Hujiang materials: a provider of overall solutions for high barrier industrial flexible packaging
The company is mainly engaged in the R & D, production and sales of high barrier industrial flexible packaging. It is a professional provider of overall solutions for high barrier industrial flexible packaging. The company was founded in 1995 and entered the field of industrial special packaging in 2002. In 2003, the company’s leading product, aluminum plastic composite heavy bags, was successfully developed and put into operation. At present, the company’s main products are all kinds of high barrier industrial flexible packaging, including aluminum plastic composite heavy bags, aluminum plastic composite inner bags, PE heavy bags, PE inner bags and functional films. High barrier packaging can effectively prevent gas, moisture, ultraviolet and radiation from entering the packaging and maintain the stability of the properties of the contents. It is mainly used in the special packaging of chemical, electrical (lithium battery), food, medicine and other products. Aluminum plastic composite heavy bags are the company’s leading products, accounting for about 60% of the main business income.
The scale of plastic packaging market continues to grow, the technology of high barrier packaging materials is gradually mature, and import substitution is gradually realized. The functional requirements of high barrier packaging materials are higher and higher, and the corresponding equipment investment and technical requirements are also gradually improved, making it gradually develop into a capital and technology intensive subdivision field of plastic packaging.
The scale of revenue grew steadily. From 2018 to 2020, the company’s operating revenue increased from 210 million yuan to 230 million yuan, with an average annual compound growth of 5.6%. In 2021, the company’s operating revenue in the first three quarters reached 250 million yuan, with a year-on-year growth rate of 56.8%. Due to the recovery of downstream chemical industry in the first three quarters of 2021, the demand of customers increased, and the company’s heavy bag products increased in large quantities. In addition, some new customer orders developed in the early stage gradually increased in large quantities, and the revenue growth accelerated.
Profitability improved slightly. In 2020, the company achieved a net profit of 30 million yuan, with a compound growth rate of 12.7% from 2018 to 2020. In 2021, the company realized a net profit attributable to the parent company of RMB 40 million in the first three quarters, with a year-on-year increase of 42.7%. From 2018 to 2020, the company’s net profit margin increased from 12.7% to 14.1%, and its profitability improved.
By industry, the company’s downstream customers are mainly in the chemical industry. In 2020, the company’s product sales revenue to the chemical industry reached 190 million yuan, with a compound growth rate of 4.6% from 2018 to 2020. From 2018 to the first half of 2021, the company’s sales to the chemical industry accounted for more than 82%, which is the main source of the company’s operating revenue.
Aluminum plastic composite heavy bags and aluminum plastic composite inner bags are the main products of the company. In terms of products, the company’s revenue mainly comes from the sales of packaging products such as aluminum plastic composite heavy bags, aluminum plastic composite inner bags, PE heavy bags and PE inner bags. From 2018 to the first half of 2021, the sales of aluminum plastic composite heavy bags and aluminum plastic composite inner bags accounted for a relatively high proportion, with a total of about 80%.
Downstream customers have large scale and strong anti risk ability, and the company has stable cooperation with major customers. The domestic customers of the company are mainly leading enterprises in the chemical industry, such as BASF, DSM and other multinational companies investing in China, and the export customers are mainly overseas affiliated enterprises of the above multinational companies and a few dealers. From 2018 to 2021h1, the company’s sales revenue to the top five customers accounted for 43.5%, 41.5%, 38% and 37.9% respectively, and the main customers were relatively concentrated. In 2007 and 2008, the company successively established cooperative relations with DSM and BASF. In the initial stage, it only purchased in small quantities, and its main packaging materials are still mainly imported from abroad. After that, the company has continuously improved the product quality and performance through technological innovation, and gradually reached the foreign advanced level. At the same time, it has advantages over foreign competitors in terms of price and service. Relying on good cost performance, the company’s supply to BASF and other multinational companies has gradually increased. At present, it has reached 50% or more of the purchase amount of similar products in China and has become its main supplier.
The product structure was optimized and the gross profit margin increased steadily. From 2018 to 2020, the company’s gross profit margin increased from 33.6% to 36.5%, mainly due to: on the one hand, with the decline of the price of bulk raw materials, the procurement cost of the company’s main raw materials, such as plastic particles, aluminum foil and nylon film, decreased; On the other hand, the growth of downstream customers’ demand for packaging bags and other medium and high-end products, the optimization of product structure and the increase of the proportion of sales of high gross profit products have played a driving role in the overall gross profit margin.
Packaging products are positioned as high-end products with high gross profit margin. In terms of products, the gross profit margin of the company’s aluminum-plastic composite packaging bag and PE packaging bag products is high, both of which are maintained at more than 30%, mainly because the company’s packaging bag products have both customization and strong functionality, and are recognized by BASF, DSM, Wanhua Chemical Group Co.Ltd(600309) , Huafon Chemical Co.Ltd(002064) and other well-known enterprises at home and abroad, with a high-end positioning. On the contrary, compared with the packaging bag products, the functional film has relatively single function and low gross profit margin, about 10%.
The company’s main raw materials are plastic particles, nylon film, PET film and aluminum foil. The market price has strong linkage with international bulk commodities such as crude oil and aluminum. Since the second half of 2020, crude oil, metals and other bulk commodities have increased significantly and fluctuated greatly. The company has signed an agreement with major customers with price linkage terms, that is, it is agreed that if the price fluctuation of upstream raw materials exceeds a certain range, the product price can be adjusted in the next quarter, and the procurement cost is relatively stable.
The cost rate showed a steady downward trend. In the first half of 20182021, the company’s expense ratio decreased from 18.6% to 16.9%, mainly due to the stable customer structure and the improvement of sales expense delivery efficiency. Specifically, in the first half of 20182021, the sales expense rate decreased from 3.9% to 2.4%; The rate of administrative expenses decreased from 10% to 9%, mainly due to the improvement of management efficiency; The financial and R & D expense rates are relatively stable, 1.1% and 4.4% respectively from January to June 2021. In terms of industry, the company’s sales expense rate is lower than the average sales expense rate of comparable companies, mainly because the company’s main customers are relatively stable. For a long time, the company has established a good cooperative relationship with its main customers and has low expenses in customer development and marketing.
Risk tips
The risk of sharp fluctuations in the price of raw materials;
The risk of expanding the scope of the epidemic;
Risks of intensified industry competition;
The risk that the progress of customer development is less than expected.
