On the evening of April 28, Tianyuan, the “first stock of express materials”, released its 2021 annual report and 2022 first quarter report. The data shows that in 2021, Tianyuan’s revenue will be 1.289 billion yuan, a year-on-year increase of 26.94%; the net profit attributable to shareholders of listed companies is about 25.93 million yuan, a year-on-year decrease of 55.95%; non-net profit deducted is 4.1473 million yuan, a year-on-year decrease of 91.71% .
The revenue of 1.289 billion yuan has reached the highest point in five years, but the profitability of Tianyuan shares is getting worse. The situation of increasing income but not increasing profits is not only reflected in the annual answer sheet.
The “Daily Economic News” reporter noticed that in Q1 2022, Tianyuan’s revenue was 327 million yuan, a year-on-year increase of 19.89%; the net profit attributable to shareholders of listed companies was 291,100 yuan, a year-on-year decrease of 97.87%; non-net profit was deducted -1.7109 million yuan, a year-on-year change from profit to loss.
However, the secondary market did not react negatively to the two financial reports that did not look very optimistic. As of the day after the financial report was released (April 29), the A-share market closed, and Tianyuan’s share price rose 5.03% from the previous trading day. The total market value is 1.477 billion yuan.
This may be related to a policy from the previous day. On April 28, the “Beijing Plastic Pollution Control Action Plan 2022 Work Points” issued by the Beijing Municipal Development and Reform Commission proposed that by the end of 2022, Beijing express delivery outlets will prohibit the use of non-degradable plastic packaging bags.
In fact, it’s not just Beijing’s new round of policies. On March 2, when the “Resolution on Ending Plastic Pollution (Draft)” was passed at the 5th United Nations Environment Assembly resumed session, including Tianyuan shares, there were many degradable plastics. Concept stocks rose sharply.
Taking advantage of the shift from “plastic restriction” to “plastic ban” policy, it should have been a good time for Tianyuan to show its strength. As expected, why is this?
Green packaging products used in express delivery. Image Source:IC photo-1198021225434578976
Snowball data shows that since the beginning of 2022, Tianyuan’s share price has dropped by 24.68% as a whole, and the company’s share price in 2021 has also dropped by 24.72% compared with the previous year.
In 2021, deducted non-net profit will drop by 91.71% year-on-year
The annual report of Tianyuan shares shows that in 2021, its net profit attributable to the parent is 25.9348 million yuan, a year-on-year decrease of 55.95%; the deducted non-net profit is 4.1473 million yuan, a year-on-year decrease of 91.71%. The reporter noticed that, especially in the fourth quarter of 2021, Tianyuan’s single-quarter net profit attributable to the parent was 2.8695 million yuan, a year-on-year decrease of 81.99%; the single-quarter deducted non-net profit was -1.3882 million yuan, a year-on-year decrease of 113.21%.
Although the financial report did not point out the reasons for the sharp decline in profits, it is not difficult to see one or two from the fluctuations in gross profit margins and operating costs.
The “Daily Economic News” reporter noted that in 2021, Tianyuan’s operating costs will be 1.136 billion yuan, an increase of 34.01% over the same period last year. Among them, the cost of Tianyuan’s main products electronic label series and plastic packaging series increased by 40.69% and 41.47% respectively.
The annual report also shows the composition of operating costs. The reporter noticed that direct materials and outsourcing costs are the two highest proportions, of which direct materials account for 61.11% of the total cost and outsourcing costs are 20.13%.
It is worth noting that the operating cost of direct materials increased by 45.38% year-on-year, the largest increase among all cost components. And this one is still down year-on-year in 2020. The rising cost of upstream raw materials is part of the reason for Tianyuan’s increase in revenue but not profit.
In addition, in 2021, Tianyuan’s gross profit margin will be 11.90%, a decrease of 4.65% from the previous year. The gross profit margin level of Tianyuan shares has been unstable. Especially at the first meeting, the Issuance Examination Committee also focused on the situation that its gross profit margin fluctuates differently from its peers.
