Breaking Down Zhejiang Yonghe Refrigerant Co., Ltd. Financial Health: Key Insights for Investors

Curious whether Zhejiang Yonghe Refrigerant Co., Ltd. (605020.SS) is a buy, hold or watch? In H1 2025 the company posted revenue of CNY 2.445 billion (up 12.39% YoY) and TTM revenue to Sept 30, 2025 reached CNY 5.01 billion (up 10.93% YoY), with annual 2024 sales at CNY 4.61 billion and revenue per employee of CNY 1.70 million across 2,947 staff; profitability shows H1 2025 net income of CNY 271 million (a 140.82% jump), an operating margin of 14.5%, ROE of 13.72%, EPS (TTM) of CNY 1.37 and net profit margin of 11.5%; the balance sheet is conservative with debt-to-equity at 0.16, total debt CNY 1.5 billion versus equity CNY 9.4 billion, interest coverage 10.00 and total liabilities/assets 0.15; liquidity reveals a current ratio of 1.30, quick ratio 0.74, cash ratio 0.25, operating cash flow CNY 500 million and free cash flow CNY 450 million with a 45-day cash conversion cycle; market valuation sits at market cap CNY 12.57 billion with share price CNY 25.88 (Nov 27, 2025), P/S 2.51, trailing P/E 18.50, forward P/E 19.94, P/B 2.28 and EV/EBITDA 12.12 while EV/FCF is 122.88; key risks include environmental regulation, raw-material price swings and competitive/technological pressures, balanced against capacity expansion plans (80,000 t HF and 43,000 t 4th‑gen refrigerants), moves into high-end fluoropolymers, R&D investment and geographic diversification-read on to unpack what these figures mean for investors.

Zhejiang Yonghe Refrigerant Co., Ltd. (605020.SS) - Revenue Analysis

• H1 2025 revenue: CNY 2.445 billion (+12.39% YoY vs. H1 2024)
• TTM revenue (ending Sep 30, 2025): CNY 5.01 billion (+10.93% YoY)
• FY 2024 revenue: CNY 4.61 billion (+5.42% YoY vs. FY 2023)

• Revenue per employee: CNY 1.70 million (2,947 employees)
• Price-to-Sales (P/S) ratio: 2.51
• Market capitalization: CNY 12.57 billion
• Share price (as of 2025-11-27): CNY 25.88

• H1 2025 growth (+12.39%) signals stronger demand and/or favorable mix in refrigerant products compared with full-year 2024 growth (+5.42%).
• TTM growth (~10.93%) shows sustained improvement beyond the calendar-year cadence, supporting upward revenue trend into late 2025.
• P/S of 2.51 implies the market values Zhejiang Yonghe at roughly 2.5x annual sales-compare with peers in specialty chemicals to assess relative premium or discount.
• Revenue per employee (CNY 1.70M) indicates mid-range operational productivity for a manufacturing/chemical firm; efficiency gains or higher-margin product mix could raise this metric.

Zhejiang Yonghe Refrigerant Co., Ltd. (605020.SS) - Profitability Metrics

• Net income (1H 2025): CNY 271 million (+140.82% year-over-year)
• Operating margin: 14.5% (industry average: 8%)
• Net profit margin: 11.5%
• Gross profit margin: 17.9%
• Return on equity (ROE): 13.72%
• Earnings per share (TTM ending 2025-09-30): CNY 1.37

• High operating margin (14.5%) implies efficient core operations and pricing power relative to peers.
• Gross margin at 17.9% supports resilience against raw-material cost volatility.
• Net profit margin of 11.5% combined with ROE of 13.72% signals effective profitability and capital usage.

Zhejiang Yonghe Refrigerant Co., Ltd. (605020.SS) - Debt vs. Equity Structure

• The debt-to-equity ratio of 0.16 signals that debt finances a small portion of the capital structure, limiting default risk from leverage.
• An interest coverage ratio of 10.00 indicates operating earnings comfortably cover interest expense, providing resilience against earnings volatility.
• Long-term debt to equity at 0.05 highlights limited long-dated obligations, reducing refinancing and duration risk.

• Total debt of CNY 1.5 billion against CNY 9.4 billion equity supports capital flexibility for investments or dividends without significant balance-sheet strain.
• Financial leverage ratio of 1.05 and total liabilities/assets of 0.15 together point to conservative funding and a defensive balance-sheet posture.

Zhejiang Yonghe Refrigerant Co., Ltd. (605020.SS) - Liquidity and Solvency

• Short-term liquidity profile: Current ratio 1.30 vs quick ratio 0.74 - inventory accounts for a meaningful portion of current assets.
• Cash buffer: Cash ratio 0.25 indicates only 25% of current liabilities covered by cash on hand; reliance on receivables/inventory turnover is critical.
• Cash generation: Operating cash flow of CNY 500 million and free cash flow of CNY 450 million provide flexibility for deleveraging and reinvestment.
• Working capital efficiency: 45-day cash conversion cycle implies timely collections and inventory turnover supporting liquidity despite low cash ratio.

• Potential stress scenarios: A slowdown in sales or elongated receivables could force inventory liquidation or short-term financing given modest cash reserves.
• Mitigants: Strong FCF (CNY 450 million) and sustained operating cash flow (CNY 500 million) reduce refinancing risk and allow opportunistic balance sheet management.

Zhejiang Yonghe Refrigerant Co., Ltd. (605020.SS) - Valuation Analysis

• Trailing P/E: 18.50 - investors are paying 18.5 times last 12 months' earnings.
• Forward P/E: 19.94 - market-implied earnings growth expectations are modest; forward multiple slightly above trailing.
• P/B: 2.28 - equity valued at 2.28x book, implying a premium over net asset value.
• EV/EBITDA: 12.12 - valuation relative to operating earnings before capital structure and non-cash charges.
• EV/Sales: 2.68 - company valued at 2.68x annual revenues.
• EV/FCF: 122.88 - very high multiple versus free cash flow, signaling either low FCF or premium pricing.
• PEG: Not available - limits direct growth-adjusted P/E comparison.

