Source of this article: Times Finance Author: Zhou Li
On the evening of April 29, Kingfa Technology (600143. According to the 2023 annual report released by SH, Kingfa Technology achieved an annual turnover of 47.941 billion yuan, a year-on-year increase of 18.63%, a stable growth for 8 consecutive years, and a new high since its listing, and a net profit attributable to the parent company of 317 million yuan, a year-on-year decrease of 84%.
In this regard, Kingfa Technology said that due to geopolitical turmoil, the acceleration of the restructuring of the industrial chain and supply chain, and the overall decline in the efficiency of the petrochemical industry caused by the imbalance between supply and demand, the company's green petrochemical sector is facing many challenges and pressures.
Although the chemical industry is at the bottom of the cycle and changes in the market environment have dragged down profits, Kingfa's R&D investment has increased instead of decreasing, and the R&D expenditure in 2023 will be 1.973 billion yuan, a record high, a year-on-year increase of 35.72%.
With the support of technology, Kingfa Technology has not only achieved the largest PBAT production capacity in Asia and the largest market share of film bags in Asia, but also took the lead in realizing the industrialization of PA10T in the world. At the same time, its special engineering plastics have also achieved a major transformation from "import" to "comprehensive leading" in the field of LED lighting and consumer electronics connectors.
The 2024 Government Work Report proposes to promote the renewal and technological transformation of various production equipment and service equipment, and encourage and promote the trade-in of consumer goods. The person in charge of the relevant department pointed out that the preliminary estimate of equipment renewal is a huge market with an annual scale of more than 5 trillion yuan, and the upgrading of automobiles and household appliances creates a trillion-scale market space. In 2024, when the "trade-in" of consumer goods is on fire, how will Kingfa's business development focus change?
The sales growth rate is leading, and the layout is a trillion blue ocean
From the perspective of products, the main force of Kingfa Technology's revenue is still the modified plastics sector, with a revenue of 26.966 billion yuan, a year-on-year increase of 5.14%, and its sales volume hit a record high, with a sales volume of 2.1125 million tons, a year-on-year increase of 19.88%.
Kingfa Technology said that the company's modified plastics "overall solution" and "global service" competitive advantages are highlighted, seize the rapid growth opportunities of new energy vehicles, smart home appliances, power batteries, photovoltaics, energy storage and other emerging industries, and take multiple measures to seize the market, the company's automotive materials, electronic and electrical materials, consumer electronic materials, environmental protection high-performance recycled plastics and other materials sales growth rate is higher than the growth rate of the downstream industry.
Behind the recognition of the products by the market, it may be related to Kingfa's continuous exploration of new market demand and research and development of new products.
In 2024, the State Council issued the "Action Plan for Promoting Large-scale Equipment Renewal and Consumer Goods Trade-in", which mentions that it is necessary to implement the trade-in action of consumer goods, carry out the trade-in of automobiles and home appliances, and promote the replacement of consumer goods for home improvement.
Data shows that by the end of 2023, the number of household appliances such as refrigerators, washing machines, and air conditioners in mainland China has exceeded 3 billion. With the upgrading of automobiles, home appliances and other products, it is expected to release a trillion-scale market space. In key areas such as industry and agriculture, the demand for equipment renewal is expected to usher in a huge market with an annual scale of more than 5 trillion yuan.
In the face of the trillion-dollar blue ocean of "trade-in", Kingfa Technology seized the opportunity and continued to extend to the direction of high-end and high value-added industries.
According to the annual report data, Kingfa's R&D expenses in 2023 will be 1.973 billion yuan, a year-on-year increase of 35.72%, a record high, and the number of domestic and foreign patents applied by Kingfa Technology is also increasing. As of December 31, 2023, the company has applied for a total of 6,036 domestic and foreign patents, including 4,394 invention patents, 761 utility models, 35 designs, 552 PCTs, and 294 foreign patents.
Backed by strong R&D capabilities, Kingfa Technology continues to upgrade high-strength, high-fluidity, thin-walled, spray-free and other home appliance material solutions, optimize product structure, and meet new trends such as high-end home appliance consumption, intelligence, and home integration. According to the annual report, the global sales volume of Kingfa Technology's main household appliances materials was 400,600 tons, a year-on-year increase of 14.46%.
At the same time, with the rapid popularization of new energy vehicles, achieving faster charging speed and improving safety performance have become the "battleground" for many brands. Kingfa has developed many new achievements according to market demand, such as: PPE injection molding scheme for battery pack covers, new polypropylene materials with high light transmittance and sprayable polypropylene, which have become the world's first mass production application examples of "integrated luminous front face......
The continuous promotion of product innovation has also made Kingfa's automotive materials more favored by "car makers", and its global sales of automotive materials last year were 967,000 tons, a year-on-year increase of 28.74%. If the growth trend continues, it is expected to exceed 1.2 million tons this year.
Driven by the "trade-in" policy, scrapped consumer goods must also find new places for resource reuse.
In recent years, the mainland home appliance market has entered the "era of both increment and stock" from the "incremental era". According to the data, in 2023, the number of major categories of home appliances in mainland China will exceed 3 billion units, and the annual scrap volume will be close to 10%, which is a huge market for the home appliance recycling industry.
This year, the Ministry of Commerce and other nine departments jointly issued the "Notice on Improving the Recycling System of Renewable Resources such as Waste Household Appliances and Furniture" to guide all localities to speed up the improvement of the recycling network of waste materials; the State Council issued the "Action Plan for Promoting Large-scale Equipment Renewal and Trade-in of Consumer Goods", proposing that by 2027, the recycling of scrapped vehicles will increase by about double compared with 2023, the recycling of waste household appliances will increase by 30% compared with 2023, and the proportion of recycled materials in the supply of resources will be further increased.
