Financial analysis of leading chemical enterprises

The industry concentration has increased to a stable profit in the industrial chain, and the company has significant cost advantages. With the deepening of supply-side reform and the accelerated integration of leading enterprises, the concentration of the domestic titanium dioxide industry has been improved, and the improvement of the competitive pattern has brought stability to the profitability of the industry. Since 2017, the overall gross margin of listed companies in the industry has stabilized at more than 30%, and Longbai has benefited from the advantages of its own scale, technology and partial self-sufficiency of raw materials. The gross profit margin is 5%-10% higher than the industry average, and the cost advantage is significant.

The new energy sector is advancing steadily, forming the second growth curve of the company. The company's phase 1 production line of 50,000 tons of iron phosphate/lithium iron phosphate, 25,000 tons of graphite negative electrode has been opened, will form sales this year, Phase 2 50,000 tons of iron phosphate/lithium iron phosphate, 75,000 tons of graphite negative electrode will also be prepared for construction this year, the next two years will form 350,000 tons of iron phosphate/lithium iron phosphate, 100,000 tons of graphite negative electrode production capacity, Form the second longest curve of the company.

1.5 Linglong tires: short-term performance setbacks in the dark hours, waiting for the industry to recover

Quarterly results missed expectations. In 2021, the company achieved operating income of 18.579 billion yuan, an increase of 1.07%; Net profit returned to the mother was 789 million yuan, down 64.48% year-on-year. In the first quarter of 2022, the operating income was 4.351 billion yuan, down 12.74% year-on-year; Net profit loss of 92 million yuan, down 118.57% year-on-year. The performance was lower than expected because the upstream and downstream of the industrial chain improved less than expected, and the epidemic repeatedly affected the company's production and sales.

Downstream demand decline coupled with trade friction, high prices of upstream raw materials superimposed sea freight skyrocketing, internal and external difficulties under the company's performance pressure. From the demand side, in 2021, the automotive market demand obstruction has an impact on the sales of tire supporting, the automotive market due to the shortage of chips in the global market has a cumulative production reduction of about 11.31 million, commercial vehicles are subject to the five countries and six standards switch, leading to a sharp decline in the demand for medium and heavy trucks; The demand for replacement markets is also weak in the context of repeated outbreaks. From the cost side, the main raw material prices in 2021 are in a high state of volatility, of which the average annual price of natural rubber and carbon black rose 25% and 52% respectively, under the cost pressure of the company's tire product gross margin fell 11% to 16.9%, of which the fourth quarter gross margin was only 6.2%. Considering that raw material prices are still at a high level, coupled with the impact of the epidemic on downstream demand, it is expected that the company's performance will still take time to recover.

The strategic plan is clear, the company continues to make efforts to support the market, and the achievements in the field of new energy are outstanding. The company deeply cultivates the original tire market, ranking first in China for many consecutive years, and has entered 7 of the world's top 10 automobile factories, with a total of more than 200 million pieces of supporting equipment. At the same time, in 2021, the sales growth rate in the field of new energy support reached 182%, and the overall market share was close to 20%, ranking first in domestic tires. Although the current overall industry is in a low period, the company's short-term performance loss, but in the global layout and adhere to the supporting strategy, the trend of long-term growth in the future remains unchanged.