Ruankong Co., Ltd. 2025 Annual Report Analysis: Revenue Increased by 15.95%, Operating Cash Flow Dropped by 59.82%

Core Profitability Indicators Analysis

Operating Revenue: Scale Expansion, Overseas Business Drives Growth

In 2025, the company achieved an operating revenue of 8.32B yuan, a year-on-year increase of 15.95%, continuing the trend of revenue scale expansion. By region, domestic revenue was 5.42B yuan, a slight decrease of 2.79% year-on-year; overseas revenue was 2.9B yuan, a significant increase of 81.22% year-on-year, with overseas operations becoming the main driver of revenue growth, demonstrating the effectiveness of the company’s internationalization strategy. By product, rubber new materials revenue reached 2.56B yuan, a surge of 71.07%; rubber equipment system revenue was 1.03B yuan, up 19.85%, with product structure optimization contributing to revenue growth.

Net Profit and Non-Recurring Net Profit: Profit Decline, Limited Impact from Non-Operating Items

In 2025, net profit attributable to shareholders of the listed company was 403 million yuan, down 20.36% year-on-year; non-recurring net profit was 351 million yuan, down 21.85%. Profit indicators showed a clear decline. Non-recurring gains and losses totaled 52.14 million yuan in 2025, slightly less than 57.07 million yuan in 2024. The decline in non-recurring net profit was greater than that of net profit, indicating that the decline in core business profitability is the main reason for the overall profit decrease.

Earnings Per Share: Decline in tandem with Profit

In 2025, basic earnings per share (EPS) was 0.3952 yuan/share, down 20.80% year-on-year; non-recurring EPS was 0.3428 yuan/share (non-recurring net profit divided by total shares), down 21.85%. The decline in EPS is consistent with the decrease in net profit and non-recurring net profit, reflecting that the company’s earnings per share have decreased along with overall profitability.

Cost Control Analysis

Total Expenses: Slight Overall Decrease

In 2025, the company’s total operating expenses were 368M yuan, slightly lower than 11.29B yuan in 2024, maintaining relatively stable expense control. Selling expenses and R&D expenses saw slight increases, while management and financial expenses decreased, showing differentiated changes in expense structure.

Selling Expenses: Slight Growth with Revenue Expansion

Selling expenses increased by 6.96%, mainly due to the expansion of revenue, especially from overseas markets, leading to increased marketing and customer service costs. The selling expense ratio was 1.66%, slightly lower than 1.80% in 2024, indicating that the growth rate of selling expenses was lower than revenue growth, reflecting improved expense management efficiency.

Management Expenses: Shrinking Scale, Effective Control

Management expenses decreased by 5.75%, mainly due to optimized management processes and reduced unnecessary expenditures. The management expense ratio was 5.46%, significantly lower than 6.72% in 2024, demonstrating effective expense control.

Financial Expenses: Significant Drop, Mainly Due to Increased Interest Income

Financial expenses fell sharply by 49.96%, mainly because of increased interest income from deposits. Interest income was 50.47 million yuan in 2025, up 33.83% from 37.71 million yuan in 2024; interest expenses were 57.57 million yuan, down 15.13% from 67.83 million yuan. The combined effect of higher interest income and lower interest expenses drove the substantial decrease in financial costs.

R&D Expenses: Continued Investment, Slight Decline in Proportion

R&D expenses increased by 4.36%, reflecting ongoing investment mainly in rubber equipment systems and new rubber materials for technological development and upgrades. The R&D expense ratio was 5.10%, slightly lower than 5.66% in 2024, as revenue growth outpaced R&D expenditure growth.

R&D Personnel Overview

In 2025, R&D personnel numbered 1,065, a 4.82% increase from 1,016 in 2024; R&D staff accounted for 21.73%, slightly lower than 22.18% in 2024. Among them, undergraduate and above R&D staff totaled 715 (552 + 163), an 11.37% increase from 642 (485 + 157) in 2024. The educational level of R&D personnel has improved significantly, supporting enhanced technological R&D capabilities.