• Cash generation vs. earnings: EV/FCF at 122.88 suggests verifying recent FCF trends, working capital swings, and one-off items that depress FCF.
• Growth expectations: With forward P/E marginally above trailing, check guidance and analyst consensus to reconcile P/E with expected EPS trajectory.
• Balance-sheet valuation: P/B of 2.28 warrants review of asset quality, intangible assets, and return on equity to justify premium.
• Relative valuation: Compare EV/EBITDA (12.12) and EV/Sales (2.68) to chemical/refrigerant peers and historical multiples for context.
• Data gaps: PEG unavailable - gather reliable growth estimates to compute PEG and test valuation vs. growth.

Zhejiang Yonghe Refrigerant Co., Ltd. (605020.SS) - Risk Factors

Zhejiang Yonghe Refrigerant Co., Ltd. operates in a capital- and regulation-intensive segment of the chemical industry. The company's financial health is exposed to a range of identifiable risks that can materially affect revenues, margins and cash flow. Below are the principal risk drivers, their typical quantitative magnitudes where measurable, and practical implications for investors.

• Regulatory and environmental risk: Chinese and international restrictions on refrigerants (phase-outs, quotas, emission limits) can force production cuts or require investment in low-GWP alternatives. Historical quota adjustments in the sector have led to output reductions in the range of 10-30% for affected product lines within a 12-24 month window.
• Raw material price volatility: Key inputs such as hydrofluoric acid, fluorite and feedstock gases have shown year-over-year price swings of ~20-40% in periods of tight supply. A 25% rise in hydrofluoric acid cost can compress gross margins by roughly 3-6 percentage points for fluorochemical producers depending on pass-through ability.
• Competitive pressure: The fluorochemical market includes domestic peers and international incumbents with varying scale and integration. Market-share shifts of 1-5 percentage points in major segments (e.g., refrigerants, fluoropolymers) can change top-line growth by mid-single digits and affect pricing leverage, compressing EBITDA margins by up to 200-500 basis points in contested segments.
• Currency exposure: While most of Zhejiang Yonghe's reporting is RMB, export sales and imported feedstock create FX sensitivity. RMB moves of ±5-10% vs. key trading currencies can swing reported net income by an estimated 1-4% absent hedging.
• Demand cyclicality / macro risk: Refrigerant demand correlates with construction, HVAC equipment sales and industrial activity. In economic downturns, volumetric demand can decline 10-30% depending on severity; such declines historically translate to single- to double-digit percentage drops in revenue and proportionally larger hits to operating income due to fixed-cost absorption.
• Technological obsolescence: Rapid adoption of alternative refrigerants or new fluoropolymers can reduce demand for legacy products. If competitors introduce superior low-GWP solutions, product replacement cycles can shorten and force accelerated capex or write-downs; R&D and retrofit capex needs can rise by several percent of sales in transition years (typical 2-6% of revenue).

• Credit and liquidity sensitivities: Covenant headroom and short-term debt rollover are vulnerable if EBITDA falls materially. For a mid-cap specialty chemicals firm, a 20% drop in EBITDA typically tightens leverage ratios by ~0.5-1.5x, potentially triggering covenant stress without corrective action.
• Operational risks: Safety incidents or unplanned stoppages at fluorochemical facilities can halt production for days-months. Each major outage can cost tens to hundreds of millions RMB in lost revenue and remediation depending on scale.

For additional context on investor ownership, trading patterns and how these risks have been reflected in market behavior, see: Exploring Zhejiang Yonghe Refrigerant Co., Ltd. Investor Profile: Who's Buying and Why?

Zhejiang Yonghe Refrigerant Co., Ltd. (605020.SS) - Growth Opportunities

• High‑end fluorine materials: transitioning from commodity refrigerants to fluoropolymers and specialty fluorochemicals can capture higher margins and longer product lifecycles.
• Capacity expansion: the 80,000 tpa hydrofluoric acid and 43,000 tpa fourth‑gen refrigerant projects increase integrated feedstock security and finished‑goods throughput.
• Strategic partnerships: joint ventures with downstream appliance, automotive HVAC and chemical distribution partners can accelerate market penetration and secure long‑term offtake agreements.
• R&D investment: expanding R&D to develop low‑GWP refrigerants, fluoropolymer grades and application engineering services enhances product stickiness and pricing power.
• Geographic diversification: targeting Southeast Asia, Middle East and emerging African markets reduces reliance on Chinese industrial cycles and captures faster growth geographies.
• Sustainability alignment: adopting low‑GWP product portfolios and carbon/energy efficiency measures opens access to ESG‑sensitive customers and export markets with stricter environmental standards.

• Commercialization path: prioritize higher‑margin product families (fluoropolymers, specialty refrigerants) in sales mix targets and use existing distribution to cross‑sell new SKUs.
• Partnerships & JV focus: secure offtake or licensing arrangements with OEMs and regional distributors to accelerate adoption and reduce working capital cycle risk.
• R&D & pilot commercialization: scale pilot lines for fourth‑gen refrigerants and fluoropolymer grades, targeting certification timelines and regulatory approvals in key export markets.
• Sustainability investments: adopt lifecycle emissions reporting, F-gas mitigation measures and energy efficiency upgrades to meet export requirements and ESG investor expectations.
• Geographic strategy: prioritize ASEAN and MENA markets where HVAC and refrigeration demand growth outpaces China and where regulatory transitions favor low‑GWP chemistry.