On April 29, the 2021 annual general meeting of Fujian Kuncai Material Technology Co.Ltd(603826) ( Fujian Kuncai Material Technology Co.Ltd(603826) , SH) was held in the office of its subsidiary Fujian Fushi new materials Co., Ltd. (hereinafter referred to as Fushi new materials).
The reporter of the daily economic news noted that the factory building located in Jiangyin Industrial Zone, Fuqing, Fujian Province covers a large area. Fujian Kuncai Material Technology Co.Ltd(603826) specially arranged a special bus to connect the shareholders attending the meeting. It took about 5 minutes to drive from the gate 3 of Fushi new materials to the meeting room.
On this industrial land, in addition to Fushi new materials, the ” Shanghai Pudong Development Bank Co.Ltd(600000) T / a titanium dioxide and Shanghai Pudong Development Bank Co.Ltd(600000) T / a iron oxide” project proposed by Zhengtai New Materials Technology Co., Ltd. (hereinafter referred to as Zhengtai new materials), a subsidiary of Fujian Kuncai Material Technology Co.Ltd(603826) is also located in this area.
“Iron oxide has a market of 2.8 million tons in the world, while titanium dioxide is about 8 million tons. Kuncai’s scale mainly focuses on the titanium dioxide standards of the five major imported brands of 5 million tons, and takes them as the pricing standard.” At the shareholders’ meeting, Xie Bingkun, chairman of Fujian Kuncai Material Technology Co.Ltd(603826) board of directors, said:.
Measures to deal with the price rise of raw materials
In 2021, Fujian Kuncai Material Technology Co.Ltd(603826) realized an operating revenue of about 890 million yuan, with a year-on-year increase of 19.1%; The net profit attributable to the shareholders of the listed company was about 140 million yuan, a year-on-year decrease of about 8.47%.
The reporter of the daily economic news noted that one of the main reasons for the deviation between the operating revenue and profit of Fujian Kuncai Material Technology Co.Ltd(603826) in 2021 is the decline of gross profit margin. In 2021, Fujian Kuncai Material Technology Co.Ltd(603826) the gross profit margin of pearlescent materials was 35.24%, a year-on-year decrease of 4.94 percentage points; The gross profit margin of other products was 18.02%, with a year-on-year increase of 14.1 percentage points; The gross profit margin of the overall product was 35%, a year-on-year decrease of 4.82 percentage points.
In addition, financial expenses, exchange rate and other factors also affect the net profit level of the company in 2021 to a certain extent.
At the shareholders’ meeting, in view of the rise in the price of raw materials and countermeasures, Fujian Kuncai Material Technology Co.Ltd(603826) chairman Xie Bingkun said: “we have taken two measures: first, we have raised the price of Merle products by 10%, and we will raise the price of pearlescent materials again this year, which can basically hold (wipe) the price increase of raw materials through the price increase. Second, from this year, titanium and iron are basically owned by Fushi company Production to meet the raw materials of kuncai. Titanium and iron account for about 40% of our direct production cost, and the others are mica, water, electricity, gas and so on. The biggest problem this year should be titanium tetrachloride (price increase), which has now risen to about 9500 yuan / ton, so try to provide it yourself. Ferric chloride also consumes about seven or eight million a year. This is our by-product and can also solve this problem. The problem of rising costs and prices will be greatly improved this year. Kuncai can guarantee its own raw materials and reduce costs. “
In addition, Xie Bingkun also mentioned some disadvantages: “The price rise of tin tetrachloride is terrible. From more than 30000 tons to 120000 tons, it will cost an additional twenty or thirty million tons of tin tetrachloride a year. In addition, the material of synthetic mica has increased by about 20% month on month. This has something to do with Cecep Solar Energy Co.Ltd(000591) , the heat of new energy vehicles. Especially after the” double control “last year, it has something to do with the price increase of these high-energy synthetic mica materials. This year has brought a negative factor, and the electricity charge has increased greatly About ten percent, we estimate that it will also increase the cost by millions. This year, our technological transformation may not show benefits until the second half of the year, that is, to change to natural gas. “
In addition, Xie Bingkun said: “the exchange rate has begun to improve recently. Our enterprise’s collection of foreign exchange is greater than its foreign exchange expenditure. Foreign exchange expenditure is only part of the purchase of mica chips, so the exchange rate is very key and will increase our gross profit margin virtually.”
