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Disposing of loss-making sub-businesses to benefit from LCD polarizers, Shanshan shares first quarter net profit to turn losses

The price of lithium battery materials fell first and then rose last year, coupled with business losses such as charging piles, energy storage, clothing, etc., and long-term equity investment income is impaired, resulting in a year-on-year decline in Shanshan shares by 5.35% year-on-year revenue to 8.216 billion yuan. The net profit attributable to the parent was 138 million yuan, a year-on-year decrease of 48.85%. The company said it would spin off its loss-making sub-business and focus on its main business. At the same time, LG Chem’s LCD polarizer business acquired last year was consolidated, and it is expected that the net profit in the first quarter of this year will turn around the same period last year.

In response to the pressure of rising costs this year, 'At present, due to the mismatch of supply and demand, the price of raw materials such as lithium carbonate has risen rapidly, and the dependence of the industrial chain still exists. The battery manufacturers themselves have high gross profit margins, so the positive Material manufacturers’ shipment prices can be partly transmitted to the downstream.' A brokerage analyst told a reporter from the Caixin Press on April 3.

High-tech lithium battery forecasts that ternary materials will still be the main market in 2021, and nickel materials will be the mainstream. In terms of prices, affected by the rising prices of upstream raw materials, the overall price of the cathode material industry is expected to rise.

In 2020, the prices of positive and negative materials will show a 'v'-shaped trend. In the first half of last year, affected by the epidemic and industry cycles, the prices of products were low due to sluggish demand; in the second half of the year, with the progress of the economic recovery, demand picked up, but competition intensified and profit margins fell.

Finally, the company achieved a year-on-year increase of 38.44% in sales of cathode materials, a 4.75% increase in revenue year-on-year to 3.849 billion yuan, and a net profit of 139 million yuan attributable to the parent, a year-on-year decrease of 27.78%. The anode material company's annual shipments were 24.47% year-on-year, and revenue was 2.518 billion yuan, a year-on-year decrease of 1.03%.

However, as the entire production line of the first phase of the Baotou integrated project is fully integrated, and relying on the advantages of local electricity prices and integrated production lines in Inner Mongolia, the company has significantly reduced costs and increased efficiency. Coupled with the increase in the proportion of consumer products with high gross profit margins, the company's negative electrode business achieved a net profit of 175 million yuan last year, which was an increase of 18.76% year-on-year.

In 2021, the non-main business will be divested to respond to the increase in raw material prices

Starting in the fourth quarter of last year, the price of negative electrode raw materials entered an upward channel. 'Currently, it is a bit unfavorable for the anode material factory. The price of raw materials has risen too fast, and the industry market is relatively fragmented and the concentration is not high, resulting in a lag in the downstream transmission time, and the intensity is not so large, which compresses the gross profit margin.' The above-mentioned brokerage analysis. The division analysis said.

The sub-businesses that have a greater impact on the company’s net profit are charging piles, energy storage, clothing and other sub-businesses. In 2020, the total net profit attributable to shareholders of listed companies is 296 million yuan, and the loss has increased by 130 million yuan year-on-year.

In order to cope with the impact of losses, the company stated that it will gradually divest non-core businesses in order to concentrate resources to develop the main business. At present, the company has stopped new investment in energy storage, charging piles and other businesses, and has reduced the business scale. At the same time, the apparel brand operation business was sold during the period.

'Currently, the charging pile industry is still in the market cultivation period, with a large amount of investment, and there are almost no profitable companies in the industry.' On April 3, an insider in the cathode material industry told a reporter from the Financial Association. 'Materials companies develop new businesses based on their own understanding of the industry, but if they deviate from their main business, it will be difficult for the market to recognize them, and the performance may be dragged down in the future.'

It is worth noting that , The company released a quarterly report pre-increasing announcement, saying that benefiting from the consolidation of the polarizer business and the increased volume of positive and negative materials, it is expected to achieve a net profit of 250 million to 280 million yuan attributable to the parent in the first quarter of 2021, a year-on-year turnaround.

The company announced in June last year that it had acquired LG Chem’s LCD polarizer business. Polarizers account for about 10% of the total cost of LCD panels, and the gross profit margin is at a higher position in the LCD industry chain. According to AVC data, LG Chem's polarizer business has the largest market share in 2019, at 23%.

According to Omdia data, it is estimated that domestic polarizer demand will reach 380 million square meters in 2021, while domestic polarizer production capacity will be less than 250 million square meters. There is still a supply gap of more than 30%. Localized replacement space huge.

In the March research report of IFC Securities, it is believed that after the company acquired the business, the former middle and high-level cadres, Korean management and technical experts have all retained their posts, the team is stable, and it is expected to further develop the industrial chain, production capacity, cost, and efficiency. And other advantages. (Associated Finance Press)

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