In 2021, Hunan Haili Chemical Industry Co.Ltd(600731) ( Hunan Haili Chemical Industry Co.Ltd(600731) . SH) successively acquired the engineering consulting company, Anke company, Hunan xingvegetable seed industry and Haili lithium battery under the controlling shareholder Haili group. At the beginning of 2022, the company announced the expansion of pesticide chemical projects with a total investment of more than 1.6 billion yuan. Why frequently acquire the assets of major shareholders? Where will Hunan Haili Chemical Industry Co.Ltd(600731) develop after continuous capacity expansion? A reporter from the financial associated press recently went to Hunan Haili Chemical Industry Co.Ltd(600731) to interview and investigate, trying to find the answer.
Liu Hongbo, Secretary of the board of directors of the company, told the financial associated press that the asset securitization of Haili group, the controlling shareholder of the company, has achieved more than 90%. The asset injection reflects the support of major shareholders for listed companies and is also in line with the trend of state-owned enterprise reform. In the future, the company will continue to expand production, increase the scale of agrochemical business, increase the market share of lithium battery business, and strengthen the cooperation between industry, University and research in seed industry, so as to form a pattern of “agrochemical into large and multiple industries”.
asset M & A does not change the main business of agrochemical
“We still regard pesticide chemical industry as our main business,” Liu Hongbo told the financial associated press.
Founded in 1994, Hunan Haili Chemical Industry Co.Ltd(600731) is a science and technology joint-stock enterprise mainly initiated and established by Hunan Institute of chemical industry, mainly engaged in the R & D, production and trade of pesticides and fine chemicals. From 2017 to 2020, the company’s operating revenue increased from 1.218 billion to 2.026 billion yuan, and the net profit attributable to the parent increased from 35 million yuan to 271 million yuan, with a compound growth rate of 66.81% in four years
In the first three quarters of 2021, the company achieved an operating revenue of 1.59 billion yuan, a year-on-year increase of 16.01%, and a net profit of 197 million yuan after deduction, a year-on-year decrease of 7.58%. For the decline in performance, the company said that due to the global covid-19 epidemic, the rise in the price of some raw materials and other factors, the company’s transportation costs and product costs increased. However, Liu Hongbo said that the company has the ability to transmit to the downstream and has appropriately raised the sales price of products since the fourth quarter of last year.
From the perspective of the overall demand of the downstream pesticide market, Wang fengle, chief expert of the National Agricultural Technology Extension Service Center, said that the demand for pesticide use in 2022 is expected to be basically the same as that in 2021, with a slight decrease. The demand for pesticide use for pest control is rigid and will not fluctuate significantly.
Hunan Haili Chemical Industry Co.Ltd(600731) agrochemical sector continues to expand this year. On February 26, the company announced three investment and expansion projects on the first day: the construction of 4000 tons of carbaryl and 5000 tons of thiophanate methyl and other products in Ningxia, the expansion of 6000 tons of carbofuran buthion project in Guixi Haili and the construction of 3000 tons of pyrimidine methyl project. The total investment of the three projects is 1.683 billion yuan.
For the above capacity expansion, the announcement said that it was considered in combination with the market environment. 6000 tons of butachlor is “the customer’s order demand has increased sharply, and the existing production capacity has been unable to meet the company’s supply demand”, while 3000 tons of methyl pyrimidine phosphorus is “in order to meet the customer’s demand, the company has carried out optimization research… The company plans to use this optimization technology to build a 3000t / a methyl pyrimidine phosphorus production plant in Haili Guixi new plant”.
Liu Hongbo told the financial associated press that at present, the 6000t / a buthion Budweiser reconstruction and expansion project in Haili Guixi has begun and will be completed in the first half of the year. Ningxia project started construction in March. After the 6000t / a buthion Budweiser and Ningxia projects in Guixi are put into operation, they will contribute a total operating income of 1.6 billion yuan and realize a total net profit of 240 million yuan.
It is worth mentioning that the current agrochemical industry is facing rising pressure on raw materials. In this regard, Liu Hongbo said that the company’s cost pressure can be transmitted downstream. “At present, the international division of labor is basically clear. After we realize in-depth cooperation with multinational companies, we can talk to customers about the rise in the rigidity of raw materials and labor”. At the same time, he said that compared with the sharp rise in the price of upstream crude oil, the price increase in the downstream will be quite smooth through the game in all links of the industrial chain.
lithium battery and seed industry to find a breakthrough
During the investigation, Liu Hongbo told the associated press that according to the three-year action plan for the reform of relevant state-owned enterprises, the asset securitization level of the group has reached 90%. Among the multiple assets acquired from the group in 2021, lithium battery and seed industry will become the focus of Hunan Haili Chemical Industry Co.Ltd(600731) following agrochemical.
Haili lithium battery is mainly engaged in the research, production and sales of power lithium manganate cathode materials. Xingvegetable seed industry is developed by Hunan Vegetable Research Institute, mainly engaged in the R & D and sales of vegetable seeds. In the first three quarters of 2021, the above two companies had a total revenue of 182 million yuan and a total net profit of 5.8496 million yuan.
The lithium business is currently aimed at increasing market share. Haili lithium battery has an annual output of 5000 tons of lithium battery cathode materials, including 4000 tons of lithium manganate. Liu Hongbo told the financial associated press that the company will continue to focus on the lithium manganate market segment and strive to enter the top three in the segment industry by binding downstream customers.
Moco, President of true lithium research, told the financial associated press that the small power market and mini car market with low energy density requirements are the basic sectors of lithium manganate batteries. According to the statistics of lithium battery research institute of Gaogong Industry Research Institute, in the battery cell market of two wheeled vehicles, the proportion of lithium manganate batteries gradually increased from 43% in 2019 to 53% in the first half of 2021, showing an upward trend year by year.
“Now some lithium manganate batteries are replacing disposable batteries, and this market may have 200 GWH a year in China.”. Merco said that in recent years, the price rise of raw materials of lithium manganate battery may lead to its price higher than that of disposable battery, but the multi-use characteristic will still reflect its economy.
Benefiting from the overall improvement of the industry, Haili lithium battery has full orders at present. According to the person in charge of relevant departments of lithium battery company, the company’s orders have been scheduled to May. Liu Hongbo also told the financial associated press that the revenue of lithium battery company increased significantly in 2021, and the company was also well prepared to “fight a protracted war”. He was confident to use the advantages of listed companies to face the industry competition, “survive the industry reshuffle and make the rest the king”.
On the other hand, xingvegetable seed industry is strengthening industry university research cooperation. In January 2022, Hunan xingvegetable seed industry and the academician team of Zou School of Hunan Agricultural University jointly established an innovation center to carry out the screening, testing, exhibition and promotion of new pepper varieties in Hunan. Liu Hongbo introduced that xingvegetable seed industry will also strengthen cooperation with the vegetable institute of the Provincial Academy of Agricultural Sciences, Yuelushan laboratory and other platforms to further improve its comprehensive strength. Strengthen the cooperation between industry, University and research, and revitalize the vegetable seed industry, aiming to cultivate new varieties and strive to be among the top ten in China’s vegetable seed industry during the 14th Five Year Plan period.
