About Huatai United Securities Co., Ltd
Recommendation letter for stock listing of Huarong Chemical Co., Ltd
Shenzhen Stock Exchange:
As the sponsor of Huarong Chemical Co., Ltd. (hereinafter referred to as the "issuer", "company" and "Huarong chemical") for initial public offering and listing on the gem, Huatai United Securities Co., Ltd. (hereinafter referred to as "Huatai United Securities" and "sponsor") and its sponsor representatives have been in accordance with the company law of the people's Republic of China and the securities law of the people's Republic of China The measures for the administration of securities issuance and listing recommendation business, the measures for the administration of the registration of initial public offerings on the gem (for Trial Implementation) (hereinafter referred to as the "administrative measures"), the rules for the listing of shares on the gem of Shenzhen Stock Exchange (hereinafter referred to as the "Listing Rules"), the rules for the examination and approval of the issuance and listing of shares on the gem of Shenzhen Stock Exchange and other laws and regulations, as well as the relevant provisions of the CSRC and Shenzhen Stock Exchange, Be honest and trustworthy, be diligent and responsible, issue the listing recommendation letter in strict accordance with the business rules and industry self-discipline norms formulated according to law, and ensure that the documents issued are true, accurate and complete.
Unless otherwise specified, the abbreviation and interpretation in this listing recommendation have the same meaning as those in the prospectus of Huarong Chemical Co., Ltd. for initial public offering and listing on GEM (Registration draft). There may be differences in mantissa between the sum of partial totals and each addend, which are caused by the rounding of the data.
The relevant information is reported as follows: I. Basic information of the issuer (I) overview of the issuer
Name of issuer: Huarong Chemical Co., Ltd
Registered address: No. 166, Linyang Road, Jiuchi Town, Pengzhou, Chengdu, Sichuan
Date of establishment: September 7, 2000
Registered capital: 360 million yuan
Legal representative: Tang Chong
Contact: 02886238215
Business scope: general items: manufacturing of daily chemical products; Production of chemical products (excluding licensed chemical products); Sales of chemical products (excluding licensed chemical products); Natural science research and experimental development; Technical services, technical development, technical consultation, technical exchange, technology transfer and technology promotion; business management; Import and export of goods; Technology import and export (except for projects subject to approval according to law, carry out business activities independently according to law with business license). License project: fertilizer production; Food additive production; Production of hazardous chemicals; Disinfectant production (excluding hazardous chemicals); Road transport of dangerous goods; The specific R & D of dangerous goods (including the approval of the relevant R & D department or the relevant technical documents of the project) can only be carried out after the approval of the relevant R & D Department of dangerous goods (including the approval of the relevant R & D department or the relevant road business license) (the specific R & D Department of the project shall not be subject to the approval of the relevant R & D department)
Huarong chemical is an advanced enterprise committed to the green recycling and comprehensive utilization of potassium hydroxide. Its main product is potassium hydroxide. According to the statistics of Baichuan Yingfu, the sales volume of fixed potassium of the company ranked second in China in 2019. Focusing on modern industries such as new fertilizer, high-end daily chemicals, food and medicine, new energy and electronic information, the company focuses on the development of electronic grade, photovoltaic grade, reagent grade and food grade fine potassium products and chlorine products. Relying on its accumulated experience in technology, process and production management for many years, the company extends to downstream fine chemical products around potassium compounds and chlorinated compounds. Through the scientific layout of various production sectors and the reasonable arrangement of process flow, the company gives full play to the use efficiency of production equipment, raw materials and energy, and recycles water resources, heat energy and potassium ions in the production process, A circular economy operation mode characterized by "rational development of resources and comprehensive utilization of energy" has been established.
The issuer has mastered the production technology and mass production capacity of alkali and acid ultra-clean and high-purity reagents, adhered to the innovative development strategy of "potassium extension and chlorine transformation", optimized the product structure, focused on the R & D and innovation of technologies in strategic emerging industries such as wet electronic chemicals, and vigorously developed encouraged emerging fine chemical products such as ultra-clean and high-purity reagents, food additives, environmental friendly water treatment agents and high-quality potassium fertilizer, Strive to open up the whole process big data of "production, supply, marketing, storage and transportation" and build a new format of integrated comprehensive services; Through the implementation of fund-raising projects, the company continuously improves its influence and market share in downstream application fields such as electronic information, new energy, food and medicine, high-end daily chemicals and new fertilizers, and realizes the transformation from a production-oriented enterprise to an enterprise integrating R & D, production and services. After years of efforts, continuous research and development and continuous innovation, the company has mastered the following core technologies:
Serial number core technology name application product application process technology source
1 zero polar distance preparation of high-quality potassium hydroxide, integrated innovation of potassium hydroxide and chlorine production electrolysis
Serial number core technology name application product application process technology source
Application technology products
2 brine refining deep removal of metal impurities such as calcium and magnesium, independent research and development of potassium hydroxide brine refining technology
3. On line automatic pH control technology of brine refining independent research and development of potassium hydroxide brine refining
4. Independent research and development of brine ammonium removal technology and potassium hydroxide brine refining
5 potassium alkali concentration and production technology potassium hydroxide solid potassium manufacturing digestion absorption re innovation
6 fixed potassium product quantitative packaging technology independent research and development of potassium hydroxide product packaging
7. Independent research and development of potassium hydroxide product packaging
8 chlor alkali by-product chlorine gas preparation high quality hydrochloric acid reagent grade hydrochloric acid reagent hydrochloric acid preparation independent research and development technology
Over the years, the company has adhered to taking technology as the foundation and market-oriented, guided and encouraged innovation, and earnestly took technological R & D innovation as the key measure to enhance competitiveness. The company has a technology center to coordinate the development of daily technological research and innovation, and has formulated a scientific and perfect project management mechanism. In addition, the company has conducted research on fine potassium products and chlorine products, participated in the formulation of a number of industrial and national standards such as high quality flake potassium hydroxide (Hg / T 3 Beijing Infosec Technologies Co.Ltd(688201) 0), technical specification for evaluation of green design products potassium hydroxide (Hg / T 59822021) and national food safety standard potassium hydroxide as food additive (GB 255752010), and has accumulated rich achievements and formed a number of core technologies. As of the signing date of the listing sponsor, the company has 39 authorized patents, including 8 invention patents, 28 utility model patents and 3 design patents.
