Ningbo Boway Alloy Material Co Ltd

Boway Alloy released its 2026 semi-annual report. In the first half, it achieved operating revenue of 12.636 billion yuan, up 23.62% year on year, but net profit attributable to the parent company was 394 million yuan, down 41.66% year on year, and non-GAAP net profit was 352 million yuan, down 46.24%. By product, new materials revenue was 10.825 billion yuan, up 36.42% year on year, with net profit of 269 million yuan, up 14.70%; new energy products revenue was 1.677 billion yuan, down 22.70% year on year, with net profit of 126 million yuan, down 71.56%. The company's operating costs were 11.394 billion yuan, up 29.86% year on year. Cost growth outpaced revenue, and combined with a 20.74% increase in research and development expenses and financial expenses turning from negative to positive, profit margins were squeezed. In addition, the implementation site of the company's 30,000-ton special alloy electronic material strip expansion project has been changed to Morocco, with an estimated total investment of 1.076 billion yuan. The scheduled date for reaching usable condition has been postponed from June 2026 to December 2028. No profit distribution will be made in this reporting period.

Boway Alloy recently replied to the Shanghai Stock Exchange's annual report inquiry letter, explaining the issue of low cash yield. The company's period-end cash balance was 2.493 billion yuan, of which 1.648 billion yuan was held overseas, accounting for 66.06 percent. Interest-bearing liabilities stood at 7.42 billion yuan, with interest expenses of 206 million yuan, while interest income was only 14.1027 million yuan. The average cash yield was just 0.57 percent, significantly lower than comparable companies in the industry. The company stated that the low yield was mainly due to the high proportion of overseas funds. The foreign currency settlement account at Wells Fargo in the United States had frequent transactions and a zero interest rate on demand deposits. The main corporate demand deposit account at Commerzbank in Germany also offered no deposit interest. Since May 2025, the four major state-owned banks in China have set a uniform corporate demand deposit rate of 0.05 percent, with agreement deposit rates around 0.1 to 0.25 percent. The company did not allocate funds to structured deposits or wealth management products, using the cash primarily for daily working capital turnover and project investment reserves. Regarding the reasonableness of the high level of interest-bearing liabilities, the company explained that the ongoing construction of its 2-gigawatt solar cell and 3-gigawatt module projects in the United States required substantial funds. The two US module production lines, which began production in 2025, are still in the capacity ramp-up phase, necessitating significant working capital. Coupled with limited overseas credit lines, the company retained large amounts of cash. The high year-end cash balance was also due to concentrated customer payments at year-end.