Hongbai New Materials hits three-year high despite persistent losses and multiple risks

EarningsIndustry

Summary · why it matters

Hongbai New Materials, the world's top supplier of sulfur-containing silanes by market share, is enduring a harsh operating winter. It posted a net loss attributable to shareholders of 146 million yuan in 2025, followed by a further loss of 28.02 million yuan in the first quarter of 2026. Yet its share price briefly touched 14.9 yuan at the end of June, a three-year high, giving it a total market value of 8 billion yuan and a trailing price-to-earnings ratio of negative 47 times, a sharp deviation from the chemical raw materials sector average of around 25.2 times. The company's gross margin has slid from 33.89 percent in 2022 to just 2.21 percent in the first quarter of 2026. Its core silane coupling agent business has seen revenue shrink under the weight of an industry price war, while total costs rose 1.47 percent year on year. Depreciation, labour, and financial expenses stemming from capacity expansion have become rigid outlays. At the industry level, China's functional silane market is plagued by low-end overcapacity. Peers such as Chenguang New Materials, Yanggu Huatai, Sanfu Shares, and Jianghan New Materials continue to expand production, while downstream tyre demand growth is slowing. The resulting supply-demand imbalance has eroded pricing power. The high-end electronic-grade silane project that the company is pinning its hopes on has yet to break ground, and its Thailand production base faces multiple pressures, making it difficult to offset losses in the traditional business in the near term. During the period of losses, the actual controller's concert parties, financial investors, and senior executives have been selling down their holdings intensively. Controlling shareholder Hongbai Chemical reduced its stake by 19.5 million shares, and Xinyu Baolong has announced a clearance-style divestment plan. The concentrated cashing out by insiders is fuelling market concerns that the industry's downcycle will be prolonged.