This is because it opens up diversified expansion.
In 2007, the first generation leader of Long Sheng, Ruan Shuilong , retreated to the second line, and the second generation of leader Ruan Weixiang began to take charge. After that, Ruan Weixiang began to make diversified investments, including auto parts, real estate, inorganic chemicals, etc.
However, the contribution ratio of these businesses is not high - in the automotive sector, the products are mainly automotive stamping parts, and the customers are mainly around Changan Automobile , the business is developing tepidly, and the operating profit margin is also declining year by year; inorganic Although the revenue of the chemicals business has reached about 1 billion yuan, the operating profit margin is also declining year by year.
The newly added real estate business, affected by the initial investment, did not contribute much revenue. Instead, it led to an increase in the book inventory and also dragged down the operating activities cash flow .
In short, the profitability gap between the diversified new main business and the old dye main business is still relatively large.
Moreover, after the international crude oil price bottomed out in December 2008, it rebounded rapidly, rising from US$40/barrel to over US$120/barrel, an increase of more than three times, pushing costs upward.
In the same period, because the price of dyes has to take into account the downstream digestion capacity, it only increased by less than 60% during the same period.
Raw material prices are under pressure + diversified expansion. The two major factors have superimposed, causing the overall gross profit margin to decline again.
In addition, at this time, the economic environment fluctuated greatly, and its performance growth rate also fluctuated - the revenue growth rate declined year by year amid violent fluctuations, especially in 2009 and 2012, the revenue growth rate was 9.34%, respectively. -7.05%.
Among them, 2009 was mainly affected by the slowdown in demand caused by the global financial crisis , while 2012 was caused by the shrinking demand in the downstream printing and dyeing industry and the decline in the sales price of disperse dyes
Overall, the fundamentals of this period Not optimistic, so the valuation also showed some performance - the stock price rose sharply from 2004 to 2012, but then the downstream prosperity declined, and the stock price fell accordingly. PB also followed the correction to 1.15X at the end of 2012, a drop of 66% and a record low.
It is worth noting that from 2009 to 2010, the stock price and valuation were on the rise, but the corresponding gross profit margin was in a sharp decline stage. Why is this?
This is mainly because Longsheng is still expanding its production capacity during the trough period of the industry, building 36,000 tons of disperse dyes and 50,000 tons of reactive dyes (including 20,000 tons of the Indian KIRI joint venture). At the same time, there is also a merger and acquisition case - it United India KIRI acquires DyStar . Therefore, market sentiment is relatively high.
Here, we should pay attention to one thing - since 2013, its stock price and valuation have suddenly rebounded. What is the logic behind this?
foresees the follow-up, and listening to the analysis in the next chapter
does not constitute any investment advice. The stock market is risky, so you need to be cautious when entering the market.
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