After its 2025 annual report received a 'disclaimer of opinion' and the controlling shareholder's shares were put up for judicial auction, veteran polyester leader Sanfangxiang stands on the brink of delisting. Since 2023, the company has accumulated losses exceeding 1.6 billion yuan, making it a textbook case of industry 'involution' in the polyester bottle chip sector. Its plight is not an isolated incident but a microcosm of the broader supply-demand imbalance in the polyester supply chain.
The Fatal Blow of Overcapacity
Sanfangxiang's crisis began with a 2020 'snake-swallows-elephant' acquisition of Hailun Chemical for 7.35 billion yuan, shifting its core business from textile printing and dyeing to bottle-grade polyester chips and PTA. Profits initially grew to 818 million yuan in 2022, but the market turned sharply from 2023. According to industry public data, domestic polyester bottle chip capacity surged to over 20 million tons per year by 2024, while demand stood at only about 12 million tons. This mismatch crushed product margins. As the second-largest producer, Sanfangxiang's aggressive expansion backfired, with losses widening from 487 million yuan in 2024 to 885 million yuan in 2025. Its trade revenue also plummeted nearly 60% year-on-year.
A narrow supply chain was another critical weakness. The company only covered the PTA-to-polyester chip segment, relying entirely on external purchases for the key raw material PX. Any upstream price hike directly eroded profits. This 'two-ends-outside' structure worked in an upcycle but proved disastrous during a downturn.
Debt Guarantees and Related-Party Transactions Lurk
Beyond operating losses, Sanfangxiang's financial risks are equally severe. As of the latest announcement, overdue debt guarantees for subsidiaries totaled 522 million yuan, equivalent to 10.82% of net assets. A fully-owned unit, Hailun Petrochemical, defaulted on lease payments to Taiping石化 Financial Leasing, forcing the parent company to seek rollovers. More troubling: as of end-2025, accounts receivable from related parties stood at 3.561 billion yuan, with only 107 million yuan in provisions. Auditors stated they could not verify recoverability. The controlling shareholder's shares are frozen; a potential auction could trigger a change in control.
Policy Intervention Offers Breathing Room
A turnaround emerged in late 2025 when national authorities convened meetings with PTA and bottle chip leaders to address 'involutionary' competition. This signaled the start of industry consolidation. In Q1 2026, Sanfangxiang posted a net profit of 32.74 million yuan, returning to the black. The Strait of Hormuz blockade also boosted polyester chain prices, temporarily lifting margins and pushing the stock price above the 1-yuan delisting threshold.
But risks remain. On June 26, Lianhe Credit Rating downgraded Sanfangxiang's long-term credit rating to A- with a negative outlook. The controlling shareholder's share auction was suspended due to an execution objection, but the sword of Damocles still hangs over the company.
Industry Lessons: Survival in the Involution Era
Sanfangxiang's case offers multiple warnings for the chemical fiber industry. First, capacity expansion must align with demand growth; the sector's capacity utilization rate has fallen below 60%. Second, vertical integration matters more than horizontal expansion. Competitors like Hengli and Rongsheng, with full 'PX-PTA-polyester' chains, show stronger resilience. Finally, financial health is a delisting red line; runaway related-party deals and guarantee defaults can accelerate collapse.