Diwang Industrial (1950.HK) Q2 2025 Earnings Report

Diwang Industrial Holdings Limited reported a robust QQ2 2025, with revenue of 262.89 million CNY, up 91.44% year over year while quarterly growth remained flat versus the prior quarter. Gross profit reached 126.08 million CNY, yielding a gross margin of approximately 48.0%, and operating income of 12.39 million CNY creating an operating margin near 4.71%. Net income stood at 13.91 million CNY, with basic earnings per share of 0.0194 CNY, up around 193.9% year over year. Despite these earnings improvements, the company continues to display negative free cash flow per share and negative operating cash flow per share, underscoring working capital and capital expenditure dynamics that warrant monitoring. From a liquidity and balance sheet perspective, Diwang shows a solid liquidity position with a current ratio of 3.06 and a debt ratio of 0.124, indicating modest leverage and ample short-term coverage. However, cash conversion metrics reveal a cash flow generation challenge: operating cash flow per share is -0.0323 CNY and free cash flow per share is -0.0410 CNY, with a cash balance per share of 0.108 CNY. The company’s valuation metrics imply a relatively low multiple framework (P/E ~3.72x, P/B ~0.32x) relative to regional chemical peers, suggesting the market may have priced in near-term growth constraints or cash flow questions. Going forward, the absence of explicit forward guidance means investors should hinge expectations on continued revenue momentum, margin resilience, and improvements in working capital efficiency, while remaining vigilant to commodity price volatility, FX exposure, and potential competitive pressures in the coating agents and synthetic resins markets.