A 46-year-old polyester giant is experiencing a rapid fall from industry peak to the brink of delisting. Sanfangxiang, based in Jiangyin, Jiangsu, received disclaimers of opinion and internal control adverse opinions in its 2025 annual report, triggering dual delisting risk warnings. With controlling shareholder shares auctioned and overdue guarantees exceeding 500 million yuan, the numbers paint a grim picture of overcapacity in the polyester bottle chip sector.
The Price of Capacity Expansion
Sanfangxiang's crisis didn't happen overnight. In 2020, the company, originally a textile printing and dyeing firm, acquired Hailun Petrochemical for 7.35 billion yuan, pivoting to bottle-grade polyester chips and PTA. The first two years after the acquisition were profitable: net profit of 630 million yuan in 2021 and 818 million yuan in 2022. But from 2023 to 2025, the company suffered three consecutive years of losses totaling 1.628 billion yuan, with a single-year loss of 885 million yuan in 2025.
Where did the money go? The answer lies in severe supply-demand imbalance. China's polyester bottle chip capacity surged past 20 million tons per year during 2023-2024, while demand stood at only 12 million tons. The 8-million-ton gap crushed product spreads. As the second-largest producer, Sanfangxiang expanded aggressively but fell into a trap of rising output without profit growth.
More critically, the company's industrial chain is too narrow. It only covers the PTA-to-polyester chip segment, relying entirely on external purchases for the core raw material PX. This "both ends out" structure leaves it vulnerable to upstream price hikes. In 2025, its trading business revenue plunged nearly 60% to just 1.713 billion yuan, a direct symptom of this structural flaw.
Debt Chains and Audit Risks
Beyond operating losses, Sanfangxiang faces a cascade of overdue guarantees. As of the latest filing, cumulative overdue debts guaranteed by the company for its subsidiaries reached 522 million yuan, or 10.82% of its latest audited net assets. A subsidiary, Hailun Petrochemical, defaulted on 25.6376 million yuan in lease payments to Taiping石化 Financial Leasing, with the parent company bearing irrevocable joint liability. Controlling shareholder shares are frozen, and if disposed, control could change hands.
Audit risks are equally alarming. Accountants could not obtain sufficient evidence for the recoverability of 3.561 billion yuan in related-party receivables, signaling severe internal control and cash collection deficiencies. In June 2026, Lianhe Credit Rating downgraded Sanfangxiang's long-term credit rating to A- with a negative outlook, and downgraded its convertible bonds to A-.
Anti-Internal-Competition Industry Shift
Sanfangxiang's crisis mirrors the broader disorderly capacity expansion in China's polyester industry. But a turnaround may be brewing. In the second half of 2025, national authorities convened a symposium with PTA and bottle chip leaders to discuss industry operations and projects under construction. Against a backdrop of supply-demand mismatch and thin margins, the meeting was seen as a key step to address "internal competition."
The policy effect showed in Q1 2026: Sanfangxiang posted a net profit of 32.7409 million yuan, reversing losses. Meanwhile, external events like the Strait of Hormuz blockade boosted polyester chain product prices and margins. The stock price rebounded, temporarily escaping the 1-yuan delisting threshold. But the controlling shareholder's share auction, though delayed by objections, still hangs like a sword of Damocles.
Sanfangxiang's story sounds an alarm: capacity expansion must not come at the expense of profitability and risk control. For buyers, it underscores the need to reassess supplier financial health and supply chain resilience.