Shenghua New Material's net profit fell by 97%, the fixed increase was 2 billion, the stock price fell by 80%, and the market value shrank by 62 billion

Yangtze River Business Daily News ● Yangtze River Business Daily reporter Shen Yourong

Shenghua New Materials, a well-known enterprise in the industry, (603026. SH) business performance declined significantly.

According to the performance forecast, in 2023, Shenghua New Materials is expected to achieve a net profit attributable to shareholders of the parent company (hereinafter referred to as "net profit") of 15 million yuan to 23 million yuan, a year-on-year decrease of more than 97%.

Shenghua New Materials explained that factors such as weak downstream demand, increased production capacity, and declining prices have led to a sharp decline in net profit.

In the first quarter of 2024, the company expects a net profit of 22 million yuan to 33 million yuan, a year-on-year increase of 175.25% to 312.88%. The company said that the recovery of downstream demand, superimposed cost reduction and efficiency increase, the company's performance has improved.

Shenghua New Materials has completed the change of ownership, and Qingdao State-owned Assets has become the actual controller of the company. Even so, the fixed increase of 4.5 billion yuan, which began to be planned in 2022, has shrunk to 1.990 billion yuan after many revisions, and has not yet landed.

In the secondary market, since September 17, 2021, the share price of Shenghua New Materials has fallen from the peak of 348.88 yuan per share, and by April 23 this year, the range has fallen by more than 80%.

How can Shenghua New Materials get out of the double dilemma of performance and stock price?

Net profit hit a new low in nearly 14 years

Shenghua is about to deliver one of the most ugly annual reports ever.

In the first three quarters of 2023, Shenghua New Materials achieved operating income of 4.399 billion yuan, a year-on-year decrease of 31.96%, a net profit of 70.1909 million yuan, a year-on-year decrease of 91.86%, and a net profit after deducting non-recurring gains and losses (hereinafter referred to as "non-net profit") of 64.5831 million yuan, a year-on-year decrease of 92.35%.

According to the annual performance forecast, in 2023, the company's net profit is expected to be 15 million yuan to 23 million yuan, a decrease of about 868 million yuan to 876 million yuan compared with the same period last year (statutory disclosure data), a year-on-year decrease of 97.42% to 98.32%; The estimated non-net profit is 11 million yuan to 19 million yuan, which will decrease by about 838 million yuan to 846 million yuan compared with the same period last year (statutory disclosure data), a year-on-year decrease of 97.78% to 98.72%.

According to this, in the fourth quarter of 2023, the company fell into a loss, with net profit and non-net profit ranging from -55.1909 million yuan to -47.1909 million yuan and -53.5831 million yuan to -45.5831 million yuan respectively.

The Yangtze River Business Daily reporter found that according to the net profit and non-net profit estimates for 2023, this will be the worst annual performance of Shenghua New Materials since it began to disclose operating performance data in 2010. In 2010, the company's net profit was 89.659 million yuan. From 2010 to 2022, the lowest annual net profit was 42.5321 million yuan in 2014, which was also significantly higher than the net profit in 2023.

Why did 2023 become the worst year for net profit in history? Shenghua New Materials explained that it was caused by factors such as weak downstream demand, increased production capacity, and declining prices. Among them, in the fourth quarter, the supply of MTBE (methyl tert-butyl ether) increased, and the price fell by about 10% quarter-on-quarter, resulting in a serious compression of MTBE profits. In addition, the release of new production capacity and the entry of downstream demand into the seasonal off-season, the price of dimethyl carbonate series products in the fourth quarter fell by about 11% quarter-on-quarter, resulting in a decline in gross profit.

In the first quarter of this year, Shenghua New Material's operating performance improved slightly, the company expects the net profit in the first quarter to be 22 million yuan to 33 million yuan, an increase of 14.0074 million yuan to 25.0074 million yuan year-on-year, a year-on-year increase of 175.25% to 312.88%, and is expected to deduct non-net profit of 18 million yuan to 29 million yuan, an increase of 10.4105 million yuan to 21.4105 million yuan, a year-on-year increase of 137.17% to 282.11%.

Shenghua explained that since the beginning of this year, the market has gradually recovered, affected by the recovery of downstream demand, the company's various devices have been running stably, and at the same time, vigorously promoting cost reduction and efficiency improvement measures, which effectively supported the current performance.

Even so, the net profit of Shenghua New Materials in the first quarter of this year is still at a low level.

The dividend rate is less than 10% for two consecutive years

The operating performance will decline, and the cash dividends of Shenghua New Materials will also shrink significantly.

Up to now, Shenghua New Materials has not disclosed the 2023 annual report, and it is difficult to predict whether it will pay cash dividends in 2023 due to its small expected net profit and large decline. In the past few years, the company's cash dividend ratio has been low.

From 2015 to 2018, the company distributed cash dividends of 20 million yuan, 122 million yuan, 122 million yuan and 122 million yuan respectively, accounting for 45.94%, 71.32%, 65.23% and 59.21% of the net profit of the year.

In 2019, Shenghua New Materials did not pay cash dividends. From 2020 to 2022, the cash dividends distributed by the company were 122 million yuan, 61 million yuan and 61 million yuan respectively, with dividend rates of 46.81%, 5.16% and 6.83% respectively.

In 2021 and 2022, the company's dividend rate will be less than 10% for two consecutive years.

Relying on the advantages of carbonate solvents and conforming to the rapid development of the new energy industry, the company has laid out electrolyte projects downstream to realize the whole industrial chain layout of carbonate solvents, lithium salts and additives required from upstream propylene oxide to midstream electrolytes, and is the only company in the electrolyte industry that extends the upstream to propylene oxide, is the world's largest supplier of lithium battery solvents, and is the only company in the world that can provide lithium-ion battery electrolyte solvents, solutes, The whole industry chain company of additive products.

In 2022, the company plans to raise 4.5 billion yuan to significantly expand the electrolyte production capacity, of which the fundraising projects include the construction of a total annual electrolyte production capacity of 500,000 tons in Wuhan and Dongying.

After three revisions, the company cancelled the electrolyte capacity expansion plan, and the amount of funds to be raised shrank to 1.99 billion yuan.

Up to now, the private placement plan has been approved by the Listing Committee, but it has not yet been implemented.

It is worth mentioning that in the secondary market, the share price of Shenghua New Materials fell sharply. On September 17, 2021, the company's share price reached 348.88 yuan / share, and on April 23 this year, the stock price was 41.9 yuan / share, a cumulative decline of about 88%. The corresponding market value has evaporated by more than 62 billion yuan, and it is currently only about 8.5 billion yuan.