Cyclical Tailwinds Meet GNMI Integration Expectations: Jihua Group's Q3 Report Delivers Accelerated Growth

HONG KONG, Nov. 5, 2026 /PRNewswire/ -- On October 30, Zhejiang Jihua Group Co., Ltd. (603980.SH, hereinafter "Jihua Group") released its third-quarter report. For the first three quarters of the year, the company recorded revenue of RMB 1.322 billion, up 25.16% year on year; net profit attributable to shareholders of the listed company reached RMB 79.7918 million, a sharp increase of 452.60% year on year; and net profit attributable to shareholders after deducting non-recurring items came in at RMB 20.4171 million, turning profitable from a loss in the same period last year.

This impressive set of results coincides with Global New Material International Holdings Limited's (6616.HK, hereinafter "GNMI") official entry as the controlling shareholder of Jihua Group. Earlier this year, Tonglu Junheng, an affiliate of GNMI, acquired a 29.89% stake in Jihua Group for a consideration of approximately RMB 1.495 billion. The voting rights arrangement, the share transfer and the early re-election of the board of directors have now all been completed, with Dr. Su Ertian, Chairman of GNMI, assuming the chairmanship of Jihua Group.

The convergence of these two events has prompted the market to re-examine Jihua Group through the lens of industrial integration. Looking back, GNMI's South Korean and German business segments both delivered substantial earnings growth following their integration. Now, this integration playbook — already proven overseas — is being applied to Jihua Group.

From Price to Profit: Jihua Group's Q3 Revenue and Gross Margin Hit Multi-Year Highs

Attributing the marked improvement in performance, Jihua Group explained that it was "driven by changes in the industry and market environment, with product selling prices rising significantly year on year, resulting in higher product gross profit."

The current round of dye price increases stems not from a surge in demand, but from tightening supply at the intermediates end. The price of the reduction product — the core intermediate for disperse dyes — has surged by more than 600% this year. Its production involves high-risk processes such as nitration and hydrogenation and is subject to stringent standards for waste acid disposal; compliant and effective domestic capacity stands at only 50,000–60,000 tonnes, with little new supply expected in the short term, allowing cost increases to pass through the chain smoothly.

As the industry's price center shifts upward, Jihua Group, positioned in the midstream, is a natural beneficiary. As a leading domestic player in disperse dyes and the world's third-largest dye production base, the company commands a complete fine chemicals value chain with outstanding scale and channel advantages, enabling it to capture the incremental profits generated by this round of price increases.

In the third quarter, Jihua Group recorded revenue of RMB 525 million, up 51.53% year on year, and net profit after deducting non-recurring items of RMB 781,100, turning profitable from a loss a year earlier. Back-calculating from quarterly revenue and operating costs, gross margin for the quarter was approximately 29.78%, up roughly 18.4 percentage points year on year and 7.7 percentage points quarter on quarter — a level that ranks near the top of the company's quarterly track record of recent years.

More importantly, the improvement in profitability has been a year-long trend. In terms of net profit after deducting non-recurring items, Jihua Group posted RMB 19.636 million in the first half and RMB 20.4171 million in the first three quarters, both turning profitable from losses of RMB 10.7531 million and RMB 23.8617 million in the corresponding periods of last year. On a cumulative basis, gross margin has climbed period by period — from 15.84% in the Q1 report, to 18.86% in the interim report, and to 23.20% in the Q3 report — fully confirming a systemic upward shift in the earnings center of the core business.

In the near term, intermediates supply is unlikely to loosen quickly, industry inventories remain low, and operating rates are recovering in the peak season, keeping dye prices biased to the upside. Drawing on its industrial foundation and product price increases, Jihua Group has demonstrated considerable earnings elasticity in this cycle.

With GNMI's entry into Jihua Group, a question of even greater strategic imagination now lies before the new shareholder: how to leverage GNMI's industrial resources in new materials and its global channels to convert the price dividends granted by the cycle into durable profitability and a lasting industry position for Jihua Group.

From Effect Pigments to an All-Round Surface Performance Materials Platform: GNMI Adds Another Piece to Its Product Matrix

GNMI's entry into Jihua Group is no mere financial investment; it is a key step in broadening the boundaries of its new materials platform and enriching its product matrix.

To appreciate the value of this transaction — priced at nearly RMB 1.5 billion — one must first examine Jihua Group's core moats and fundamental value.

After more than three decades of development, Jihua Group has built a complete fine chemicals value chain spanning basic chemical raw materials, energy supply, intermediates and finished dyes. Its total dye capacity approaches 100,000 tonnes — including 75,000 tonnes of disperse dyes (top three in the industry) and 20,000 tonnes of reactive dyes — complemented by 20,000 tonnes of capacity for H-acid, a key intermediate, and 330,000 tonnes of capacity for sulfuric acid, a basic chemical raw material. Amid the current cycle of tightening intermediates supply and a rising dye price center, Jihua Group, as a leading disperse dye producer, has seen its profit headroom expand significantly, as evidenced by a single-quarter gross margin approaching 30% in Q3.

Jihua Group's technological foundation is equally solid. The company holds 119 patents and has led or participated in the formulation of 41 national and industry standards. Its three subsidiaries — Jiangsu Jihua, Jihua Jiangdong and Jihua Materials — are all national high-tech enterprises, supported by platforms such as a national postdoctoral research workstation and provincial-level enterprise R&D centers.

