Huitong Energy reports its worst performance in three years after entering the semiconductor industry; three key development details require attention.

Interface News Reporter | Guo Jingjing

After transitioning into the semiconductor industry for a year, Huitong Energy (600605.SH) has released its first performance report.

The annual report shows that in 2025, Huitong Energy achieved revenue of 103 million yuan, a decrease of 24.48% year-on-year; net profit attributable to shareholders of 24.12 million yuan, down 74.64%; net profit after non-recurring gains and losses of 17.72 million yuan, up 2.13%; net cash flow from operating activities was -1.63 billion yuan, compared to 72.43 million yuan in the same period last year.

Without compensation for expropriation and demolition, Huitong Energy posted its worst annual results in nearly three years. The company explained that the revenue decline was due to the contraction of its low-margin Meiju decoration business; the net cash outflow from operating activities was mainly due to paying policy-based relocation income taxes.

In 2024, one of Huitong Energy’s properties was expropriated, with compensation totaling 251 million yuan, including a reward fee of 82.59 million yuan recorded as non-operating income.

Despite poor performance, Huitong Energy still insists on dividend payments. The company plans to distribute a cash dividend of 0.4 yuan per 10 shares (tax included), totaling approximately 8.25 million yuan (tax included), accounting for 34.21% of net profit attributable to shareholders.

Huitong Energy indeed has substantial assets. On March 10, it announced plans to use up to 1.2 billion yuan of idle funds for cash management, investing in high-security, low-risk, highly liquid cash management products.

“Relying on old assets is not a long-term solution.” In 2025, Huitong Energy’s biggest move is to expand into the semiconductor industry.

Huitong Energy was formerly a state-owned Shanghai Light Industry Machinery Company. In December 2024, its former actual controller, Tang Yuxiang, officially exited, and Huang Ying took control.

Born in 1976, Huang Ying has over ten years of experience in venture capital, mainly investing in TMT, healthcare, and intelligent manufacturing sectors. She previously worked at Shanghai Weihao Chuangxin Investment Management Co., Ltd., which received investment from Weir Group (603501.SH, i.e., Will Semiconductor).

After taking control of Huitong Energy, Huang Ying led the company’s strategic shift into the semiconductor industry. However, based on the annual report, the new business is still in its early stages, and reversing Huitong Energy’s performance decline will require more time and development.

Specifically, there are three key areas to watch.

Detail 1: Nearly 200 million yuan direct investment in Xinghua Chip, profits still pending

In August 2025, Huitong Energy announced it would invest 185 million yuan to acquire a 7.43% stake in Xinghua Chip (Shaoxing) Semiconductor Technology Co., Ltd. (referred to as “Xinghua Chip”). This move attracted significant market attention.

“This is a crucial step for the company to advance into the hard tech physical industry,” Huitong Energy said. The annual report shows that the acquisition is still in progress, with the company actively completing the business registration procedures.

Huitong Energy noted that when Xinghua Chip’s first-phase production line reaches full capacity, the company plans to further increase its investment or acquire more shares at a price not exceeding 2 yuan per share (including 2 yuan).

Founded in late November 2022, Xinghua Chip is engaged in the production of semiconductor photomasks (also called masks). Its actual controller, Shaoxing Xinxing Enterprise Management, is controlled by Zhang Rujing, known as the “chip godfather,” who previously founded SMIC (688981.SH), Xinseng Semiconductor, Qingdao Xin’en, and other semiconductor companies.

“The company will continue to increase R&D investment, aiming to break into 14nm and below advanced process nodes, striving to become a leading domestic photomask supplier,” Xinghua Chip stated at the time.

Interface News learned that Xinghua Chip began production and sales at the end of 2024. It has now developed and produced photomasks for 40nm and above processes, with stable mass production capabilities for 55nm and above BIM and PSM photomasks, and is expected to deliver 28nm process products by 2026.

Currently, Xinghua Chip’s capacity and sales are in the ramp-up phase, with full production expected in the first quarter of 2026. The company has also launched a second-phase expansion project, aiming for full capacity by the fourth quarter of 2026, which will increase its total capacity to 3,000 pieces per month.

According to Huitong Energy’s announcement, as of September 30, 2025, Xinghua Chip’s total assets were 1.33 billion yuan, with net assets of 1.039 billion yuan; in 2024 and the first nine months of 2025, it achieved revenues of 5.097 million yuan and 21.23 million yuan, respectively, with losses of 45.28 million yuan and 68.08 million yuan.

This may require more patience. “Xinghua Chip is still steadily advancing its R&D and production, and it will take time to develop,” a related person from Huitong Energy told Interface News.

Semiconductor photomasks, as the “negatives” of lithography, are the third-largest consumable in front-end semiconductor materials. According to SEMI data, the cost of masks accounts for over 10% of the total wafer fabrication materials.

