Meeting minutes of receiving institutional investors’ research activities
1、 Institutional Research
Meeting time: February 23, 2022
Meeting place: company conference room (No. 69, Tianhu South Road, Qujiang District)
Conference form: teleconference communication
Participants: Wang Yuzhe, Secretary of the board of directors, Haitong Securities Company Limited(600837) , Zhongtai Securities Co.Ltd(600918) asset management, asset management of Dongzheng Ronghui securities, Wanjia fund, Baoying fund, China Europe Fund, Haifutong fund, TEDA Manulife fund, Huaneng Guicheng trust, CCB pension management, OLP Capital Management Limited
2、 Main contents of teleconference communication
1. Introduction to the development history of the company
Since its establishment in 2001, the company has always taken high-performance paper-based functional materials as its main business, closely followed the demand changes in the fields of consumption and industry, and achieved 20 years of rapid growth. As one of the largest R & D and production enterprises of paper-based functional materials in China, the company is committed to providing one-stop solutions for downstream customers. It has five production bases in China, including Zhejiang Qujiang, Henan Neixiang and Zhejiang Changshan, Guangxi Laibin (under construction) and Hubei Shishou (under construction). The company and its holding subsidiaries and joint ventures now have 50 modern papermaking production lines, One pulp production line, 21 coating production lines and 7 super calenders, and has the production capacity of the whole industrial chain of forest land, chemical industry, pulping, energy, logistics, base paper and paper products. The industrial width and industrial depth layout are relatively perfect. Up to now, the annual production capacity of the company and its joint venture company has reached 1.1 million tons, and there are more than 2600 downstream direct sales customers. At the same time, the company also takes the R & D and manufacturing of paper-based functional materials as the core, actively promotes the realization of made in China 2025, implements the intelligent management of factories, and actively arranges in new materials, new energy and upstream and downstream integration such as energy manufacturing, chemical materials, industrial water treatment and solid waste treatment, distributed photovoltaic power generation, logistics and C-end products. While expanding its main business and giving full play to its scale advantages, the company’s product diversification advantages, flexible production capacity, technical scheme advantages, environmental protection governance advantages, management innovation advantages, brand customer advantages and the company’s “home culture” advantages are important guarantees for the stable development of Xianhe Co.Ltd(603733) . At the same time, the company also attaches great importance to sustainable development, actively promotes the use of new energy, and is contributing to the sustainable development of the industry together with suppliers and customers upstream and downstream of the industrial chain.
2. What is the impact of energy costs in the fourth quarter of last year
At present, the company has normal production and operation and sufficient orders. In October of the fourth quarter, the company received the power restriction plan from the local government and actively cooperated with its implementation. Due to the long implementation time, it had an impact on the company’s capacity release in the fourth quarter. The company believes that the power restriction is short-term and partial, and the long-term impact on the energy structure is limited. At the same time, the company is also actively adjusting the market strategy and terminal price to maintain stable performance growth, and plans to gradually deal with and partially digest the impact in the first quarter of 2022 by correspondingly increasing the sales price of its own products, adjusting the product variety structure, increasing cost reduction and efficiency increase.
3. May I ask about the price increase of the company
At present, the company has fully released production capacity and stable operation. After the Spring Festival, it is the traditional peak season of the market, and the overall delivery volume of the company will be improved. In terms of the current market environment, the company has made positive price adjustment, and the subsequent company will dynamically track the market price trend and adjust the product price in time according to the market conditions and other factors.
4. What do you think of the subsequent wood pulp cost
At present, wood pulp is still in a stable state as a whole, and the price is expected to rise in the second quarter. The company will timely adjust the pulp inventory in combination with the production order and wood pulp price. The company will also reasonably absorb the possible impact of rising costs through the price adjustment in the downstream market. At present, the company has enough wood pulp inventory to support the production and operation of the company. At the same time, the company has a stable management team and rich experience in cost control, and has maintained a stable and good cooperative relationship with raw material suppliers for many years, which can well ensure the supply of raw materials.
5. What is the expected pace of the company’s production capacity in the future? The subsequent production plans in Hubei and Guangxi. Xiawang paper PM5 project has been successfully put into operation in late December 2021, releasing a production capacity of more than 70000 tons; Zhefeng pm9 project in Changshan area of the company has been put into operation in November 2021, releasing a capacity of 40000 tons, and the two production lines are full-load production. In addition, the company carried out the technical improvement project of Zhefeng PM4 in 2021, restoring the production capacity of 40000 tons. The new production capacity of the company is mainly composed of release materials, transfer materials, food packaging and medical packaging materials. The plant of the 300000 ton food cardboard project of the company is under construction. It is expected to complete the construction of the plant in May 2022 and start production from July to August. The project will be put into production in Guangxi in the second half of 2023, mainly focusing on the production line of food and medical products; The investment project of Hubei base is expected to be put into operation by the end of 2023. The main products of the project’s future production line will focus on furniture decoration, food packaging materials and other series. For the specific progress, please refer to the company’s project progress announcement disclosed by the company’s legal information disclosure media such as Shanghai Stock Exchange.
6. Does the company face the problem of competition with customers and how to solve it
The company has long attached great importance to maintaining customer relations. After years of development, the company has more than 2600 valuable downstream customers and has maintained a good cooperative relationship. For those industries that use the company’s products for a long time and occupy a large market share, such as self-adhesive, tobacco and other industries, the company will continue to maintain these good cooperative relations and further stabilize the market. The entry point for the company to extend to the downstream market is mainly based on the market distribution, competition situation and customer conditions. Generally, it is considered that the downstream market is relatively scattered and products with high quality requirements are mainly considered, such as silicone paper market.
Xianhe Co.Ltd(603733) board of directors February 25, 2022
