Jiahe Technology (920392) held a 2025 annual performance briefing to elaborate on the reasons for revenue growth without profit increase and future growth points

Kunshan Jiahe Paper Products Technology Co., Ltd. held a performance briefing on May 22nd via online remote means. The company's chairman Mr. Dong Hongjiang, general manager Mr. Chen Yuchuan, board secretary Mr. Duan Xiaoyong, financial head Mr. Jiang Tongdong, and sponsor representative Mr. Cao Yu attended and answered questions of concern to investors. Regarding the reasons for the year-on-year increase in operating income but a decrease in net profit for the year 2025, the company stated: "The operating income for 2025 is 738 million yuan, an increase of 13.74% compared to the same period last year, mainly due to the company acquiring control of Vietnam Lisheng in April 2024 and including it in the consolidation from May, whereas the previous year only included 8 months of income. The net profit attributable to shareholders of the listed company is 20.5538 million yuan, a decrease of 39.25% compared to the same period last year, mainly due to: (1) In April 2024, when the company completed the acquisition of Vietnam Lisheng and obtained control, it generated a one-time gain of 10.3974 million yuan from 'the investment cost of acquiring the subsidiary being less than the fair value of identifiable net assets,' which did not occur in this period; (2) The government subsidies received in this period were less than those in the same period last year. During the reporting period, the net profit attributable to shareholders of the listed company, after deducting non-recurring gains and losses, was 19.9672 million yuan, an increase of 2.68% compared to the same period last year." Regarding future performance growth points, the company outlook includes: "First, combining deep cultivation of existing customers with the expansion of new markets; Second, the wholly-owned subsidiary Guangde Jialian Packaging Technology Co., Ltd. will gradually release production capacity as project construction progresses, which will become a new source of growth for domestic business; Third, continuous technological innovation; Fourth, in terms of overseas market layout, the full-year consolidation due to the acquisition of Vietnam Liwei in 2025 will drive a year-on-year increase in operating income of 13.74%. In the future, the company will rely on the existing Vietnam base to continue deepening the Southeast Asian market it has covered, in line with the overseas needs of downstream customers, and steadily promote the coordinated development of domestic and overseas businesses; Fifth, benefiting from the support of green packaging industry policies." In the face of industry competition, the company disclosed its core competitiveness and differentiation strategy: "The company has long served well-known domestic and international brand customers such as Walmart, Home Depot, Lowe's, Target, Best Buy, and LEGO, and has been awarded the 'PARTNER OF THE YEAR' evaluation by Home Depot for five consecutive years; "Through a one-stop service system of 'R&D design - customized production - testing and distribution - after-sales service'; "The company insists on independent R&D, continuously tackling technical challenges in lightweight materials, high-strength structures, and color management; "The company continuously optimizes ERP, MES, and other systems, cooperating with Huawei Cloud to achieve data cloud migration; "In 2024, the company completed the acquisition of 26% equity in Vietnam Lisheng, incorporating it into the consolidated financial statements, beginning to form a business pattern of domestic and overseas synergy." Regarding the significant increase in net cash flow from operating activities for the year 2025, the company stated: "The net cash flow from operating activities for 2025 is 47.5423 million yuan, an increase of 19.1425 million yuan compared to the same period last year, with an increase rate of 67.40%, mainly due to the increase in operating income and cash received from sales of goods." Regarding the fundraising project "Guangde Jialian Packaging Technology Co., Ltd. Paper Products Project, Flexo Printing Project" progress, the company stated: "The construction and acceptance of part of the factory (24,228.19 square meters) have been completed, and this part of the factory was put into production in October 2023. In 2025, Guangde Jialian achieved main business revenue of 105 million yuan, a year-on-year increase of 16.50%. During the reporting period, all raised funds have been fully utilized." "Currently, the project is progressing as planned, with all main engineering completed and the main structure topped out. The focus of subsequent work is on indoor decoration, installation of electromechanical equipment, and production equipment." Regarding the integration effects of the acquisition of Vietnam Lisheng, the company stated: "The acquisition of Vietnam Lisheng is an important step in the company's overseas layout, and it has basically achieved the strategic expectations of expanding business growth space. 2025 will be the first complete year for this subsidiary to be included in the consolidated financial statements, which has made a positive contribution to the overall revenue growth of the company and successfully entered the LEGO supply chain system, with related orders gradually being realized." The synergy effects are reflected in four aspects: sharing of market and customer resources, collaboration in business operations and management systems, mutual access to technology and R&D resources, and coordination of production capacity and orders. The company stated, "We will continue to adhere to the principles of focusing on the main business and controllable risks, and prudently assess acquisition opportunities that align with the company's long-term development strategy." Regarding cost control and lean operations, the company introduced: "We have established a supply chain operation mechanism centered on dynamic demand control, continuously promoting the standardization of production processes and closed-loop management of quality control, and conducting comprehensive transportation performance testing through an ISTA-certified laboratory to strengthen quality control throughout the process." Regarding R&D investment, the company disclosed: "In 2025, the total R&D investment of the company will be 16.6352 million yuan, accounting for 2.25% of operating revenue." "During the reporting period, the company held 36 utility model patents, 3 invention patents, and 4 software copyrights." Future R&D will focus on optimizing digital management systems, strengthening R&D collaboration with Vietnam Lisheng, and advancing lightweight packaging and high-strength material applications. Regarding the reasons for increased revenue but decreased profit in the first quarter of 2026, the company stated: "The operating revenue for the first quarter of 2026 was 178 million yuan, a year-on-year increase of 13.99%, while the net profit attributable to shareholders of the listed company was 2.7668 million yuan, a decrease of 46.74% compared to the same period last year." The main reasons are the rise in raw material prices and market competition leading to a year-on-year decline in gross profit margin, increased sales expenses, and increased credit impairment losses. The company is actively promoting measures to improve cost transmission mechanism negotiations, accelerating the capacity ramp-up of the Guangde factory, and optimizing product structure. The company also reminded, "If raw material prices continue to rise or market competition intensifies, the company's gross profit margin may still be under pressure." According to Wall Street Finance, the company's main business is the R&D, design, production, and sales of paper packaging and display products. The company provides customers with comprehensive packaging and display solutions, which can be customized and designed according to customer needs, offering refined services