Zhejiang Yongtai forecasts 50-70% profit growth in first half 2025

Zhejiang Yongtai Technology (LSE:YTT) forecasts a substantial 50.40% to 70.45% year-over-year increase in H1 2025 net profit attributable to shareholders, reaching RMB56.625-RMB64.175 million, citing improved production capacity and utilization in its crop-science and lithium-battery segments. Crucially, the preliminary, unaudited forecast indicates that net profit *excluding* non-recurring gains (primarily government grants) shows a more tempered outlook, ranging from a 23.26% decline to a 5.21% increase, underscoring the significant contribution of these one-off items to headline profitability.

Analysis

Zhejiang Yongtai Technology (002326) has issued a preliminary forecast for the first half of 2025, projecting a significant 50.40% to 70.45% year-over-year increase in net profit attributable to shareholders, reaching between RMB56.625 million and RMB64.175 million. This growth is attributed to improved production capacity and higher utilization rates at key subsidiaries, which has boosted production and sales volumes in the company's crop-science and lithium-battery material segments. However, the quality of this earnings growth warrants scrutiny. After excluding non-recurring items, the company's core profitability paints a much weaker picture, with net profit forecasted to change between a 23.26% decline and a modest 5.21% increase. The discrepancy is substantial, as non-recurring profits, primarily from government grants, are estimated to be approximately RMB36 million. Investors should note that these financial figures are unaudited and preliminary, with final results to be confirmed in the official 2025 interim report.

Key Decisions for Investors

• Investors should look past the headline profit forecast and focus on the core operational performance, as the projected net profit is significantly inflated by approximately RMB36 million in non-recurring government grants.
• The weak underlying profit forecast, ranging from a 23.26% decline to a 5.21% gain, suggests caution is warranted until there is clear evidence of sustainable, organic earnings growth.
• Given that these results are preliminary and unaudited, it is prudent to await the company's official 2025 interim report for finalized figures before making any adjustments to positions in Zhejiang Yongtai Technology.