*ST Songfa Meets "Star Removal and Hat Removal" Conditions, 2025 Net Profit of 2.655 Billion Yuan, Year-over-Year Growth of 1083.05%

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On the evening of March 9, Guangdong Songfa Ceramics Co., Ltd. (603268.SH) (hereinafter “*ST Songfa”) disclosed its first annual report after restructuring. The financial report shows that, thanks to the earlier injection of assets related to shipbuilding from Hengli Heavy Industry Group Co., Ltd. (hereinafter “Hengli Heavy Industry”) and the completion of the main business transformation, the company’s total operating revenue in 2025 increased by 274.95% year-on-year, and net profit attributable to the parent increased by 1083.05%. Meanwhile, *ST Songfa clearly stated that the circumstances that triggered delisting risk warning have been eliminated, and it has submitted an application to the Shanghai Stock Exchange to revoke the delisting risk warning on its stock.

Regarding the subsequent improvement of financial structure and the progress of the 13.5 billion yuan shipbuilding capacity expansion project, a reporter from Huaxia Times contacted *ST Songfa and sent an interview outline as required. The company’s relevant responsible person responded that the information is subject to official announcements, and the current progress of the 13.5 billion yuan shipbuilding capacity expansion project is not within the scope of disclosure. However, in February this year, *ST Songfa told reporters that the company has always focused on its own operational development, and for the order targets and production plans for 2026, it will strictly comply with laws, regulations, and regulatory requirements, and will promptly release relevant information through regular reports, interim announcements, and other legal disclosure channels.

Core indicators have improved across the board

The annual report shows that in 2025, *ST Songfa achieved a significant improvement in various operational indicators through major asset swaps and issuing shares to purchase assets, including the injection of 100% equity of Hengli Heavy Industry, strategically exiting the ceramic products industry, and fully integrating shipbuilding and high-end equipment manufacturing assets under Hengli Heavy Industry. Its main business shifted to the research, design, production, and sales of ships and high-end equipment. Currently, the company’s business has covered key links such as independent production of marine engines and shipbuilding.

After the strategic transformation, *ST Songfa stated that “the company’s various operating indicators have fundamentally improved” in 2025. Hengli Heavy Industry possesses globally leading shipbuilding capabilities and has become the core source of the company’s performance growth. Relying on Hengli Heavy Industry’s core technology and efficient capacity, combined with the booming global ship market, the company has sufficient orders on hand, stable deliveries, and significant increases in revenue, profit, and net assets.

According to the annual report, in 2025, due to a substantial increase in shipbuilding orders compared to the previous year, *ST Songfa achieved operating revenue of 21.639 billion yuan, a year-on-year increase of 274.95%. Industry-wise, the main revenue source was shipbuilding, which earned 20.864 billion yuan, up 320.19% year-on-year, with a gross profit margin of 18.87%.

The profit side also performed impressively. During the same period, the company achieved a net profit attributable to shareholders of listed companies of 2.655 billion yuan, an increase of 1083.05% year-on-year; and a net profit excluding non-recurring gains and losses of 2.033 billion yuan, turning losses into profits and growing significantly. By the end of the reporting period, the company’s total assets reached 49.392 billion yuan, and net assets attributable to shareholders of listed companies were 9.452 billion yuan, representing increases of 154.04% and 188.27%, respectively, compared to the end of the previous year.

In 2025, Hengli Heavy Industry and its subsidiaries were included in the company’s consolidated financial statements. Under the consolidated scope, Hengli Heavy Industry achieved a net profit attributable to the parent company of 2.579 billion yuan after deducting non-recurring gains and losses, exceeding the full-year performance commitment of 1.127 billion yuan. According to the previous performance compensation agreement signed by both parties, Hengli Heavy Industry committed that during the performance compensation period (2025, 2026, and 2027), the cumulative net profit attributable to the parent company after deducting non-recurring gains and losses would not be less than 4.8 billion yuan.

Quarterly, in the first and second quarters, the company achieved revenues of 2.972 billion yuan and 3.708 billion yuan, with net profits attributable to shareholders of 254 million yuan and 293 million yuan, respectively; non-recurring net profits were -21.497 million yuan and 137 million yuan. Notably, after *ST Songfa’s restructuring of Hengli Heavy Industry in May 2025, the company’s performance in the second half of 2025 significantly improved. In the third and fourth quarters, revenues reached 5.079 billion yuan and 9.881 billion yuan, with net profits attributable to shareholders of 624 million yuan and 1.382 billion yuan, and non-recurring net profits of 572 million yuan and 1.345 billion yuan, showing a quarter-by-quarter explosive growth.

