Hubei Yihua Chemical Industry Co., Ltd, released a string of landmark announcements on September 21, rolling out a full set of strategic moves spanning organizational streamlining, new energy material capacity expansion, and capital efficiency improvement, all aligned with the chemical sector's lean operation and high-value transformation drive.

Wholly-owned trading subsidiary to be absorbed

The firm will fully merge its 2015-founded trading arm Yihua Trading, eliminating its independent legal entity status without any consideration payment.

The move will consolidate all assets, debts and operational resources of the subsidiary, which posted unaudited net assets of 109.08 million yuan and net profit of 2.74 million yuan in January-August 2026, into the parent company. The transaction requires no shareholder meeting approval, does not count as a related-party deal or major asset restructuring, and will not alter the firm's name, registered capital or management lineup.

It will cut redundant management layers, lower administrative costs, and bring no material impact to the group's consolidated financials, as the subsidiary's figures have long been fully incorporated into the parent's statements.

150kt/year iron phosphate project kicks off

Hubei Yihua's wholly-owned new energy subsidiary will break ground on a 150,000-tonne-per-year iron phosphate project with a total investment of 1.152 billion yuan, marking a key step in its downstream foray into the new energy battery material track.

The company has already built solid foundations in this segment: its joint venture Bangpu Yihua has brought 300,000 tonnes/year iron phosphate and 200,000 tonnes/year nickel sulfate lines to full production, while its 100,000 tonnes/year refined phosphoric acid joint venture with Stanley is running at steady capacity. Leveraging its decades-long phosphorus chemical expertise, low-cost stable purified phosphoric acid and synthetic ammonia supply, the project will help the firm capture the booming demand from the global lithium iron phosphate battery market for EVs and grid energy storage.

This 150,000-tonne line is only the first phase of its grand roadmap: backed by local phosphorus-fluorine-silica resource endowment and park-level industrial supporting facilities, Hubei Yihua will scale up iron phosphate capacity in stages to hit 1 million tonnes per year in the long run, building a fully integrated "mine – phosphoric acid – purified phosphoric acid – new energy material" value chain that converts its inherent resource advantages into full-spectrum cost and competitive edges.

500 million yuan idle raised funds to top up working capital

To ease its tight short-term liquidity pressure and slash financial costs, the board has approved using up to 500 million yuan($74.12 million) of temporarily idle raised funds as supplementary working capital for up to 12 months, with the quota allowed for rolling reuse within the validity period.

Based on the current 3.00% one-year LPR, this move is expected to save around 15 million yuan in annual interest expenses, offering strong financial support for the firm's ongoing business expansion.

These coordinated "subtraction addition" moves come as Hubei Yihua pushes to fix legacy governance and financial strains from past corruption cases and industry cycles, amid a challenging operating environment in H1 2026.

The firm's overall gross margin slid 4.44 ppts YoY to 14.34%, with its core phosphorus compound fertilizer segment seeing gross margin plunge 11.37 ppts to merely 7.05%, squeezed by spiking raw material costs from US-Iran geopolitical tensions and delayed phosphate fertilizer export openings.

With a 68.92% asset-liability ratio, current ratio of 0.67 and quick ratio of 0.48 as of end-H1, the firm faces over 8.2 billion yuan in total short-term interest-bearing debt, against only 4.59 billion yuan in monetary funds.

The latest package of measures is precisely targeted to defuse short-term debt risks, upgrade its low-margin traditional chemical business, and secure a foothold in the fast-growing new energy material track to drive long-term profit recovery.