Cash Flow Overview

Total Cash Flow: Significant Net Inflow

In 2025, the company’s net increase in cash and cash equivalents was 586 million yuan, a substantial turnaround from a net decrease of 29 million yuan in 2024, mainly driven by increased net cash flows from investing and financing activities.

Operating Activities Cash Flow: Sharp Decline

Net cash flow from operating activities was 3.68 billion yuan, down 59.82% year-on-year, mainly due to increased procurement payments driven by expanded business scale. Total cash outflows from operating activities were 7.4B yuan, up 18.37%, with payments for goods and services at 107M yuan, up 26.54%. The growth in cash outflows far exceeded the increase in cash inflows (11.52%), leading to a significant decline in net cash from operating activities.

Investing Activities Cash Flow: Turned from Outflow to Inflow

Net cash flow from investing activities was 1.07 billion yuan, a turnaround from -6.22 billion yuan in 2024, an increase of 117.20%, mainly due to increased investment recoveries. Total cash inflows from investing activities were 622M yuan, up 30.19%, with cash received from investment recoveries at 3.51B yuan, up 30.70%. Outflows were 119M yuan, up 2.90%. The higher recovery of investments compared to new investments caused cash flow from investing activities to shift from net outflow to net inflow.

Financing Activities Cash Flow: Turned from Outflow to Inflow

Net cash flow from financing activities was 1.19 billion yuan, reversing from -3.24 billion yuan in 2024, an increase of 136.89%, mainly due to reduced debt repayments. Total cash outflows for financing were 324M yuan, down 41.02%, with debt repayments at 961 million yuan, down 47.27%. Inflows were 1.35M yuan, down 22.60%. The larger reduction in debt repayment compared to decline in financing inflows caused cash flow from financing activities to shift from net outflow to net inflow.

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Potential Risks Analysis

Industry Cycle Risk

The company’s rubber equipment and new rubber materials industries are highly correlated with the automotive and tire industries, which are significantly affected by macroeconomic cycles. If macroeconomic downturns occur, leading to decreased demand for automobiles and reduced investment willingness of tire companies, orders for rubber equipment systems may decline; similarly, demand for rubber new materials will decrease with tire industry demand, adversely impacting the company’s performance.

Market Competition Risk

The rubber equipment industry faces fierce competition with many domestic and international competitors. If the company cannot continuously improve technology, product quality, and service capabilities, market share may decline. The rubber new materials industry also faces domestic competition; failure to maintain technological leadership could pressure product prices and gross margins.

Raw Material Price Fluctuation Risk

The company’s raw materials mainly include steel, rubber, and chemical raw materials, whose prices are highly volatile due to macroeconomic factors and supply-demand dynamics. Significant increases in raw material prices, if not matched by product price increases, will raise production costs and reduce profitability.

Overseas Business Risks

As overseas business proportion increases, risks such as exchange rate fluctuations, geopolitical issues, and trade barriers also rise. Exchange rate volatility may lead to exchange losses when converting overseas revenues and profits into RMB; geopolitical conflicts and trade barriers could affect overseas expansion and order fulfillment.

Executive and Director Compensation Analysis

Chairman’s Compensation

Chairman Guan Bingzheng received a pre-tax total compensation of 1.26M yuan during the reporting period, up 6.75% from 1.35M yuan in 2024, consistent with the company’s revenue growth.

General Manager’s Compensation

The company’s president, Guan Bingzheng, also serves as chairman, with pre-tax compensation of 1.345 million yuan, same as the chairman.

Vice Presidents’ Compensation

Vice presidents Yang Huili, Xiang Kunhong, Liu Feng, Wu Shoutao, Wang Zhiming, Ding Zentang, and Yu Yihang received pre-tax total compensations of 995.1K, 998K, 928K, 994K, 957.6K, 855.7K, and 786.2K yuan respectively. Their compensation ranges from 786.2K to 998K yuan, generally aligned with responsibilities and performance contributions.

Chief Financial Officer’s Compensation

CFO Zhang Yao received a pre-tax total of 936k yuan, up 8.84% from 860k yuan in 2024, slightly higher than the company’s revenue growth rate.

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