Then there is the asset base. As of the end of September 2026, Jihua Group's asset-liability ratio stood at just 12.23%, with a current ratio of 7.45 and RMB 1.390 billion in cash on the balance sheet — a distinctly low-leverage, high-liquidity profile. In addition, the company owns production bases and industrial land totaling more than 710,000 square meters across the Yangtze River Delta, further cementing its hardware foundation.

For GNMI, this is a strategic addition that broadens the boundaries of its new materials platform. Deeply rooted in synthetic mica and pearlescent materials, GNMI has the opportunity, following the acquisition of Jihua Group, to upgrade from an effect pigment supplier into an all-round surface performance materials platform covering "color + effect + function", extending its business from automotive, cosmetics and industrial coatings into textile printing and dyeing.

From South Korea to the German Business Segment: A Replicable Integration Playbook

Synergistic integration is a discipline that GNMI has practiced repeatedly in recent years.

In early 2023, GNMI acquired a 42.45% stake in CQV, South Korea's largest pearlescent materials company (now the Group's South Korean business segment), for approximately RMB 470 million, becoming its single largest shareholder before subsequently raising its holding to 50.61%. At the time, the Korean segment's products were mainly automotive-grade and cosmetic-grade, making it the ideal springboard for the Group's entry into the high-end market.

After three years of integration, in the first half of 2026 the South Korean business segment delivered revenue growth of 17.2% year on year excluding foreign exchange effects, with gross margin climbing from around 30% at the time of acquisition to 46%, and net profit multiplying several-fold. For a company that already possessed an industry-standard earnings base, such a leap within three years rests squarely on GNMI's integrative capabilities in supply chain optimization, cost control and operational efficiency.

Merck's Surface Solutions business (SUSONITY, now the Group's German business segment) is an even more substantial test case — and the truest measure of GNMI's cross-border integration capabilities.

On July 31, 2025, GNMI completed the cash acquisition of 100% of the equity of the German business segment for EUR 665 million (approximately RMB 5.187 billion), setting a record for the largest cross-border M&A transaction in the global surface performance materials industry.

The German segment's service network spans Asia, Europe, Africa and the Americas. Its top ten customers have all been partners for more than 15 years, some for over 30, and it has long supplied top-tier luxury automotive brands and leading beauty groups. Constrained by production bases in high-cost countries and by inventory adjustments, however, its profitability stood at a relatively low level at closing.

More than a year on from completion, sharply improving financial data fully attest to the results of integration. In the first half of 2026, the German business segment's adjusted gross margin rose from 29.4% at initial consolidation to 37.6%, an increase of 8.2 percentage points, while average monthly sales grew 32.3% compared with the initial consolidation period.

Behind these two successful integrations, GNMI has distilled its integration practices — stabilizing operations, activating capacity and strengthening synergies — into a replicable playbook. Today, this playbook is being brought to a company that has cultivated fine chemicals for more than three decades and has demonstrated strong earnings elasticity in an industry upcycle.

From Synergy to Delivery: Three Pathways to Platformization and Globalization

The synergy between GNMI and Jihua Group can unfold along three dimensions.

The first is R&D and technology synergy. GNMI is deeply engaged in inorganic effect materials, synthetic mica and surface application development, while Jihua Group has accumulated profound expertise in organic synthesis, dye formulation and large-scale fine chemicals production, complemented by water-based non-stick coating capacity. This can further strengthen GNMI's R&D and engineering capabilities in organic chemicals and provide a practical vehicle for the formulation-level fusion of organic and inorganic materials.

The second is manufacturing and supply chain synergy. GNMI operates six manufacturing bases across China, Germany, the United States, Japan and South Korea, with capacity utilization steadily rising and yield-optimization initiatives already in place — this globalized supply chain management capability is the part of the integration that can be most directly exported. Jihua Group's experience in scaled fine chemicals manufacturing and process control likewise offers a useful complement to GNMI's engineering capabilities in organic chemicals. In addition, the Tonglu synthetic mica project with an annual capacity of 100,000 tonnes was ignited for trial production in February 2026; once fully ramped up, it will deliver scaled supply of high-end synthetic mica, and Jihua's accumulation in fine synthesis can offer valuable technical reference for GNMI in process scale-up and quality stability. The two sides' complementary strengths on the manufacturing front represent an important step in GNMI's effort to broaden the boundaries of its new materials platform and enrich its product matrix.

The third is market channel synergy. GNMI has built a globalized revenue structure characterized by multi-regional synergy: overseas revenue accounted for 57.5% of the total in the first half of 2026, and the company has successfully entered the supply chains of multiple global luxury automotive brands and leading international beauty customers. Jihua Group, long rooted in the Yangtze River Delta, has built deep regional channel barriers in textile printing and dyeing on the back of a comprehensive fine chemicals production and sales network. Jihua's products are also exported overseas on a long-standing basis: in 2025, the company's overseas revenue reached RMB 245 million, with a gross margin of 17.17% on overseas business, markedly higher than the 11.54% on domestic business. The two sides' sales footprints are thus clearly complementary: Jihua's Yangtze River Delta roots can strengthen GNMI's reach into China's core economic belt, while GNMI's global channels and brand credibility open up broader international market space for Jihua.

Conclusion: The Cycle Determines the Starting Point; Synergy Determines the Slope

GNMI's integration of Jihua Group comes at a unique window of cyclical prosperity, allowing it to methodically extend the integration playbook proven in South Korea and Germany into the fine chemicals field, layer by layer. The deeper value of industrial integration ultimately rests on substantive improvements in operating quality and the steady delivery of long-term returns.

As the product matrix continues to expand and the globalized industrial footprint takes shape, GNMI is growing from an effect pigment supplier into an all-round surface performance materials platform covering "color + effect + function".