Stock abbreviation: Huarong Chemical Stock Code: 301256 Huarong Chemical Co., Ltd
（HUARONG CHEMICAL CO., LTD.）
(No. 166, Linyang Road, Jiuchi Town, Pengzhou, Chengdu, Sichuan)
Announcement on initial public offering and listing on GEM
Sponsor (lead underwriter)
(401, building B7, Qianhai Shenzhen Hong Kong fund Town, No. 128, guiwan fifth road, Nanshan street, Qianhai Shenzhen Hong Kong cooperation zone, Shenzhen) March 2022
hot tip
The shares of Huarong Chemical Co., Ltd. (hereinafter referred to as "Huarong chemical", "the company", "the issuer" or "the company") will be listed on the gem of Shenzhen Stock Exchange on March 22, 2022. This market has high investment risk. GEM companies have the characteristics of unstable performance, high operation risk and high delisting risk, and investors are facing greater market risk. Investors should fully understand the investment risks of the gem and the risk factors disclosed by the company, and make investment decisions prudently.
The company reminds investors to fully understand the risks of the stock market and the risk factors disclosed by the company, avoid blindly following the trend of "speculation" in the initial stage of IPO, and make prudent decision and rational investment.
Unless otherwise specified, the abbreviations or terms in this listing announcement shall have the same interpretation as the prospectus of the company's initial public offering of shares and listing on the gem.
Section I important statements and tips
1、 Important statements and tips
The company and all directors, supervisors and senior managers guarantee the authenticity, accuracy and completeness of the listing announcement, promise that there are no false records, misleading statements or major omissions in the listing announcement, and bear legal liabilities according to law.
The opinions of Shenzhen Stock Exchange and relevant government authorities on the listing of the company's shares and related matters do not indicate any guarantee to the company.
The company reminds investors to carefully read the information published on cninfo.com.cn China Securities Network (www.cs. Com. CN.) China Securities Network (www.cn. Stock. Com.) Securities Times (www.stcn. Com.) Securities Daily (www.zqrb. CN.) The contents of the "risk factors" chapter of the company's prospectus should pay attention to risks, make prudent decisions and make rational investment.
The company reminds the majority of investors to pay attention to the relevant contents not involved in this listing announcement. Please refer to the full text of the company's prospectus.
2、 Special tips on investment risk at the initial stage of gem IPO
The offering price is 8.05 yuan / share, which does not exceed the median and weighted average of offline investors' quotation after excluding the highest quotation, as well as the securities investment fund, national social security fund, basic old-age insurance fund established through public offering after excluding the highest quotation The enterprise annuity fund established in accordance with the measures for the administration of enterprise annuity fund and the insurance fund quotation median and weighted average in accordance with the measures for the administration of the use of insurance funds, whichever is lower. According to the industry classification guidelines for Listed Companies formulated by the CSRC, the industry of the issuer is "C26 chemical raw materials and chemical products manufacturing industry". The static average p / E ratio of "C26 chemical raw materials and chemical products manufacturing industry" published by China Securities Index Co., Ltd. in the latest month is 41.65 times (as of March 4, 2022, T-4). The valuation levels of comparable listed companies are as follows:
4 (t-day-240, day 22 people receive the annual private price of 3 currency months) 2e0p2s0 (annual yuan deduction / share non) before 2020, after 2020, after 2020, after 2020, securities code, securities abbreviation EPS (yuan / share) non former P / E, non post P / E ratio
Tangshan Sunfar Silicon Industry Co.Ltd(603938) .SH Tangshan Sunfar Silicon Industry Co.Ltd(603938) 42.61 0.50 0.47 85.44 91.46
Sichuan Jinlu Group Co.Ltd(000510) .SZ Sichuan Jinlu Group Co.Ltd(000510) 6.89 0.12 0.11 58.67 65.24
Jiangyin Jianghua Microelectronics Materials Co.Ltd(603078) .SH Jiangyin Jianghua Microelectronics Materials Co.Ltd(603078) 25.86 0.30 0.25 87.09 102.76
4 (t-day-240, day 22 people receive the annual private offer for 3 currency months) 2e0p2s0 (annual yuan deduction / share non) before 2020, after 2020, after 2020, after 2020, securities code, securities abbreviation EPS (yuan / share) is not the former P / E, not the latter P / E
Rate rate
Average 77.07 86.49
Source: wind data, as of March 4, 2022 (T-4)
Note 1: if there is mantissa difference in the calculation of P / E ratio, it is caused by rounding;
Note 2: EPS before / after deduction of non recurring profit and loss in 2020 = net profit attributable to the parent before / after deduction of non recurring profit and loss in 2020 / total share capital on T-4 day; The issuance price of 8.05 yuan / share corresponds to the lower diluted P / E ratio of the issuer's net profit attributable to the parent before and after deducting non recurring profits and losses in 2020, which is 38.47 times lower than the static P / E ratio of comparable listed companies and the average static P / E ratio of "C26 chemical raw materials and chemical products manufacturing industry" published by China Securities Index Co., Ltd. on March 4, 2022 (T-4), However, there is still a risk that the decline of the issuer's share price will bring losses to investors in the future.