“28nm” is a dividing line. Due to the complexity of manufacturing wafers at 28nm and below, the masks involved are critical process secrets for wafer fabs. Leading fabs like Intel, Samsung, TSMC, and SMIC produce masks in-house. Chipmakers seeking lower costs tend to purchase from independent third-party mask vendors.

Currently, the global market for semiconductor masks is dominated by foreign companies. SEMI data shows that 65% of wafer fabs produce masks in-house, while third-party mask vendors account for 35%, with the top three—Photronics (USA), Toppan (Japan), and DNP (Japan)—holding 80% of the market share.

Domestic mask market players include Qingyi Optoelectronics (688138.SH), Luwei Optoelectronics (688401.SH), and Longtu Photomasks (688138.SH). “Currently, the domestic localization rate of semiconductor masks is about 10%,” Qingyi Optoelectronics recently told investors.

However, competition is intensifying domestically. Longtu Photomasks recently disclosed that its 2025 net profit attributable to shareholders fell 36.86% year-on-year to 57.99 million yuan. The company stated that competition in the semiconductor mask industry has increased, especially for 130nm and above processes, leading to strategic price cuts for some customers and a decline in gross margins at its Shenzhen factory.

“Semiconductor mask industry features high capital investment, high technical barriers, and reliance on proprietary technology,” Huajin Securities noted. As the semiconductor industry develops rapidly, domestic demand for masks is growing quickly. However, if foreign competitors increase capital investment or engage in price wars to maintain market share, industry competition will intensify.

Huitong Energy needs to keep a close eye on Xinghua Chip’s progress. “The specific R&D, market, production, and management are still handled by its existing management team. This investment involves certain corporate governance and control risks,” Huitong Energy said.

Detail 2: Rapid entry into memory chip trading, “riding” the current boom?

In response to the soaring memory chip prices, Huitong Energy has also entered the chip trading business.

Since the second half of last year, memory chip prices have surged. For example, the price of DDR4 16Gb (2GX8) 3200 chips was $6.2 each in June 2025, then jumped to $50.1, and by February 2026, approached $77.

“This wave of market is driven by genuine demand. The market has now become a seller’s market, with everyone rushing to stock up,” a memory chip expert told Interface News.

In November 2025, Huitong Energy acquired a 51% stake in Shenzhen Huizhuan Semiconductor Technology Co., Ltd. (“Huizhuan Semiconductor”) to quickly expand into memory chip trading. Its main products include memory chips (DDR4, DDR5, LPDDR5X) and memory modules.

The annual report shows that in 2025, Huitong Energy’s related sales reached 11.35 million yuan (tax included), with recognized revenue of 485,700 yuan. As of December 31, 2025, the company still held inventory valued at 48.73 million yuan, including memory chips and modules.

Image source: Huitong Energy 2025 Annual Report

In 2025, Huizhuan Semiconductor achieved a net profit attributable to shareholders of 178,300 yuan after deducting non-recurring gains and losses.

However, amid the rapid price increase, “bubble” risks are rising. Southwest Securities warned that “due to the sharp rise in storage prices, some speculation and hoarding are occurring in circulation channels. If speculation excessively impacts downstream demand, there is a risk of prices falling.”

Huitong Energy also invests in industry funds to expand its semiconductor supply chain. In April 2025, it planned to invest 30 million yuan in Anhui Gaoxin Yuanhe Puhua Private Equity Fund, with 15 million yuan actually invested by the end of the year; in May, it invested 30 million yuan in Guoyi (Ningbo) Private Equity Fund, but has not yet made an actual investment.

It’s worth noting that, as a traditional real estate company, Huitong Energy lacks experience and talent in semiconductor operations and management. “There are risks that the company’s investments in new fields may be affected by insufficient understanding of market conditions, industry policies, and technological levels,” Huitong Energy admitted.

Detail 3: Major shareholders’ continuous share reductions, stock price volatility

Concerns remain in the market regarding Huitong Energy’s cross-industry expansion.

Throughout 2025, the stock price declined nearly 14% from the beginning of the year to the end, and from its peak of 43.28 yuan in early December 2024 when the actual controller changed hands, it has fallen by nearly 30%. Since the start of 2026, the stock has continued to decline, with a drop of over 6% by March 11.

Major shareholders’ continuous share disposals have also raised investor concerns. On February 12, Huitong Energy announced that Ningbo Hutong Private Equity Fund, holding about 6% of shares, planned to reduce its holdings by no more than 2.0628 million shares. Earlier, on January 21, 2026, another major shareholder, Shanghai Hongying Investment, reduced 900,000 shares, cashing out approximately 27.34 million yuan.

As of now, the company’s controlling shareholder, Xizang Dejin, has pledged a total of 34.4 million shares, representing 62.2% of its holdings.

Disclosures show that within the next six months, the pledged shares totaling 19.42 million (35.11% of its holdings and 9.41% of total shares) will mature, with a financing balance of 220 million yuan; within the next year, a total of 32.8 million pledged shares (59.31% of its holdings and 15.9% of total shares) will mature, with a financing balance of 368 million yuan.