In September 2018, Argus ( Shanghai) Textile Chemicals Co.Ltd(603790) , which landed on the main board of Shanghai Stock Exchange, hit a high point soon after listing, and then went all the way down. Its latest share price has fallen more than 60% from its peak at that time, and its chemical industry index has more than doubled over the same period.
The disclosure of the third quarterly report disappointed shareholders: the net profit attributable to the parent company in the third quarter was only 8.93 million yuan, a year-on-year decrease of 48.11%. In contrast, the net profit attributable to the parent company of other chemical sub sectors excluding petrochemical industry in the same period increased by 103.53% year-on-year.
According to the listing prospectus of Argus ( Shanghai) Textile Chemicals Co.Ltd(603790) , in addition to replenishing working capital, the company’s four equity investment projects ranked according to priorities will reach the expected usable state in 2019 and 2020 respectively. However, Argus ( Shanghai) Textile Chemicals Co.Ltd(603790) has been listed for more than 4 years, and the largest raised investment project has been postponed for three times, which has not been completed so far; The second largest project was terminated; The third and fourth major projects have been postponed for one year and have not been completed so far.
In October 2021, the reporter of China Securities Journal and China Securities Taurus visited the location of the largest IPO raised investment project Argus ( Shanghai) Textile Chemicals Co.Ltd(603790) postponed three times. The construction of phase I project has been completed, and the steel structure of phase II plant and warehouse has not been completed.
For the construction of the project, Cheng Yuqing, the company’s director, said in a telephone interview with the China Securities Journal Taurus reporter that the second phase is mainly to build safe and environmental protection devices such as warehouses and waste water tanks, which is expected to be completed in the first quarter of next year. For the company’s recent operation, he said that the company’s current operation is relatively stable.
the four IPO projects did not meet expectations
According to the listing prospectus released in September 2018, the company’s IPO raised a total of 350 million yuan, of which 169 million yuan is planned to invest in the “new production project of high-performance environmental protection textile additives with an annual output of 16000 tons” (hereinafter referred to as the “textile additives project”), and 25.793 million yuan is planned to invest in the “new project of clothing brand color management service system construction project”, 28 million yuan is planned to be invested in the “new project of Internet customer color integration solution”, 27.6 million yuan is planned to be invested in the “new project of marketing service network construction project”, and 100 million yuan is planned to be invested in the “supplementary working capital” project.
Source: company announcement
According to the prospectus, in addition to the supplementary working capital projects, the construction period of the “textile auxiliaries” project with the largest investment is 18 months, the production period is 4 years, and it will be ready for use in December 2019; The construction period of the other three projects is two years, and they will be ready for use in December 2020.
According to the prospectus, the project plans to build energy-saving and environmental protection textile additives and high-performance ecological textile additives production lines and supporting facilities, so as to expand the production capacity of the company’s textile additives. In the future, with the full production of the project, it is expected to add about 343 million yuan of sales revenue to the company every year and 65.6043 million yuan of total annual profit during the operation period.
However, after the listing, Argus ( Shanghai) Textile Chemicals Co.Ltd(603790) postponed the first largest raised investment project three times. According to the announcement, in January 2020, the company will adjust the date when the project reaches the scheduled usable state from December 2019 to December 2020; In October 2020, the company extended the scheduled availability date to July 2021; In July 2021, the company extended the scheduled availability date of the project to may 2022 for the third time, 29 months later than the scheduled date at the initial stage of listing.
As for the reasons for the project delay, the company said that during the development of the raised investment project, the relevant requirements of the government on administrative planning approval, engineering construction drawing review, fire acceptance and other links were more detailed and improved. The company actively responded to the requirements of the local government and further refined and improved the relevant design of the project, such as pile foundation scheme, rainwater forced drainage system, fire safety facilities Environmental protection facilities have been refined and improved for many times, so the overall progress of the project is delayed compared with the plan. In addition, during the construction of the raised investment project, the relevant technical communication and Exchange take more time, which has a certain impact on the project progress.
In mid October 2021, a reporter from China Securities Journal and China Securities Taurus visited the project site and found that the construction of phase I project has been completed, and the steel structure of phase II plant and warehouse has not been completed. Site security said that the plant construction started in August and is expected to be completed in May next year.
