Polyester Bottle Chip Giant ST Sanfang: An Industry Warning Amid Overcapacity and Debt Crisis

After three consecutive years of losses totaling 1.628 billion yuan, a 'disclaimer of opinion' on its 2025 annual report, and an 'adverse internal control opinion,' veteran polyester giant Sanfangxiang (ST Sanfang) is teetering on the edge of delisting. Founded in 1980 in Jiangyin and listed in 2003, the company's fate is not an isolated case but a microcosm of the deep overcapacity crisis in the polyester bottle chip sector.

The Overcapacity Meat Grinder

Sanfangxiang's losses stem directly from a severe supply-demand mismatch in the polyester bottle chip industry. Public data shows that domestic capacity surged to over 20 million tons per year between 2023 and 2024, while demand was only about 12 million tons—a capacity utilization rate below 60%. As the second-largest producer, Sanfangxiang expanded aggressively after acquiring Hailun Chemical, but product spreads shrank as excess supply crushed margins.

More critically, its industrial chain is dangerously narrow: covering only the PTA-to-bottle chip segment, with the key raw material PX almost entirely purchased externally. Any upstream price hike immediately squeezes profits. In 2025, the company's trading revenue plummeted 59.97% year-on-year, a clear sign of weak cost control.

Debt Risks and Related-Party Transaction Fog

Beyond operational losses, Sanfangxiang faces a chain reaction of overdue guarantees. As of the latest filing, cumulative overdue debt under guarantees for subsidiaries reached 522 million yuan, accounting for 10.82% of the latest audited net assets. A finance lease for wholly-owned subsidiary Hailun Petrochemical has fallen into arrears, triggering the company's irrevocable joint liability.

Related-party transaction risks are equally alarming: by end-2025, accounts receivable from related parties totaled 3.561 billion yuan, but the accumulated bad debt provision was only 107 million yuan. Auditors explicitly stated they could not obtain sufficient evidence on the recoverability of these amounts. Controlling shareholder shares have been frozen, and any subsequent disposal could trigger a change in control—further heightening uncertainty for creditors and investors.

Policy Intervention: Dawn and Shadow

In the second half of 2025, Chinese regulators held a symposium with leading PTA and bottle chip companies, widely seen as a signal to curb 'involution-style' competition. Under policy guidance, the supply-demand landscape has marginally improved. In Q1 2026, Sanfangxiang posted a net profit of 32.74 million yuan, returning to profitability. Geopolitical tensions in the Strait of Hormuz also drove a price rebound in the polyester chain, temporarily relieving margin pressure.

But risks persist. In June 2026, Lianhe Credit downgraded Sanfangxiang's long-term credit rating to A- with a negative outlook. The auction of controlling shareholder shares has been suspended due to an execution objection, but the sword of Damocles remains. A 600 million yuan related-party guarantee for the controlling shareholder has not been recognized as a provision—a potential black hole if triggered.

Practical Recommendations

For Buyers - For purchases of bottle chip or PTA from Sanfangxiang or its subsidiaries, require advance payment or letter of credit guarantees to avoid supply disruptions due to liquidity crises. - Monitor the progress of related-party transactions and guarantee litigation; if delisting triggers, cascading defaults may follow. - Diversify sourcing to reduce reliance on single high-capacity producers.

For Foreign Trade Companies - For export business involving Sanfangxiang, verify whether the issuing bank still accepts its credit rating; consider third-party confirmation if necessary. - Monitor geopolitical developments in the Strait of Hormuz to anticipate polyester raw material price swings; lock in forward contracts to hedge volatility. - Track the pace of capacity consolidation under anti-involution policies to adjust inventory cycles.