Jinan Shengquan expands production and speeds up Zhuhai Phase II special epoxy resin project to be put into production next year

On May 19, 2022, Jinan Shengquan Group Co.
, Ltd.
held the 2021 Annual and 2022 First Quarter Results and Cash Dividend Presentation at the Shanghai Stock Exchange Roadshow Center in the form of video and online interaction
.

Shengquan's annual production capacity will reach 670,000 tons

At the performance meeting, Shengquan Group stated that the company's current production and operation conditions are normal.
After the company's 230,000-ton phenolic resin project is completed and put into production, the annual production capacity will reach 670,000 tons, making it the world's largest phenolic resin manufacturer
.
Shengquan is a global leader in green and energy-saving comprehensive utilization of straw and a manufacturer of thermal insulation raw materials for the return cabin of the "Shenzhou" spacecraft.
Its leading products, furan resin and phenolic resin, are ranked first in China and in the forefront of the world in terms of production and sales.
Chip photoresist resin, 5G communication PCB uses electronic resin, Shengquan light core steel and other products to break the foreign monopoly
.
The company has a mature price adjustment mechanism, and will adjust the product sales price in a timely manner according to factors such as raw material prices and market supply and demand
.

A number of product production lines have been built

In terms of production lines, Shengquan introduced at the meeting that the Daqing project is currently undergoing trial production, and is progressing normally according to the company's plan, and the carbon emission reduction achieved has not yet been realized
.
The production line of the company's photoresist resin project with an annual output of 500 tons has been completed, and the products of the production line have been certified by customers and started to be supplied to customers
.

The designed production capacity of the Zhuhai subsidiary is 60,000 tons of phenolic resin and 10,000 tons of special epoxy resin.
The first phase of 20,000 tons of phenolic resin and 4,000 tons of special epoxy resin has been completed and put into production, and the second phase of 40,000 tons of phenolic resin and 6,000 tons of special epoxy resin has been completed and put into production.
The special epoxy resin will be completed and put into production in 2023
.

Regarding carbon anodes with broad prospects, Shengquan said that the production of carbon anodes with conductive phenolic resins instead of traditional coal tar pitch as binders is a brand-new application field of phenolic resins.
With the wide attention of the market, with the improvement of market recognition, mass production will gradually be formed
.

Sustainability of performance growth is not affected

According to the performance announced by Shengquan, in 2021, the company's operating income will be 8.
825 billion yuan, a year-on-year increase of 6.
08%; the net profit attributable to shareholders of listed companies will be 687 million yuan, a year-on-year decrease of 21.
62%
.
In the first quarter of 2022, the company's operating income was 2.
226 billion yuan, a year-on-year increase of 16.
53%; the net profit attributable to shareholders of the listed company was 125 million yuan, a year-on-year decrease of 21.
81%
.

It is worth noting that while the net profit of Shengquan Group is declining, the company's accounts receivable and bills receivable balances are rising
.
As can be seen in the annual report released this time, Shengquan's operating cash flow in 2021 will be -227 million, and in the first quarter of 2022, the company's operating net cash flow will be -825 million, continuing to be a net outflow
.
In this regard, Shengquan responded in the survey that it was mainly caused by the increase in the price of raw materials and the increase in sales, which led to the increase in inventories and accounts receivable
.

Some investors have noticed that the data on Qichacha shows that so far, there have been 474 cases of judgment documents involving Shengquan Group, of which there are as many as 300 cases of sales contract disputes
.
With high accounts receivable and deteriorating operating cash flow, investors are worried about whether Shengquan Group will have a recovery risk
.

Shengquan Group responded to this, saying that the first quarter of 2022 was affected by the epidemic.
On the one hand, the company increased safety stocks to prevent supply chain risks.
On the other hand, sales receipts were delayed due to the epidemic, which was in line with market conditions and the industry.
Features
.
In addition, the main settlement method of the company's sales payment is bank acceptance bills.
At the end of the first quarter of 2022, the company still has a balance of more than 800 million bank acceptance bills
.
To sum up, the above situation will not affect the company's dominant position in the industry chain, nor will it affect the company's performance growth sustainability
.