The person in charge of the local safety and Environmental Protection Bureau told the China Securities Journal China Securities Taurus reporter that the project is the most special project in the chemical park of Taicang port area, and the location of the plot was originally in the chemical park; Later, according to the new regulations on fine chemical industry, the chemical industry park needs to retreat 500 meters, and the boundary of 500 meters is just located on the central axis of the project plot. Nearly one of them is divided into two, resulting in that half of the plot can be engaged in chemical operations and the other half can not. Due to the difficulty of physical partition, relevant departments gave instructions, and the other half of the area was adjusted for warehouse and material trade.
China Securities News · China Securities Taurus reporter interviewed Argus ( Shanghai) Textile Chemicals Co.Ltd(603790) Dong Mi Cheng Yuqing on this phone. He said that the situation that the production line becomes a warehouse does exist, “it has some impact on the construction period. The design is adjusted, and then the construction is delayed.” For the construction of the project, Cheng Yuqing said that the first phase has been completed and the pipeline and commissioning equipment are under construction; Phase II is mainly to build warehouses, waste water tanks and other safety and environmental protection devices; It is expected to be completed in the first quarter of next year.
For other projects to be raised and invested in the company’s IPO, the situation is not optimistic. In October 2020, the company announced to terminate the second largest raised investment project and permanently supplement the remaining raised funds with working capital. At the same time, the company adjusted the date when the third largest project and the fourth largest project reached the scheduled usable state from December 2020 to December 2021.
As for whether the remaining three projects can be completed on schedule, Cheng Yuqing said that the concerns of investors are reasonable, the enterprises are also anxious, the project itself has no major problems, and the adjustment of the project is also based on market changes.
share price and performance are opposite to the overall trend of the industry
According to the financial report, Argus ( Shanghai) Textile Chemicals Co.Ltd(603790) 2018 was the peak year of the company’s performance, and the company’s net profit reached 129 million yuan, the highest in recent five years. Since then, the index has fallen for two consecutive years. In 2019, the net profit was about 117 million yuan, a year-on-year decrease of 9.22%; In 2020, the net profit was about 55.06 million yuan, a year-on-year decrease of 53.05%.
According to the third quarterly report of 2021, the net profit of the company in the third quarter was only 8.93 million yuan, a decrease of about 48.11% over the same period last year. The company said that it was mainly due to the decrease of gross profit margin and the increase of expenses.
In the first three quarters, the company achieved a net profit of about 61 million yuan, a year-on-year increase of 18.71%; Although it has rebounded compared with previous years, from the cash flow statement, the operation of the company in the first three quarters may not be more optimistic than last year.
Source: company announcement
In the first three quarters of 2021, the net cash flow from Argus ( Shanghai) Textile Chemicals Co.Ltd(603790) operating activities was only about 14.56 million yuan, a year-on-year decrease of 77.30%. The company said that it was mainly due to the increase of inventory and loan payment.
In response to the above problems, the company’s Board Secretary Cheng Yuqing told the China Securities Journal China Securities Taurus reporter that the company’s current operation is relatively stable. At the end of September 2021, investors asked on the interactive platform whether the company was affected by local production restriction and shutdown? The company also replied that “the current business activities are normal”.
Source: Shanghai Stock Exchange interactive platform
On the contrary, Argus ( Shanghai) Textile Chemicals Co.Ltd(603790) ‘s chemical industry has performed well in recent years. According to Dongguan Securities Research Report, in the first three quarters of 2021, the total operating revenue of Shenwan chemical industry was 4131.063 billion yuan, a year-on-year increase of 32.87%. Excluding petrochemicals, other chemical sub sectors realized an operating revenue of 1969.439 billion yuan in the first three quarters, a year-on-year increase of 45.67%. In terms of net profit, in the first three quarters of 2021, the chemical sector realized a net profit attributable to the parent company of 275.472 billion yuan, a year-on-year increase of 134.78%. Excluding petrochemicals, other chemical sub sectors realized a net profit attributable to the parent company of 208.243 billion yuan in the first three quarters, a year-on-year increase of 143.95%.
The performance of the performance is also fed back to the performance of the stock price. The latest stock price of Argus ( Shanghai) Textile Chemicals Co.Ltd(603790) has fallen by more than 60% compared with the stock price high set shortly after listing, according to the data of China Securities Taurus.
In contrast, Argus ( Shanghai) Textile Chemicals Co.Ltd(603790) ‘s chemical (886069) industry index rose more than 111% over the same period.
(China Securities Journal)
