A veteran PET bottle chip leader, founded in 1980 and listed in 2003, now stands on the brink of delisting due to three consecutive years of losses and a 'disclaimer of opinion' on its audit report. Sanfangxiang's plight is not an isolated case but a typical example of a company being crushed by severe overcapacity in China's PET bottle chip industry.
Overcapacity: The Core Profit Killer
Public data shows that between 2023 and 2024, domestic PET bottle chip capacity surged to over 20 million tons per year, while market demand was only 12 million tons, leaving a gap of 8 million tons. Product spreads have continuously shrunk, squeezing industry profits to the limit. As the second-largest producer, Sanfangxiang could not escape the damage; its aggressive capacity expansion backfired. From 2023 to 2025, the company accumulated losses of 1.628 billion yuan, with a single-year loss of 885 million yuan in 2025, a significant year-on-year increase.
More critically, Sanfangxiang's industrial chain is highly concentrated on the 'PTA to PET bottle chip' segment, with core raw material PX entirely dependent on external purchases. When upstream PX prices fluctuate, the company lacks hedging ability, and profit margins are repeatedly squeezed. This single-chain model was profitable during an upcycle but proves extremely fragile in the current environment of overcapacity and narrowing spreads.
Debt and Guarantees: A Chain of Financial Bombs
Beyond operating losses, Sanfangxiang's financial risks are accelerating. As of the latest announcement, the company's cumulative overdue debt under guarantees for subsidiaries has reached 522 million yuan, accounting for 10.82% of its latest audited net assets. A wholly-owned subsidiary, Hailun Petrochemical, triggered guarantee liabilities after failing to pay due financial lease rentals. The company's accounts receivable from related parties stood at 3.561 billion yuan, with only 107 million yuan in bad debt provisions. Auditors explicitly stated they could not obtain sufficient evidence for the recoverability of these amounts.
The controlling shareholder's shares are frozen, and if disposed of, could trigger a change in actual control. A 600 million yuan related-party guarantee for the controlling shareholder remains unprovisioned. Credit rating agency Lianhe Ratings downgraded Sanfangxiang's long-term credit rating to A- with a negative outlook in June 2026.
Anti-Internal Competition Policy Shows Early Signs, But Industry Shakeout Is Far From Over
In the second half of 2025, Chinese authorities convened a symposium with major PTA and bottle chip companies to discuss industry operations and project progress. Against the backdrop of supply-demand mismatch and thin margins, the meeting was seen as a policy signal to prevent and defuse 'involution' competition. In Q1 2026, Sanfangxiang posted a net profit of 32.74 million yuan, turning around from losses. Meanwhile, geopolitical events in the Strait of Hormuz boosted polyester chain product prices, improving margins. The company's stock price also temporarily moved above the 1-yuan delisting threshold.
However, the sustainability of this turnaround is questionable. The fundamental overcapacity issue remains unresolved; government intervention provides temporary relief but not a structural fix. Sanfangxiang's single-chain problem, high guarantee overdue risks, and the pending auction of controlling shareholder shares all suggest the veteran company has not yet escaped the danger zone.