With the comprehensive improvement of core financial indicators, *ST Songfa’s “delisting star” countdown has begun. Along with the disclosure of the 2025 annual report, *ST Songfa also announced that the circumstances that triggered delisting risk warning have been eliminated, and it meets the conditions to apply for the revocation of the delisting risk warning. The company has submitted an application to the Shanghai Stock Exchange, which will decide whether to revoke the warning within 15 trading days after receiving the application, based on actual circumstances.

The capital market has fully recognized the positive results of the company’s restructuring and transformation. As of the close on March 10, the stock price was 124.9 yuan per share, up 4.59%, with a total market value of 121.3 billion yuan. According to public information, since the assets of Hengli Heavy Industry were injected, *ST Songfa’s performance in the secondary market has continued to strengthen. From September 26, 2025, to March 10, 2026, over 104 trading days, the stock price increased by a total of 165.46%, and the company’s total market value has risen from over 40 billion yuan to over 100 billion yuan.

Meanwhile, *ST Songfa’s asset-liability ratio is 80.86%, down from 83.14% at the end of last year, but still relatively high. The company stated in the annual report that due to the high cost and long construction cycle of ships, shipowners generally adopt installment payments, so shipbuilding companies’ liabilities mainly include contract liabilities and other items. Asset-liability ratios are generally high, and current and quick ratios are relatively low, posing certain debt repayment risks.

In 2026, 77 new ships have been ordered

“After the restructuring, relying on the continuous empowerment of the listed platform, Hengli Heavy Industry’s capacity release and order acquisition have shown explosive growth,” the annual report states. The company now has the capacity for large-scale production of high-end ships such as bulk carriers, oil tankers, container ships, and gas transport ships. In the second half of 2025, the company secured a series of ultra-large oil tanker and bulk carrier orders. Currently, its order structure is balanced, covering the three main ship types: container, bulk, and oil ships, with order volume and new orders ranking among the top global large ocean-going shipbuilders.

Public information shows that in 2025, Hengli Heavy Industry signed 115 new orders, with orders scheduled through 2029. According to Clarkson and China Shipbuilding Network data, in terms of deadweight tonnage, Hengli Heavy Industry ranked second in China and second globally in new order volume in 2025.

Benefiting from the sustained boom in the global new shipbuilding market, the company continued to secure large orders in 2026. A rough tally by reporters shows that as of March 10, *ST Songfa announced 15 major contracts for daily operations. Public information indicates that since the beginning of 2026, the company has disclosed new ship orders for 77 vessels, with a total contract value reaching up to 60 billion yuan. In early March, *ST Songfa signed contracts for the construction of four ultra-large oil tankers, with amounts ranging from 2.759 billion to 4.138 billion yuan. “The order volume and new order volume are both among the top global large ocean-going shipbuilders,” the financial report states.

Regarding ship types, the new orders continue to focus on high-value VLCC (Very Large Crude Carrier) oil tankers built by Hengli. In 2026, the company’s order share accounts for over 80% of the global market, with all orders from well-known international shipowners such as Seatankers, Dynacom, and EPS. Looking ahead to 2026, China Merchants Energy Shipping told institutional investors that the additional VLCC capacity in 2026 is unlikely to offset the decline in efficiency of aging ships and the exit of non-compliant ships restricted by Western regulations. The supply-demand tension in the compliant market is expected to persist, and freight rates are likely to be higher than in 2025.

It is worth noting that to seize the best market window in shipbuilding over the past decade, *ST Songfa disclosed a private placement plan in January this year, intending to raise 13.5 billion yuan for capacity expansion, including projects for green intelligent high-end ship manufacturing, upgrades of Hengli Shipbuilding (Dalian) Co., Ltd.'s green ship manufacturing facilities, and supporting projects at wharves 3-6.

*ST Songfa stated that one of the main purposes of this private placement is to enhance the company’s order fulfillment and delivery capabilities, effectively ensuring long-term growth in performance. The issuance will also optimize the company’s capital structure and reduce financial risks.

Editor: Zhang Bei Chief Editor: Zhang Yuning