Li Baoping, the founder and long-time leader of Shaanxi Heimao Coking Co., completed a large block sale on March 4 that crystallised significant gains even as the company slides deeper into losses. He disposed of 32.79 million shares, about 1.61% of the company, via a block trade that fetched RMB170.84 million (roughly $24m). The shares sold were purchased in an increase between August 2024 and January 2025 for about RMB99.9998 million, implying a paper-to-cash gain of more than RMB70m over slightly more than a year.
The transaction underlines a striking contrast: He bought during a depressed share-price period and sold after the stock rose more than 75% from February 2025 to March 4, 2026. The block trades were executed at RMB5.21 per share, a c.3.5% discount to the day’s close; institutional buyers participated and acquired a meaningful tranche. Company filings stress the sale does not trigger a mandatory tender offer and will not change the controlling shareholder structure—Shaanxi Yellow River Mining Group continues to hold 45.14%—but the timing and scale of the founder’s cash-out will attract scrutiny from investors and analysts.
On fundamentals, Shaanxi Heimao’s performance is troubling. The company reported revenue of RMB14.58bn in 2024 but a net loss attributable to shareholders of RMB1.158bn. Its preliminary guidance for 2025 points to a further loss of RMB1.09bn–RMB1.19bn, meaning cumulative losses across 2024–25 will exceed RMB2.2bn (about $310m). The firm cites a combination of weaker coke selling prices, lower margins and tightened demand from steelmakers as the primary drivers of continued operating losses.
Operational metrics show the strain: fourth-quarter 2025 coke output was 1.2988m tonnes with sales of 1.2314m tonnes, generating RMB1.667bn in revenue and an average realised price of RMB1,353.59/tonne—down 12.4% year-on-year though up quarter-on-quarter. Balance-sheet pressure is visible too: the company’s asset-liability ratio climbed to 62.02% by Q3 2025, up from 55.14% at the start of 2024, increasing interest burdens and squeezing profits further.
The troubles are not unique to Shaanxi Heimao. China’s coking sector is grappling with a structural mismatch: excess low-end capacity sits alongside shortages of high-end, specialised coke products. National capacity stands at roughly 680m tonnes versus output near 490m tonnes in 2025, leaving utilisation at around 72%. High dependence on imports for premium coke and chemical derivatives—import reliance reported near 34% for some products—compounds the pressure, while environmental restrictions and high coal feedstock costs limit room for margin recovery.
Management is attempting tactical remedies. Shaanxi Heimao plans a joint trial production at the Yangxia coal mine in Xinjiang in June 2026, aiming to cut reliance on bought-in coal and reduce costs. The company is also pivoting toward higher-margin chemical lines such as BDO and LNG to offset cyclical weakness in coke sales. Whether these initiatives can meaningfully alter the firm’s cash flow and debt trajectory will be pivotal for investor confidence.
For shareholders and the market, Li’s sale is a double-edged signal. On one hand it showcases opportunistic timing and demonstrates that internal stakeholders can monetise when sentiment turns positive. On the other, the founder’s realisation of gains while the company remains loss-making raises questions about insider incentives and the alignment between management actions and minority shareholder interests. In a sector where pricing and regulation can flip rapidly, governance optics matter as much as operational fixes.