There is a risk that the net asset scale will increase significantly due to the acquisition of raised funds, which will have an important impact on the issuer's production and operation mode, operation management and risk control ability, financial status, profitability and long-term interests of shareholders.
The issuer and the recommendation institution (lead underwriter) remind investors to pay attention to investment risks, carefully study and judge the rationality of issuance pricing, and make investment decisions rationally.
The company reminds investors to pay attention to the investment risks in the initial stage of IPO (hereinafter referred to as "new shares"), and investors should fully understand the risks and rationally participate in the trading of new shares.
Specifically, the risks at the initial stage of listing include but are not limited to the following:
1. Relaxation of price limit
The competitive trading of GEM stocks is subject to a wide range of price limits. For stocks that are initially issued and listed on the gem, there are no price limits in the first five trading days after listing, and the proportion of price limits thereafter is 20%. On the first day of the listing of new shares on the main board of Shenzhen Stock Exchange, the increase limit ratio is 44%, the decrease limit ratio is 36%, and the increase and decrease limit ratio from the next trading day is 10%. The gem further relaxed the limit on the rise and fall range at the initial stage of stock listing and improved the trading risk.
2. The number of tradable shares is small
At the initial stage of listing, because the lock up period of the original shareholders is 36 months or 12 months, and the lock up period of the online lower limit is 6 months, the company's non tradable shares after this issuance are 112677343 shares, accounting for 23.47% of the total share capital after issuance. At the initial stage of listing, the company has a small number of tradable shares, which is at the risk of insufficient liquidity.
3. Margin trading risk
The stock can be used as the subject matter of margin trading on the first day of listing, which may produce certain price fluctuation risk, market risk, margin increase risk and liquidity risk. Price fluctuation risk refers to that margin trading will aggravate the price fluctuation of the underlying stock; Market risk refers to that when investors use stocks as collateral for financing, they need to bear not only the risks caused by the change of the original stock price, but also the risks caused by the change of the stock price of new investment, and pay the corresponding interest; Margin call risk means that investors need to monitor the level of guarantee ratio in the whole process of trading to ensure that it is not lower than the maintenance margin ratio required by margin trading; Liquidity risk refers to that when the price of the underlying stock fluctuates violently, the financed purchase of securities or the repayment of securities, the sale of securities or the repayment of securities may be blocked, resulting in greater liquidity risk.
4. This offering may have the risk of falling below the offering price after listing
Investors should pay full attention to the risk factors contained in the pricing marketization, know that there is a possibility of falling below the issue price after the stock is listed, effectively improve the risk awareness, strengthen the value investment concept, and avoid blind speculation. The regulatory authorities, issuers and sponsors (lead underwriters) can not guarantee that the stock will not fall below the issue price after listing. 3、 Special risk tips (I) risk of transformation and upgrading not reaching the expected level
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. (II) risk of concentration of profit contribution sources and 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. (III) 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 its distribution is uneven. Domestic potassium chloride is mainly produced in Northwest China and mainly comes from Qinghai Salt Lake. The domestic rate of the industry is about 50%. At present, China's only state-owned trading enterprises such as Zhongnong group and Sinochem Group have been approved to import potassium chloride business and sell it through their distribution channels. They are the main suppliers. Subject to its scarcity of resources and China's highly centralized supply pattern, the company's final source of potassium chloride is limited and its procurement is relatively concentrated. During the reporting period, the amount of domestic potassium chloride purchased by the issuer from Qinghai Salt Lake accounted for 38.34%, 29.06%, 44.57% and 62.14% respectively; These domestic potassium chloride are mainly purchased through Shanghai shenzhihe, and the purchase amount accounts for more than 90% of the raw materials in this category. There is a certain degree of supplier dependence risk on Qinghai Salt Lake, a domestic potassium chloride manufacturer, and Shanghai shenzhihe, a supplier. In addition, under the condition that the product price and other conditions remain unchanged, if the market price rise of potassium chloride leads to the increase of potassium chloride cost by 5%, the comprehensive gross profit margin of the company in each period will fall to 17.17%, 21.72%, 20.06% and 25.94%, that is, the corresponding decrease of 1-2 percentage points. The company's operating performance is subject to the risk of significant fluctuations in the price of potassium chloride. (IV) risk of intensified market competition
During the reporting period, the issuer's potassium hydroxide income was mainly basic products. In recent years, benefiting from the growth of downstream demand for potassium hydroxide, the overall production capacity of the industry has maintained a growth trend, including the new production capacity of Uni-Trend Technology (China) Co.Ltd(688628) and some small and medium-sized enterprises
