Profit First Exceeding 10 Billion Yuan

In 2025, Baofeng Energy’s net profit attributable to shareholders will first surpass 10 billion yuan.

Founded in 2005, Baofeng Energy is a leading enterprise in the full industrial chain of high-end coal-based new materials. Its main businesses include coal-to-olefins, coking, and fine chemicals. In 2025, revenue from olefin products reached 37.606 billion yuan, a 95.19% increase, accounting for 78.28% of total revenue.

In 2025, the 3 million tons/year coal-to-olefins project at Baofeng Energy’s Inner Mongolia base will be fully operational, making the company’s olefin capacity reach 5.2 million tons per year, ranking first in China’s coal-to-olefins industry.

At the same time, Baofeng Energy’s Ningdong Phase III olefin project’s OCC unit and vinyl acetate ethylene project officially started production, while the needle coke project entered trial production; the progress of the Ningdong Phase IV 500,000 tons/year olefin project was successfully completed.

The gross profit margin of Baofeng Energy’s olefin products also increased. In 2025, the gross profit margin of the company’s olefin products rose by 3.97 percentage points year-on-year to 38.16%.

Looking at product prices in 2025, polyolefin prices generally declined. The average domestic polyethylene price was 8,252 yuan/ton, down 623 yuan/ton (7.0%) year-on-year; polypropylene averaged 7,113 yuan/ton, down 571 yuan/ton (7.4%).

Along with product prices, the raw materials for olefin production—coal—also declined. Under a loose supply and demand environment, the coal price center significantly dropped compared to the previous year. In the first half of the year, coal prices fell sharply due to market supply and demand factors; in the second half, policy and weather factors led to tighter supply at production sites, causing a phased rebound in coal prices.

Notably, in 2025, revenue from coking and fine chemicals declined by over 20% year-on-year, reaching 7.494 billion yuan and 2.72 billion yuan respectively, accounting for 15.60% and 5.66% of total revenue. Baofeng Energy stated that, due to ample supply of coking coal, prices for coking coal and coke fluctuated downward in 2025.

Industry Bottoming Out and Rebounding? Middle Eastern Funds Increasing Holdings

Since 2026, driven by tense geopolitical situations in the Middle East, international crude oil prices have risen, and prices of polyethylene and polypropylene have been trending upward, attracting market attention to the polyolefin industry.

On the supply side, Baofeng Energy expects 2026 to be the last peak year for new domestic polyolefin capacity installations, after which industry capacity growth is expected to slow significantly. On the demand side, polyolefin downstream applications are widespread, and demand is closely linked to macroeconomic activity. The company expects that, supported by favorable national policies, demand for polyolefins will continue to grow.

Based on supply and demand expectations, Baofeng Energy predicts 2026 could be the year of a bottoming out and rebound for the polyolefin industry.

Major institutions forecast that in 2026, crude oil prices will likely remain volatile due to regional geopolitical changes, OPEC+ production negotiations, and global economic uncertainties. Under current polyolefin price levels, crude oil prices will continue to strongly support polyolefin prices.

Industrial Research on March 5 stated that coal-based olefin projects have advantages over “oil-based” and “gas-based” routes, and related companies are expected to benefit. If conflicts between the US and Iran escalate and persist, the Middle East’s petrochemical industry may face investment slowdown, reduced plant utilization, and transportation issues, which could weaken its competitiveness. This would benefit China’s chemical exports and help alleviate oversupply in China’s petrochemical industry.

Wang Peng, a deputy researcher at Beijing Academy of Social Sciences, analyzed on March 13: “Disrupted Middle Eastern shipping routes have increased logistics costs and delivery risks for global oil-based polyolefins. Baofeng, with inland capacity, can fill supply gaps in Southeast Asia and other overseas markets, and has achieved strong import substitution domestically, with a premium for stability.”

For coal-based olefins, product profitability will also be affected by coal prices. Baofeng Energy expects that in 2026, China’s coal supply and demand will remain relatively loose, with demand mainly pressured by the continued replacement of thermal power generation with renewable energy. Coal demand for thermal power is expected to face some pressure, while supply is expected to remain stable under government regulation. In this relatively loose supply and demand environment, coal prices in 2026 are expected to slightly decline compared to 2025, with profit levels for coal-based olefins likely to remain stable or slightly increase year-on-year.

It is noteworthy that several foreign investors increased their holdings in Baofeng Energy in the fourth quarter of last year. Among the company’s top ten circulating shareholders, Hong Kong Central Clearing Co. increased its holdings by 13.00%, to 199.8 million shares; Middle Eastern funds, Abu Dhabi Investment Authority—Self-Managed Funds, increased their holdings by 0.90%, to 44.81 million shares.