This Week in Imaging: Ninestar Financials Hit by U.S. Ban, Weak Chinese Economy

This week in the document-imaging industry was marked by big news from Ninestar Corporation of Zhuhai, China, which reported that it’s forecasting big losses for its 2023 fiscal year – to the tune of a net loss of $233 million – which appears to be a first for the company.

The company attributes its loss to the U.S. Department of Labor’s June 2023 ban of Ninestar products and (those of eight subsidiaries) into the U.S., citing Ninestar’s alleged violation of the U.S. Uyghur Forced Labor Prevention Act (UFLPA), a ban that  Ninestar is currently appealing.

But Ninestar also attributes its forecast losses to a global chip shortage and increased printer competition. We doubt either of this elements have much to do with its losses – by all accounts, the global chip shortage has been substantially eased since early last year, and since when hasn’t there been tough competition in the printer market?

Ninestar doesn’t reveal the extent of its revenue losses since the U.S. ban last year, but it’s likely to be substantial.

Consider that before the ban, for its fiscal-year 2022, Ninestar’s net revenue was $3.76 billion, up 13.44 percent year-over-year, while net profit was $270.57 million, up 60.14 percent year-over-year.

However, in May 2023 – before the U.S. ban – there appeared to be trouble, with Ninestar reporting that its first-quarter revenue was up 11.75 percent year-over-year, but net profit was down 48.56 percent year-over-year.

This most likely reflected the weak Chinese economy – with CNN, for instance, describing 2023 as a “miserable year” for the country’s economy.

Unfortunately, many analysts don’t see the Chinese economy getting better anytime soon, with some forecasting worse to come. Unless the Chinese economy improves, and/or  Ninestar wins its appeal to overturn the U.S. ban, tough times will continue for the company. For those printer OEMs whose printer supplies must compete with Ninestar’s lower-priced alternatives, this won’t come as bad news.

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