Ningxia Tycoon Dang Yanbao Expands Production Against the Trend, Baofeng Energy Earns Over 10 Billion Yuan Last Year, Stock Price Surges Over 70% This Year

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Ningxia billionaire Party Yobao’s leading coal chemical giant Baofeng Energy (600989.SH) has delivered a countercyclical growth report card amid domestic capacity growth outpacing demand growth.

After market close on March 12, Baofeng Energy disclosed its 2025 annual report, showing that last year the company achieved operating revenue of 48.038 billion yuan, a year-on-year increase of 45.64%; net profit attributable to shareholders was 11.35 billion yuan, a year-on-year increase of 79.09%.

Shidai Finance noted that approximately 80% of Baofeng Energy’s revenue comes from olefin products, including main products such as polyethylene (PE), polypropylene (PP), and ethylene-vinyl acetate copolymer (EVA). By 2025, the company’s Inner Mongolia base’s 3 million tons/year coal-based olefin project reached full production, with olefin capacity reaching 5.2 million tons/year, making it the largest single plant of its kind globally and ranking first in China’s coal-based olefin industry.

However, Baofeng Energy’s expansion coincides with a cyclical downturn in the industry.

“By 2025, new polyethylene capacity will reach 5.43 million tons, with total capacity hitting 41.14 million tons; polypropylene capacity will reach 49.165 million tons/year, with a cumulative expansion of 15.705 million tons over five years,” said Fu Hongjian, an analyst at Longzhong Information specializing in polyethylene, in an interview with Shidai Finance. Due to domestic capacity growth exceeding demand growth, overall polyethylene prices in China are expected to decline in 2025. Baofeng Energy’s annual report shows that the average price decline for polyethylene and polypropylene in 2025 was about 7%.

Nevertheless, influenced by falling prices of raw materials such as crude oil and coal, the overall profit of China’s polyolefin industry rebounded year-on-year last year. Among various production routes, coal-based olefin production still maintains a significant profitability advantage over other raw material routes. With its own coal mines and integrated coal chemical industry chain, Baofeng Energy’s cost control capabilities are particularly outstanding.

From production and sales data, Baofeng Energy’s polyethylene and polypropylene output and sales doubled last year. Driven by increased capacity and falling raw material prices, revenue from olefin products and gross profit margins both increased. Last year, operating income grew by 95.19% year-on-year to 37.606 billion yuan, with gross profit margin increasing by 3.97 percentage points to 38.16%.

Entering 2026, new variables are reshaping the industry’s short-term landscape. Due to macroeconomic factors and recent tensions in Middle Eastern geopolitics, international crude oil prices have risen, leading to an upward trend in polyethylene and polypropylene prices.

Wind data shows that since the end of February, the futures and spot prices of polyethylene and polypropylene have risen sharply, with increases of about 30% year-to-date. Notably, futures prices hit a new high since December 2024 on March 12, while spot prices peaked over four years on March 9 before pulling back slightly.

Recently, Huang Aijun, secretary of the board at Baofeng Energy, told Shidai Finance that the company’s production facilities have maintained full capacity operation. “Since 2026, influenced by geopolitical conflicts, crude oil prices have rebounded significantly, increasing production costs for oil-based olefin routes and driving up polyolefin prices. Currently, the company’s olefin capacity is 5.2 million tons/year. Because the company’s production route is coal-based olefin, and coal prices have remained relatively stable this year, the unit production cost of polyolefin products has not fluctuated much, and revenue and profit have benefited from rising polyolefin prices.”

However, a deeper impact lies in the supply chain. Fu Hongjian pointed out that China’s annual imports of polyethylene exceed 10 million tons, with 13.407 million tons imported in 2025, nearly 48% from the Middle East. As the Strait of Hormuz transportation is restricted, supplies from Iran, the UAE, Qatar, Kuwait, and other countries have been significantly impacted.

“Besides the obstacle to polyethylene imports, crude oil imports are also affected. Some domestic polyethylene producers worry about future oil supply shortages and have taken measures to reduce production, which may suppress domestic polyethylene output in the future and further support prices,” Fu Hongjian further analyzed.

Facing this market opportunity, Baofeng Energy is also considering broader market deployment. Huang Aijun told Shidai Finance that currently, the company’s products are mainly sold domestically, with a small proportion exported. If geopolitical conflicts intensify and overseas polyolefin prices surge, the company will consider increasing exports.

However, according to the annual report, last year Baofeng Energy’s overseas revenue was 18.8022 million yuan, a 90.55% increase year-on-year, but it accounted for only 0.04% of total revenue, indicating that expanding overseas markets still has a long way to go.

Looking ahead, Fu Hongjian said that even if the Middle Eastern geopolitical situation eases in April or May and supplies resume, shipments to China are likely to be concentrated in June or July. Meanwhile, in the second half of the year, China will enter a new round of capacity commissioning for polyethylene, increasing market supply pressure and likely causing prices to fall.

Nevertheless, the secondary market has already responded positively to Baofeng Energy’s resilience and short-term industry prospects. With a sharp rise in polyolefin prices this year and the company’s cost advantages, Baofeng Energy’s stock price has also strengthened, with an increase of over 70% so far this year. As of the close on March 12, Baofeng Energy’s stock price was 33.73 yuan per share.