Feilong Holdings 2025 Annual Report Interpretation: New Energy Business Revenue Increases 28.1% R&D Expenses Increase 9.93%

Core Revenue Metrics Analysis

Operating Revenue: Traditional Business Under Pressure, New Energy Business Shows Strong Growth

In 2025, the company achieved an operating revenue of 4.545 billion yuan, a decrease of 3.77% year-over-year, mainly due to the decline in traditional fuel vehicle-related businesses. By product, revenue from key engine thermal management components and energy-saving emission reduction parts were 1.662 billion yuan and 2.107 billion yuan, down 10.47% and 6.17% respectively; however, revenue from new energy vehicles and civilian liquid cooling components reached 673 million yuan, a significant increase of 28.10% YoY, becoming the main driver of revenue growth. By region, domestic sales revenue was 2.041 billion yuan, up 7.80% YoY, while overseas direct sales were 2.278 billion yuan, down 12.53% YoY, with fluctuations in overseas markets impacting overall revenue.

Net Profit and Non-Recurring Net Profit: Slight Profit Decline, Non-Recurring Drop Larger

In 2025, net profit attributable to shareholders of the listed company was 317 million yuan, down 3.85% YoY; non-recurring net profit was 325 million yuan, down 6.98% YoY, with a larger decline than net profit, mainly due to the weakening buffer effect of non-recurring gains and losses. Non-recurring gains and losses included a loss of 24.2765 million yuan from disposal of non-current assets, which widened compared to last year; government grants amounted to 13.5374 million yuan, a decrease of 2.0925 million yuan YoY.

Earnings Per Share: Declines Along with Net Profit

In 2025, basic earnings per share were 0.5514 yuan/share, down 3.85% YoY; non-recurring earnings per share were 0.5661 yuan/share (calculated as non-recurring net profit of 325 million yuan divided by total shares of 575 million), a decrease of 6.98%, consistent with the trend of net profit and non-recurring net profit.

In-Depth Analysis of Expense Structure

Overall Expenses: Increased R&D Investment, Significant Reduction in Selling Expenses

In 2025, total operating expenses were 696 million yuan (including selling, management, financial, and R&D expenses), up 2.38% YoY. R&D and management expenses increased, while selling and financial expenses decreased, reflecting new strategic adjustments.

Selling Expenses: Overseas Business Contraction Leads to Decrease

Selling expenses were 87.9014 million yuan, down 19.40% YoY, mainly due to decreased overseas direct sales revenue, with reductions in related costs such as customs clearance and warehousing. Customs clearance costs were 21.5115 million yuan, down 42.60%; warehousing costs were 23.0983 million yuan, down 14.12%.

Management Expenses: Expansion and Refinement Drive Higher Costs

Management expenses totaled 334 million yuan, up 7.26% YoY, mainly due to business expansion, increased staffing, and refined management needs. Salaries, travel, and consulting fees all saw growth. Employee compensation was 195 million yuan, a slight increase of 0.07%; travel expenses were 20.8603 million yuan, up 23.91%; consulting fees were 14.7432 million yuan, up 51.35%.

Financial Expenses: Increased Exchange Gains Further Reduce Expenses

Financial expenses were -24.3596 million yuan, down 16.85% (additional gains), mainly due to foreign exchange rate fluctuations increasing exchange gains from USD, EUR, and other currencies. In 2025, foreign exchange gains and losses were -25.7556 million yuan (a gain), an increase of 125.69 million yuan compared to last year.

R&D Expenses: Continued Investment in Innovation to Support Business Transformation

R&D expenses were 299 million yuan, up 9.93%, with ongoing investment in new energy thermal management and civilian liquid cooling fields. The company completed 237 new product designs and obtained 50 patents (including 9 invention patents and 41 utility model patents). R&D focus included electronic pumps, temperature control modules, and commercial liquid cooling pumps, supporting the company’s transformation into a provider of multi-scenario, multi-field thermal management solutions.

