Ouhua Energy Holdings Limited: 1H 2025 Financial Review and Investor Guidance

Ouhua Energy Holdings Limited, a Bermuda-incorporated investment holding company operating primarily in China’s LPG sector, released its unaudited condensed interim financial statements for the six months ended 30 June 2025. The report offers a comprehensive snapshot of the company’s financial health, performance trends, and management commentary. Below is a structured analysis tailored for professional investors.

Key Financial Metrics

Historical Performance Trends

The company’s financial performance exhibited a marked deterioration in 1H 2025. Revenue decreased 9.8% year-over-year, mainly due to fierce competition and weak demand in the LPG market. Gross profit collapsed by 83%, reflecting severe margin pressure as average market prices dropped and cost of sales remained elevated. Net loss attributable to equity holders grew by nearly 30%, signaling deepening operational challenges. Net asset value per share fell 14% over the period, from RMB 63.49 to RMB 54.72.

Exceptional Expenses and Earnings

There were no exceptional earnings reported. However, the company highlighted several expense components:

• Bank charges and foreign exchange losses declined sharply, contributing to lower other operating expenses.
• Administrative expenses were reduced, mainly due to lower salaries and wages.
• Employee benefit costs dropped by more than 50% year-over-year.

Related-Party Transactions and Other Corporate Actions

Ouhua engaged in significant related-party transactions during the period, particularly with Chaozhou Huafeng Group and Guangdong Zhongzhan New Energy Technology Co., Ltd. Notably, RMB 56.7 million in LPG sales were made to related parties, and RMB 14.2 million in leases and services were paid to various related entities. These transactions were conducted under shareholders’ mandates and disclosed as per listing rules.

No share buybacks occurred in 1H 2025, but the company holds 10,336,900 treasury shares (RMB 4.78 million).

Dividends

No interim or final dividend was declared for the six months ended 30 June 2025, consistent with the previous period. Management cited ongoing losses in FY2024 and 1H 2025 as the reason for the absence of dividend distributions.

Chairman’s Statement

“According to IMF’s latest prediction, the GDP growth in the People’s Republic of China (PRC) would be 4.6% year-on-year in FY2025. The Liquefied Petroleum Gas (LPG) market is expected to continue experiencing dynamic changes over the next 12 months, driven by evolving global energy demands, shifting geopolitical factors, and advancements in energy technology. The growing focus on sustainability and cleaner energy solutions is likely to increase the adoption of LPG as an alternative to traditional fossil fuels, particularly in emerging economies. The market will need to navigate challenges such as regulatory changes, competitive pressures from alternative energy sources like electric and hydrogen-powered technologies, and regional disparities in LPG pricing. Due to the uncertainties of geopolitical factors remaining in international energy market and recovering domestic market demand, the LPG market remains challenging and volatile. Ouhua would constantly keep making endeavor to capture opportunities from crisis. Since entering the solar power generation market, electricity has steadily become a stable contributor to our revenue. We will continue to proactively engage in the green energy market. With the ongoing support of our customers, bank, shareholders, and other stakeholders, Ouhua remains dedicated to achieving sustainable growth.”

Tone: Cautiously optimistic about long-term prospects, but acknowledges immediate market challenges and volatility.

Directors’ Remuneration

Macroeconomic and Industry Environment

The macroeconomic outlook for China remains modestly positive (IMF forecast of 4.6% GDP growth in 2025), but the LPG market is described as “challenging and volatile” due to competitive pressures, regulatory changes, and geopolitical uncertainties. Ouhua’s expansion into solar power generation is cited as a potential stabilizer for revenue, though it remains a small contributor relative to core LPG sales.

Cash Flow and Liquidity

Net cash used in operating activities was RMB 175.1 million, driven by working capital outflows and losses from operations. Cash and cash equivalents fell sharply from RMB 173.9 million to RMB 26.5 million over the period, raising concerns about short-term liquidity and the company’s ability to weather continued losses without external support or significant recovery in operating metrics.

Events Affecting Performance

• There were no material legal disputes, asset revaluations, or natural disasters disclosed.
• No fundraising, asset sales, or new mandates reported.
• No forecasted mergers or restructuring events mentioned.

Conclusion and Investor Recommendations

Overall Assessment: Ouhua Energy Holdings Limited’s financial performance in 1H 2025 was weak. The company faces declining revenues, shrinking margins, expanding losses, and a significant drop in cash reserves. The absence of dividend payments and ongoing related-party transactions further dampen near-term investor confidence. While management stresses the potential of solar energy and ongoing efforts to adapt, the immediate outlook remains highly challenged by market volatility and competitive pressures.

If you currently hold Ouhua Energy: Consider re-evaluating your position. The company’s poor earnings, cash flow stress, and lack of dividend suggest limited upside in the short term. Unless you have a high risk tolerance and believe in a turnaround or sector recovery, it may be prudent to reduce exposure or exit the position.

If you are not holding Ouhua Energy: It is advisable to remain on the sidelines for now. The financial and operational trends do not support a compelling entry point. Monitor for signs of margin improvement, revenue stabilization, or strategic pivots before considering investment.

Disclaimer: This analysis is based solely on the company’s published financial statements and accompanying disclosures. It does not consider external factors, market price actions, or other non-public information. Investors should perform their own due diligence and consult with a professional advisor before making investment decisions.

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