On the evening of October 25, A-share modified plastic leader Jinfa Technology (600143), released its third quarter report for 2021. In the first three quarters of this year, the company achieved operating income of 29.593 billion yuan, an increase of by 212.95% year-on-year; and achieved net profit of 1.731 billion yuan, a year-on-year decrease of 54.38%. Among them, Jinfa Technology achieved revenue of 10.306 billion yuan in the third quarter, a year-on-year increase of 11.18%, and a quarter-on-quarter net profit of 150 million yuan, a year-on-year decrease of 89.16%.
On the first trading day after the third quarter report was released (October 26), the stock price of Jinfa Technology's secondary market opened at and hit the limit . After a slight fluctuation in the trading session, it still closed at the limit , and the stock price hit a new low since the beginning of this year.
Raw materials have risen sharply and squeezed profits
Why did the release of the third quarter report lead to such a big reaction in the secondary market? According to the third quarter report of Jinfa Technology, the main reason for the decline in performance in the first three quarters is that the domestic epidemic has been effectively controlled, the prices of epidemic prevention protective supplies have returned to rationality, and the company's profits of medical and health products in this period have been significantly reduced. In addition, the loss of Jinfa Technology's assets disposal has increased.
On the same day, Jinfa Technology also disclosed its main operating data for the third quarter. From July to September this year, the company's production and sales volume of modified plastic products was 432,000 tons and 427,500 tons, respectively, with operating income of 6.328 billion yuan; the production and sales volume of new materials products were 37,900 tons and 23,200 tons, respectively, with operating income of 600 million yuan; the production and sales volume of green petrochemical products were 178,000 tons and 178,900 tons, respectively, with operating income of 1.164 billion yuan.
In terms of price changes in major products, the average sales price of modified plastic products in the third quarter increased by 21.22% year-on-year and a month-on-month decrease of 0.77%; the average sales price of new materials products in the third quarter increased by 7.34% year-on-year and a month-on-month decrease of 9.12%; the average sales price of green petrochemical products in the third quarter increased by 31.65% year-on-year and a month-on-month increase of 2.08%.
However, compared with the increase in the price of Jinfa Technology's main products, the price increase of the company's main raw materials in the third quarter was more obvious. Among them, the average purchase price of major raw materials for modified plastic products increased by 32.79% year-on-year, a decrease of 4.67% month-on-month, and the average purchase price of major raw materials for new materials products increased by 119.15% year-on-year, a decrease of 27.37% month-on-month; the average purchase price of major raw materials for green petrochemical products increased by 71.56% year-on-year, a decrease of 25.78% month-on-month.
It can be seen that the year-on-year increase in the purchase price of raw materials of Jinfa Technology's three major products has significantly exceeded the year-on-year increase of of the products in the same period. Among them, the year-on-year increase of raw materials for new materials is as high as 119.15%, while the average sales price of the product only increased by 7.34% year-on-year, which also means that the company's gross profit margin in related products will be significantly squeezed.
Jinfa Technology also pointed out in its third quarter report that the prices of main raw materials and auxiliary materials upstream of the company's main products continued to rise sharply and rapidly, and the company's costs increased significantly, which had a significant impact on the company's net profit.
is not without action in the face of rising costs. On July 26 this year, Jinfa Technology announced that the company plans to obtain 51.09% of equity Liaoning Baolai New Materials Co., Ltd. (hereinafter referred to as "Baolai New Materials") at a total of 1.88 billion yuan by acquiring the original shareholders' subscribed capital rights and increasing capital.
Tianyancha data shows that Baolai New Materials was established by Baolai Group in 2020 to promote the annual output of 600,000 tons of ABS and its supporting equipment projects. The construction of the sen project includes 600,000 tons/year ABS device, 600,000 tons/year propane dehydrogenation (PDH) device, 260,000 tons/year acrylonitrile (AN) device, 100,000 tons/year methyl methacrylate (MMA) device and supporting projects.
Jinfa Technology stated that Bola New Materials' main products overlap with the company's current main product application areas of modified plastics, and has significant upstream and downstream synergistic advantages. By holding 51% of the equity of Bolai New Materials, it will help the company enter the upstream raw material industries such as ABS, consolidate the company's industry position in the fields of chemical raw materials and modified plastics, enhance the company's profitability, and gain opportunities to enhance the technological innovation capabilities of the entire industrial chain.
The profit of the epidemic prevention business segment decreased
Jinfa Technology's third quarter report shows that in 2020, due to the impact of the epidemic, the company developed excellent sales results of epidemic prevention-related products such as meltblown materials, meltblown fabrics, masks, etc., which had a significant impact on the company's profit in the first three quarters of 2020. As the new coronavirus epidemic is gradually controlled in many countries and the market has new production capacity, the selling price of epidemic prevention-related products has returned to rationality, resulting in a significant year-on-year decline in profits in the first three quarters of 2021.
It is worth mentioning that at the end of 2020, Jinfa Technology announced that it would officially launch an annual production of 40 billion high-performance medical and health protective gloves at its Qingyuan base. Just then, Yingke Medical , which also specializes in medical gloves, achieved a net profit of more than 38 times in 2020, and became a super bull stock with an increase of more than 20 times. This also made Jinfa Technology, which also entered this field, attracting much attention from the capital market.
According to the project progress disclosed by Jinfa Technology in the third quarter report, the company's annual production of 40 billion high-performance medical and health protection gloves includes 6 groups, each group includes two workshops and a warehouse, each workshop has 8 production lines, and the project has a total of 96 production lines, and each production line has a designed daily production capacity of 1 million. As of September 30, 2021, the glove project has completed the production of 40 production lines in five workshops, and each production line is in good operation, and the remaining production lines are under construction.
However, just as the project has not yet reached production, as the global epidemic is gradually under control, the demand for medical gloves has also declined. Judging from the performance forecast of the industry leader Yingke Medical, Jinfa Technology's performance in the third quarter of this year is expected to drop by 55.13%-63.28%. The main reason is that the market has added new production capacity, and the price of glove products has declined due to fluctuations in raw material prices.
Jinfa Technology also admitted in the announcement that the construction cycle of glove project is long and there is uncertainty in the project progress, which poses certain risks to the company's medical and health products.
