Lithium battery material stock Lianchuang shares profit increased by more than six times in the first three quarters, HSBC Jinxin LuBin and Shanghai Investment Morgan Du Meng significantly increased their positions

Following the first year-on-year turnaround from a year-on-year profit in the middle of the report, the net profit of Lianchuang Shares in the first three quarters increased by more than 6 times.

On October 19, Lianchuang released the third quarter report. According to the announcement, the company's operating income in the first three quarters was 1.236 billion yuan, a year-on-year decrease of 9.85%, and the net profit attributable to the shareholders of the listed company was about 163 million yuan, an increase of more than six times year-on-year.

Revenue decreased year-on-year, but net profit increased by more than 6 times, which was driven by high gross margin growth. The announcement shows that in the first three quarters, the gross profit margin of Lianchuang shares sales increased by 195.8% year-on-year, the return on net assets increased by more than 7 times year-on-year, and the earnings per share increased by 668.85% year-on-year.

The main business of Lianchuang Co., Ltd. is chemical materials and digital marketing, and the chemical business is mainly the research and development, production and sales of new fluorine-containing materials and polyurethane new materials. Since the beginning of 2019, Lianchuang has begun a strategic transformation and has continuously divested Internet assets. The third quarterly report said that the company has sold 100% of the equity of Shanghai Quyue through a listed sale and has signed a "property rights transaction contract" with the transferee. After the completion of this transaction, the company no longer holds the equity of Shanghai Quyue.

After divesting the Internet digital marketing business, which has been losing money, Lianchuang Co., Ltd. focused on the research and development, production and sales of new chemical materials and new environmental protection materials. Hitched a ride on the express train of new energy, its operating conditions continued to improve.

The company's performance has grown rapidly, mainly affected by the market situation of new energy lithium battery material products. Among them, the downstream demand for the main product R142b has increased significantly, resulting in a sharp increase in its selling price and an increase in gross profit. At the same time, the holding subsidiary Huaan New Material PVDF (Polyvinylidene Fluoride) project has been put into production, which is expected to bring new profit growth points to the company. From the fourth quarter of 2021, Huaan New Material's contribution to the company's performance will increase simultaneously.

PVDF (polyvinylidene fluoride), downstream applications mainly include lithium batteries, photovoltaics and coatings; R142b is the raw material for the production of PVDF, and each ton of PVDF consumes about 1.8 tons of R142b. As an enterprise that lays out these two major materials at the same time, Lianchuang shares have attracted the attention of the market market.

According to Baichuan Yingfu data, in 2020, the demand for PVDF in the fields of coatings, lithium batteries, photovoltaic back films, injection molding and water treatment membranes in the country was 17,700 tons, 0.96 million tons, 0.39 million tons, 10,100 tons and 0.67 million tons, respectively, totaling 48,000 tons. Among them, coatings are the largest downstream of PVDF, accounting for 36.94%, and lithium batteries and photovoltaics are the fastest growing areas.

Recently, driven by the rapid growth of downstream demand for lithium batteries and photovoltaics, the supply of PVDF and its raw material R142b (difluorochloroethane) is very tight, the supply and demand are seriously mismatched, and the price of products has risen sharply. According to Baichuan Yingfu data, the average price of R142b in the first quarter was 23,000 yuan / ton, and the average price in the second quarter was 41,200 yuan / ton, an increase of 79% month-on-month. As prices have risen, so have the share prices of related companies.

In the domestic market, Dongyue Group is the largest supplier of domestic PVDF, and the recent stock price has doubled, and its subsidiary Huaxia Shenzhou has a production capacity of 10,000 tons; Juhua shares have a production capacity of 10,000 tons (of which 1,000 tons of lithium battery bonding PVDF); Putailai Holding Company Ruyuan Dongguang has 2,000 tons (coating capacity). Since the beginning of July, the share price of Lianchuang shares has increased by more than 4 times, and reached a historical peak of 29.9 yuan per share on September 23.

The industry boom has attracted heavy positions in public funds. According to the third quarterly report, among the top 10 shareholders with unlimited sale conditions of Lianchuang Shares, the DYNAMIC strategies of HSBC Jinxin low-carbon pioneer and HSBC Jinxin managed by Lu Bin have exceeded 23 million shares, and the two-year holding period of Shanghai Investment Morgan Emerging Power and Shanghai Investment Morgan Vision managed by Du Meng has held nearly 21 million shares, and the four funds have entered the top ten shareholders with unlimited sale conditions; in addition, SDIC UBS New Energy and GF Technology Innovation are also among the top ten.

This article originated from Blue Whale Finance