Sapphire Corporation Limited FY2025 Financial Review: Strong Recovery Amid Sector Challenges

Sapphire Corporation Limited, listed on the Singapore Exchange, reported its unaudited condensed interim financial statements for the full year and second half ended 31 December 2025. The Group’s operations are primarily in China, focusing on urban renewal, infrastructure services, and investment management. This review analyzes key metrics, performance trends, exceptional items, and outlook for investors.

Key Financial Metrics & Comparative Table

Historical Performance & Trends

• Revenue: Marked growth driven by higher trading activity and maiden contribution from the new subsidiary Shengshi Fanmu, which accounted for RMB 13.5 million in 2H2025. Total revenue increased 11.8% YoY, and surged 29.9% QoQ in 2H2025.
• Profitability: Net profit jumped to RMB 4.8 million for FY2025 (up 214.7% YoY), reversing a loss in 2H2024. EPS similarly rose sharply.
• Gross Margin: Remained stable at 2.2%, indicating competitive pressures and rising costs.
• Cash Position: Cash and cash equivalents declined to RMB 33.2 million from RMB 61.8 million due to working capital increases and repayments.
• Associate Contributions: Share of profits from Ranken Railway (associate) rose to RMB 18.1 million (up RMB 6.5 million YoY), signifying robust performance in EPC infrastructure projects.

Exceptional Items & Notable Transactions

• Impairment Losses: RMB 6.2 million recognized on overdue guaranteed receivables assigned by Ranken Railway to Chengdu KQR.
• Provisions: No new provisions for liabilities or guarantees in FY2025 due to improved receivables collection and reduced guaranteed banking facilities.
• Related Party Transactions: Material transactions included guarantee fee income, leasing, and sale of goods with associates. Covered guarantees for banking facilities provided to Ranken Railway decreased to RMB 88.2 million.
• Directors’ Remuneration: Directors’ remuneration totaled RMB 2.2 million for FY2025.

Chairman’s Statement & Outlook

Chairman’s Statement:
“Urbanisation remains one of the key economic drivers in China as the government has been proactively supporting and promoting urban infrastructure development, urban renewal and city redevelopment in several key clusters under its economic policies and innovation ecosystem. Alongside these city modern urbanisation programmes, the Group recorded a maiden revenue contribution from its newly-operated subsidiary in 2H2025 for provision of integrated services in cultural and creative event planning; and commercial space optimisation and transformation projects, which have successfully been initiated under the brand of ‘盛世梵木’; the eco-friendly development, sustainable urban renewal plans and environmental conservation solutions will hold an increasingly important and integral role in China’s urban infrastructure development sector; and that if such related projects could successfully be procured, managed, and executed, will help to diversify and expand our recurring revenue streams; and we have significant investments in EPC projects for land transport infrastructure and environmental conservation in China which we jointly manage via our principal associate, Ranken Railway. In FY2025, the financial performance for Ranken Railway improved and its net asset position of Ranken Railway remains robust with our share of this investment close to RMB 468 million as at 31 December 2025. In the meantime, we are well aware that many industries in China are still dealing with the increasingly higher operating costs and excess capacity concerns amidst the existing challenging external environment, as previously disclosed. In view of this, while strengthening our execution capabilities and leveraging on market opportunities, we will continue to adopt a more progressive and less aggressive expansion strategy ahead.”

Tone: The Chairman’s statement is positive regarding sectoral opportunities and internal execution, but cautious on wider macro challenges and competitive pressures.

Dividend Policy

• No dividend proposed for FY2025 or FY2024, as the Group seeks to conserve cash for working capital and future investments.

Other Corporate Actions & Events

• No changes in share capital, convertible securities, or treasury shares.
• No significant divestments, IPOs, fundraising, or asset sales reported.
• No material legal disputes, natural disasters, or policy changes noted.
• Subsidiary incorporation and expansion into cultural and creative services contributed to revenue diversification.

Performance Summary & Recommendations

Overall Financial Performance: Sapphire Corporation delivered a strong rebound in FY2025, with robust revenue growth, sharp profitability improvement, and increased contributions from associates. However, cash flow is negative from operations due to higher working capital needs, and ongoing sector challenges in China present risks. The Group’s cautious expansion, stable net asset value, and diversification efforts are positive, but dividend restraint and competitive pressures remain concerns.

Investor Recommendations

• If you currently hold Sapphire Corporation shares:
  • Consider holding your position. The company has exhibited a turnaround in profitability, growth in core business, and a stable asset base. However, monitor cash flows and sector headwinds closely. Lack of dividends signals management’s preference for reinvestment, so this should be weighed against your income objectives.
• If you do not currently hold Sapphire Corporation shares:
  • Consider entering with caution if you are seeking exposure to China’s infrastructure sector and can tolerate volatility. Sapphire’s growth and sectoral positioning are positives, but investors should be aware of competitive pressures, margin challenges, and operational cash flow risks. Wait for further clarity on sustained profitability and improved cash generation if risk appetite is low.

Disclaimer: This analysis is based only on Sapphire Corporation’s official FY2025 financial report. It does not constitute investment advice. Investors should conduct their own research and consider their risk profile and investment goals before acting.

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