A few days ago, Kanglongda released its 2023 annual report, achieving operating income of 1.563 billion yuan, a year-on-year increase of 13.73%. Due to multiple factors such as the heavy decline in lithium carbonate prices, the sharp depreciation of the RMB exchange rate against the US dollar, the provision for goodwill impairment of subsidiaries and the reversal of deferred income tax assets of subsidiaries during the reporting period, Kanglongda deducted a net profit loss of 187 million yuan from the non-attributable parent company.
A careful analysis of the annual report disclosed this time shows that as we enter the new year, most of the company's adverse factors have been gradually digested. From the perspective of the dual main business of "lithium salt new materials + hand protection products", the old main business hand protection products business has maintained the confidence of the stable market, and the sales volume of new lithium salt materials in the new main business has increased by 137.65% year-on-year, basically forming a new growth pole.
The old business chassis is stable, and Kanglongda's revenue will grow steadily in 2023
After nearly two years of continuous investment and construction, it has basically formed a two-wheel drive of "lithium salt new materials + hand protection products" and a take-off trend under the development strategy of "domestic + Vietnam" dual bases. Judging from the business revenue of each segment in 2023, the old business of hand protection products has maintained the confidence of stabilizing the market, contributing 1.068 billion yuan of operating income, and the second growth pole of the lithium salt new materials sector has also been basically formed, with a year-on-year increase of 486 million yuan in operating income that year nearly doubled.
As a veteran R&D, production and sales provider of functional protective gloves in China, Kanglongda has established a solid head advantage in the industry through the in-depth development, comprehensive application and long-term accumulation of ultra-high molecular weight polyethylene fiber preparation technology, yarn coating technology, seamless weaving technology and oil-based PU, water-based nitrile butadiene rubber, natural latex, neoprene, etc. blending (alloy) technology and coating and dipping process. At present, the foreign labor protection market is more mature than the domestic market, and Kanglongda's products are mainly sold to overseas markets mainly in Europe, the United States and Japan.
Compared with the steady growth of the old business of hand protection products, Kanglongda's lithium salt business segment has overcome various difficulties in 2023 by actively resisting the cyclical disturbance factors of the industry, and its production and operation have achieved growth higher than market expectations. According to the 2023 annual report, Kanglongda's lithium salt business achieved operating income of 307 million yuan, a year-on-year increase of 325.68%.
As lithium salt companies are in the upstream of the industry, the price of lithium carbonate will fall heavily in 2023, and the profit decline of the lithium salt industry is particularly obvious. However, with the recent recovery of lithium salt prices and the country's support for the development of the new energy industry, the industry remains optimistic about the development of the industry. According to the data of Shanghai Ganglian and Flush, in the past month, the spot price of lithium carbonate has remained above 110,000 yuan/ton, and there has been a phased stabilization and rise. Industry insiders also said that all parties in the market have a high acceptance of the current spot price, and downstream demand has rebounded.
With the implementation of the dual main business strategy development through multiple measures, a new round of sustainable and rapid growth can be expected
In the face of various adverse effects in 2023, Kanglongda has actively taken a series of measures to adhere to the implementation of the two-wheel drive of "lithium salt new materials + hand protection products" and the development strategy of "domestic + Vietnam" dual-base wings, gradually and effectively overcoming the impact of multiple unfavorable factors, and laying a solid foundation for subsequent sustainable development.
Keeping up with the pace of industry development and national industrial policies, Kanglongda has increased R&D investment and continuously launched products with higher performance, higher cost performance and more functions, while planning the internationalization of the R&D, production and sales base of hand protection products, and made every effort to accelerate the formation of R&D, production and sales capabilities of the Vietnamese base. In 2023, while accelerating the formation of the capacity of the Vietnam base, Kanglongda will achieve a good maintenance of the domestic stock business and the visit climax of many customers in the Vietnam base by strengthening the promotion of the Vietnamese base under the trend of supply chain transfer in the United States and the West, by strengthening the promotion of new technologies and new products, by strengthening the combined order marketing, and by actively participating in important exhibitions at home and abroad.
According to reports, the production equipment and facilities of Vietnam Kanglongda are built by integrating advanced technology from Malaysia, China and other countries, and are leading in automation, digitalization, energy saving, and product quality, and have built 12 disposable nitrile glove production lines and 20 labor protection glove production lines. In terms of product cost, Vietnam Kanglongda has the advantages of more than 1/3 lower energy costs such as electricity and steam, about 50% lower labor costs and relatively lower tax burden than domestic bases, and more special is that customers in Western markets such as Europe and the United States can enjoy preferential tariff exemption and reduction in the import process, and customers can greatly or significantly reduce the DDP price of products, and at the same time can better meet the demands of American and Western importers to optimize the supply chain. Vietnam's Kanglongda's advanced equipment, relatively low product manufacturing costs and the strategic advantages of better satisfying customers, reducing import costs and optimizing the supply chain layout have become a strong new growth pole for Kanglongda's old hand protection products.
In terms of lithium salt new materials business, in 2023, in order to reduce the impact of large fluctuations in raw material and product prices and ensure the stability of performance, Kanglongda's holding subsidiary actively adopts the business model of "processing + purchase and sales", and establishes long-term and stable cooperative relations with important upstream and downstream customers, which provides a guarantee for the stability of raw material supply and product sales, thereby reducing losses. According to the annual report, in 2023, Kanglongda lithium salt processing will achieve an operating income of 179 million yuan, and the gross profit margin of the business will reach 55.48%.
At the same time, in terms of R&D and production of lithium salts, Kanglongda's subsidiaries have responded to the competitive pressure of homogenization of the lithium industry through technological and process innovation and deepening refined management. According to reports, Tiancheng Lithium adopts the self-developed lepidolite composite sulfate roasting method and tunnel kiln mixed roasting process, and has achieved a major breakthrough in the technology and process of preparing battery-grade lithium carbonate from low-grade lepidolite in Yichun in terms of leaching rate, recovery rate and environmental protection production. The high leaching rate and high recovery rate of lepidolite, the roasting core processing technology and refined management and advanced environmental protection advantages not only make Yichun lepidolite resources be comprehensively and efficiently recycled, but also make the company's achievements in the subsequent new growth poles have a solid foundation.
At the same time, Kanglongda and its lithium salt business subsidiaries continue to find suitable lithium mines in accordance with the strategic idea of opening up the upstream lithium mines of the lithium salt processing business, with a view to realizing the integration of lithium salt supply and production as soon as possible, so as to promote the sustainable development of the company's lithium salt new material business.