Over 100 Companies Disclose 20% Loss in Annual Reports, Companies with First-Time Losses Mostly Due to Transformation Challenges

AI · How should investors upgrade their screening logic to respond to market changes?

During the annual report disclosure period of listed companies, some A-share companies have delivered impressive “report cards,” while others with poor performance are also submitting their results.

According to Shanghai Petrochemical (600688.SH), which disclosed on the evening of March 18, the company turned from profit to loss last year, with revenue and net profit both declining. Its full-year net profit attributable to the parent was a loss of over 1.4 billion yuan. On the same day, Laimei Pharmaceutical (300006.SZ), which also released its annual report, continued to lose money last year, with the loss further widening.

Wind statistics show that as of March 18, a total of 144 A-share companies have disclosed their 2025 annual reports, of which 24 reported a net loss attributable to the parent last year, accounting for less than 20%. Among these companies, XinNuoWei (300765.SZ), Hefei China (603122.SH), and others reported their first annual loss.

In terms of scale, Shanghai Petrochemical has the largest loss, with more than ten companies including Junshi Biosciences-U (688180.SH) also losing over 100 million yuan. The main reason for the losses is industry cyclical downturns. Many loss-making companies are also facing cash flow “bleeding,” with some experiencing losses amid transformation pains.

Regarding the performance disclosures of loss-making companies, Tian Lihui, director of the Financial Development Research Institute at Nankai University, told First Financial that this phenomenon reflects profound changes in the A-share ecosystem. The proactive disclosure by loss-making companies is a sign of market rationalization. “Affected by industry cycles and other factors, some sectors are in deep adjustment periods, and companies choose to release financial pressures early, which is also a cautious expectation management behavior,” he said.

Shanghai Petrochemical lost over 1.4 billion last year

The annual report shows that last year, Shanghai Petrochemical achieved revenue of 75.563 billion yuan, down 13.28% year-on-year, with a net loss attributable to the parent of 1.433 billion yuan, down 552.64% year-on-year.

Regarding the loss, the company stated that in 2025, international crude oil prices fluctuated downward, and the overall Chinese petrochemical industry showed a weak trend, with most product prices under pressure. During the period, the company’s refining units underwent major repairs, leading to decreased refining output and profits.

Shanghai Petrochemical’s operating cash flow also declined significantly. It was disclosed that the company’s net cash flow from operating activities in 2025 was 1.993 billion yuan, a sharp decrease of 74.25% from 7.74 billion yuan in 2024. The company explained that cash received from sales of goods and services decreased compared to last year.

This also means that Shanghai Petrochemical, after returning to profit in 2024, fell back into loss again. The annual report shows that the company suffered consecutive losses in 2022 and 2023, with net profits of -2.872 billion yuan and -1.406 billion yuan respectively. In 2024, the company reversed its loss, achieving a net profit of 317 million yuan.

Another recently disclosed A-share company, Laimei Pharmaceutical, also recorded a loss last year, with the loss further expanding.

The report shows that in 2025, Laimei Pharmaceutical achieved revenue of 776 million yuan, down 2.5% year-on-year, with a net loss of 135 million yuan, down 53.42% year-on-year.

Laimei Pharmaceutical explained that during the reporting period, some of its products’ sales volume and prices declined year-on-year, leading to a decrease in operating income. The company also continued R&D investments to enrich its product pipeline and made provisions for intangible asset impairments, which affected operating profit.

Laimei Pharmaceutical has been losing money for seven consecutive years. From 2019 to 2025, its cumulative net loss attributable to the parent exceeded 800 million yuan.

It is worth noting that the company also faces cash flow “losses.” In 2025, net cash flow from operating activities was 26.0378 million yuan, a significant decrease of 85.93% from 185 million yuan in 2024, mainly due to reduced cash received from sales of goods, services, and other operating cash flows.

Many A-share companies report their first annual loss after listing

Including the above companies, among the A-share companies that have disclosed their 2025 annual reports, 24 reported losses last year, with more than half (14 companies) losing over 100 million yuan.

Shanghai Petrochemical is currently the only company with a loss exceeding 1 billion yuan last year. Other large-scale losses include Junshi Biosciences-U and *ST JAWO (300268.SZ), with net losses of 875 million yuan and 427 million yuan respectively. Additionally, companies like Guanhao High-Tech (600433.SH), XinNuoWei, and Yueyang Forest Paper (600963.SH) also lost over 200 million yuan last year.

The reporter notes that among these loss-making companies, many experienced their first loss after listing in 2025, including Jinhe Commercial Management (603682.SH), Hefei China, and XinNuoWei.

From the reasons for losses, some companies are caught in the pains of transformation and performance pressure.

XinNuoWei, which is shifting to innovative drugs, experienced its first annual report loss in six years since listing. The company’s revenue increased but profit did not, with net profit dropping over 500%.

The annual report shows that XinNuoWei’s revenue last year was 2.158 billion yuan, up 8.93% year-on-year, but its net loss was 241 million yuan, a sharp decline of 548.8%.

Regarding the performance loss, XinNuoWei cited three reasons: increased R&D investment, with R&D expenses rising over 20%; market factors leading to lower gross margins and profitability of its caffeine products; and the acquisition of minority stakes in Jushui Biotech, which impacted net profit through its current gains and losses.

Data shows that XinNuoWei listed on the ChiNext in 2019 and was renamed in 2023 as Shiyao Innovation Pharmaceutical Co., Ltd. In recent years, the company has been seeking to transform into the innovative drug sector, with its controlling shareholder, Shiyao Group, integrating its innovative drug company Jushui Biotech into XinNuoWei.

In 2025, XinNuoWei acquired a 29% minority stake in Jushui Biotech for 1.1 billion yuan, increasing its shareholding from 51% to 80%.

Some losses are influenced by industry factors.

Paper companies Yueyang Forest Paper and Guanhao High-Tech both experienced their first losses last year. Yueyang Forest Paper’s revenue increased but profit declined, with revenue of 8.665 billion yuan, up 6.78%, but net loss of 235 million yuan, down 236.66%. Guanhao High-Tech’s revenue and net profit both declined, with revenue of 7.152 billion yuan and a net loss of 304 million yuan, down 5.75% and 265.29%, respectively.

Over the past year, the paper industry faced supply-demand imbalance and cost pressures. Yueyang Forest Paper attributed its losses to increased capacity expansion among large paper companies and intensified market competition.

Regarding the overall performance of A-share companies in 2025, Tian Lihui predicts a pattern of “pressure on total volume, bright spots in structure.”

He further analyzed that, affected by macroeconomic transformation and industry cleanup, the overall profit growth of A-share companies will face challenges. “Particularly, we need to be alert to the impact of asset impairments on financial statements,” he said.

Tian Lihui also pointed out that there are bright spots, such as high-end manufacturing representing new productive forces, rare resources resonating with global industries, and the hard-tech sector aligned with independent and controllable development, which show strong structural prosperity.

“Traditional industries like real estate and photovoltaics are still in adjustment periods,” he added.

Regarding the continuous disclosure of performance by loss-making companies, Tian Lihui believes that the concentrated release of negative information essentially reduces subsequent market tail risks. For investors, screening logic must also be upgraded accordingly.

“Look beyond performance to assess quality, focusing on the sustainability of profitability and cash flow content. Also, stay attuned to industry cycles, concentrating on high-growth sectors that have proven resilience. Additionally, use disclosures to evaluate governance, viewing a company’s transparency attitude as a window into its governance level,” he said.

(Article from First Financial)