Kingfa Technology has also long been in this regard, and it has actively cooperated with a number of Fortune 500 companies in the fields of automobiles, home appliances, consumer electronics and packaging in the fields of waste plastics recycling, full life cycle management and low-carbon materials to jointly promote the application of recycled materials in the industry and assist customers in achieving sustainable development goals.
Under the strong combination, the global sales volume of Kingfa's environmentally friendly high-performance recycled plastics reached 266,100 tons, a year-on-year increase of 40.79%. In the past 20 years, Kingfa has provided more than 2 million tons of environmentally friendly high-performance recycled plastics to the world, ranking first in the industry in terms of production and sales.
However, becoming the "sales champion" of the industry is not the end of Kingfa Technology, "building a national recycling network and creating a full-chain ecology of circular economy" is their goal.
"The company has built a waste plastic recycling network covering the whole country, mastered the recycling and processing capacity of waste plastics from multiple sources and categories such as cities, oceans, and industries, and further improved the whole chain production technology of waste plastic recycling, pre-treatment, and reuse, and realized the high-quality recycling of waste plastics. Kingfa said.
Green Petrochemical Seeks New Growth, New Material Sales Increase by 45% Year-on-Year
Compared with modified plastics, due to the downturn in the chemical market, Kingfa's green petrochemical sector performed averagely, which also became the main reason for Kingfa's performance decline last year. The revenue of green petrochemical products in 2022 will be 3.78 billion, with a gross profit margin of -13.69%, and the revenue in 2023 will be 9.35 billion, with a gross profit margin of -12.44%, a revenue growth of 147.34%, and a narrowing of negative gross profit margin.
As an important subsidiary of Kingfa Technology's green petrochemical sector, Liaoning Kingfa's net profit was -1.16 billion yuan. As for the reasons for the loss of Liaoning Kingfa, it said that first, after the company's new investment in the device, the operation is in the climbing stage, and the operation has not yet been stable, and the production efficiency is not as expected, which affects the overall profitability to a certain extent;
In addition to the operational reasons of Liaoning Kingfa itself, market conditions are also one of the reasons for poor performance, and the market price of ABS, which is mainly produced by Liaoning Kingfa, will decline in 2023, from 12,100 yuan/ton in January to 10,700 yuan/ton in December, a decrease of more than 10%.
However, when the chemical market was sluggish, Ningbo Kingfa's net profit shrank from -747 million yuan in 2022 to -721 million yuan in 2023, and the loss narrowed slightly.
In this regard, Kingfa Technology said that it will actively implement the loss reduction measures of the petrochemical sector from the following aspects: first, it will penetrate the industrial chain of "propane-propylene-polypropylene-modified polypropylene" to enhance its ability to resist risks; The PSA hydrogen purification device and the supporting downstream filling project were successfully put into operation, which became a new growth point for the company's profits; third, the research and development of medical-grade and optical-grade COC materials broke through the key technology, breaking the dependence on imports, and during the reporting period, the company's self-developed COC pilot plant has been successfully put into operation; fourth, the company's propane dehydrogenation unit has been overhauled and optimized, and the production load has been increased by 15% after the company's propane dehydrogenation unit has been overhauled, which has effectively improved the operation efficiency of the device; It has been widely recognized in the fields of home appliances, OA and transportation.
In addition to the green petrochemical sector to promote the narrowing of losses, in the new materials sector with high gross margin, Kingfa Technology will achieve sales volume of 178,100 tons in 2023, a year-on-year increase of 45.03%, and actively explore new fields and improve application transformation.
For example, in terms of fully biodegradable plastics, Kingfa has developed a variety of new products such as PBS, PBAT and PLA to meet the multi-faceted needs of the market, achieve a substantial increase in market share, and achieve a year-on-year increase of 46.4% in sales; High-performance PEEK and medical grade (food grade) PPSU (PES) have been widely used in storage, computing connectors, wear-resistant parts, medical devices and food contact and other fields; in terms of carbon fiber and composite materials, its sales increased by 50.63% year-on-year. Many industries such as cold chain logistics vehicles have achieved rapid growth.
The development of new products and the expansion of new fields have made Kingfa Technology one of the enterprises with the most complete product range in the global new chemical materials industry. Continuous scientific and technological innovation and talent reserves, coupled with years of large-scale R&D investment, have made Kingfa's intellectual property accumulation rise year after year, giving it full confidence in the competition for cutting-edge materials and overseas markets. Recently, Kingfa Technology's degradable material technology has successfully passed the preliminary evaluation of the second prize of the 2023 National Science and Technology Progress Award, indicating that its research and development strength of degradable materials has been recognized at the national level, and Kingfa Technology has taken the lead in realizing the industrialization of PA10T in the world, and is the only high-temperature semi-aromatic polyamide material that has passed the Rheinland bio-based certification, with leading performance in the industry.
For the future business development direction or strategy of the company, Kingfa Technology said that it will adhere to the strategic development policy of 100 billion yuan of "strengthening the middle, consolidating both ends, leading by innovation, and leapfrogging development", expand and strengthen the polymer materials business, give full play to the pillar role and anti-risk ability of the polymer materials business, guide the benign development of upstream and downstream business sectors, and promote the synergy of the whole industry chain. We will continue to do a good job in marketing innovation, technological innovation, operational innovation and organizational optimization, and play a synergistic and leading role. Focusing on the grand goal of 100 billion yuan of output value, we will coordinate the four major business sectors of modified plastics, new materials, green petrochemicals, and medical and health care to achieve sustainable and high-quality development. Work together to build a first-class R&D, marketing, supply and manufacturing platform, become a globally respected new material enterprise, and provide guarantee and support for national strategic materials.