Hengyang Petrochemical Logistics Limited: 9M2025 Financial Review and Analysis

Hengyang Petrochemical Logistics Limited (“Hengyang” or “the Group”), listed on the Catalist Board of SGX, released its unaudited condensed interim consolidated financial statements for the nine-month period ended 30 September 2025 (“9M2025”). The company’s primary asset is a 41.64% joint venture interest in Jiangyin Foreversun Chemical Logistics Co., Ltd. (“China Holdco”), which drives all underlying business operations in China. This review dissects the company’s financial performance, key metrics, notable developments, and provides a perspective for investors.

Key Financial Metrics and Performance Table

Performance Review

Income and Profitability

The Group reported a net loss of RMB15.94 million for 9M2025, a sharp decline from a net profit of RMB0.23 million in the same period the year before. This downturn is primarily attributed to the Group’s share of loss from its joint venture, China Holdco, which swung from a profit contribution of RMB2.81 million in 9M2024 to a loss of RMB13.4 million in 9M2025. Interest income increased slightly due to higher cash balances but remains immaterial in the broader context.

Revenue and Segmental Analysis

While Hengyang itself does not generate revenue, its joint venture China Holdco saw revenue fall 6.3% to RMB406.67 million in 9M2025. Gross profit declined even more sharply, down 21.4% year-on-year, as operating leverage and a drop in high-margin segment activity took their toll.

• Transportation Segment: Revenue dropped by 36.7% due to lower transport volumes.
• Storage Service Segment: Revenue fell by 2.3%, with some new business offset by lower utilization rates at several subsidiaries.

Expenses and Margins

Administrative and other expenses at the Group level were stable, with a small increase of 2.38%. China Holdco’s finance costs rose, and the Group’s overall loss before tax was RMB15.94 million versus a small profit last year.

Cash Flow and Financial Position

Operating cash outflow was RMB3.11 million, in line with the increased loss. The Group’s cash and cash equivalents stood at RMB16.23 million, down from RMB19.25 million at 2024 year-end. Net asset value per share fell 2.9% to RMB262.24 cents.

Dividend

No dividend was declared for 9M2025, in line with the previous year. The Board cited the absence of dividends from China Holdco as the reason for not recommending a payout.

Significant Events and Risks

• US Sanctions: On 10 October 2025, Hengyang, its CEO Mr. Gu Wenlong, and China Holdco were added to the US OFAC Specially Designated Nationals List. The company is still assessing the operational and financial impact, which could be significant given the potential for banking, trade, or reputational consequences.
• Macroeconomic Headwinds: Ongoing US tariffs on Chinese goods and general market demand weakness have hurt volumes at China Holdco’s subsidiaries, especially in export chemicals and gas products.
• Debt Guarantees: While the Group itself carries no direct debt, it provides guarantees for RMB200.29 million of China Holdco’s borrowings. There have been no defaults, and assets pledged appear to adequately cover the obligations.

Related Party Transactions

The most significant related party transaction was the provision of petrochemical storage and transport services by China Holdco to Jinqiao Chemical (wholly owned by the CEO’s spouse), totaling RMB19.81 million during the period.

Corporate Actions and Capital Structure

There were no changes in share capital, outstanding convertibles, treasury shares, or subsidiary holdings during the period. The company has 203,461,883 shares outstanding.

Outlook

The Group’s outlook is clouded by several factors:

• Macroeconomic uncertainty due to ongoing US-China trade tensions and new tariffs.
• Operational risks associated with recent US sanctions, which may affect banking and commercial relationships.
• Pressure on utilization rates and margins in key logistics and storage segments, despite recent capacity expansions and new project completions at Wuhan and Tianjin.

Management intends to focus on maximizing utilization of new storage and port capacity and will monitor developments closely.

Conclusion and Investment Recommendations

Overall Assessment: The financial performance and outlook for Hengyang Petrochemical Logistics Limited appear weak at this stage. The company has swung to a material loss, faces operational headwinds, and is exposed to significant external risks, particularly the recent US sanctions and industry-wide macroeconomic pressures. There is also no dividend support for shareholders in the near term.

Investor Recommendations

• If you currently hold this stock: Consider reviewing your position. The near-term outlook is highly uncertain, and the risk of further downside appears significant given the combination of operational losses and external sanctions. Investors should monitor management’s ongoing assessment of the sanctions’ impact, but defensive action may be warranted unless there is a clear turnaround.
• If you do not currently own this stock: It is advisable to stay on the sidelines until there is greater clarity on the impact of US sanctions, a return to profitability, and evidence of sustainable growth or dividend resumption. The risk-reward profile is currently unattractive.

Disclaimer: This analysis is based solely on the company’s published financial statements and does not constitute investment advice. Investors should conduct their own due diligence and consult with a qualified financial advisor before making any investment decisions.

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