After three consecutive years of cumulative losses exceeding 1.6 billion yuan, a 'disclaimer of opinion' on its 2025 annual report, and judicial auction of controlling shareholder shares, veteran polyester leader Sanfangxiang is teetering on the brink of delisting. Its plight is not an isolated case but a microcosm of severe overcapacity and intensifying competition in China's polyester bottle chip industry.
Overcapacity Crushes Margins
The root of Sanfangxiang's losses lies in extreme supply-demand imbalance. From 2023 to 2024, China's polyester bottle chip capacity surged past 20 million tons annually, while downstream demand was only about 12 million tons—a gap of 8 million tons. As the industry's second-largest producer, Sanfangxiang acquired Hailun Petrochemical in a 'snake-swallows-elephant' deal in 2020, shifting focus to bottle-grade polyester chips and PTA, then aggressively expanded capacity. But higher output failed to translate into profits: losses began in 2023 and ballooned to 885 million yuan in 2025 alone, nearly doubling year-on-year.
More critically, Sanfangxiang's industrial chain covers only the PTA-to-bottle-chip segment, leaving it fully dependent on external purchases for core raw material PX. Any upstream price increase squeezes margins to near zero. Its trading revenue plunged nearly 60% in 2025, a direct signal that product spreads have collapsed below breakeven.
Debt Chain Reaction and Audit Crisis
Beyond losses, guarantee defaults and related-party receivables have worsened the financial picture. As of the latest filing, cumulative overdue debts from guarantees for subsidiaries reached 522 million yuan, 10.82% of net assets. Subsidiary Hailun Petrochemical has defaulted on financial lease payments to Taiping石化, triggering Sanfangxiang's irrevocable joint liability.
More alarming is the related-party receivables issue: at end-2025, receivables from related parties stood at 3.561 billion yuan, yet only 107 million yuan in bad debt provisions had been made. Auditors explicitly stated they could not obtain sufficient evidence for recoverability—the core reason for the 'disclaimer of opinion.' Controlling shareholder shares have been frozen and auctioned (temporarily halted due to an objection), but control change risk remains.
Anti-Involution Policy Offers a Lifeline
A turnaround is not impossible. In H2 2025, Chinese authorities convened a symposium with major PTA and bottle chip producers, signaling a push to curb 'involution-style' competition. This policy shift has begun to improve supply-demand dynamics. In Q1 2026, Sanfangxiang posted a net profit of 32.74 million yuan, swinging from loss. Geopolitical tensions in the Strait of Hormuz also boosted polyester chain prices, providing short-term relief.
But profit does not equal safety. In June 2026, Lianhe Credit Rating downgraded Sanfangxiang's long-term credit rating to A- with a negative outlook. While the stock price has temporarily escaped the 1-yuan delisting threshold, the controlling shareholder auction, contingent guarantee risks, and the fundamental problem of a narrow industrial chain remain unresolved.
Implications for Industry Buyers and Traders
Sanfangxiang's case sends a clear warning: in an overcapacity environment, scale expansion alone is no longer a moat. Vertical integration, cost control, and cash flow health are the true survival factors.