On January 19th, Minfeng Special Paper (600235.SH), known as the "first listed company in specialty paper," released its earnings forecast, stating that it expects to achieve a net profit attributable to the parent company of approximately 15.7 million yuan in 2025, a year-on-year decrease of 78%; and a net profit attributable to the parent company excluding non-recurring items of approximately 6 million yuan, a year-on-year decrease of 92%.
Regarding the main reasons for the expected decrease in earnings, Minfeng Special Paper stated that firstly, the company's PM20 and PM22 filters ceased operation in 2024, resulting in no production in 2025. Secondly, the company's Nanhu plant completely ceased production at the end of June 2025, leading to no production in the second half of 2025. Although the company's Haiyan plant's Phase I and Phase II projects officially commenced production at the end of March and June 2025 respectively, capacity is still in the ramp-up phase, resulting in a year-on-year decrease in overall production and sales, and consequently a year-on-year decrease in operating revenue and operating profit for the current period.
Regarding when the Haiyan plant will reach full production capacity, relevant staff stated that although the specific commissioning time is difficult to determine, the company is making every effort to advance the process, and all aspects of work are proceeding normally.
It's worth noting that after the Nanhu plant ceased production, Minfeng Special Paper actively sought buyers for the unused equipment and other assets. However, from October to November 2025, it listed the assets twice through public announcements on the Jiaxing Property Rights Exchange, lowering the asking price from 170 million yuan to 153 million yuan (a 10% discount), but ultimately failed to attract any bidders.
Therefore, Minfeng Special Paper chose a different platform. Last December, it stated on its investor relations platform that it intended to auction the aforementioned assets again through Alibaba's asset auction platform.
A search on Alibaba's asset platform revealed that the unused equipment will be auctioned at 10:00 AM on January 21st, with a starting price of 170 million yuan. The deadline for submitting bidder information is 3:00 PM on January 20th, but as of press time, no one has registered.
However, besides the decline in production and sales leading to a double drop in revenue and operating profit, intense competition in the paper industry has also impacted Minfeng Special Paper's performance. "Due to intense market competition for the company's main products, the selling price of the main products declined year-on-year during the reporting period," Minfeng Special Paper stated in its announcement.
According to the investor relations interaction platform, when investors inquired about the types of industrial supporting papers Minfeng Special Paper produces, the company stated that its main products currently include tobacco industry paper series, transparent paper series, glassine paper series, and coated paper series.
In recent years, the Chinese paper industry has faced increasingly fierce competition under the dual pressures of weak demand and high costs, with price wars becoming a common industry problem. Faced with persistently weak demand from downstream packaging and printing companies, enterprises are willing to push the selling price of finished paper down to near the cost line in order to seize limited orders. Furthermore, the uncertainty of commodity supply and price fluctuations further increases the market volatility risks faced by enterprises. Competition in niche markets such as tobacco paper, transparent paper, and coated paper is also intensifying.
According to its periodic reports, in the first half of 2025, Minfeng Special Paper's revenue from its industrial paper manufacturing business reached 274 million yuan, accounting for 45.51% of total revenue, becoming the company's main source of income. However, its operating costs were as high as 253 million yuan, accounting for 50.58% of total costs, and its gross profit margin decreased from 9.00% in 2024 to 7.63%.
While the gross profit margin of the company's main paper manufacturing business declined, Minfeng Special Paper's inventory increased, from 358 million yuan at the end of 2024 to 425 million yuan at the end of the third quarter of 2025, an increase of approximately 18.72%.
At the same time, Minfeng Special Paper's cash flow also came under pressure. According to its Q3 2025 financial report, due to a decrease in cash received from sales of goods and services and other cash received from operating activities, its net cash flow from operating activities in the first three quarters of 2025 was RMB 27.2471 million, a year-on-year decrease of 81.82%. However, looking at Q3 2025 alone, this figure was RMB 10.7871 million, a year-on-year decrease of 64.73%, showing some improvement compared to the first half of the year. Regarding assets and liabilities, as of the end of Q3 2025, although Minfeng Special Paper's non-current liabilities due within one year decreased compared to the end of 2024, they still amounted to RMB 146 million; while its cash and cash equivalents had plummeted by 38.72% to RMB 109 million during the same period, indicating continued debt repayment pressure.
However, to promote urban renewal in Jiaxing City, in September 2025, Minfeng Special Paper announced that it had signed a "Framework Agreement on Compensation for the Expropriation of Houses on State-Owned Land." The buildings on the site of the company's Nanhu plant, which had completely ceased production, were within the proposed expropriation area. According to the agreement, Minfeng Special Paper would receive expropriation compensation of RMB 1.08 billion (of which RMB 8.8793 million was collected on behalf of other companies for expropriation compensation, which the company would transfer to those companies).
On November 7, 2025, Minfeng Special Paper received the first installment of expropriation compensation of RMB 130 million (of which RMB 1.0692 million was collected on behalf of other companies for expropriation compensation, which the company would transfer to those companies). As the expropriation process progresses, Minfeng Special Paper is expected to receive further compensation payments in 2027-2028.
