TBEA’s 5.0% Y/Y Net Profit Growth: A Strategic Assessment of Earnings Resilience and Expansion Plans

TBEA Co., Ltd. (600089) has navigated a complex economic landscape to achieve a 5.0% year-over-year (Y/Y) net profit growth in 2025, despite headwinds in its polysilicon business and broader industry challenges. This resilience underscores the company’s strategic focus on cost optimization, diversification into high-growth sectors, and capital-raising initiatives to fuel future expansion.

Operational Performance: Balancing Growth and Cost Efficiency

TBEA’s 2025 financial report highlights a 8.5% Y/Y revenue increase to 47 billion CNY, driven by its Power Engineering (48.5% of revenue) and New Energy Solutions (16.0%) segments [3]. The latter’s growth reflects global demand for renewable energy solutions, aligning with sustainability trends. However, the company’s net profit margin in 2024 was 3.7%, a sharp decline from prior years, due to significant losses in its polysilicon operations [5].

A critical factor in TBEA’s earnings resilience is its improved cost management. The cost of revenue growth for the latest twelve months (TTM) fell to 5.6%, down from an average of 22.8% between 2020 and 2024 [1]. This suggests tighter control over production costs, though gross margins remain at 17.39%, and operating margins at 8.08% [3]. Selling, general, and administrative (SG&A) expenses totaled 6.84 billion CNY for TTM 2025, reflecting ongoing operational pressures [6].

Geographic Reliance: Domestic Dominance and International Ambitions

TBEA’s geographic footprint is heavily weighted toward China, which accounts for 91.9% of its net sales [1]. The company operates in 24 countries and 15 domestic industrial parks, but precise revenue breakdowns by region remain undisclosed [6]. In 2022, overseas markets contributed 30% of revenue, with TBEA aiming to increase this to 40% by 2025 [4]. This strategic push into international markets is critical for mitigating domestic economic volatility and diversifying revenue streams.

However, the lack of granular geographic data raises questions about the sustainability of this expansion. While TBEA’s capital-raising plans include funding for overseas projects, the exact allocation by region remains unspecified [2]. Investors should monitor how effectively the company can scale its international operations without diluting margins.

Capital-Raising and Future Growth: Funding the Next Phase

TBEA’s recent announcement to raise up to 8 billion yuan underscores its commitment to expanding in power transmission, renewable energy, and infrastructure [1]. This funding will support projects in both domestic and international markets, aligning with its goal to boost overseas revenue. The capital raise also reflects the company’s need to offset losses in its polysilicon business and invest in higher-margin segments like New Energy Solutions [3].

The success of this strategy hinges on TBEA’s ability to execute projects efficiently and manage debt. Its TTM net profit margin of 4.23% [2] indicates that profitability remains under pressure, necessitating disciplined capital allocation.

Conclusion: A Cautious Outlook for Resilience

TBEA’s 5.0% Y/Y net profit growth in 2025 is a testament to its operational adaptability, particularly in cost management and new energy diversification. However, the company’s reliance on domestic markets and recent profitability declines in core segments like polysilicon present risks. The 8 billion yuan capital raise offers a pathway to growth but requires careful execution to avoid overleveraging. For investors, TBEA’s trajectory will depend on its ability to balance short-term cost controls with long-term strategic investments in renewables and international expansion.

Source:
[1] Cost of Revenue Growth For Tbea Co Ltd (600089) [https://finbox.com/SHSE:600089/explorer/cogs_growth/]
[2] SS:600089 Financials | Tbea Co Ltd [https://www.investing.com/equities/teba-financial-summary]
[3] Breaking Down TBEA Co., Ltd. Financial Health: Key Insights ... [https://dcfmodeling.com/blogs/health/600089ss-financial-health?srsltid=AfmBOopr62JhlVdwbB1JDuT59wdMNjl9oKC3YGQ50tmPxXJVFUx6iZNm]
[4] In 2022, approximately 30% of its revenue came from overseas markets, a proportion TBEA aims to increase to 40% by 2025. Risk Factor, Description, Current ..., [https://dcfmodeling.com/blogs/health/600089ss-financial-health?srsltid=AfmBOoqeby2uARTUBVzmNEICyspckRIxnTwDuAONDxJbZI7F7ACQ6Te_]
[5] TBEA (600089) 2024 Annual Report and 2025 Quarterly ... [https://news.futunn.com/en/post/56880442/tbea-co-ltd-600089-2024-annual-report-and-2025-first]
[6] Selling, General & Admin Expenses For Tbea Co Ltd ..., [https://finbox.com/SHSE:600089/explorer/sga]