Nearly half of mona Lisa's production capacity was stopped and the "ambition" of market expansion was severely frustrated

China's network finance and economics on September 15 (reporter Li Bin Zhao Rong) ceramic tile leading enterprise Mona Lisa Group Co., Ltd. (002918.SZ) issued an announcement on the 14th that due to the impact of the local power rationing and production limitation policy, its production base in Guangxi was forced to temporarily stop production of 6 production lines, and the remaining 1 production line was in a low-load state and faced suspension; the 4 production lines of the second phase of the project that are planned to start construction in the second half of the year will also face the risk of not being able to build and put into production as scheduled.

The specific content of the announcement is as follows: Due to the tight power supply, Guangxi Zhuang Autonomous Region has recently implemented power curtailment and production restrictions on building ceramics and other industries in its jurisdiction. Guangxi Mona Lisa New Materials Co., Ltd. (hereinafter referred to as "Guimeng Company"), a holding subsidiary of Mona Lisa Group Co., Ltd. (hereinafter referred to as "the Company"), has been greatly reduced, and has recently been forced to temporarily stop production of 6 production lines (the total daily production capacity of architectural ceramics is about 150,000 square meters), and the remaining 1 production line (the daily production capacity of architectural ceramics is about 25,000 square meters) is also in a state of low load non-normal operation, and may face suspension of production, resulting in a significant reduction in the production efficiency of Guimeng Company. Guimeng originally planned to start construction of the four production lines in the second half of 2021 may face the risk of not being able to build and put into operation as scheduled.

According to the information revealed by the company at the investor relations activities on the 14th, there is no deadline for the power ration and production limitation, and it is not yet known when production will resume. The company said that Guimeng Company will arrange equipment maintenance, optimize process control and other ways to reasonably organize production, as far as possible to reduce the adverse impact of production and power rationing on the company. Foshan Xiqiao, Guangdong Qingyuan, Jiangxi Gao'an three production bases will actively adjust the allocation of production lines, increase resource supply, and undertake some guimeng company's shipping orders to ensure delivery to customers on schedule.

According to industry insiders, the regional attributes of the architectural ceramics industry are strong, and the cross-regional adjustment of shipping orders proposed by the company can only be a temporary emergency method, and will greatly increase costs and losses.

At present, Mona Lisa's production base includes four parts: Foshan in Guangdong, Qingyuan in Guangdong, Fujian County in Guangxi and Gao'an in Jiangxi. According to the latest annual report data, mona Lisa's production capacity reached 115.2 million square meters in 2020, an increase of 31 million square meters over 2019. According to the calculation of the announcement information, the sum of the annual production capacity of the six production lines that have been discontinued in the Guangxi base and the production line that is running at low load and may face suspension is about 60 million square meters, accounting for nearly half of the current total production capacity of Mona Lisa.

According to previous news, the Guangxi production base originally planned to add the second phase of four kiln production lines and its supporting equipment, facilities and plant project has just officially started on August 4, the project was originally planned to complete construction and put into production in 2022. At present, in the case of unknown period of power curtailment and production curtailment policy, the construction and commissioning of the second phase of the project may be far away.

According to Mona Lisa's recently announced 2021 restricted stock incentive plan, the company expects operating income growth rates of no less than 30%, 70% and 113% from 2021 to 2023 compared to 2020. Affected by the suspension of production, the above revenue growth plan is unlikely to be realized.

The architectural ceramics industry has always had the characteristics of "large market, small enterprises", and the industry competition is fierce; in recent years, the industry concentration has increased significantly. According to the data released by the China Building Sanitary Ceramics Association, during the period from 2016 to 2020, the head enterprises expanded rapidly, and the market share of the top ten enterprises in the industry increased by 3% in five years, reaching 18%.

Since its listing in 2017, the Mona Lisa's ambitions for the industry's "hegemonic" status have been unmistakable. On the one hand, the company maintains its advantages in product upgrading, and on the other hand, it invests heavily in capacity expansion. The production base in Fujian County, Guangxi Andi and Gao'an in Jiangxi, which are involved in this suspension, have been acquired through mergers and acquisitions in recent years. Just a month ago, Mona Lisa also launched a convertible bond subscription, raising 1.169 billion yuan to acquire about 58.97% of the equity of Meishande (Jiangxi Gao'an production base), which was listed on September 16.

At the investor relations activity on the 14th, the company said that the three bases of Foshan Xiqiao, Guangdong Qingyuan and Jiangxi Gao'an have not yet received the relevant requirements for power curtailment and production limitation. According to industry analysts, with the country's increasing requirements for energy conservation and environmental protection in recent years, the architectural ceramics industry, in addition to facing the challenge of increasing the cost of energy conservation and environmental protection, inevitably responds to more stringent industry policies and proposes adaptive measures. In the near future, if the power curtailment and production curtailment policy in many regions continues, it is inevitable that the field of building material production will be affected by a large area.

(Editor-in-charge: Zhao Rong)