Revenue plummeted over 70%, net assets close to negative values! ASCI Energy has been significantly impacted!

(Source: Coatings Procurement Network)

On the evening of March 13, Yashi Chuangneng Technology (Shanghai) Co., Ltd. (hereinafter referred to as “Yashi Chuangneng” or “the Company”) issued a reply announcement regarding the regulatory work letter on its performance forecast matters. The company responded to each of the Shanghai Stock Exchange’s core inquiries concerning its revenue, gross profit margin, ongoing operations, asset impairment, and related-party transactions. The announcement shows that the company’s 2025 revenue is 477 million yuan, a significant decrease of 76.77% year-over-year, with an estimated net loss attributable to shareholders of 830 million to 1.25 billion yuan, and net assets approaching negative. The company is also facing factory shutdowns, account freezes, multiple lawsuits, and other difficulties; it states that these current challenges are temporary, and has taken multiple measures to resolve debts, activate assets, and insists on preparing financial statements based on ongoing operations. The related performance changes and accounting treatments are deemed reasonable.

The announcement states that the company recently received the Shanghai Stock Exchange’s “Regulatory Work Letter Regarding Yashi Chuangneng Technology (Shanghai) Co., Ltd.” The letter requests additional disclosures, including quarterly revenue figures, gross profit margin changes and their reasons, the top ten customers before 2025, and details on income unrelated to core business and lacking commercial substance, along with explanations of the accuracy of deductions.

The company replied that in 2025, its revenue was 476.7578 million yuan, down 76.77% from the previous year, with quarterly declines of about 60%-80%. The main reasons are: 1) deep adjustments in the real estate and construction industries, which severely impacted its business; 2) tightening of its credit sales policies; 3) large reductions in due bills and loan balances from some financial institutions, leading to liquidity difficulties.

Gross profit margin varied across quarters in 2025. Q1 was -5.84% (vs. 19.80% last year), Q2 was 5.96% (vs. 24.43%), Q3 was -2.73% (vs. 23.20%), and Q4 was 26.95% (vs. -1.39%). The main reasons for the decline in gross profit margin in the first three quarters include a 26% increase in depreciation and amortization included in operating costs, while revenue decreased by 77%. The increase in Q4 gross margin to 26.95% was mainly due to falling raw material prices, such as a 20% decrease in single-material prices for emulsions from Q3 to Q4, and product mix optimization, with higher proportions of high-margin functional building coatings.

The changes in revenue and gross profit margin in 2025 are mainly influenced by multiple internal and external factors, with the primary reason being the sharp decline in revenue. These changes are considered reasonable.

Regarding ongoing operations, the performance forecast and previous announcements show that from 2021 to 2024, the net profit attributable to shareholders after deducting non-recurring gains and losses was -645 million yuan, 36 million yuan, 10 million yuan, and -358 million yuan, respectively. As of the end of 2024, the company’s net assets were 1.309 billion yuan. The company’s losses in this period increased significantly; based on the maximum loss disclosed in the forecast, the net assets at year-end are estimated to be only 19 million yuan, approaching negative. During the reporting period, factories in Chongqing, Shijiazhuang, and Chuzhou waterproofing were shut down, and the company faced large overdue debts and multiple lawsuits, with some assets seized and frozen.

The company responded that the Chuzhou and Xinjiang factories are the main production bases. The sales revenue from products produced by the Chongqing, Shijiazhuang, and Chuzhou waterproofing factories accounted for 11.95% in 2022, 24.07% in 2023, and 30.12% in 2024. The shutdown of these factories will not cause serious impact on the company’s production and operations. Currently, the company’s business scale and revenue are relatively small; the capacity of the Chuzhou and Xinjiang factories can ensure supply. The shutdown of the Chongqing, Shijiazhuang, and Chuzhou waterproofing factories is beneficial for reducing overall operating costs and improving efficiency. The company will make proper arrangements for factories that are shut down or halted based on future operational developments.

As of the end of 2025, the company and about 40 subsidiaries had opened 211 settlement accounts, with 48 accounts in normal use, 163 accounts frozen due to litigation, with a total frozen amount of 77.3151 million yuan. As of December 31, 2025, the balance of cash and cash equivalents was 98.2875 million yuan, with the total frozen amount accounting for 78.66% of the end-of-period cash.

In 2025, the company’s cash receipts from operating activities totaled about 720 million yuan, with an average frozen amount of 58.9913 million yuan annually. Although many accounts are frozen, this has not caused fundamental impacts on operations. The main external operating entity is Yashi Marketing Management (Shanghai) Co., Ltd., whose accounts are functioning normally. Therefore, the company has not encountered major bank account freezes.

