A 46-year-old legacy polyester giant is teetering on the edge of delisting. Sanfangxiang (*ST Sanfang) received a 'disclaimer of opinion' on its 2025 annual report and an 'adverse internal control opinion.' Its controlling shareholder's shares are being auctioned—signals that, for any listed company, mean a make-or-break moment.
The Root Cause: Overcapacity
Sanfangxiang's plight is not an isolated case but a microcosm of the 'involution' in the polyester bottle-grade chip sector. From 2023 to 2024, domestic capacity surged past 20 million tons per year, while market demand stood at only about 12 million tons. This severe supply-demand mismatch has squeezed product spreads to near-zero, crushing industry profits.
As the second-largest domestic producer of polyester bottle-grade chips, Sanfangxiang shifted its core business to bottle-grade polyester chips and PTA after acquiring Hailun Chemical in a 'snake-swallowing-elephant' deal in 2020. The first two years after the acquisition (2021-2022) were profitable, with net profits of 630 million yuan and 818 million yuan, respectively. But from 2023 onward, the company suffered three consecutive years of losses, totaling 1.628 billion yuan. In 2025 alone, it lost 885 million yuan, nearly doubling year-on-year.
More critically, Sanfangxiang's industrial chain is too thin. It covers only the PTA-to-polyester-chip segment, relying entirely on external purchases for its core raw material, PX. Once upstream PX prices fluctuate, the company's cost-control ability crumbles. In 2025, its trading revenue fell nearly 60% year-on-year to 1.713 billion yuan, reflecting weak downstream demand.
Debt and Guarantees: A Sword of Damocles
Beyond losses, Sanfangxiang faces a minefield of debt risks. As of the latest announcement, the company's cumulative overdue debt from guarantees provided to subsidiaries has reached 522 million yuan, accounting for 10.82% of its most recent audited net assets. Notably, its wholly owned subsidiary Hailun Petrochemical failed to pay due rent to Taiping石化 Financial Leasing, totaling 25.6376 million yuan, for which the company bears irrevocable joint liability.
More alarmingly, as of end-2025, the company's accounts receivable from related parties stood at 3.561 billion yuan, but accumulated bad-debt provisions were only 107 million yuan. Auditors explicitly stated they could not obtain sufficient evidence on the recoverability of these receivables. Additionally, shares held by the controlling shareholder, Sanfangxiang Group, and its affiliates have been frozen; if subsequently disposed of, it could trigger a change in control. The company has also provided 600 million yuan in related-party guarantees for the controlling shareholder without recognizing any estimated liabilities—meaning more potential bombs may still be ticking.
Anti-Involution: A Glimmer of Hope?
Sanfangxiang's crisis stems from excessive industry competition, and policy intervention may offer a lifeline. In the second half of 2025, relevant national authorities convened a symposium with leading PTA and bottle-chip enterprises to discuss ways to prevent and resolve 'involution-style' competition and promote stable industry operations. This signal was widely interpreted as government readiness to intervene in overcapacity.
The effect was already visible in Q1 2026: Sanfangxiang posted a net profit of 32.7409 million yuan, turning profitable year-on-year. Additionally, tensions in the Strait of Hormuz this year have driven up polyester chain product prices, improving margins. The company's stock price has also temporarily moved above the 1-yuan delisting threshold.
However, these short-term gains do not mask long-term risks. On June 26, Lianhe Ratings downgraded Sanfangxiang's long-term credit rating to A- with a negative outlook, and also downgraded its 'Sanfang Convertible Bond' to A-. In May 2026, the judicial auction of the controlling shareholder's shares was postponed due to an execution objection, but the Sword of Damocles remains suspended overhead.