The cost of overcapacity in the PET bottle chip sector is being crystallized in the form of a delisting risk for a veteran industry leader. Sanfangxiang, a Jiangyin-based company founded in 1980, faces a dual delisting warning after its 2025 annual report received a disclaimer of opinion and an internal control adverse opinion, while its controlling shareholder's shares face judicial auction. This is not merely a single-company crisis but a microcosm of the entire polyester chain's supply-demand imbalance and squeezed margins.
Background: From a 'Snake Swallowing Elephant' to Consecutive Losses
The pivotal shift for Sanfangxiang occurred in 2020. When its original textile printing and dyeing business lost competitiveness, the company acquired Hailun Chemical—a firm with over 20 times its revenue and 7 times its net assets—for a market cap of around RMB 3.4 billion, completing a 'snake swallowing elephant' restructuring. The new main business shifted to bottle-grade PET chips and PTA. For the first two years after the acquisition, profits grew steadily: RMB 630 million in 2021 and RMB 818 million in 2022. However, from 2023 onward, the situation reversed sharply, with cumulative losses over three consecutive years reaching RMB 1.628 billion. In 2025 alone, the company lost RMB 885 million, a significant year-on-year expansion.
The direct driver of these losses is severe supply-demand mismatch in the industry. According to public industry data, domestic PET bottle chip capacity surged in 2023-2024, exceeding 20 million tons per year, while actual demand stood at only 12 million tons. This created a gap of 8 million tons, leading to extreme price compression and industry-wide involution. As the second-largest producer in the sector, Sanfangxiang expanded aggressively but failed to translate higher output into profits. Its industrial chain covers only the PTA-to-bottle chip segment, leaving it heavily dependent on external purchases of the key raw material PX, which weakens cost control. In 2025, the company's trading business revenue slumped 59.97% year-on-year to RMB 1.713 billion.
Industry Impact: Debt Contagion and Anti-Involution Signals
Beyond losses, Sanfangxiang's debt risks are spreading. As of the latest announcement, the cumulative overdue debt for which the company provides guarantees for subsidiaries and inter-subsidiary guarantees has reached RMB 522 million, accounting for 10.82% of the latest audited net assets. Notably, subsidiary Hailun Petrochemical failed to pay RMB 25.6376 million in rent to Taiping石化 Financial Leasing, and the company provided irrevocable joint liability guarantees. More concerning is that as of the end of fiscal 2025, the company's accounts receivable from related parties stood at RMB 3.561 billion, but only RMB 107 million in bad debt provisions had been made. Auditors explicitly stated they could not obtain sufficient evidence regarding the recoverability of these amounts. The controlling shareholder's shares have been judicially frozen; if disposed of, actual control could change.
Yet, Sanfangxiang's crisis also sends a key signal: government anti-involution intervention is showing effects. In the second half of 2025, relevant national authorities convened a symposium with major PTA and bottle chip producers, addressing supply-demand mismatch and thin margins—widely seen as a critical move to prevent 'involution' competition. In Q1 2026, Sanfangxiang reported a net profit of RMB 32.7409 million, swinging back to profitability. Additionally, due to geopolitical factors such as the Strait of Hormuz blockade, polyester chain product prices rebounded significantly, improving margins. The company's share price also temporarily moved away from the RMB 1 delisting threshold.
However, risks remain. On June 26, 2026, Lianhe Credit downgraded Sanfangxiang's long-term credit rating to A- with a negative outlook, and also downgraded its convertible bonds. Although the controlling shareholder's share auction was temporarily halted due to an execution objection, the 'sword of Damocles' still hangs overhead.