LOPAL TECH disclosed its 2025 annual performance report on April 9. During the reporting period, the company achieved operating revenue of 8.938 billion yuan, a year-on-year increase of 16.42%. However, total profit was -224 million yuan, a sharp decrease of 509 million yuan compared to the same period last year. Net profit attributable to shareholders was -173 million yuan, plummeting 472 million yuan year-on-year. After deducting non-recurring gains and losses, the net profit was -39 million yuan, a drastic decline of 660 million yuan compared to the previous year. While revenue showed steady growth, the company shifted from profit to loss, with core profitability indicators experiencing a comprehensive collapse.

Notably, the company's performance explanation contained seemingly contradictory statements. On one hand, it claimed that "the loss decreased significantly compared to the same period last year," while on the other hand, the data showed that total profit turned from a positive figure in the previous year to a loss of 224 million yuan this year. Calculations indicate that the total profit for the same period last year was approximately 285 million yuan, compared to -224 million yuan this year, representing an actual profit decline of 178%. This inconsistency raises investor concerns about the rigor of the financial report disclosure.

Firstly, the cathode material business pursued a 'volume-for-price' strategy: sales volume growth failed to offset profit erosion. The company explained that increased demand for power batteries and energy storage batteries drove up demand for lithium iron phosphate, leading to an improved industry supply-demand dynamic. This boosted sales volume for the company's lithium iron phosphate cathode material business, allowing scale effects to materialize and profitability to recover somewhat.

However, the significant gap between the claimed "recovery in profitability" and the reality of "shifting from profit to loss" reveals that the cathode material business is far from emerging from its downturn. In 2025, although demand in the lithium iron phosphate industry rebounded, product prices remained low. Coupled with fluctuations in the prices of raw materials like lithium carbonate, companies generally faced the dilemma of "increased volume without increased profits." LOPAL TECH's revenue growth was primarily driven by sales volume, but unit gross profit may have decreased instead of increased, leading to the erosion of overall profits.

Secondly, the minor loss of 39 million yuan in non-GAAP net profit contrasts sharply with the substantial net loss attributable to shareholders of 173 million yuan, indicating significant non-recurring losses acting as a 'hidden risk'. The net profit after deducting non-recurring items was only -39 million yuan, whereas the net profit attributable to shareholders showed a loss of 173 million yuan, a difference of 134 million yuan. This implies the company incurred substantial non-recurring losses, potentially from asset impairments, credit impairments, investment losses, or non-operating expenses. The performance report did not disclose details, but the scale of this difference exceeds the non-GAAP loss itself, becoming the primary factor dragging down the net profit attributable to shareholders.

For investors, the 'one-off' nature of non-recurring losses does not necessarily guarantee a subsequent reversal. If these losses involve inventory write-downs, bad debt provisions, or impairment of long-term assets, it suggests that potential risks on the company's balance sheet have not yet been cleared.

Thirdly, owners' equity contracted by 10.79%, while the leverage ratio climbed. As of the end of 2025, the company's total assets were 18.672 billion yuan, an increase of 16.30% from the beginning of the period. However, the owners' equity attributable to shareholders of the listed company was only 2.828 billion yuan, a decrease of 10.79% from the start of the period. The expansion of assets alongside the shrinkage of net assets indicates a significant increase in liability scale and a notable rise in the asset-liability ratio.

Under the dual pressures of profit losses and declining net assets, the company's financial leverage has increased further. If the cathode material business cannot achieve profitability quickly,持续的 interest expenses and depreciation will intensify cash flow constraints and could potentially trigger financial covenants in financing agreements.

Fourthly, intense industry competition persists, and the prospects for returning to profitability remain unclear. In 2025, although the lithium iron phosphate cathode material industry underwent a round of capacity rationalization, leading companies continued to expand production, while second and third-tier firms engaged in fierce competition for market share. LOPAL TECH persisted with capacity expansion during the industry's downturn, achieving sales growth at the expense of price. With overall industry capacity still过剩 and product prices unlikely to rebound significantly, relying solely on scale effects is insufficient for the company to return to profitability.

Furthermore, within the company's business structure, traditional segments like lubricants and automotive urea show sluggish growth, making cathode materials the primary revenue source. This means LOPAL TECH's performance is highly tied to the lithium battery material cycle, concentrating cyclical fluctuation risks.

In conclusion, for 2025, LOPAL TECH presented a perplexing report card: beneath the surface of revenue growth and a seemingly narrowed loss lies the harsh reality of total profit turning negative, an expanded net loss attributable to shareholders, and shrinking owners' equity. The company's claim of "recovered profitability" appears more like a faint gasp during an industry trough. Investors need to be vigilant: Will non-recurring losses continue to appear? Can cathode material prices truly emerge from the bottom? Until these questions have clear answers, LOPAL TECH's "spring" may still be far away.