(III) main operating and financial data and indicators of the issuer
Project 2021.6.30/ 202012.31 / 201912.31 / 201812.31 / January June 20212020 20192018
Total assets (10000 yuan) 6914283707533368394407330324
Owner's equity attributable to the parent company Riyue Heavy Industry Co.Ltd(603218) 055248824217308416669200 yuan
Asset liability ratio (parent company) 12.73%, 21.99%, 38.34%, 43.16%
Operating income (10000 yuan) 31664209460327103393179663159
Net profit (10000 yuan) 4982671032907993249744732
The net profit attributable to the owner of the parent company is 4982671032907993249744732 yuan (10000 yuan) after deducting non recurring profits and losses
Net profit attributable to the owner of the parent company: 430281100439790815350484900 yuan
Project 2021.6.30/ 202012.31 / 201912.31 / 201812.31 / January June 20212020 20192018
Basic earnings per share (yuan) 0.14 0.29 0.29 0.22
Diluted earnings per share (yuan) 0.14 0.29 0.29 0.22
Weighted average return on net assets: 8.62%, 21.04%, 21.29%, 9.80%
Cash flow from operating activities -79294473574614533741235843 net (10000 yuan)
Cash dividend (10000 yuan) -- 100 Shenzhen Capstone Industrial Co.Ltd(000038) 00000
R & D investment accounts for 1.42% 1.02% 1.82% 1.42% of operating income (Ⅳ) main risks of the issuer
1. Risks of transformation and upgrading not reaching the expectation
In 2018, the company established and implemented the innovative development strategy of "potassium extension and chlorine transformation", continued to extend and expand to the downstream of fine chemicals around modern industries such as new fertilizers, high-end daily chemicals, food and medicine, new energy and electronic information, and shut down the production line of polyvinyl chloride resin products in November 2020 to optimize the product structure, improve the added value of chlorine products and enhance the ability of green cycle and sustainable development.
With the continuous promotion of the innovative development strategy of "potassium extension and chlorine transformation", the proportion of production and sales of high value-added new products such as wet electronic chemicals, high-end daily chemicals and food additives will gradually increase, but there are still risks that the mass production is slower than expected and the customer development cycle is too long.
2. Concentration of profit contribution sources and risk of continuous loss of chlorine products
During the reporting period, the sales revenue of the issuer's potassium hydroxide products was 597083 million yuan, 6392754 million yuan, Kweichow Moutai Co.Ltd(600519) 2 million yuan and 2901682 million yuan respectively, accounting for 109.13%, 100.25%, 94.38% and 127.74% of the gross profit respectively, that is, the gross profit of the company is mainly contributed by potassium hydroxide, which is the main source of profit of the company. The sales revenue of chlorine products was 3655388 million yuan, 3861733 million yuan, 3364647 million yuan and 241044 million yuan respectively, and the gross profit margin was - 4.85%, - 0.38%, 2.95% and - 101.68% respectively. From 2018 to 2020, it was basically in the state of profit and loss balance or slight loss. After the shutdown of PVC, the loss expanded in the first half of 2021 and the gross profit margin decreased significantly. Among them, the sales revenue of PVC resin from 2018 to 2020 was 353036100 yuan, 363070600 yuan and 293745800 yuan respectively, accounting for 96.58%, 94.02% and 87.30% of the revenue of chlorine products respectively, and the gross profit margin was - 0.49%, 4.01% and 5.42% respectively. Therefore, the fluctuation of gross profit margin of PVC products is the main factor affecting the fluctuation of gross profit margin of chlorine products from 2018 to 2020. After PVC production was stopped at the end of 2020, the company's chlorine products were mainly hydrochloric acid and sodium hypochlorite. Due to the significant increase in the sales volume of ordinary hydrochloric acid with low price, but the large volume of high-grade hydrochloric acid has not yet been added, combined with the rise in the price of raw material potassium chloride and the allocation of fixed costs such as the depreciation of relevant public equipment after the shutdown of PVC, the loss amount of hydrochloric acid products increased in the first half of 2021, resulting in an increase in the overall loss range of chlorine products.
In order to optimize the product structure and improve the ability of green circulation and sustainable development, the company closed the PVC resin production line in November 2020, mainly through the process routes of hydrochloric acid, sodium hypochlorite and other chlorine products to absorb the by-product chlorine. To sum up, if the profit level of potassium hydroxide decreases significantly, and the profits of other chlorine products after PVC shutdown do not meet the expectations, resulting in continuous losses, it will have an adverse impact on the operating performance of the company.
3. Risk of supplier dependence and price fluctuation of raw materials
The main raw material of the company's products is potassium chloride, which is the main component of the cost of the company's potassium compounds and chlorinated compounds. From 2018 to 2020, the cost of potassium chloride accounted for about 35% of the issuer's main business cost. After PVC production was stopped at the end of 2020, the cost of potassium chloride accounted for more than 50% of the issuer's main business cost from January to June 2021.
Potassium chloride is a product with scarce resources. China's reserves are not high and the distribution is uneven. Domestic potassium chloride
