In-Depth Analysis of Minfeng Special Paper (600235) Production Suspension Incident and Turnaround Strategies

Now let me prepare a comprehensive analysis report for you based on the collected data:

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Minfeng Special Paper (Stock Code: 600235.SH) is a leading enterprise in China’s special paper industry, with main businesses including tobacco industry paper series, transparent paper series, glassine paper series, and coated paper series. Listed on the Shanghai Stock Exchange, it is known as “First Stock of Special Paper” and currently has a market capitalization of approximately RMB 1.69 billion [0].

According to the company’s 2025 performance forecast and announcements, Minfeng Special Paper is facing severe capacity adjustment pressure:

Suspended Equipment/Plant	Suspension Time	Affected Capacity
PM20	End of May 2024	Fully suspended, no output
PM22	End of August 2024	Fully suspended, no output
PM19, PM21	End of June 2025	Full suspension of Nanhu Plant
Nanhu Plant	End of June 2025	Full suspension

Meanwhile, the new capacity ramp-up at the Haiyan Plant is slower than expected:

• Haiyan Phase I Project
  : Put into operation at the end of March 2025, current capacity utilization rate is approximately 60%
• Haiyan Phase II Project
  : Put into operation at the end of June 2025, current capacity utilization rate is approximately 40%

This situation of “old capacity exiting while new capacity not yet reaching full production” has directly led to a sharp decline in the company’s production and sales volume [1][2].

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Financial Indicator	2024	2025	YoY Change
Operating Revenue	RMB 1.52 billion	Approximately RMB 1.2 billion	-21%
Net Profit Attributable to Parent Company	RMB 72 million	RMB 15.7 million	-78%
Non-Recurring Net Profit	RMB 71.57 million	RMB 6 million	-92%
Gross Profit Margin	Approximately 9%	7.63%	-1.37pp

The company’s 2025 net profit plummeted from RMB 72 million to RMB 15.7 million, a decrease of as much as 78%; non-recurring net profit even plummeted 92% year-on-year to only RMB 6 million [1][2].

According to the company’s announcements, the significant performance decline is mainly caused by the following factors:

• PM20 and PM22 were fully suspended for the entire year with no output
• Nanhu Plant was fully suspended in the second half of 2025
• Capacity ramp-up at Haiyan Plant is slower than expected
• Leading to a significant year-on-year decrease in overall production and sales volume

• Fierce market competition for leading products
• Intensified price wars in the special paper market
• Year-on-year decline in finished paper prices

• Haiyan Phase I project was transferred to fixed assets in April 2025
• Haiyan Phase II project was transferred to fixed assets in July 2025
• Depreciation expenses increased significantly

• Rising debt financing costs
• Increased capital turnover pressure

• The 2023 VAT additional deduction of RMB 11.04 million was recorded in the first quarter of 2024
• Leading to a significant year-on-year decline in other income in 2025

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Indicator	Value	Industry Average	Assessment
Gross Profit Margin	7.63%	Approximately 12%	Below Average
Net Profit Margin	2.51%	Approximately 6%	Below Average
ROE	1.97%	Approximately 8%	Below Average

The company’s profitability indicators are all below the industry average. The gross profit margin of the industrial supporting paper business has dropped from 9% to 7.63%, resulting in significant operational pressure [0].

Indicator	Value	Risk Assessment
Current Ratio	0.87	Below Safety Line (1.0)
Quick Ratio	0.48	Low
Monetary Funds	RMB 109 million	-38.72% YoY
Non-Current Liabilities Due Within One Year	RMB 146 million	High Debt Repayment Pressure

Financial analysis shows that the company is in a

state, with tight working capital and significant short-term debt repayment pressure [0].

Indicator	First Three Quarters of 2024	First Three Quarters of 2025	YoY Change
Net Cash Flow from Operating Activities	RMB 150 million	RMB 27 million	-81.82%
Inventory	RMB 358 million	RMB 425 million	+18.72%

Cash flow has dropped significantly, and the increase in inventory has further occupied working capital. The company’s capital chain pressure cannot be ignored [3].

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Based on a comprehensive analysis of Minfeng Special Paper’s situation, the company’s turnaround should focus on the following five aspects:

• Strengthen production management and optimize process flows
• Accelerate new employee training to improve operational proficiency
• Collaborate closely with equipment suppliers to resolve technical bottlenecks
• Target: Reach full production for the phase I project in the first half of 2026, and increase the capacity utilization rate of the phase II project to over 70%

After reaching full production, the Haiyan Plant can achieve an annual capacity of approximately 50,000 tons, which is expected to contribute incremental revenue of RMB 300-400 million [1].

• The equipment of the Nanhu Plant has failed to be sold after two listings on the Jiaxing Property Rights Exchange
• The third auction will be held on January 21, 2026 (Alibaba Assets Platform)
• Starting Bid Price: RMB 170 million
• No applicants have registered so far [3]

If the disposal is successful, it can bring in cash inflow of approximately RMB 150-170 million and reduce depreciation expenses by approximately RMB 20 million per year.

Installment	Time	Amount (10,000 yuan)	Remarks
First Installment	November 2025	13,000	Already received
Second Installment	2026	Approximately 47,500	Expected
Third Installment	2027-2028	Approximately 47,200	Expected
Total	2025-2028	108,000	Including RMB 8.87 million collected on behalf

• Repay part of short-term liabilities (approximately RMB 100 million)
• Supplement working capital (alleviate cash flow pressure)
• Invest in capacity ramp-up and technological upgrading of the Haiyan Plant

The expropriation compensation funds will significantly improve the company’s financial situation, reduce the asset-liability ratio and financial expenses [3].

