Revenue growth, a swing to positive adjusted net profit and positive operating cash flow together show that Jingxing Paper’s recovery is substantive. Yet the low comparison base, changes in expenses and improvements in individual businesses are not enough to establish a full turnaround in the packaging-paper cycle.

First Half of 2026 | Consolidated Basis

RMB 3.161 billion in revenue　· RMB 139.2 million in net profit attributable to shareholders　· RMB 127.1 million in adjusted net profit　· RMB 600.5 million in net operating cash flow

Section 01 · Understanding the Numbers

The 153% increase starts from a base of only RMB 55.03 million

Net profit attributable to shareholders increased from RMB 55.03 million to RMB 139.2 million, an absolute increase of approximately RMB 84.18 million and a year-on-year gain of 152.95%. The figure primarily describes the pace of recovery from a low base; it does not represent a surge in profit margin. Over the same period, revenue rose 20.22% and operating costs increased 21.60%, meaning costs still grew faster than revenue. Overall gross margin declined from 9.15% to 8.12%.

Net profit attributable to shareholders excluding non-recurring gains and losses swung from a loss of RMB 37.66 million to a profit of RMB 127.1 million. Non-recurring gains were approximately RMB 12.16 million, indicating that the recovery was driven mainly by continuing operations. More precisely, the company has entered a period of earnings recovery, rather than broad-based margin expansion.

Research source:Jingxing Paper 2026 Interim Report

Section 02 · Product Mix

Packaging Base Paper and Recycled Pulp Sheets Recovered; Other Businesses Did Not

Revenue from industrial packaging base paper was RMB 2.183 billion, up 18.57% year on year; gross margin was 9.50%, an increase of 3.18 percentage points. The company said recovering demand lifted sales volumes, but it did not disclose volumes, average selling prices or unit recovered-paper costs. The improvement in gross profit therefore cannot be precisely decomposed into volume, price and raw-material effects.

Revenue from recycled pulp sheets reached RMB 410 million, up 431.12% year on year; gross margin was 3.45%, an increase of 8.75 percentage points and a return from negative to positive territory. Rapid growth improved the product mix, but a 3.45% gross margin remains modest, and the separate contributions of volume and price were not disclosed.

Revenue from corrugated boxes and paperboard was broadly flat, while gross margin declined to 5.10%. Tissue-paper revenue fell 1.70%, with gross margin down to 5.53%. The recovery was concentrated in packaging base paper and recycled pulp sheets; not every product category improved.

Section 03 · Profit Drivers

Overall Gross Margin Fell, While Core-Product Gross Margin Improved

Overall gross margin declined from 9.15% to 8.12%. The company also disclosed that, after excluding the prior-year “other” business, which generated RMB 156 million in revenue at a 59.77% gross margin, gross margin on its core products increased from 5.96% to 8.00%, a gain of 2.04 percentage points. The consolidated measure was affected by the revenue mix, while the core-product measure confirms an operating recovery; both perspectives must be retained.

Finance costs fell from RMB 39.44 million to RMB 5.78 million, a decrease of approximately RMB 33.66 million; interest expense declined by about RMB 22.89 million. The company attributed this to the cessation of interest accrual after its convertible bonds were delisted and to higher interest income. The reduction in finance costs was equivalent to roughly 40% of the increase in profit before tax, but this is only a comparison of scale and should not be presented as a precise contribution rate. Other income, fair-value changes and movements in asset-impairment losses also provided support.

Section 04 · Cash-Flow Quality

Operating Cash Flow Turned Positive, Driven by Both Earnings and Working Capital

Net cash flow from operating activities swung from an outflow of RMB 491.4 million to an inflow of RMB 600.5 million. Supplementary disclosures show net profit of RMB 142.6 million for the period; lower inventories released RMB 212.9 million of cash, higher operating payables contributed RMB 125.1 million, and changes in operating receivables absorbed RMB 41.51 million. The improvement in cash flow therefore reflected both earnings and cash released from inventories and payables.

Period-end inventories stood at RMB 746 million, down 21.71% from year-end, providing a clear benefit to cash flow. However, cash paid to acquire and construct long-term assets reached RMB 927 million, exceeding operating cash flow. The simplified difference between the two was approximately negative RMB 327 million, indicating that capital investment still required external financing. This difference is used only to assess capital-expenditure coverage and is not a formally reported free-cash-flow measure.

Section 05 · Overseas Investment

The Malaysia Project Brings the Cycle Debate Onto the Balance Sheet

Construction in progress stood at RMB 1.913 billion at period end, approximately 310% higher than at year-end. Of this amount, RMB 1.630 billion related to the 600,000-tonne Phase II containerboard project in Malaysia, which was 90% complete; equipment commissioning is expected to begin in November. Commissioning, ramp-up, stable operation and profitability are four distinct stages. Future assessment must consider operating rates, yield, local recovered-paper costs, selling prices, logistics and exchange rates.

The company’s debt-to-asset ratio was approximately 33.09%, up about 6.57 percentage points from roughly 26.52% at year-end; long-term borrowings increased from RMB 500 million to RMB 1.297 billion. Jingxing Holdings (Malaysia) recorded first-half revenue of RMB 660 million, net profit of RMB 4.77 million and a debt-to-asset ratio of 64.57%. The company also proposes to provide a guarantee of up to RMB 110 million for a RMB 100 million loan to the subsidiary, subject to shareholder approval.

Research source:Jingxing Paper Announcement on a Guarantee for Its Malaysian Subsidiary

Section 06 · The Industry Counterargument

Industry Profits Are Recovering, but Prices Have Yet to Strengthen Broadly

According to the National Bureau of Statistics, first-half revenue at paper and paper-products enterprises above designated size increased 5.5%, while profit rose 27.5%. Yet the industry’s producer price index fell 0.1% year on year in June and declined 1.6% cumulatively from January through June. Recovering profits alongside a weak price index point more to the combined effects of costs, product mix and a low comparison base than to a broad pricing boom.

Peers also moved in different directions: Sun Paper’s revenue and net profit attributable to shareholders both increased by approximately 9%, while Shanying International’s revenue rose 3.01% but the company remained loss-making. Product mixes, raw-material strategies, overseas assets and capital structures vary widely, so simple rankings are inappropriate. This divergence itself indicates that the industry remains in a bottoming recovery.

Research sources:National Bureau of Statistics: Industrial Enterprise Profits; National Bureau of Statistics: Producer Prices for Industrial Products

Section 07 · Confirmation Metrics

Five Indicators That Will Determine Whether the Turnaround Is Real

01 | Packaging base-paper spread:Whether the 9.50% gross margin can be sustained depends on whether increases in finished-paper prices continue to outpace recovered-paper and energy costs.

02 | Recycled pulp sheets:Whether the 3.45% gross margin can continue to improve after the increase in revenue volume.

03 | Source of cash:Whether recurring customer collections can replace the cash released by changes in inventories and payables.

04 | Project ramp-up:Whether the Malaysia Phase II project delivers its targeted operating rate, yield, costs and orders.

05 | Capital coverage:Whether operating cash flow can cover investment and whether the debt ratio and long-term borrowings can stabilize.

Paper Industry Analysis · Let the Numbers Speak

Jingxing Paper has shown evidence of moving beyond its operating trough, while the packaging-paper industry remains in a bottoming recovery. A cycle turnaround will be fully supported only when product spreads, core gross margin, recurring cash flow and returns on new capacity improve together.