China Risun Group Limited (1907.HK) Q2 2025 Earnings Report

- QQ2 2025 revenue rose to 20.55 billion CNY, up 84.0% year over year, underpinned by stronger activity in coke and coking chemicals and higher refined chemical volumes. The quarterly gross profit was 1.69 billion CNY with a gross margin of 8.20%, while EBITDA reached 1.72 billion CNY and operating income was 816.31 million CNY, signaling solid underlying operating cash generation despite a lean bottom line.
- Net income was 28.64 million CNY, with a net margin of 0.14%. The bottom-line strength was heavily affected by a sizable negative other income/expenses component (-677.40 million CNY) and a relatively high effective tax rate of 37.4%. After tax, earnings remained positive but modest, highlighting earnings volatility driven by non-operating items and conservative tax positioning within the period.
- Balance sheet and liquidity show structural leverage and near-term liquidity challenges. Current ratio 0.616 and cash ratio 0.060 indicate liquidity headwinds, while debt to capitalization stands at 73.6% and debt to equity at 2.79, signaling meaningful leverage in a cyclically exposed business. Despite this, the company generated positive operating cash flow per share (0.449 CNY) and free cash flow per share (0.176 CNY), contributing to a cash-flowful operating base even as the company balances working capital dynamics.
- The QQ2 2025 results reflect a cyclical, commodity-sensitive business. Relative to regional peers, Risun’s margins remain modest (gross margin ~8.2%, operating margin ~3.97%), underscoring exposure to input-cost swings and non-operating items. The market should monitor commodity price trends, steel demand cycles, debt refinancing risk, and capex plans as key drivers of future profitability and balance sheet health.
- Overall investment stance: maintain a cautious but constructive view on Risun’s ability to leverage its integrated coke and chemical platform to capitalize on cyclicality, while closely watching leverage, working capital efficiency, and any material non-operating charges that can materially affect earnings in the near term.