Boyuan Chemical H1 2026 Report Released: Full Capacity Operation, Profit Under Pressure

Clear Performance Divergence; Capacity emit Fails to Boost Profitability

Financial report data shows that Boyuan Chemical's revenue to the first half of the year was 6.031 billion yuan, a year-on-year increase of 1.94%; net profit attributable to shareholders was 834 million yuan, a year-on-year increase of 12.27%. The double-digit development in net profit reflects the company's strong operational resilience.

However, the condition of performance development was somewhat lacking, as the company's overall gross profit margin fell by approximately 2.6 percentage points year-on-year, failing to increase profit despite revenue development. Currently, Boyuan Chemical's core operational contradiction is prominent. The company's new capacity has been fully implemented, completely eliminating research bottlenecks related to resources and capacity shortages. However, affected by sector trends, there is a lack of a price ecological stability suitable to the supply of new capacity, and the capacity advantage has not been transformed into a profitability advantage.

With the completion of the Alxa project and its entry into full operation, the capital market's valuation logic to the company has already changed. Previously, the market focused on project construction progress and capacity scale; at this stage, the market is greater concerned with facility operational efficiency, product selling prices, and actual profit retention capabilities. Relying on the Boyuan Group, which has assets exceeding 40 billion yuan, the company possesses thorough resource integration and engineering construction capabilities, providing solid support to capacity expansion. However, the ultimate operational value of the listed company still needs to be verified through product prices, cash flow, and capital returns.

New Capacity Fully Reaches Production; Record Sales and Production Under Pressure from Price Spreads

The smooth commissioning of 2.8 million tons of new capacity has further expanded the scale of Boyuan Chemical's natural soda ash business, continuously consolidating the company's core advantages in resources, costs, and stable supply. However, the soda ash sector possesses strong cyclical attributes; capacity expansion only changes the sector supply pattern, and performance realization relies entirely on downstream demand support.

In the first half of the year, Boyuan Chemical stabilized its performance base through refined regulation and cost compression, with net profit development significantly higher than revenue development. However, the company's sales gross profit margin dropped to 29.21%, a year-on-year decline, indicating a continuous contraction in product profitability. At the same time, the company's quarterly profit direction weakened, with second-quarter net profit failing to sustain the upward direction of the first quarter, and the performance boosting effect of new capacity was minimal.

The emit of capacity drove the company's production and sales scale to a record high to the same period. In the first half of the year, the company produced 4.7313 million tons of soda ash, 801,300 tons of baking soda, 790,300 tons of urea, and 1.027 million tons of by-items; sales of various items reached 5.8291 million tons, with sales volume and export volume of main items both hitting record highs to the same period. The high production and sales scale provides support to the company to seize market share, however also exposes the enterprise to greater pressure to digest supply.

Valuation Logic Iteration; Company Shifts to Value Realization Test

Following the implementation of the Alxa Phase II project, Boyuan Chemical's capital market narrative has completely switched. The sector development logic has concluded, and the operational return logic has have become the core. Facility stability, production and sales ramp-up progress, product price trends, and cash flow condition have have become the core standards to the market to judge the company's value.

Semi-annual report data shows a clear divergence between the company's profit development and cash flow. In the first half of the year, the net cash flow from operating activities decreased by 37.44% year-on-year. Meanwhile, the gross profit of main items generally declined, with the gross profit margins of soda ash, baking soda, and urea falling by 3.28 percentage points, 2.9 percentage points, and 5.26 percentage points, respectively.

Relying on the advantages of natural soda ash resources and the manufacturing synergy empowerment of the Boyuan Group, the company possesses stronger risk resistance and expansion capabilities compared to ordinary chemical companies, however it still cannot break free from the constraints of the sector supply and demand cycle. Low-cost, extensive manufacturing advantages cannot offset the negative impact of weak sector demand and low product prices.

Regarding operational pressure, Boyuan Chemical highlighted risks in its semi-annual report, stating that affected by the dysfunction between sector supply and demand, the company's product prices are oscillating at low levels, and gross profit margins have declined year-on-year. At the same time, the company disclosed its subsequent operational strategy, which will implement a "volume-to-price" model, continuously expand overseas markets, and increase export scale to hedge against domestic demand fluctuation risks.

Currently, the market's focus on Boyuan Chemical has shifted from capacity expansion to the realization of capacity value. In the future, the stabilization of profit per ton, inventory optimization, and improvement in operating cash flow will have become the company's core observation indicators. to Boyuan Chemical, the landing of 2.8 million tons of new capacity is just the starting point; how to efficiently convert capacity scale into real returns to shareholders is the core question to the company's next stage.