The stock price continues to decline, and Xinqianglian's net operating cash flow in 2025 is projected to decrease by over 90%.

On March 27, the stock price of Xinqianglian opened lower. Since reaching a temporary high on March 13, Xinqianglian’s stock price has continued to weaken, with only 1 day of increase out of the 10 trading days up to March 26, and the remaining 9 trading days all showing declines. As of today’s noon closing, Xinqianglian’s stock price is reported at 44.66 yuan/share, with a cumulative decline of over 16% since March 13.

Image source: Wind

On the evening of March 26, Xinqianglian released its annual report for 2025. In 2025, the company reported an operating revenue of 4.628 billion yuan, a year-on-year increase of 57.11%; the net profit attributable to shareholders of the listed company, after deducting non-recurring gains and losses, was 712 million yuan, a year-on-year increase of 377.56%.

However, following these figures, issues such as negative cash flow from operating activities for three consecutive quarters, a customer concentration exceeding 70%, underperforming fundraising projects, and share reductions by major shareholders cannot be ignored.

Cash flow from operating activities dropped by more than 90%

The annual report shows that in 2025, Xinqianglian’s net cash flow from operating activities was only 18.3844 million yuan, a year-on-year decrease of 95.86%.

In fact, in 2025, Xinqianglian’s net cash flow from operating activities was in a net outflow state for multiple quarters: a net outflow of 3.9925 million yuan in the second quarter, a net outflow of 17.4325 million yuan in the third quarter, and a net outflow of 60.989 million yuan in the fourth quarter; only the first quarter achieved a net inflow of 101 million yuan before facing continuous pressure. The company explained that this was mainly due to an increase in cash paid for purchasing goods and receiving services.

At the same time, several business segments of the company experienced a significant increase in inventory levels. The inventory in the rotation support industry at the end of the year was 5,171 units, an increase of 89.76% compared to 2,725 units at the end of the previous year; the inventory in the forging industry was 14,000 tons, an increase of 184.77% compared to 4,926.78 tons at the end of the previous year; the inventory in the rolling body industry was 1,521.52 tons, an increase of 103.96% compared to 745.98 tons at the end of the previous year.

The annual report also shows that the company’s inventory in 2025 was 1.288 billion yuan, with the proportion of total assets rising from 8.36% at the beginning of 2025 to 11.03% at the end of 2025. Xinqianglian explained this was mainly due to increased sales, production capacity improvements, and increased raw material stocking.

High customer concentration is one of the characteristics of Xinqianglian. In 2025, the top five customers contributed a total sales revenue of 3.462 billion yuan, accounting for 74.80% of the annual total sales. Among them, the largest customer had a sales revenue of 1.03 billion yuan, accounting for 22.27%; the second-largest customer had a sales revenue of 929 million yuan, accounting for 20.08%; and the third-largest customer had a sales revenue of 792 million yuan, accounting for 17.11%, with the combined sales proportion of just the top three customers close to 60%.

The annual report shows that the company’s accounts receivable reached 1.544 billion yuan in 2025, accounting for 13.22% of total assets. The operating revenue from wind power products was 3.580 billion yuan, accounting for 77.36% of total operating revenue.

Xinqianglian mentioned in its company risk section that the large accounts receivable is one of the characteristics of wind power equipment manufacturing enterprises, mainly due to the large amount and low turnover rate of accounts receivable in the downstream wind power complete machine industry. The company stated that it will continue to strengthen accounts receivable management, closely monitor customer operating conditions, improve risk prevention mechanisms, actively take effective measures to ensure cash flow, reduce bad debt risks, and maintain overall business stability.

Fundraising projects did not meet expectations

Share reduction by major shareholders

The annual report shows that in 2025, the benefits of the company’s fundraising projects did not meet expectations.

In 2022, Xinqianglian raised a net amount of 1.195 billion yuan through the issuance of convertible bonds, of which the core fundraising project “Gearbox Bearings and Precision Components Project” promised an investment of 865 million yuan. As of the end of 2025, a total of 874 million yuan had been invested, achieving an investment progress of 101.07%, and it is expected to reach the predetermined usable state by June 30, 2025—this is already a result after a delay. On December 24, 2024, the company approved a proposal for the delay of certain fundraising projects, adjusting the date for the “Gearbox Bearings and Precision Components Project” to reach the predetermined usable state from December 31, 2024, to June 30, 2025.

However, during the reporting period, the project achieved a benefit of -8.2131 million yuan, which did not meet expectations. The annual report explains that this was mainly due to the time required for equipment debugging, trial operation, and acceptance work, with the final payment and warranty money yet to be paid, and that after production, the equipment debugging and run-in period was long, requiring time accumulation for production line stability and efficiency improvements; as of the end of the year, capacity had not been fully released.

Additionally, the share reduction actions of the company’s major shareholders are noteworthy. On August 22, 2025, the company’s controlling shareholder and actual controllers, Xiao Zhengqiang and Xiao Gaoqiang, issued a pre-disclosure announcement regarding their share reduction plans, intending to reduce their holdings of no more than 2.3385 million shares and 1.4705 million shares through centralized bidding within three months after 15 trading days, and to reduce their holdings of no more than 4.677 million shares and 2.9411 million shares through block trades. After the completion of the reduction plan, the two will hold a total of 1.188 billion shares in the company, reducing their combined ownership percentage from 34.18% to 28.69%. The company stated in the annual report that after this reduction, there has been no change in the controlling shareholders and actual controllers, and it has not adversely affected the company’s governance structure and ongoing operations.