Huabao Flavours & Fragrances Co., Ltd. (a subsidiary of HUABAO INTL) reported mixed first-quarter results for the three months ended 31 March 2026, according to figures prepared under PRC Accounting Standards.

Revenue and Profitability • Revenue rose 13.60% year on year to RMB 363.05 million, supported by higher sales across flavour and fragrance lines. • Net profit attributable to shareholders fell 8.54% to RMB 44.62 million. • Excluding non-recurring gains, net profit dropped 24.16% to RMB 27.64 million, indicating weaker underlying profitability. • Earnings per share declined to RMB 0.07 from RMB 0.08, and the weighted average return on net assets slipped 0.07 percentage points to 0.65%.

Non-Recurring Items Non-recurring gains totalled RMB 16.98 million, largely driven by: – RMB 15.30 million in fair-value and investment gains on financial assets. – RMB 2.88 million in government grants. Adjusting for share-based compensation expenses, net profit increased 10.12% to RMB 62.97 million.

Cash Flow and Liquidity • Operating cash inflow improved to RMB 4.06 million versus an outflow of RMB 6.69 million a year earlier, mainly on stronger customer collections. • Investing activities generated an inflow of RMB 215.65 million, compared with a RMB 4.55 billion outflow in the prior-year period, reflecting reduced placement of time deposits. • Financing activities produced a RMB 45.08 million inflow owing to lower repayments and dividend payments.

Balance-Sheet Highlights • Total assets edged up 0.17% to RMB 7.36 billion. • Shareholders’ equity grew 0.72% to RMB 6.84 billion. • Construction-in-progress nearly doubled (+94.27%) to RMB 409.30 million, signalling stepped-up capital projects, while employee compensation payable fell 70.29% after the payment of prior-year performance bonuses.

Expense Movements • Financial expenses narrowed to a credit of RMB 1.80 million (from RMB 19.92 million credit) as interest income declined following the purchase of wealth-management products. • Government-subsidy related other income dropped 75.34% to RMB 3.65 million. • Income tax expense decreased 42.00% to RMB 8.69 million due to lower profits at certain subsidiaries.

Key Takeaways Huabao Flavours delivered top-line growth and stronger cash generation, but profitability was pressured once non-recurring items were stripped out, reflecting lower government subsidies and a softer core margin. The balance sheet remained stable, and capital expenditure accelerated, as evidenced by the rise in construction-in-progress.