Sunshine Paper (China Sunshine Paper Holdings Company Limited) recorded solid top-line growth but lower earnings for the six months ended 30 June 2026, underscoring the industry’s cost pressures and margin squeeze amid volatile market conditions.

Revenue and Sales Volume • Group revenue expanded 20.2% year-on-year to RMB 4.30 billion, supported by a 17.5% rise in machine-made paper sales to 1.14 million tonnes. • Paper products remained the core contributor, generating RMB 4.10 billion, or 95.5 % of total revenue. Electricity and steam sales added RMB 168.05 million (3.9 %), while other income streams contributed RMB 26.59 million (0.6 %).

Profitability • Profit attributable to shareholders fell 30.7 % to RMB 57.65 million as the cost of major raw materials outpaced selling price gains. • Group gross profit slipped 3.5 % to RMB 519.60 million; gross margin narrowed to 12.1 % from 15.1 %. • Cost of sales rose 24.5 % to RMB 3.78 billion, reflecting raw-material and energy cost inflation. • Segment margins: white top linerboard 15.1 %, coated-white top linerboard 11.1 %, core board 12.9 %, specialised paper 8.6 %, corrugated paper 10.0 %.

Expenses and Other Income • Distribution expenses increased 5.3 % to RMB 190.81 million but fell to 4.4 % of revenue (1H 2025: 5.1 %). • Administrative expenses rose 17.6 % to RMB 285.67 million. • Other income climbed to RMB 126.37 million, bolstered by RMB 91.25 million in government grants. • Net finance costs edged up 0.9 % to RMB 61.25 million; capitalised interest reached RMB 19.19 million.

Balance Sheet and Liquidity • Cash, bank balances and restricted deposits totalled RMB 3.05 billion (31 Dec 2025: RMB 2.92 billion). • Total debt stood at RMB 4.51 billion, lifting net gearing to 27.1 % from 26.4 %. • Inventory turnover improved to 34 days (1H 2025: 36 days), while trade receivable days shortened to 38. Current ratio declined to 0.81.

Cash Flow and Capital Expenditure • Operating cash inflow contracted to RMB 82.30 million versus RMB 181.97 million a year earlier. • Net investing outflow widened to RMB 668.06 million, reflecting RMB 472.70 million in capital expenditure and higher deposits for new production lines. • Net financing inflow reached RMB 492.75 million, driven by RMB 2.12 billion of new bank borrowings and RMB 396.22 million growth in discounted bills financing.

Capital Commitments and Pledges • Outstanding capex commitments were RMB 1.59 billion at period-end. • Assets pledged for borrowings amounted to RMB 2.45 billion.

Governance and Dividend • Board changes included the resignations of an executive director and two non-executive/independent directors, with two new appointments effective 29 January 2026. • No interim dividend was declared.

Outlook Management highlighted persistent cost headwinds and intense competition heading into 2H 2026, stressing continued focus on cost control, digital upgrades and efficiency gains to safeguard profitability and cash flow.