R&D Personnel: Team Expansion and Continuous Optimization

In 2025, R&D staff numbered 602, an increase of 4.70% YoY; R&D personnel accounted for 9.62% of total staff, down 0.91 percentage points, mainly due to faster overall staff growth. In terms of education, 256 R&D staff held bachelor’s degrees or higher, up 8.94%; 57 held master’s degrees, up 18.75%, indicating an improved high-education ratio and enhanced professional capabilities.

Cash Flow Status: Stable Operating Cash Flow, Improved Investment and Financing Cash Flows

Overall Cash Flow: Significant Increase in Cash and Equivalents

In 2025, net increase in cash and cash equivalents was 341 million yuan, up 14.92 times, mainly due to improved net cash flow from investing activities and positive net cash flow from financing activities.

Operating Cash Flow: Stable with High Quality

Net cash flow from operating activities was 374 million yuan, down 1.67% YoY, a much smaller decline than revenue, indicating high-quality operating cash flow. Cash received from sales of goods and services was 4.689 billion yuan, up 7.12%; cash paid for purchases and services was 3.494 billion yuan, down 4.39%, reflecting effective cost control.

Investing Cash Flow: Increased Maturity of Financial Products, Narrowed Net Outflow

Net cash flow from investing activities was -97.9959 million yuan, a 52.02% increase in net outflow (reduction), mainly due to increased maturity of financial products, with cash recovered from investments totaling 1.181 billion yuan, up 25.18%. Payments for fixed assets, intangible assets, and other long-term assets were 415 million yuan, up 48.02%, indicating ongoing capacity expansion and project development.

Financing Cash Flow: Increased Borrowings and Reduced Debt Repayments, Turning Positive

Net cash flow from financing activities was 40.9333 million yuan, up 119.89%, turning from net outflow to inflow, mainly due to borrowing proceeds of 359 million yuan, up 20.42%; debt repayments were 137 million yuan, down 49.00%. The company’s financing strategy has been adjusted to optimize debt structure.

Remuneration of Directors, Supervisors, and Senior Management

In 2025, total pre-tax remuneration paid to directors, supervisors, and senior management was 6.263 million yuan. Notably:

• Chairman Sun Feng received no pre-tax remuneration, mainly from affiliated company Zhongjing Wanxi Pharmaceutical.
• Vice Chairman and General Manager Sun Yaozhong received 1.5218 million yuan, the highest among executives, responsible for overall management.
• Other vice presidents: Xi Guoqin (538,800 yuan), Wang Ruijin (434,500 yuan), Jiao Lei (420,500 yuan), Feng Changhong (415,000 yuan), Zhang Qun (452,200 yuan), Zhao Yantong (349,600 yuan), Sun Kai (244,800 yuan), Tang Guozhong (383,100 yuan), Xie Guolou (383,100 yuan). Compensation varies based on responsibilities and tenure.
• CFO Sun Dingwen received 383,100 yuan, responsible for financial management.

Risk Warnings Facing the Company

Structural Adjustment Risk in the Traditional Fuel Vehicle Market

The traditional fuel vehicle market continues to shrink, with the company’s traditional business still dominant, facing transformation pressure from new energy alternatives. Further market share decline could adversely impact revenue and profitability.

Raw Material Price Fluctuation Risk

Prices of raw materials such as pig iron, nickel, and aluminum are volatile. Significant increases could raise production costs and compress profit margins.

Market Competition Risk

Intensified competition in new energy thermal management and civilian liquid cooling markets requires ongoing R&D and cost control; otherwise, market share and profit levels may decline.

Operational Efficiency Risks During Transformation and Capacity Expansion

The company’s shift toward becoming a comprehensive thermal management solution provider, along with capacity expansion and overseas projects, increases costs in staffing, operations, and depreciation. If market demand falls short, underutilization of capacity could harm operational results.

International Trade Environment Risks

Over 50% of revenue comes from overseas; uncertainties in trade policies, tariffs, and geopolitical factors could impact overseas stability and profitability.

Exchange Rate Fluctuation Risks

High proportion of international trade revenue makes the company vulnerable to currency fluctuations, which could affect foreign exchange gains/losses and overseas profits. Significant RMB appreciation could negatively impact export competitiveness.

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