In 2025, the company paid approximately 950 million yuan for raw materials, contractors, and debt principal and interest, which is twice its annual revenue. Overall, debts are being paid in an orderly manner. According to public information from Qichacha, the company is involved in 39 dishonesty cases totaling 37.1313 million yuan, about 0.9% of total liabilities, and 54 cases involving restrictions on high consumption, totaling 147.8663 million yuan, about 3.5% of total liabilities. The amounts involved are relatively small. The main operating entities, such as Yashi Marketing Management (Shanghai) Co., Ltd. and Yashi Chuangneng Technology (Urumqi) Co., Ltd., are operating normally and are not listed as dishonest or restricted.

Yashi Chuangneng states that although some subsidiaries face restrictions on high consumption or are listed as dishonest persons subject to enforcement, these do not constitute serious dishonesty. The company is actively communicating and negotiating with creditors, using methods such as debt-to-equity swaps, asset pledges, extending payment terms, and installment payments to resolve debts in an orderly manner. The company will also strengthen receivables collection, activate non-productive assets, and expand financing channels to resolve debts as soon as possible.

As of now, the company has 485 pending cases as defendant or person subject to enforcement, including ongoing and unresolved judgments, with a total amount of 1.2552 billion yuan. Among these, 37 cases involve amounts over 3 million yuan. Assuming the maximum risk exposure based on plaintiff claims and enforcement requests, and using December 31, 2026, as the debt repayment date with interest calculated to the expected repayment date, the maximum risk exposure could reach 1.16 billion yuan.

The company’s revenue in 2025 declined sharply, with significant net losses and liquidity difficulties. The main reasons are: 1) deep adjustments in the real estate and construction sectors, leading to revenue decline and increased accounts receivable credit impairment; 2) rapid expansion of capacity in previous years, heavy capital investment, high financial costs, low capacity utilization, and large depreciation and asset impairment; 3) significant reduction in loan balances from some financial institutions.

Regarding the company’s ongoing viability, the company believes that preparing financial statements on a going concern basis is appropriate. First, revenue in 2025 still reached 477 million yuan, with main production bases operating normally. Second, under the guidance of the Supreme People’s Court’s “Good-faith and Civilized Enforcement” concept, the current lawsuits, preservation, and enforcement actions have not caused fundamental impacts on normal operations. Third, under the principle of “not blindly suspending or reducing loans,” most banks have not taken measures to suspend or reduce credit. Fourth, the company has been deeply engaged in the industry for nearly 30 years, with strong brand influence, a solid market foundation, and a stable core team. Therefore, the current difficulties are temporary. The company is actively implementing measures such as business transformation, disposal of idle or low-efficiency assets, negotiations with creditors, and seeking strategic investors. As the real estate and construction markets gradually recover, and with the development of urban renewal and other projects, the company’s business is expected to gradually improve, and operational quality will recover in an orderly manner.

If the current difficulties and pressures are not effectively resolved, continued decline in operational quality could lead to worsening liquidity, loss of control over lawsuits, judicial disposal of core assets, turning net assets negative, and stock risk warnings.

Regarding asset impairment, the performance forecast states that the company has recognized impairment provisions for assets such as fixed assets, construction in progress, and accounts receivable that show impairment signs, and has reversed previously recognized deferred tax assets.

The announcement reveals that as of the end of 2025, the overdue accounts receivable totaled 2.2485 billion yuan; the provision for bad debts in this period was 277.8194 million yuan, with accumulated provisions of 1.3832 billion yuan. The provisions are deemed reasonable and sufficient, consistent with the company’s accounting policies. The migration rates in 2025 are similar to those in 2024, and the bad debt provisions are comparable to industry peers, with no unreasonable situations. The company has considered debtor creditworthiness, repayment ability, and actual recovery risks, applying the higher of individual or collective provisions, which are deemed reasonable and sufficient. The recognition of deferred tax assets in previous periods was based on information at the time and is considered appropriate; adjustments in 2025 are in line with prudent accounting principles.

Regarding related-party transactions and fund flows, Yashi Chuangneng states that it has 27 related lawsuits, including disputes with Zhongcai Investment Group’s commercial factoring, Hangzhou Yingjiang Enterprise Management Consulting’s private lending, Shanghai Dingzhi Xin Trading’s pawn disputes, Shanghai Dingqie Quan Trading’s pawn disputes, and 23 employee stock ownership plan disputes. Among these, two cases involve the company providing pledges or guarantees as a controlling shareholder, actual controller, or related party. The company also disclosed its fund lending situation.

Editor: Wang Lihong