Shanghai Wei new material on the market: the money is used to buy epoxy resin, profit margin is only 1.97 percent

On the evening of September 24th, SSE New Materials (688585) announced that the company's shares would be listed on the SSE On september 28th. The company's offering price is 2.49 yuan per share, corresponding to the issue price-earnings ratio of 12.83 times.
high revenue, the main business outstanding
The new material was established in October 2000, the main environmental protection high-performance corrosion-resistant materials, wind blade materials, new composite materials research and development, production and sales, three categories of products accounted for more than 90% of the total revenue, the main business outstanding . The main products include vinyl ester resin, special unsaturated polyester resin, wind blade perfusion resin, hand paste resin, adhesive, wind blade girder with pre-immersion resin and other composite resin products. The main application areas downstream include energy conservation, environmental protection and new energy. Among them, the field of energy conservation and environmental protection mainly includes rail transportation safety materials and electric power, petrochemical, electrical and electronic, metallurgy, semiconductors, construction and other industries pollution prevention and control projects;
revenue for 2017-2019 was RMB1,024 million, RMB1,238 million and RMB1,349 million, respectively. Among them, in 2019, the company's wind power blade materials revenue of 657 million yuan, accounting for 48.69 percent of operating income, the size of the product business by the wind power industry business climate, policy control and fluctuations.
January-June 2020, the Company's operating income was RMB713 million, an increase of 12.39% over the same period last year, operating profit was RMB65.312 million, an increase of 9.86% over the same period last year, and net profit was RMB460.391 million, an increase of 11.67% over the same period last year.
the cost of raw materials is too high, the profit margin is very low
in 2017-2019, the operating costs of the company are 826 million yuan, 1.056 billion yuan and 1.084 billion yuan, respectively, the average annual operating costs accounted for about 82% of total revenue. Among them, raw material costs as a proportion of operating costs are 96.19%, 95.56% and 97.21%, the main raw materials based on epoxy resin, methyl acrylic, styrene and other chemical products. The direct impact of high raw material costs is low profit margins: in 2017-2019, the company's three-year net profit margin was 5.04%, 1.97% and 5.8%, respectively.
enterprise development
affected by the epidemic, the operating rate of Shanghai New Materials in the first quarter of 2020 was low, and operating income and net profit declined significantly year-on-year. Mainly due to the outbreak caused by the Spring Festival holiday delay, logistics control and other reasons, the company's downstream customers are affected by a certain degree of production and operation, so that the first quarter of orders than the normal progress has been delayed, resulting in a sharp decline in the company's operating income and net profit. However, with the outbreak has been effectively controlled, the company's subsidiaries have been fully resumed, domestic and foreign major customers, suppliers and logistics have been fully resumed. The company's sales and product shipments have returned to normal, production capacity gradually increased, orders gradually increased, daily orders and the implementation of major contracts there are no obstacles.
the May 2019 Notice of the National Development and Reform Commission on Improving the Policy on Feed-in Tariffs for Wind Power, wind power projects must be completed by the end of 2020 and the end of 2021 to receive subsidies. Affected by this policy, by the end of 2020 domestic on-line wind power, by the end of 2021 offshore wind power will be a rush to install the trend, it is expected that this year, the new material will usher in the performance peak.
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