The reporter checked its prospectus and found that from 2014 to 2016, Tianyuan’s gross profit margins were 19.0%, 21.7%, and 24.6%, respectively. Its gross profit margin is rising significantly faster than the industry average. From 2017 to 2019, the gross profit margin of Tianyuan shares was 20.5%, 20.3%, and 22.4%, respectively.
Regarding the fluctuation of gross profit margin in 2019, the prospectus once explained that the market price of the company’s main raw materials in 2019 showed a downward trend. With the improvement of the proficiency of production personnel and the production efficiency of production lines, direct labor costs accounted for than decreased. In 2020, Tianyuan’s gross profit margin was 16.5%, with a larger decline. In 2021, Tianyuan’s gross profit margin will experience a significant decline again.
When explaining the changes in the manufacturing base project, Tianyuan mentioned the reasons for the decline in the gross profit margin of electronic label products: Since 2020, the electronic label series products have changed with the downstream market demand, resulting in changes in product specifications, and market competition has continued to intensify , resulting in a decline in product gross profit margins.
The concept of degradable plastics is popular, but some people are happy and some people are worried
In the past two years, degradable plastics have been riding the wind. Huaxi Securities predicts that the demand for degradable plastics is expected to exceed 1 million tons in 2023. In the next five years, the demand for degradable plastics in my country is expected to grow rapidly, and it is conservatively estimated that the demand in 2025 will be 3.5-4.5 million tons.
Guohai Securities Research Report also pointed out that under the promotion of the “plastic ban” policy, it is predicted that by 2025, the total market demand for degradable plastics in China will reach 4.15 million tons, which is 9.23 times the demand in 2018. The unit price is 20,000 tons. Calculated at RMB/ton, the market space is estimated to be 83 billion.
However, the reporter noticed that most of the degradable plastic concepts are popular in the capital market, most of which are upstream manufacturing enterprises of Tianyuan. Their stock prices have risen and their performance has doubled. The situation of midstream companies such as Tianyuan is just the opposite.
In addition to the unsatisfactory performance, the reporter noticed that in 2021, the share price of Tianyuan shares will drop by as much as 24.72% for the whole year, and the decline since 2022 is 24.68%. Such scenery.
The fluctuation of raw material prices has a huge impact on Tianyuan Packaging and printing enterprises. In particular, due to multiple factors such as stricter environmental protection policies, the production costs of upstream paper mills and petrochemical enterprises of packaging and printing enterprises have been rising, and the price pressure of degradable plastic raw materials has been directly transmitted to the downstream. fluctuations in market prices.
Tianyuan shares also disclosed relevant operating risks in the annual report. The raw materials required for its main business mainly include plastic materials and paper. During the reporting period, its direct materials accounted for a relatively high proportion of the cost of its main business, and fluctuations in the purchase price of raw materials had a greater impact on the company’s main business costs and profitability.
“Seeking change” may be the strategic direction of Tianyuan for a long time to come.
On the one hand is the All in green consumables packaging. In the context of the “double carbon” work and the implementation of the “plastic restriction order”, Tianyuan has increased investment in research and development. The annual report shows that the research and development expenses in 2021 will be 54.268 million yuan, an increase of 23.50% compared with 2020. The reporter also noticed that Tianyuan Co., Ltd. added a new investment project of raised funds, “Green and Low-Carbon Packaging Consumables Manufacturing Base Project”.
On the other hand, it is to adjust the business structure and develop diversified businesses. The reporter learned that Tianyuan Co., Ltd. has made a series of adjustments to its own express e-commerce logistics green packaging consumables manufacturing base project, including reducing the investment in the main product electronic label product line. At the same time, it has accelerated the development of its own diversified business and expanded to catering, takeaway, supermarket, finance, graphics and other industries. Tianyuan has also added investment in food packaging series products, degradable packaging bag series products and other production lines.
However, such a complete change will take time. In the short term, Tianyuan shares will still go through a relatively long period of pressure.
Cover image source: IC photo