• Increase the proportion of high-value-added products (glassine paper, special coated paper)
• Expand application areas of environmentally friendly special paper
• Develop differentiated customized products to improve pricing power
• Target: Increase gross profit margin to over 10%

• Optimize the procurement supply chain to reduce raw material costs
• Improve energy utilization efficiency to reduce energy consumption per ton
• Implement lean production to reduce waste
• Target: Reduce management expense ratio by 1-2 percentage points

Phase	Time	Key Milestone	Net Profit Forecast
Bottoming Phase	Q4 2025	Capacity switch completed	Approximately RMB 4 million
Recovery Phase	Q1 2026	Haiyan Phase I project reaches full production	Approximately RMB 8 million
Rebound Phase	Q2 2026	Equipment disposal completed	Approximately RMB 15 million
Growth Phase	Q3 2026	Expropriation compensation funds received	Approximately RMB 22 million
Stable Phase	Q4 2026	Full recovery of profitability	Approximately RMB 30 million

• Main incremental contribution from the improvement of capacity utilization rate at the Haiyan Plant
• Non-recurring gains from expropriation compensation funds boost profits
• The impact of increased depreciation is gradually absorbed

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• The time for the Haiyan Plant to reach full production may be delayed
• Product quality stability needs to be verified
• Customer certification cycle may be relatively long

• Fierce competition in the tobacco paper and glassine paper markets
• Price wars may continue
• Downstream demand growth slows down

• Sharp decline in monetary funds, high debt repayment pressure
• Sustained negative operating cash flow
• Risk of unsuccessful equipment auction

• Slow inventory turnover, facing price decline risks
• Sustained pressure from fixed asset depreciation

Risk	Response Measures
Delayed Capacity Ramp-Up	Strengthen cooperation with equipment suppliers and introduce professional technical teams
Intensified Competition	Adopt differentiated competition and increase the proportion of high-end products
Tight Capital Chain	Actively promote the arrival of expropriation compensation funds and optimize debt structure
Asset Impairment	Accelerate inventory turnover and control procurement rhythm

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Indicator	Value	Industry Comparison
Price-to-Earnings Ratio (P/E)	81.35x	Significantly Higher Than Industry Average
Price-to-Book Ratio (P/B)	1.59x	Slightly Higher Than Industry Average
EV/OCF	23.87x	Relatively High

The current valuation level reflects the market’s expectation of the company’s future turnaround, but the valuation appears relatively high after the significant performance decline [0].

• Closely monitor the progress of capacity ramp-up at the Haiyan Plant
• Pay attention to the results of equipment auction and the arrival of expropriation compensation funds
• Risk Warning
  : Significant performance volatility, participate cautiously

• The company is expected to see a performance inflection point after the Haiyan Plant reaches full production
• Expropriation compensation funds will significantly improve the financial situation
• Key Points to Focus On
  : Recovery speed of production and sales volume, changes in product gross profit margin

• The special paper industry still has growth potential
• The company’s leading position in the industry is stable
• Investment Logic
  : Distressed turnaround, focus on the improvement of capacity utilization rate

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Minfeng Special Paper is currently in a critical transformation period. The suspension of PM20, PM22 and the full suspension of the Nanhu Plant have led to a significant reduction in capacity, and the slower-than-expected capacity ramp-up at the Haiyan Plant has caused a gap between old and new capacities. Coupled with factors such as intensified market competition and falling product prices, the company’s 2025 performance is under severe pressure.

However, there are also obvious positive factors for the company’s turnaround:

1. The RMB 1.08 billion expropriation compensation funds for the Nanhu Plant
   will be received in installments, which will significantly improve the financial situation
2. New capacity at the Haiyan Plant
   , once reaching full production, will restore and exceed the original capacity level
3. Equipment asset disposal
   can bring in cash flow and reduce depreciation burden

It is expected that the company will see a performance inflection point in 2026, with net profit expected to recover to the level of RMB 30 million. Investors should focus on the progress of capacity ramp-up, the arrival of expropriation compensation funds, and changes in the competitive pattern of the special paper industry.

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[0] Jinling API - Minfeng Special Paper (600235.SS) Company Profile and Financial Data
[1] National Business Daily - “Minfeng Special Paper: Expected Net Profit for 2025 is Approximately RMB 15.7 Million” (https://www.nbd.com.cn/articles/2026-01-19/4225878.html)
[2] South China Business Network - “Minfeng Special Paper: 2025 Annual Net Profit Expected to Decrease by Approximately 78.00% Year-on-Year” (https://finance.eastmoney.com/a/202601193623262077.html)
[3] Sina Finance - “Fierce Competition in the Paper Industry, Minfeng Special Paper’s Expected Non-Recurring Net Profit Plummeted 92% Last Year” (https://finance.sina.com.cn/jjxw/2026-01-20/doc-inhhxehz0543469.shtml)

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Figure 1: Analysis of Minfeng Special Paper’s Capacity Status, Performance Trend, Decline Factors and Turnaround Strategies

Figure 2: Minfeng Special Paper’s Profitability, Solvency, Cash Flow and Turnaround Path Forecast