Shougang Resources Shares Drop 6.7% After Profit Plummets 58%

Edgen Stock·Mar 26 2026, 16:51

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Key Takeaways

Shougang Resources reported a severe contraction in profitability for its 2025 fiscal year, causing an immediate negative reaction in its stock price. The dramatic fall in net profit, driven by collapsing margins, contrasts with a relatively stable revenue figure. Despite the earnings slump, the company has maintained a high dividend payout, a move that investors may view as unsustainable.

Shougang Resources' net profit fell 57.7% year-over-year to RMB 632 million for the 2025 fiscal year.
Gross profit collapsed by 59.1%, indicating severe margin compression despite only a 1.6% dip in revenue.
The company announced a full-year dividend of RMB 0.12, representing an unusually high payout ratio of 97% of its diminished earnings.

Net Profit Plummets 57.7% on Collapsing Margins

Shougang Resources (00639.HK) announced a significant deterioration in its financial performance for the fiscal year 2025. The company's net profit plummeted by 57.7% year-over-year to RMB 632 million. This steep decline occurred even as annual revenue remained relatively stable, falling just 1.6% to RMB 5.056 billion.

The core of the issue lies in sharply contracting profitability. Gross profit collapsed by 59.1% to RMB 1.084 billion, revealing that the cost of operations consumed a much larger portion of revenue than in the previous year. The resulting earnings per share (EPS) for the period was RMB 0.1242.

Shares Fall 6.7% as 97% Dividend Payout Is Questioned

In response to the weak earnings report, investors pushed shares of Shougang Resources down 6.7% on March 26. The sell-off reflected concerns not only about the profit decline but also about the company's capital allocation strategy. Despite the earnings collapse, Shougang declared a final dividend of RMB 0.06, which, when combined with the interim dividend, brings the total for the year to RMB 0.12.

This dividend level equates to a payout ratio of 97%, meaning the company is returning nearly all of its net profit to shareholders. While attractive on the surface, such a high ratio during a period of financial weakness raises questions about the dividend's sustainability and signals a lack of internal reinvestment for future growth. The negative sentiment was also reflected in derivatives markets, where short-selling activity accounted for 4.44% of turnover, totaling $2.98 million.