capacity increase with digestibility
According to the annual report of Fujian Kuncai Material Technology Co.Ltd(603826) 2021, the company’s “14th five year plan” development strategy includes the planned annual production capacity of 50000 tons of pearlescent materials and 20000 tons of synthetic mica; Zhengtai new materials, a wholly-owned subsidiary, plans to build an annual output of 800000 tons of titanium dioxide and 800000 tons of iron oxide.
For how to digest the new capacity, Xie Bingkun believes that according to his research and analysis of the market, the new capacity is digestible.
Xie Bingkun said: “first, at present, China’s competitors still produce 20000 or 30000 tons of pearlescent pigment. If they continue to lose money for one year or two years, the market will be released and we will fill in the blank. Second, with the price of titanium tetrachloride rising so high and the cost of natural gas in EU countries so high, the production cost of competitors in EU countries will be reduced.” Very high, so according to our planned time, the global pearlescent pigment will need about 100000 to 100000 tons (demand) by 2024. We have our own unique advantages. One is brand and quality, the other is scale, and the third is the whole industrial chain. Therefore, we are allowed to do 50000 tons in this segment. “
In addition, for the production capacity of titanium dioxide, Xie Bingkun said: “The current cost of chlorinated titanium dioxide in China is about 22000 yuan / ton, and the cost of sulfuric acid method is 18000 yuan / ton. The cost of chlorinated titanium dioxide abroad is 25000 yuan / ton to 26000 yuan / ton. The average market price of chlorinated titanium dioxide is 30000 to 31000 yuan / ton. The high-end ones sell 34500 yuan, the low-end ones 2809 yuan, while the domestic chlorinated titanium dioxide can only sell 21000 yuan / ton to 22000 yuan because of poor quality Yuan / ton. We are the only one in the world that adopts extraction technology and have core cost advantages. The whole cost of titanium dioxide is about 15000 yuan per ton. If 6000 yuan of iron oxide is removed, it is more than 9000 yuan. If the quality can be replaced, there is no upper limit in the market and there is no upper limit in demand. Titanium dioxide doesn’t pay attention to brand, it pays attention to cost performance, which is a bulk material. Because large enterprises use hundreds of thousands of tons, small enterprises also use more than 10000 tons, and customers below 10000 tons are class C customers, which are handed over to the distribution agent, not my target. At present, our company has set the class C Customer guideline of less than 50000 tons, and we will hand over to the dealer if the demand is less than 50000 tons. Iron oxide has a global market of 2.8 million tons, while titanium dioxide has a market of about 8 million tons. The scale of kuncai mainly focuses on the titanium dioxide standards of the five major imported brands of 5 million tons, and takes them (them) as the pricing standard. “
For the dual brand strategy, Xie Bingkun said: “there are two strategic arrangements for pearlescent pigments. Pearlescent pigments have the ability to raise prices (strength). But what’s the problem? We have a strategic arrangement to launch the Moore brand alone. There are still 13 pearlescent pigment enterprises in China, which has affected the international status, international market competition (power) and product quality market position of the whole China to varying degrees. Last year, (pearlescent pigment enterprises from 12) It has become 9 and now 7. These seven pearlescent pigment enterprises are basically at a loss, and only kuncai is making a profit. If kuncai doesn’t raise the price under pressure, the competitor will lose 3000 yuan per ton (pearlescent pigment). Then why don’t we lose money but make a profit? There are several main points. The first is the internationally recognized automobile grade and cosmetic grade (pearlescent pigment). I am the only one in China. High-end products are profitable and low-end products are meager profits. Second, titanium tetrachloride and ferric chloride in our raw materials this year are produced by ourselves, which is an advantage. Third, we have the advantage of scale. The scale of ordinary enterprises is thousands of tons, and we have tens of thousands of tons. This has the advantage of cost. “
