Jiutian Chemical Group Limited: 1H2025 Interim Financial Analysis

Jiutian Chemical Group Limited has released its unaudited condensed interim financial statements for the half-year ended 30 June 2025. The following analysis covers key financial metrics, historical trends, and significant corporate events based solely on the information disclosed in the report.

Key Financial Metrics and Performance Comparison

Historical Performance Trends

The Group recorded a significant increase in revenue for 1H2025 (+74% YoY), mainly due to the commencement of trial production at the new methylamine plant and resumed sales of chemical products. Despite this, a gross loss persisted, though the gross loss margin improved over last year, reflecting more effective cost control and operational efficiencies following a production pause in 2024.

Net loss narrowed to RMB 64.7 million (from RMB 84.5 million in 1H2024), primarily due to improvements in gross margin, reduced administrative and distribution expenses, a reversal of impairment loss on financial assets, and a smaller share of loss from associated companies. Net asset value per share declined, reflecting the continued losses.

Exceptional Earnings, Expenses & Related-Party Transactions

• Reversal of Impairment Loss: RMB 2 million in 1H2025, from recovery of receivables from a former subsidiary.
• Finance Costs: Increased due to the end of capitalisation of borrowing costs after substantial completion of the new plant.
• Share of Losses in Associates: Decreased following cost-reduction efforts and cessation of loss-sharing from a liquidated associate.
• Related Party Transactions: Extensive transactions with parent, associates, and other related companies, including purchase and sale of raw materials, industrial steam, and rental expenses.
• No Dividends: No interim dividend declared; all available funds are being conserved for operational needs and the Synthetic Ammonia Project.

Significant Events & Corporate Actions

• Production Resumption: Trial production at the methylamine plant commenced in 2Q2025, boosting revenue but not reversing losses due to weak pricing and overcapacity in the market.
• No Fundraising or Share Buybacks: No new equity issuance, buybacks, or major asset sales in this period.
• Use of Placement Proceeds: S\$2.77 million of S\$9.97 million raised in 2020 remains unutilised, earmarked for working capital.

Chairman’s Statement

“The Group recorded an increase in revenue in 1H2025 compared to 1H2024. This was mainly driven by the commencement of trial production at the new methylamine plant and sale of the produce in 2Q2025. In contrast, the Group had ceased production of its main products, namely Dimethylformamide (“DMF”) and methylamine in 2Q2024 as part of its efforts to reduce losses amid weak market conditions. The resumption of production, along with ongoing trading of chemical products, contributed to the higher revenue for 1H2025 … Despite the improvement in revenue, the Group recorded a gross loss in 1H2025. This was largely attributable to continued pressure on selling prices, which remained below production cost levels. The challenging pricing environment stemmed from an industry-wide softening in demand, driven by China’s weak economic situation, and was further impacted by an oversupply situation in the market.” (Tone: Cautiously negative, acknowledging operational improvements but emphasizing continued industry and economic challenges.)

Macroeconomic and Industry Outlook

The report highlights persistent headwinds in China’s chemical sector, including weak domestic demand, global trade uncertainties, and renewed U.S. tariffs. Oversupply in the industry, especially for DMF and methylamine, continues to depress prices. Management expects the business environment to remain challenging and is focused on cost controls, production discipline, and operational flexibility.

Conclusion & Investment Recommendation

Overall Assessment: Jiutian Chemical Group Limited’s financial performance remains weak despite revenue recovery. The gross loss persists, although cost management has improved. The balance sheet shows a decline in net asset value, and cash outflows continue. Macroeconomic and industry factors are expected to remain unfavorable in the near term.

For Existing Shareholders:

• Consider reducing exposure if your risk tolerance is low, as the company is still loss-making and industry conditions remain adverse.
• If holding for the long-term and willing to wait for a cyclical upturn, monitor closely for further operational improvements or signs of industry recovery.

For New Investors (Not Currently Holding):

• Caution is advised. Entry may only be justified for high-risk, contrarian investors betting on a sector recovery or company turnaround.
• Wait for evidence of sustainable profitability or a meaningful industry rebound before initiating a new position.

Disclaimer: This analysis is based solely on data and disclosures in the company’s 1H2025 interim financial report. It does not constitute investment advice. All investments carry risk, and past performance is not indicative of future results. Please consult with your professional financial advisor before making any investment decisions.

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