With cumulative losses of 1.628 billion yuan over three consecutive years and a 2025 annual report flagged with a 'disclaimer of opinion' and 'internal control adverse opinion,' veteran polyester leader Sanfangxiang is teetering on the brink of delisting. Its controlling shareholder's shares have been subject to judicial auction, and though the process is temporarily stayed, the company founded in 1980 now stands at the epicenter of an industry shakeout.
Overcapacity as the Fatal Wound
Sanfangxiang's plight is not an isolated case but a microcosm of the polyester bottle chip sector's capacity frenzy. Industry data shows that from 2023 to 2024, domestic PET bottle chip capacity surged past 20 million tons per year, while downstream demand remained at just 12 million tons per year—a supply-demand gap of over 8 million tons. This implies an average capacity utilization rate below 60%, making price wars the norm.
As the second-largest player in the sector, Sanfangxiang acquired Hailun Chemical for 7.35 billion yuan in 2020, shifting its main business from textile dyeing to bottle-grade polyester chips and PTA. In the first two years after the acquisition, profits were solid: 630 million yuan in 2021 and 818 million yuan in 2022. But from 2023 onward, the overcapacity hangover hit hard: the company posted three consecutive years of losses, escalating from 256 million yuan in 2023 to 885 million yuan in 2025.
The core issue lies in its narrow supply chain. Sanfangxiang only covers the PTA-to-polyester chip segment, relying entirely on external purchases for its key raw material, PX. When upstream PX prices rise due to crude oil volatility or supplier maintenance, the company lacks internal hedging mechanisms, and margins are rapidly squeezed. In 2025, its trading business revenue fell 59.97% year-on-year, directly reflecting a loss of market pricing power.
Debt Chain Reaction and Internal Control Failure
Beyond losses, guarantee defaults represent another time bomb. As of the latest announcement, cumulative overdue debts guaranteed by Sanfangxiang for its subsidiaries reached 522 million yuan, accounting for 10.82% of the most recent audited net assets. Specifically, its wholly owned subsidiary Hailun Petrochemical defaulted on 25.64 million yuan in rent payments to Taiping石化 Financial Leasing, for which Sanfangxiang provided irrevocable joint liability guarantees.
More alarming to the market is the risk from related-party transactions. At the end of 2025, the company's accounts receivable from related parties stood at 3.561 billion yuan, but the accumulated bad debt provision was only 107 million yuan. The auditor explicitly stated it could not obtain sufficient appropriate audit evidence regarding the recoverability of these amounts. All shares held by the controlling shareholder, Sanfangxiang Group, and Jiangsu Sanfangxiang International Trade Co., Ltd., have been judicially frozen. If disposal proceeds, the company's actual control may change. Additionally, 600 million yuan in related-party guarantees provided for the controlling shareholder have not been recognized as provisions, implying potential losses not yet reflected in the financial statements.
Breathing Room from State Intervention, Yet Unresolved Challenges
Sanfangxiang's turnaround came from industry-level anti-involution measures. In the second half of 2025, national authorities convened a symposium with leading PTA and bottle chip enterprises to discuss ongoing projects and industry operations. Against the backdrop of supply-demand mismatch and razor-thin margins, the meeting was widely seen as a policy signal to curb vicious competition.
Results appeared in Q1 2026: Sanfangxiang posted a net profit of 32.74 million yuan, reversing losses. The blockade of the Strait of Hormuz also pushed up polyester chain product prices, improving margins. The company's stock price temporarily moved above the 1-yuan delisting threshold.
But long-term risks persist. On June 26, Lianhe Credit Rating downgraded Sanfangxiang's issuer credit rating to A- with a negative outlook. The controlling shareholder's stake auction, though postponed, remains unresolved. From an industry perspective, even with policy intervention, the gap between 20 million tons of capacity and 12 million tons of demand will take years to digest. Unless Sanfangxiang fills its supply chain gaps and reduces external dependence, any price rebound will be merely a painkiller.
Lessons for the Industry
Sanfangxiang's case teaches the polyester industry a lesson: in an overcapacity cycle, scale is no longer a moat; supply chain completeness is. Companies that bet on a single link and lack raw material self-sufficiency have little defense in a price war.
For buyers, it is essential to reassess suppliers' financial health. Sanfangxiang's guarantee defaults and related-party issues show that even a well-known brand may have compromised fulfillment capability due to cash flow strain. Priority should be given to suppliers with integrated supply chains and controllable debt ratios.
For foreign trade firms, Sanfangxiang's export business may suffer from its credit rating downgrade. When negotiating PET chip or PTA orders, request the latest credit rating report and consider safer settlement methods such as letters of credit or advance payments.