A veteran polyester leader founded in 1980 now stands on the brink of delisting. Sanfangxiang's 2025 annual report received an 'unable to express opinion' and an 'internal control negative opinion,' triggering dual delisting risk warnings, while the controlling shareholder's shares face judicial auction. These signals point to a brutal reality: the polyester industry's overcapacity is eliminating weaker players in the most unforgiving way.
The Cost of Overcapacity: A Three-Year, 1.6 Billion Yuan Loss
Sanfangxiang's financial trajectory vividly maps the cyclical downturn of the polyester bottle chip sector. After earning profits of 630 million yuan in 2021 and 818 million yuan in 2022, the company has suffered three consecutive years of losses since 2023, totaling 1.628 billion yuan. In 2025 alone, losses reached 885 million yuan, nearly doubling year-on-year.
This money was not lost to poor management but to the brutal supply-demand imbalance. China's polyester bottle chip industry saw concentrated capacity release from 2023 to 2024, pushing total domestic capacity beyond 20 million tons per year, while actual demand stood at only 12 million tons. As the industry's second-largest producer, Sanfangxiang acquired Hailun Chemical for 7.35 billion yuan in 2020, pivoting from textile dyeing to bottle-grade polyester chips and PTA, and launched large-scale expansion. Capacity rose, but profits did not follow.
Single-Chain Structure: The Fatal Weakness in Cost Control
Sanfangxiang's plight is not merely a victim of the industry cycle. Its industrial chain is too narrow—covering only the PTA-to-polyester bottle chip segment, with core raw material PX heavily reliant on external purchases. This means any rise in upstream PX prices instantly squeezes margins. Compared to integrated leaders with 'PX-PTA-polyester' chains, Sanfangxiang's cost control is notably weak.
In 2025, the company's trading revenue fell 59.97% year-on-year to 1.713 billion yuan, further confirming the weakness of its core business. More alarming: as of end-2025, 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 recoverability. The controlling shareholder's shares are under judicial freeze, and any disposal could trigger a change of control.
Debt Risks: The Chain Reaction of Guarantee Defaults
Beyond losses, Sanfangxiang faces a 'minefield' of overdue guarantees. As of the latest announcement, cumulative overdue debts under guarantees for subsidiaries reached 522 million yuan, or 10.82% of the most recent audited net assets. Among them, 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.
The company has also not recognized provisions for a 600 million yuan related-party guarantee for the controlling shareholder. These figures conceal enormous uncertainty. Lianhe Credit Rating downgraded Sanfangxiang's long-term credit rating to A- with a negative outlook on June 26, and also downgraded the 'Sanfang Convertible Bond.'
Anti-Involution: A Policy-Driven Turnaround
Yet there is a glimmer of hope. Sanfangxiang's crisis stems from involution, and anti-involution policies may offer a lifeline. In the second half of 2025, national authorities convened meetings with PTA and bottle chip leading enterprises to discuss industry operations and project progress. Against the backdrop of supply-demand mismatch and thin margins, this meeting was seen as a key measure to prevent 'involution-style' competition and promote stable operations.
Under government intervention, the competitive landscape improved markedly. In Q1 2026, Sanfangxiang posted a net profit of 32.74 million yuan, turning around from losses. Additionally, the Strait of Hormuz blockade this year triggered a significant rebound in polyester chain product prices, improving margins. The company's share price also recovered somewhat, temporarily moving away from the 1-yuan delisting threshold.
But the 'sword of Damocles' remains. In May 2026, the controlling shareholder's shares were put up for public auction, which was temporarily stayed due to an execution objection, but the risk of control change persists.
Industry Shakeout Accelerates: From Scale to Efficiency Competition
The Sanfangxiang case reveals a broader trend: the polyester industry is shifting from a 'scale expansion' phase to an 'efficiency competition' phase. Over the past few years, polyester leaders rushed into PTA and bottle chip segments, leading to concentrated capacity release and severe supply-demand imbalance. When industry margins are compressed to the limit, only companies with integrated chains, strong cost control, and diversified customer bases can survive.
For buyers, this means reassessing supplier financial health. Large capacity does not equal stable supply—a company on the verge of delisting poses inherent continuity risks. For foreign trade enterprises, the Sanfangxiang case reminds us that supplier credit ratings and financial transparency matter more than price in cross-border trade.