Transform carbon fiber, the future space can be expected

As the company is located in Jilin Economic and Technological Development Zone is a national carbon fiber high-tech industrialization base, the area has formed an industrial aggregation and supporting in the upstream and downstream areas of the carbon fiber industry, and with the continuous decline in the manufacturing cost of carbon fiber and its composite materials, the downstream application space will expand, the company's integrated layout is expected to benefit from the long-term expansion of the industry in the future.

1.2 Financial overview of the company

At present, the company's main business is viscose fiber, including viscose filament and viscose staple fiber; The small tow carbon fiber project of Kemaker, a wholly-owned subsidiary, has been fully completed. In the first half of 2022, the global economic growth continued to slow down, the domestic epidemic situation showed a multi-point distribution, affected by the outbreak of new coronavirus in Jilin City, the company took measures to reduce production, at the same time in the first half of the year, the prices of raw materials, chemical accessories and energy rose significantly, and the superimposed cost rose in the case of insufficient production, and the combined factors eventually led to a year-on-year decline in profits. In the past three years, under the influence of the novel coronavirus pneumonia epidemic sweeping the world, the risks and tests of the operation of the chemical fiber industry have increased. In the face of difficulties such as the macroeconomic downturn, the contraction of demand, and the reduction of orders, the economic efficiency and operation quality of the industry have dropped significantly year-on-year, and the market price of chemical fiber is generally running at a low level. At the same time, the industry entered the decline channel during the period, the market was in a stalemate, and the situation was not as expected. Especially after the price rise of bulk raw materials and the "double control", the price of chemical accessories, energy and so on has soared, greatly increasing the production and operating costs, resulting in the rapid compression of the profit space of the viscose fiber industry; As a result, the company's performance recorded a loss during the period.

In the first three quarters of 2022, the company achieved operating income of 3.032 billion yuan, +15.76% year-on-year; Net profit returned to the mother was -89 million yuan, year-on-year -6,745.07%. The company released its 2022 annual performance forecast on January 31, and it is expected that the company's revenue in 2022 will be 3.85 billion to 4.05 billion yuan, and the revenue in 2021 will be 3.58 billion yuan, which is +7.54%-13.13% year-on-year. Net profit loss of 78 million to 95 million yuan, +26.48%-39.64% year-on-year; Non-net profit loss of 13.65 to 30.65 million yuan, narrowing 77.56% to 90.01%. In 2022, faced with the pressure of rising costs such as raw and auxiliary materials and energy prices, the company responded by actively adjusting to further improve its operating performance; However, affected by the loss caused by the production reduction after the outbreak of the new coronavirus in Jilin City in the first half of the year, the net profit is still expected to be negative this year.

In the first three quarters of 2022, the gross profit margin of the company's overall sales was 7.86%, and the net profit margin of sales was -2.76%. From the point of view of products, the gross profit margin of viscose filament in the first half of the year was 10.01%, which showed a declining trend in the past three years. The main reason is that the downstream application of viscose filament in addition to China, Europe and South Asia are the main consumption areas, but the demand and price have declined in the past three years due to the impact of the global epidemic. And previously, India made countervailing investigations on more than 60 denser viscose filament yarns originating in or imported from China, a combination of factors led to a decline in gross profit margin, but at present, with the relaxation of the overseas epidemic, and India made a negative countervailing final ruling (meaning the end of anti-dumping restrictions), the current downstream demand of the industry has recovered, and viscose filament prices have begun to grow. And in the long run, there is also good for the export of viscose filament. Product viscose staple fiber 22H1 gross profit margin of 0.15%, China's viscose staple fiber industry in recent years boom degree continues to decline, under the influence of multiple negative factors the entire textile industry chain cycle blocked, some enterprises began to stop production to see the subsequent market supply and demand grid changes. The viscose staple fiber market is supported by the cost, and the price is basically unchanged from the same period last year, but the industry as a whole is in a state of loss due to the high price of raw and auxiliary materials such as pulp and liquid alkali.

Carbon fiber product 22H1 gross profit margin of 19.27%, carbon fiber current development momentum is good, broad prospects, especially civil large tow carbon fiber track high prosperity, wind, light based power new energy rapid growth has driven the demand for civil large tow carbon fiber, the market size is huge. The production line with an annual output of 600 tons of small tow carbon fiber prepared by Jilin Kemike, a wholly-owned subsidiary of the company, has been completed and reached production as of the end of the reporting period. The company shares 49% of Jilin Baojing mainly from large tow, low-cost carbon fiber research and development, production and sales, has been maintained full production and sales; At the same time, the company used the funds raised by the non-public offering to build the annual output of 12,000 tons of carbon fiber composite pultrusion plate project, and further advanced to the carbon fiber production chain.