Yunnan Energy Investment 2025 Annual Report Analysis: Revenue down 27.75% year-over-year, net profit attributable to parent down 64.99% year-over-year

Interpretation of Operating Income

In 2025, Yunnan Energy Investment achieved operating income of 2.495 billion yuan, a year-on-year decrease of 27.75%. Looking at the business segments:

• Salt and Nitrate Products: Revenue was 1.11 billion yuan, down 7.76% year-on-year, mainly affected by the downstream soda ash industry’s performance and a decrease in industrial salt product sales prices compared to last year.
• Electricity: Revenue was 899 million yuan, down 24.47% year-on-year, primarily due to the average precipitation in Yunnan Province being the second highest since 1961, leading to reduced wind availability. The average wind speed at the company’s wind farms decreased by 0.86 m/s compared to the previous year. Although the installed capacity of new energy increased year-on-year, electricity generation dropped from 3.814 billion kWh last year to 3.359 billion kWh, compounded by wind and solar curtailment and declining market transaction prices.
• Natural Gas: Revenue was 408 million yuan, down 57.99% year-on-year, due to the company completing a capital increase in the equity of its holding subsidiary, Yunnan Natural Gas Co., Ltd., to Yunnan Shale Gas Exploration and Development Co., Ltd. The natural gas company has not been included in the company’s consolidated financial statements since April 30, 2025.

Interpretation of Net Profit and Deducted Net Profit

• Net Profit Attributable to Shareholders: In 2025, net profit attributable to shareholders was 236 million yuan, a year-on-year decrease of 64.99%. This was mainly impacted by the decline in the performance of the electricity segment, reduced wind availability, curtailment of wind and solar, and falling electricity prices. Additionally, with the expansion of the company’s new energy installed capacity, depreciation and other fixed costs have increased correspondingly, leading to a year-on-year decrease of 444 million yuan in net profit attributable to shareholders of the listed company in the new energy segment.
• Deducted Net Profit Attributable to Shareholders: The deducted net profit attributable to shareholders was 210 million yuan, a year-on-year decrease of 68.20%. The reasons for the change were basically consistent with those of net profit attributable to shareholders. The impact of non-recurring gains and losses on net profit was relatively small, with non-recurring gains and losses amounting to 26 million yuan in 2025, an increase from 15 million yuan in 2024, mainly due to increased income from financial products.

Interpretation of Earnings Per Share

• Basic Earnings Per Share: In 2025, basic earnings per share were 0.2566 yuan/share, down 65.00% year-on-year, which is basically consistent with the change in net profit attributable to shareholders. Since the total share capital of the company has not changed, the decline in net profit directly led to a decrease in earnings per share.
• Deducted Earnings Per Share: The deducted earnings per share were 0.2280 yuan/share (calculated based on the deducted net profit attributable to shareholders), down 68.20% year-on-year, consistent with the change in deducted net profit attributable to shareholders.

Interpretation of Expenses

In 2025, the company’s total period expenses amounted to 561.9724 million yuan, a year-on-year decrease of 33.43%, primarily because the natural gas company is no longer included in the consolidated financial statements, and the company has strengthened cost control. Looking at the expenses:

Sales Expenses

In 2025, sales expenses were 152.9328 million yuan, down 42.35% year-on-year. The main reasons are: First, the company adjusted the contract performance costs related to salt sales from the original sales expenses to be reported under the main business costs; second, the natural gas company has not been included in the company’s consolidated financial statements since April 30, 2025.

Management Expenses

In 2025, management expenses were 175.8514 million yuan, down 44.16% year-on-year. This was mainly due to the natural gas company not being included in the consolidated financial statements, along with a decrease in employee compensation during the reporting period.

Financial Expenses

In 2025, financial expenses were 155.3048 million yuan, an increase of 19.48% year-on-year. This was mainly because interest expenses on project loans were capitalized after the projects were put into operation, and as new energy projects were gradually capitalized, previously capitalized interest expenses were converted to expenses, resulting in increased financial expenses.

R&D Expenses

In 2025, R&D expenses were 7.8833 million yuan, an increase of 61.70% year-on-year. This was mainly due to increased R&D investment during the reporting period, with the company increasing its investment in projects such as the development of sodium-ion battery cathode material technology, geophysical exploration of compressed air energy storage in salt caverns, and the R&D of new functional edible salt products for blood sugar and lipid reduction.

