A veteran polyester leader that started in 1980 now stands at the brink of delisting. Sanfangxiang has accumulated losses of 1.628 billion yuan over three consecutive years, with its 2025 annual report receiving a 'disclaimer of opinion' and an 'adverse internal control opinion'. This is not merely a corporate financial crisis but a concentrated eruption of the overcapacity contradiction in the chemical fiber industry.
The Price of Overcapacity
Sanfangxiang's loss trajectory closely mirrors the capacity expansion cycle of the polyester bottle chip sector. From 2023 to 2024, domestic capacity surged past 20 million tons per year, while actual demand was only about 12 million tons. This left a gap of 8 million tons, meaning over one-third of capacity was idle. As the industry's second-largest player, Sanfangxiang joined the expansion race. In 2020, the company, then valued at about 3.4 billion yuan, acquired Hailun Chemical for 7.35 billion yuan in a 'snake-swallows-elephant' deal, pivoting to bottle-grade polyester chips and PTA. Profits grew to 818 million yuan in the first two years post-acquisition but then collapsed. From 2023, as supply-demand dynamics deteriorated sharply, the company fell into sustained losses: 487 million yuan in 2024 and 885 million yuan in 2025. More critically, Sanfangxiang's value chain is too thin. It only covers the PTA-to-bottle-chip segment, relying entirely on external purchases for its core raw material, PX. Any upstream price hike squeezes margins to near zero.
Debt Risks and Governance Crisis
Losses are just the tip of the iceberg. As of the latest filing, guaranteed overdue debts for subsidiaries reached 522 million yuan, accounting for 10.82% of net assets. The wholly-owned subsidiary Hailun Chemical defaulted on lease payments with Taiping石化 Financial Leasing, and the company can only 'actively communicate with creditors'. More alarming is the related-party transaction risk. By 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 on recoverability. The controlling shareholder's shares are frozen, and if disposed of, control could change. On June 26, Lianhe Credit downgraded Sanfangxiang's long-term credit rating to A- with a negative outlook.
Anti-Involution Turning Point and Industry Lessons
Sanfangxiang's crisis stems from 'involution', and its turnaround also comes from 'anti-involution'. In H2 2025, national authorities convened a meeting of leading PTA and bottle chip enterprises to discuss operations and projects under construction. Against a backdrop of severe supply-demand mismatch, the meeting was seen as a key policy intervention signal. Results appeared in Q1 2026: Sanfangxiang posted a net profit of 32.74 million yuan, turning profitable year-on-year. Additionally, geopolitical tensions in the Strait of Hormuz boosted polyester chain prices, improving margins. The stock price temporarily moved above the 1-yuan delisting threshold. But the 'Sword of Damocles' remains. In May 2026, the controlling shareholder's shares were put up for auction, though temporarily halted by an objection. The 600 million yuan in related-party guarantees for the parent company remain unprovisioned.
Implications for the Industry
Sanfangxiang's case is not isolated. The 8-million-ton gap between capacity and demand in polyester bottle chips means most players face margin compression or losses. Capacity rationalization is inevitable but may be prolonged and painful. For downstream buyers, short-term price swings present opportunities, but supplier financial health must be scrutinized. For exporters, domestic overcapacity is pushing firms overseas, but trade frictions and anti-dumping risks are rising.