Liberty Energy Faces Headwinds: Earnings Decline Amidst Market Challenges and Rising Costs

Financial Performance

Based on the provided data, Liberty Energy's total operating revenue in March 31, 2025 was RMB977,461,000, a decrease of approximately 8.91% from RMB1,073,125,000 in March 31, 2024. This change indicates that the company faces certain challenges in terms of operating revenue, which may affect its overall profitability.

Key Financial Data

1. Change in Sales Cost: The sales cost in 2025 was RMB761,616,000, lower than RMB782,680,000 in 2024, although the cost decreased, the reduction in operating revenue failed to effectively offset the cost, leading to a significant decrease in gross profit.

2. Impact of Declining Demand: The decrease in operating revenue may reflect a weakening demand, especially in the energy sector, affected by macroeconomic fluctuations or increased industry competition.

3. Increase in Interest Expenses: Interest expenses increased from RMB7,541,000 in 2024 to RMB9,543,000, adding financial burden to the company, which may negatively affect its operating activities.

4. Change in Operating Expenses Special Items: The operating expenses special items in 2025 were RMB41,560,000, while in 2024 they were RMB-11,600,000, indicating challenges in operational efficiency or management.

5. Significant Decline in Pre-Tax Profit: The pre-tax profit declined from RMB108,370,000 in 2024 to RMB27,917,000, indicating significant pressure on the company's profitability.

Peer Comparison

1. Industry-wide Analysis: The energy industry as a whole faces supply chain issues and demand fluctuations, which may lead to a general decline in operating revenue. Factors such as increased competition within the industry, price volatility, and policy changes can all contribute to fluctuations in a company's operating revenue.

2. Peer Evaluation Analysis: Liberty Energy's significant decline in operating revenue may indicate that its market share is being squeezed or its product competitiveness is insufficient. Further comparison of operating revenue performance among other companies in the industry is needed to assess its relative position.

Summary

Liberty Energy's operating revenue in the first quarter of 2025 has significantly decreased, mainly affected by weakening demand, the inability of sales cost to effectively offset revenue decline, increased interest expenses, and other factors. The overall industry environment also faces challenges, putting pressure on the company's profitability.

Opportunities

1. Positive policy changes may lead to an expansion of market share, especially an increase in energy import tariffs that may benefit the company in competition.

2. Continued growth in the new energy market, especially the increase in wind and photovoltaic power generation, may provide new market opportunities for Liberty Energy.

3. If the company can improve operational efficiency, it will have the opportunity to enhance its profitability and market competitiveness.

Risks

1. Continued weakening of demand may lead to further declines in operating revenue, affecting the company's overall financial condition.

2. Continued increases in interest expenses will add financial burden to the company, which may affect its long-term financial stability.

3. Increased competition within the industry may further erode the company's market share, affecting its profitability.