Investment amount plummeted by over 560 million yuan! Yufu Co., Ltd.'s 35,000-ton technological upgrade project has been significantly scaled back, with over 20,000 tons of capacity halted before construction even began.

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Reporter: Peng Fei | Editor: Dong Xing Sheng

On the evening of March 26, Youfu Co., Ltd. (SZ002427, stock price 6.26 yuan, market value 6.169 billion yuan) released a notice on changes to an investment project. The notice indicated that Youfu Co., Ltd. decided to make significant adjustments to its core expansion project, which has been in development for nearly three years—“the annual production of 35,000 tons of rubber skeleton new material green intelligent production technology transformation project.”

The reporter from the Daily Economic News noted that the total production capacity target of this project has been changed from the original plan of 35,000 tons to 13,000 tons, with over 60% of the originally planned capacity being terminated. Meanwhile, the total investment amount for the project has also decreased from the initial 784 million yuan to 220 million yuan.

In response, Youfu Co., Ltd. stated that the halt of over 20,000 tons of capacity before construction is due to multiple internal and external pressures, including an overall industry surplus, continuously falling market prices, and factors such as unilateralism in international trade, tariff barriers, and insufficient project electricity load.

On April 25, 2023, Youfu Co., Ltd. held the nineteenth meeting of the fifth board of directors, where it approved the proposal for the investment and construction of a new project. According to the company’s development strategy, Youfu Co., Ltd. plans to build a new project in the Nanjing District of Huzhou City and the Youfu Industrial Park, “the annual production of 35,000 tons of rubber skeleton new material green intelligent production technology transformation project.”

At that time, Youfu Co., Ltd. had high hopes for this project. “The investment in the new project is aimed at developing new products and expanding the production scale of existing products, thereby increasing the company’s market share. Seizing new market development opportunities is beneficial for promoting the company’s sustainable development and enhancing its market competitiveness.”

According to the initial plan, the total investment for the project is 784 million yuan, with a construction period estimated to be between 21 and 33 months. Youfu Co., Ltd. believes that if the project can be successfully implemented, “it will bring new profit growth points to the company and have a positive impact on the company’s production and operations.”

However, nearly three years later, this expansion project has encountered significant changes. According to the latest announcement, the company held the eleventh meeting of the sixth board of directors on March 26, 2026, and decided to change the original plan to “the annual production of 13,000 tons of rubber skeleton new material green intelligent production technology transformation project.” After the change, the expected total investment for the project has been reduced to 220 million yuan.

From the construction progress perspective, the over 20,000 tons of capacity is actually in a “halted before construction” state. Youfu Co., Ltd. disclosed that in the originally planned annual production of 29,000 tons rubber skeleton new material green intelligent production technology transformation project, apart from the annual production of 10,000 tons of tire fabric that has been tested and put into use, and the annual production of 3,000 tons of dipping line rope project that is in the process of gradual installation and debugging, the remaining annual production of 16,000 tons of dipping tire fabric construction content “has not yet entered the construction stage.” Additionally, another annual production of 6,000 tons of dipping canvas construction content is also “currently has not yet entered the construction stage.”

Ultimately, Youfu Co., Ltd. decided to directly terminate the construction of this part of the annual production of 16,000 tons of dipping tire fabric and 6,000 tons of dipping canvas (totaling 22,000 tons of capacity) that have not yet begun construction.

From the originally planned total investment of 784 million yuan reduced to 220 million yuan, and from 35,000 tons total production capacity reduced to 13,000 tons, Youfu Co., Ltd.'s significant reduction in the core technology transformation project is not an impulsive decision, but rather a profound reflection of the drastic changes in the industry environment in recent years.

Regarding the reasons for terminating part of the capacity construction, Youfu Co., Ltd. admitted: “Due to the current overall industry surplus, continuously falling market prices, coupled with internal and external factors such as unilateralism in international trade, tariff barriers, and insufficient project electricity load, the company decided to terminate the implementation.”

As early as the project initiation in 2023, Youfu Co., Ltd. had warned of related risks, pointing out that the future profitability of the project is influenced by external environmental factors such as industry and market dynamics, and fluctuations in the prices of raw materials and products will directly affect the project’s profitability.

Although a substantial amount of unbuilt capacity has been decisively cut, Youfu Co., Ltd. particularly emphasized in the announcement: “This project change is a prudent decision made based on changes in market conditions and the actual situation of the company, and it will not have a significant adverse impact on the company’s production and operations.”

The reporter noted that according to the company’s previously disclosed “2025 Performance Forecast,” Youfu Co., Ltd. is expected to achieve a turnaround in performance in 2025, with the net profit attributable to the parent company expected to reach 26 million to 39 million yuan, marking a “profit-making situation.” In the same period last year, the company’s net profit data was -26.9357 million yuan.

Regarding why it can achieve a turnaround from loss to profit, Youfu Co., Ltd. explained: “During the reporting period, the company focused on its main business, adjusted product structure and business strategy, deeply promoted cost reduction and efficiency improvement, and enhanced product profitability, resulting in an overall gross profit margin increase compared to the same period last year.”

It is evident that the decisive halt of the 22,000 tons expansion project is an important measure under Youfu Co., Ltd.'s implementation of the general policy of “adjusting product structure and business strategy” and “deeply promoting cost reduction and efficiency improvement.”

Cover image source: Daily Economic News Media Library

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