Sinostar PEC Holdings Limited: 2Q25 & 1H25 Financial Results Analysis

Sinostar PEC Holdings Limited, a Singapore-listed company engaged in the manufacture and sale of petrochemical products in China, has released its unaudited financial results for the three and six months ended 30 June 2025. The company’s principal activities include the production of propylene, polypropylene, LPG, and related logistics services. Below, we analyze key financial metrics, performance trends, notable transactions, and management commentary to provide investors with a comprehensive overview.

Key Financial Metrics and Comparative Performance

Note: 1Q25 values are inferred as the difference between 1H25 and 2Q25 figures.

Historical Performance Trends

• Revenue Growth: For 1H25, revenue was RMB 2,640.4 million, down 10.2% YoY from 1H24, reflecting weaker market demand across most product lines.
• Profitability: Net profit plummeted 67.0% YoY for 1H25, driven primarily by a significant decline in gross profit margins and lower sales volumes.
• Gross Margin Compression: Gross profit margin for 1H25 was 3.85%, down from 9.1% in 1H24, with particular weakness in both gas segment and logistics operations.

Segment Review and Notable Trends

• MTBE (Methyl Tert-Butyl Ether): Revenue fell 23.5% YoY in 1H25, due to a 5.7% drop in sales volume and a sharp 18.9% decrease in average selling price.
• Premium Grade Polypropylene: One bright spot, with 17.6% YoY revenue growth and a 19.1% increase in volume, helped by robust demand in downstream sectors such as new energy vehicles.
• Other Key Products: Processed LPG and propylene revenues declined 13.8% and 29.4% YoY, respectively, due to both lower volumes and weaker pricing.
• Logistics & Transport: Revenue rose 12.3% YoY, but gross margin fell due to cost pressures.

Dividends

No interim dividend was declared for 2Q25. In FY2024, a final dividend of S\$0.005 per share was paid. The Board has cited ongoing market uncertainties and the need to preserve operational stability and financial resilience as reasons for withholding an interim dividend.

Balance Sheet and Capital Actions

• Rights Issue: In March 2025, the company completed a rights issue, raising RMB 242.9 million (S\$44.6 million equivalent) through the issuance of 320 million new shares at S\$0.14/share. Proceeds are earmarked for business expansion, debt service, and related costs.
• Net Asset Value: NAV per share fell to RMB 1.69 at 30 June 2025 from RMB 2.06 at end-2024, reflecting both earnings dilution and weaker profits.
• Debt Reduction: Bank borrowings and related-party loans were reduced, with RMB 50 million in related-party loans repaid during 1H25.
• Cash Position: Group cash balance stood at RMB 421.7 million at 30 June 2025, with most of it restricted under Chinese FX regulations. Operating cash flow for 1H25 was negative, mainly due to significant outflows to related parties and weaker profitability.

Related-Party Transactions and Exceptional Items

• Significant Related-Party Transactions: The company continues to conduct substantial business with related parties, including major purchases of raw materials and sales of finished products, as well as logistics services.
• No Exceptional Gains/Losses: There were no reported exceptional items, asset revaluations, or divestments during the period.

Chairman’s Statement and Outlook

“Over the next 12 months, the Chinese polyolefin industry is expected to remain challenged by a structural imbalance between expanding production capacity and relatively slower growth in downstream demand. This dynamic is likely to intensify market competition, potentially resulting in increased inventory levels and exerting downward pressure on the Group’s gross profit margins. Despite these headwinds, demand for high-end polypropylene products is projected to rise, supported by emerging applications in new energy vehicles and green consumption, along with policy measures aimed at stabilizing economic growth, stimulating consumption, and enhancing domestic circulation. The Group will continue to closely monitor market developments and remain focused on its strategy of differentiation and high-end product development. It will further strengthen investment in technology and refine its product portfolio to effectively adapt to evolving market conditions.”

Tone: The Chairman’s statement is cautious and acknowledges significant industry headwinds. While there is optimism around high-end products, the overall message is defensive and focused on resilience and adaptation rather than near-term growth.

Conclusion and Investor Recommendations

Overall Assessment: Sinostar PEC Holdings Limited reported a weak set of results for 2Q25 and 1H25, with sharp declines in revenue, profit, and margins. The company’s profitability has been squeezed by both lower sales volumes and deteriorating margins across key product lines, reflecting broad-based industry challenges. The absence of an interim dividend and a cautious outlook further reinforce the challenging environment.

• For Current Shareholders: If you are currently holding the stock, consider reducing your position or maintaining only a small, long-term exposure. The short-term outlook is clouded by margin pressures and industry overcapacity, and management is prioritizing financial stability over shareholder returns (no interim dividend, rights issue dilution). Monitor for any turnaround in demand or margin recovery before increasing exposure.
• For Prospective Investors: If you do not currently hold the stock, it is prudent to stay on the sidelines until there is clearer evidence of a sustained recovery in demand, margins, and profitability. The sector faces structural headwinds, and Sinostar’s results indicate it is not immune. Watch for improvements in cash flow, gross margin stabilization, or positive industry developments before considering entry.

Disclaimer: This analysis is based solely on information contained in the company’s latest unaudited financial results and does not constitute investment advice. Please conduct your own research and consider your financial situation and risk tolerance before making investment decisions.

View Sinostar Pec Historical chart here