Hongbaoli Group Corporation Ltd(002165) in the first quarter, Taixing Chemical, which lost 30.7 million yuan, stopped production two months ago

On April 15, Hongbaoli Group Corporation Ltd(002165) ( Hongbaoli Group Corporation Ltd(002165) , SZ; previous closing price of 4.54 yuan) released the annual report of 2021 and the first quarterly report of 2022.

According to the annual report of 2021, Hongbaoli Group Corporation Ltd(002165) achieved an operating revenue of 3.429 billion yuan, a year-on-year increase of 31.32%; The net profit attributable to the parent company was 297368 million yuan, a year-on-year decrease of 75.26%; The basic earnings per share was 0.045 yuan / share, a year-on-year decrease of 77.50%.

According to the first quarterly report of 2022, the company achieved an operating revenue of 714 million yuan, a year-on-year decrease of 14.48%; The net profit attributable to the parent company lost 307067 million yuan, a year-on-year decrease of 213.46%; The loss of basic earnings per share was 0.04 yuan / share, a year-on-year decrease of 200.00%.

Taixing Chemical stopped production for 2 months

According to the annual report of 2021, Hongbaoli Group Corporation Ltd(002165) products include Propylene Oxide downstream derivatives, hard foam combination polyether and isopropanolamine. The annual operating revenue was 3.429 billion yuan, a year-on-year increase of 31.32%, of which polyurethane polyether revenue was 1.885 billion yuan, a year-on-year increase of 21.38%; The revenue of isopropanolamine was 1.131 billion yuan, a year-on-year increase of 34.72%; The revenue of propylene oxide and accessories was 337 million yuan.

Hongbaoli Group Corporation Ltd(002165) said that during the reporting period, the price of bulk chemicals increased to a certain extent, and the price of propylene oxide remained at a high level, showing a trend of high before and low after. Propylene oxide of the company is the main raw material of hard foam polyether and isopropanolamine. In addition to the self supply of propylene oxide unit in Taixing base, the insufficient part needs to be purchased externally.

In 2021, the average purchase price of propylene oxide in the market was 14620 yuan / ton, an increase of 45.25% over the same period of last year. Therefore, the price of the company’s products was also higher than that of the same period of last year, increasing the revenue. At the same time, the company has increased R & D investment, actively explored markets outside China, served customer needs, overcome the difficulties of shipping first-class cars, coordinated resources and ensured the supply of foreign customers; At the same time, actively expand the Chinese market of isopropanolamine. With the increasing demand for new applications, the market outlook of primary and secondary isomers has moved upward, the price of primary isomers has also increased since July last year, and the contribution of isopropanolamine has increased. The propylene oxide produced should meet the needs of downstream enterprises, and some of them are also exported.

In addition, due to the rise in the price of chemical raw and auxiliary materials, the high price of propylene oxide, the rise in export sea freight and the increase in product production costs, the comprehensive gross profit margin of the product was only 13.08%, a year-on-year decrease of 6.75 percentage points. In addition, the increase in period expenses and the shutdown loss of Taixing Chemical from September to November 2021 reduced the total profit by 93.67% compared with the previous year.

Taixing Chemical is a wholly-owned subsidiary of Hongbaoli Group Corporation Ltd(002165) and located in Jiangsu Taixing economic development zone. It is the production base of propylene oxide (PO) and diisopropyl peroxide (DCP) of the company. Among them, the annual production capacity of propylene oxide is 100000 tons and that of dcp1 unit is 12000 tons.

On September 22, 2021, Hongbaoli Group Corporation Ltd(002165) announced that Taixing Chemical stopped and limited production to meet the requirements of “dual control of energy consumption” in the region. Meanwhile, according to the annual maintenance plan, Po unit and dcp1 unit were overhauled in advance. On November 19, 2021, with the approval of relevant government departments, Po device was successfully restored to production; On December 15, dcp1 unit resumed production.

propylene oxide price downturn

Hongbaoli Group Corporation Ltd(002165) said in the first quarter report of 2022 that the company’s profit loss was mainly due to the fact that the price of propylene oxide decreased by 34.68% compared with the same period of the previous year, and the price including tax basically maintained a low fluctuation between 10000 yuan / ton and 12000 yuan / ton; In addition, Taixing Chemical’s propylene oxide unit adopts the new process, which is the first set in China. The investment of the unit is large, the process needs to be continuously optimized, and the operating cost is relatively high, resulting in a loss of 70.55 million yuan in the first quarter of Taixing Chemical.

In this regard, Hongbaoli Group Corporation Ltd(002165) said that the company has actively carried out corresponding work and achieved corresponding results. “Continuously optimize the process of propylene oxide unit, reduce costs and improve efficiency; integrate resources, form a team, make preparations for the expansion of propylene oxide unit, draw up a plan, and plan to expand the production capacity of the existing unit from 100000 tons to 250000 tons, so as to reduce consumption and production costs and improve the economy of the unit; increase investment, expand the market and profitability of polyether and isopropanolamine products, and control costs Use growth to return enterprises to the track of profit growth. “

According to Zhuo Chuang information, in 2021, China’s propylene oxide consumption reached 4.0124 million tons, a year-on-year increase of 21.3%. At present, China’s propylene oxide supply and demand is still unbalanced, and the insufficient part depends on imports. In 2021, China’s propylene oxide production capacity was 3.829 million tons, the output was 3.653 million tons, and the import scale was 434000 tons.

The reporter of the daily economic news learned that since the fourth quarter of 2021, the market quotation of propylene oxide has continued to decline, and it has been fluctuating at a low level between 10300 yuan / ton and 12400 yuan / ton in the first quarter of this year. According to the data of business agency, on April 15, Wanhua Chemical Group Co.Ltd(600309) quoted 12000 yuan / ton for propylene oxide.

According to Jin Lianchuang’s analysis, the basic situation in China in 2022 is more similar to that in 2020, which is affected by the epidemic and restricted by logistics and transportation. First, the new production capacity is too concentrated and the integration trend is obvious. It is estimated that 1.58 million tons / year of propylene oxide new production capacity will be put into operation in 2022, which is bad for the market mentality in the general trend; Second, the demand of the terminal industry is insufficient, because the downstream products of propylene oxide are mostly durable goods such as mattresses, refrigerators and cars. At present, the real estate has excess capacity and the consumption capacity of residents has decreased, and the selection and replacement time of durable goods will be longer.

Jin Lianchuang also analyzed that since mid March, the epidemic in China has been distributed at many points, while under the influence of the epidemic in foreign countries, the demand for raw materials of refrigerators and freezers, which should be in relatively strong demand from March to may, has been restrained. The epidemic has led to a near “fuse”. When the epidemic in China is gradually controlled and the logistics and transportation are restored to be smooth, and the hot season comes, the demand of the downstream cold chain may improve. At the same time, the maintenance of propylene oxide units outside China is relatively concentrated from June to July, and August will gradually enter the peak demand season for downstream soft bubbles. Therefore, although there are negative factors in the market, there are positive points.

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