Interpretation of R&D Personnel Situation

In 2025, the number of R&D personnel in the company was 133, a decrease of 5.00% compared to 140 in 2024; the proportion of R&D personnel was 8.53%, an increase of 1.56 percentage points from 6.97% in 2024. In terms of educational structure, the number of researchers with a master’s degree increased from 42 to 51, a growth of 21.43%; the number of R&D personnel under 30 increased from 11 to 14, a growth of 27.27%. This increase was mainly based on the principle of “people following projects,” with increases in undergraduate and personnel under 30 to match the demand of new R&D projects.

Interpretation of Cash Flow

Net Cash Flow from Operating Activities

In 2025, the net cash flow from operating activities was 1.461 billion yuan, a year-on-year increase of 17.44%. This was mainly because the company received 603 million yuan in renewable energy electricity price subsidy funds in August-September 2025, while also strengthening cost control, resulting in a year-on-year decrease of 35.37% in cash outflows from operating activities, which was greater than the 18.12% decrease in cash inflows from operating activities.

Net Cash Flow from Investing Activities

In 2025, the net cash flow from investing activities was -2.811 billion yuan, a year-on-year decrease of 69.53%. This was mainly due to increased project investment expenditures for the 670,000-kilowatt wind power expansion project this year, with cash payments for the purchase of fixed assets, intangible assets, and other long-term assets increasing by 56.96% year-on-year.

Net Cash Flow from Financing Activities

In 2025, the net cash flow from financing activities was 430 million yuan, a year-on-year decrease of 7.19%. This was mainly because cash inflows from financing activities decreased by 17.66% year-on-year, while cash outflows from financing activities decreased by 20.09%, with the decline in inflows being greater than that of outflows.

Interpretation of Possible Risks

Operational Fluctuation Risk

The company’s electricity and salt industries, particularly industrial salt, are highly correlated with fluctuations in the domestic macroeconomy. Changes in the macroeconomy can affect electricity demand and the downstream demand for industrial salt, which in turn can adversely affect the company’s operations.

Industry Policy Change Risk

The new energy industry is greatly influenced by national and local policies. If there are future adjustments in industrial policies, such as changes in new energy subsidy policies or on-grid electricity pricing policies, it may affect the profitability of the company’s new energy business. The deepening of salt industry reforms may also intensify market competition.

Industry Competition Risk

In the new energy sector, the concentration of new energy power generation units in Yunnan Province may exacerbate competition for new energy consumption and electricity prices. In the salt industry, external salt brands are increasing their presence in the Yunnan market, leading to intensified competition in the domestic salt and industrial salt markets.

Electricity Market Consumption Risk

The rapid expansion of new energy installed capacity in Yunnan Province has led to insufficient system adjustment capability, resulting in both daytime peak electricity shortages and low valley curtailment. The curtailment rate for wind and solar energy has increased year-on-year. If these consumption issues persist, it will affect the company’s new energy generation and revenue.

Project Construction Risk

There is uncertainty regarding equipment investment costs and loan interest rates for new energy projects. If equipment prices rise or financing costs increase, it will raise project investment costs. Additionally, if there are design changes or increases in the scope of construction during project development, it may also lead to cost overruns.

Climate Change Risk

The new energy business relies on wind and solar resources, with uncertainties in wind availability and solar radiation levels each year. If there is a year of low wind or insufficient radiation, it will affect the company’s operational efficiency and profitability in new energy production.

Major Natural Disaster Risk

If wind farms encounter natural disasters such as strong winds, ice, or lightning strikes, it could damage wind turbine equipment and transmission lines, leading to a decrease in power generation capacity or even a halt in operations.

Safety and Environmental Protection Risk

With increasing environmental protection requirements, the company needs to increase its investment in environmental protection funds and technology. If the operation of environmental protection facilities is unstable or does not meet standards, it may face penalties that could impact production and operations.

Interpretation of Executive Compensation Situation

• Chairman Zhou Manfu: The total pre-tax remuneration received from the company during the reporting period was 991,100 yuan.
• General Manager Yang Jianjun: The total pre-tax remuneration received from the company during the reporting period was 856,100 yuan.
• Vice General Managers: Li Zhengliang received a pre-tax remuneration of 726,100 yuan, Li Zhongzhao received 729,200 yuan, Han Xiaoying received 701,400 yuan, and former Vice General Manager Zhao Mao received a pre-tax remuneration of 63,800 yuan (resigned on January 15, 2025).
• Chief Financial Officer Liu Xifen: The total pre-tax remuneration received from the company during the reporting period was 739,800 yuan.

The compensation for the company’s executives is determined based on job responsibilities, performance assessments, and is linked to the company’s operational performance and individual performance. Additionally, some directors do not receive compensation from the company as they hold positions in shareholder units, such as Teng Weiheng and Mo Qiushi.

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Editor: Xiaolang Quick Report