Lihua Yiweiyuan Chemical Co., Ltd. (hereinafter referred to as Weiyuan Co., Ltd., 600955, SH ), will move forward towards new strategic goals in the capital market.
On September 8, with the announcement of the results of the initial public offering of shares, Weiyuan shares completed the last routine action before listing. After landing in the capital market, this company with significant advantages in the integrated industrial chain will further consolidate its leading position in the existing product field by virtue of the advancement of fundraising projects.
In accordance with the development strategy of Weiyuan, the company will rely on the existing industrial foundation in the next five years, and adhere to the principle of international technology leadership in accordance with the working ideas of “advanced technology, friendly environment, broad market, and leading industry”. Adopt green chemical technology to realize the extension and strengthening of the industrial chain, and promote the realization of higher quality development.
It is worth noting that while obsessing with strengthening the industrial chain, the phenol, acetone and other products produced by Weiyuan will further enhance the voice of Chinese enterprises in related fields, accelerate the substitution of domestic products for imports, and ease The degree of dependence on imports of related categories will also be of great significance.
Overall operating capability indicators are better than peers
Weiyuan shares, which has not passed its 11th birthday, may not be considered to have profound qualifications, but relying on its deep cultivation in the field of organic chemistry, this company from Shandong, a major chemical province, has become a leader in the same industry in China.
The prospectus updated by Weiyuan shares on September 1st shows that during the reporting period (2018~2020), the company’s main production equipment maintained continuous operation and stable operation, and the main product capacity utilization rate was high; at the same time, it insisted on zero inventory sales management Strategies and the settlement policy of payment first, reduce the occupation of funds by inventory goods, and avoid the risk of sales collection. Based on the above factors, the issuer’s main operating capability indicators are generally better than those of listed companies in the same industry.
It is worth noting that among the peers of Weiyuan, there are many A-share star companies such as Wanhua Chemical, Luxi Chemical, Yangmei Chemical, and Hualu Hengsheng. In contrast with these giants, Weiyuan shares have not fallen behind.
From the perspective of the main indicators reflecting the company’s operating capabilities, this indicator of Weiyuan shares has been at the forefront of similar companies from 2018 to 2020. For example, in the past three years, the total asset turnover rate of Weiyuan shares was 0.86, 0.86 and 1.04 respectively, showing an overall upward trend.
In addition to the total asset turnover rate, Weiyuan shares are also at the middle level of listed companies in the same industry in terms of inventory turnover rate.
It is worth noting that for listed companies, the accounts receivable problems at the end of each reporting period have plagued the operations and capital turnover of many companies, but Weiyuan shares have no worries in this regard.
As a sponsor, CITIC Securities, based on the survey of the downstream customers of Weiyuan’s main products and interviews with the management personnel of Weiyuan, found that the main products of Weiyuan’s phenol, acetone, bisphenol A, polycarbonate, etc. are due to domestic The small number of manufacturers and the concentration of production capacity have led to a relatively strong position on the product sales side. Manufacturers generally adopt the pre-receipt model in product sales and are recognized and accepted by downstream customers. This has become an industry practice. Therefore, the issuer’s absence of accounts receivable balance at the end of each reporting period is due to industry characteristics.
Relying on its dominant position in the supply of the industry, the profitability of Weiyuan shares is also steadily improving. From 2018 to 2020, the operating income of Weiyuan shares was 4.779 billion yuan, 3.993 billion yuan and 4.386 billion yuan, gross profit was 832 million yuan, 510 million yuan and 1.123 billion yuan, and gross profit margin was 17.42%, 12.78% and 25.59%, net profit margins were 5.62%, 5.39% and 16.30%, respectively.
In 2019, due to industry-related influences, Weiyuan’s revenue and net profit have fluctuated, but in 2020, it will be affected by multiple factors such as the increase in the price of acetone and other main products, the completion of new equipment and the adjustment of corporate business boundaries. Human operating profit and net profit have increased significantly compared with 2019, and profitability has been significantly improved.
This improvement will continue in 2021, and the increase is significant. The prospectus shows that Weiyuan shares are expected to achieve an operating income range of 6.972 billion yuan to 7.272 billion yuan from January to September 2021, an increase of 143.29% to 153.76% year-on-year; the expected net profit range attributable to shareholders of the parent company is 1.519 billion yuan. To 1.769 billion yuan, a year-on-year increase of 321.05% to 390.35%.
Layout of the entire industry chain to build a moat
From the perspective of its contribution to performance, although acetone has been highlighted in the prospectus, the layout of the entire industry chain is obviously more able to support the continued improvement of Weiyuan’s performance.
In the prospectus, the industry of Weiyuan shares is the manufacturing of chemical raw materials and chemical products. This company also has a full product and industrial chain layout of “phenol, acetone-bisphenol A-polycarbonate”.
From the perspective of product distribution, the main business of Weiyuan shares also revolves around this industrial chain, involving the R&D, production and sales of new organic chemical materials. The main products include phenol, acetone, bisphenol A, polycarbonate and isopropyl. alcohol. From the perspective of specific application areas, these products are used in multiple industries.
