A veteran polyester bottle chip leader, founded in 1980, now stands on the brink of delisting after three consecutive years of losses totaling ¥1.628 billion. Sanfangxiang's annual report received a 'disclaimer of opinion' and an 'adverse internal control opinion,' triggering a double delisting risk warning. This is not merely a single company's financial crisis but a concentrated reflection of severe overcapacity and narrow supply chain vulnerability in the polyester bottle chip industry.
Capacity Involution: 20 Million Tons Supply vs. 12 Million Tons Demand
Sanfangxiang's plight originates from industry-wide supply-demand imbalance. From 2023 to 2024, domestic polyester bottle chip capacity surged past 20 million tons per year, while downstream demand hovered around 12 million tons. This means nearly 40% of capacity sits idle or underutilized. As the industry's second-largest producer, Sanfangxiang acquired Hailun Chemical for ¥7.35 billion in 2020, pivoting to bottle-grade polyester chips and PTA, and launched aggressive capacity expansion. But higher output did not translate into profits—from 2023 to 2025, cumulative losses reached ¥1.628 billion, with a single-year loss of ¥885 million in 2025.
More critically, Sanfangxiang's supply chain is dangerously narrow. It only covers the PTA-to-polyester bottle chip segment, relying entirely on purchased PX. Any upstream PX price fluctuation directly squeezes already thin margins. In 2025, the company's trading revenue plummeted 59.97% year-on-year to ¥1.713 billion, underscoring its weak cost control.
Debt Chain Reaction: Guarantee Overdues and Related-Party Receivables
Beyond operational losses, Sanfangxiang faces cascading guarantee risks. As of the latest filing, cumulative overdue debts under guarantees for subsidiaries reached ¥522 million, accounting for 10.82% of the most recent audited net assets. Hailun Chemical, a wholly-owned subsidiary, defaulted on ¥25.6376 million in rent due to Taiping石化 Financial Leasing, for which Sanfangxiang provided irrevocable joint liability guarantees. The company can only 'actively communicate with creditors to seek rollover or extension arrangements.'
More alarming are hidden risks from related-party transactions. As of end-2025, accounts receivable from related parties totaled ¥3.561 billion, but accumulated bad debt provisions were only ¥107 million. Auditors explicitly stated they could not obtain sufficient evidence on the recoverability of these amounts. Controlling shareholder shares have been judicially frozen; any subsequent disposal could trigger a change in actual control. Additionally, ¥600 million in related-party guarantees for the controlling shareholder remain unprovisioned—these numbers signal massive uncertainty.
Anti-Involution Policy: Industry Turning Point or Corporate Lifeline?
Sanfangxiang's crisis stems from industry involution, and anti-involution policies may offer a lifeline. In H2 2025, relevant national authorities convened a symposium with PTA and bottle chip leaders to discuss industry operations and project progress. Against a backdrop of supply-demand mismatch and razor-thin margins, the meeting was widely seen as a key step to defuse 'involutionary competition' and stabilize the sector.
Policy effects began to show in Q1 2026: Sanfangxiang posted a net profit of ¥32.7409 million, returning to profitability year-on-year. Meanwhile, geopolitical events like the Hormuz Strait blockade drove a significant rebound in polyester chain product prices, improving margins. The company's stock price also rebounded, temporarily moving away from the ¥1 delisting threshold.
But a turnaround does not equal safety. In June 2026, Lianhe Credit Rating downgraded Sanfangxiang's long-term credit rating to A- with a negative outlook, and downgraded its convertible bond rating to A-. In May 2026, controlling shareholder shares were put up for public auction; although the sale was stayed due to an enforcement objection, the 'sword of Damocles' remains overhead.
Implications for Industry Procurement and Investment
Sanfangxiang's case offers several critical warnings for the polyester chain. First, single-segment capacity expansion in an oversupplied environment quickly becomes a liability. Second, over-reliance on purchased raw materials leaves no buffer against price volatility. Third, the complexity of related-party transactions and guarantee chains can trigger cascading failures in a crisis.