The layout of the whole industry chain also makes the later development of Weiyuan Co., Ltd. more stable. Although it is inevitable to face competition from new market entrants and existing competitors, the production of terminal polycarbonate has certain barriers to entry in terms of technology, capital, and environmental protection. It also makes it easy for Weiyuan shares in the entire industry chain to deploy. Construct a moat.
Weiyuan shares mentioned in the prospectus that the company has a complete research and development organization and a scientific technology research and development system. Through continuous technological innovation, the development of new products and new markets provide a guarantee for the company’s development.
At the same time, Weiyuan has also cooperated with famous international companies such as KBR of the United States, Badger of the United States, Asahi Kasei of Japan, Ube Industries of Japan, Lummus of the United States and other internationally renowned companies to introduce its international leading process technology. In addition to this fundraising project, the issuer has completed and put into operation 350,000 tons/year of phenol acetone, 240,000 tons/year of bisphenol A and 130,000 tons/year of non-phosgene polycarbonate production capacity, which is the first domestic company to own ” An enterprise with full products and full industrial chain of “phenol, acetone-bisphenol A-polycarbonate”, and its production facilities are rationally arranged in the same plant area, creating a competitive advantage of complete industrial chain, abundant products and low cost.
With the above advantages, the current market environment of Weiyuan shares is superior. my country has a large demand for many of its main products and needs a large amount of imports. In the wave of domestic substitution of imports, the development space of Weiyuan shares is self-evident.
Since 2017, my country’s import dependence on phenol and acetone has increased year by year. In 2019, my country imported 464,000 tons of phenol; in 2018, my country imported 777,000 tons of acetone, and there is room for import substitution.
It is worth noting that in order to protect the healthy development of the phenol and acetone industries, the Ministry of Commerce has implemented a number of import anti-dumping measures against the issuer’s main products, phenol and acetone. According to industry insiders, the implementation of anti-dumping has caused domestic phenol and acetone prices to rise, bringing opportunities for domestic enterprises. The import substitution speed of phenol and acetone will further accelerate, and domestic phenol and acetone manufacturers will face a more favorable market environment.
Policy escort, new materials welcome historic opportunities
In addition to the market space brought about by demand growth, the successive releases of relevant industrial policies have also allowed Weiyuan shares and other related companies to encounter rare historical opportunities.
In fact, new chemical materials have always been a development industry that the state attaches importance to, as well as the development focus of the 13th Five-Year Plan for national economic and social development. The “Thirteenth Five-Year” National Strategic Emerging Industry Development Plan issued by the State Council on November 29, 2016 pointed out that the building of an additive manufacturing industry chain.
Shandong Province, where Weiyuan shares is located, has also issued relevant plans many times. The “Special Plan for the Development of New Materials Industry in Shandong Province (2018-2022)” issued by the People’s Government of Shandong Province on October 26, 2018 pointed out that the focus will be on the development of new chemical materials such as polycarbonate and special engineering plastics to promote the process of industrialization and form Characteristic park.
The promulgation of a series of industrial policies clarified the important strategic position of new chemical materials in the national economy and social development, and provided a rare historical opportunity. Facing the opportunity, we already own the shares of Weiyuan in the entire industry chain, and once again adjusted its strategic goals, directly pointing to the excavation of the moat of the industry chain.
When referring to the future development strategy, Weiyuan said that the company will rely on the existing industrial foundation in the next five years and follow the working ideas of “advanced technology, friendly environment, broad market, and leading industry”. Adhere to the principle of international technology leadership, adopt green chemical technology, realize the extension and strengthening of the industrial chain, and promote the realization of higher-quality development.
In order to further meet market demand, expand the company’s dominant position in the domestic phenol and ketone industry chain, and replace foreign imports, Weiyuan has completed and put into production the “350,000 tons/year phenol, acetone, and isopropanol joint project” in November 2020. The newly increased production capacity is 217,000 tons/year of phenol, 36,000 tons/year of acetone and 100,000 tons/year of isopropanol.
The commissioning of the above-mentioned projects has made Weiyuan a leading phenol and acetone manufacturer in China. For this organic chemistry new material giant, landing on the capital market is obviously a good opportunity for it to further strengthen its own strength.
According to the prospectus, the investment projects raised by Weiyuan shares in this issuance include “350,000 tons/year phenol, acetone, isopropanol joint project”, “100,000 tons/year high-purity dimethyl carbonate project”, and “600,000 tons/year high-purity dimethyl carbonate project”. “Ton/year propane dehydrogenation and 400,000 tons/year high-performance polypropylene project”, “R&D center project” and “Supplementary working capital”.
It is worth noting that, in addition to the “350,000 tons/year phenol, acetone, and isopropanol joint project” that has been completed and put into production, the “100,000 tons/year high-purity dimethyl carbonate The project”, “600,000 tons/year propane dehydrogenation and 400,000 tons/year high-performance polypropylene project” was constructed and put into production. Weiyuan will also increase the production capacity of propylene, polypropylene and dimethyl carbonate, and further enrich its products. , The industrial chain will be further extended and improved, forming a comprehensive advantage of coordinated upstream and downstream development, market competitiveness and anti-risk capabilities.Text/Peng Fei
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