Per reporter: Jin Zhe Per editor: Wen Duo
Although it has only been listed for 4 days, the shares of the sub-new stock Lichen Industrial (001218, SZ) are not calm at all. On October 20, Lichen Industrial reported closing at 49.93 yuan / share, down 5.93%, and even touched the drop stop in the early session of the day.
Generally speaking, new stocks are sought after in the early stages of listing, but Lichen Industrial only recorded a 44% increase in the first trading day. After that, Lichen Industry fell for two consecutive trading days, and after the close of the market on the 20th, it was not far from the issue price of 45.51 yuan.
As for the reasons why the stock price of Lichen Industry continued to decline after its listing, a daily chemical industry person who did not want to be named analyzed that this was related to the company's business structure and growth. Lichen Industry belongs to the daily chemical industry, the product itself is fiercely competitive, the profit is not high, and it is a traditional mature industry, with limited imagination space.
<h2>It fell for three consecutive days and fell by more than 25%.</h2>
"The first time I won the lottery, I encountered two drops and stoppeds, and I didn't experience the joy of new stock listing." Mr. Wang, who signed Lichen Industry, saw the profit figures on the account and told reporters with some depression that his psychological expectation was to earn more than 10,000 yuan, but after several consecutive days of decline, the profit has shrunk to more than 2,000 yuan.
The next day of listing continued to decline, and the debut of Lichen Industry also made many investors express dissatisfaction. Lichen Industrial staff also said in an interview with the media on the 19th that the company's fundamentals have not changed, and there is no major negative news, mainly because the floating capital is speculating.
On the evening of October 19, Lichen Industrial issued an announcement on the change in stock price (as shown in the chart below).
Image source: Screenshot of the announcement
But the effect is not obvious. Today (20), Lichen Industrial once again touched the drop stop, and finally closed at 49.93 yuan / share. In the past three trading days, Lichen Industry has fallen by more than 25%, and the total market value has shrunk from 5.9 billion yuan on the first day of the opening to 4.49 billion yuan.
According to the data, the main business of Lichen Industry is the research and development, production and sales of surfactants and detergents, and the customers (brands) served include Procter & Gamble, Blue Moon, Swarco, Bawang, Tihua Zhixiu, Colgate, etc. On the one hand, the company's detergent business produces its own brand of washing products such as "Horse Head", "Guanghui", "Beihua", "Yisui Li", etc., mainly in Hunan Province to achieve sales; on the other hand, it produces laundry detergent and liquid detergent for customers such as Procter & Gamble, Yihai Kerry, and Huangbai Cat in the OEM model.
At present, the production and sales of surfactants in Lichen Industry rank among the top three in the domestic industry, and it is one of the few enterprises in China that can participate in the international market competition of surfactants required for high-end washing.
According to the prospectus, Lichen Industry achieved operating income of 1.207 billion yuan in the first half of 2021, an increase of 20.94% compared with the same period of the previous year; and achieved a net profit of 94.9953 million yuan, an increase of 12.38% compared with the same period of the previous year. Lichen Industry expects that the operating income in the first three quarters of this year will increase by 3.69% to 15.88% year-on-year, and the net profit after deducting non-profit will change by -5.97% to 5.78%.
<h2>Raw materials account for more than 90% of production costs</h2>
As a fine chemical enterprise, the main product of Lichen Industry is surfactant, which plays a cleaning role in washing products, and is the main raw material for washing powder, shampoo, shower gel, hand sanitizer, laundry detergent and other washing products. According to the prospectus, from 2018 to 2020, the proportion of surfactant business revenue to main business income reached 88.89%, 89.91% and 90.35% respectively.
In addition to the surfactant business, Lichen Industry also operates the production and sales of detergents, including washing powder, liquid detergent, hotel detergents, etc., on the one hand, it produces its own brand detergents, mainly sold in Hunan Province, and on the other hand, it produces laundry detergent and liquid detergent for customers such as Procter & Gamble, Yihai Kerry, and Huangbai Cat in the OEM model. From 2018 to 2020, the sales of detergents accounted for 11.11%, 10.09% and 9.65% respectively.
Image source: Screenshot of prospectus
According to the situation of each sales region over the years, the revenue contributed by South China and East China has accounted for more than 70% of Lichen Industrial's revenue over the years, while north China, northwest China and northeast China have rarely seen more than 0.5%.
The "Daily Economic News" reporter noted that although the top ten customers of Lichen Industry are not lacking in well-known enterprises, and the revenue contributed by the top ten customers is close to 50%, because it mainly relies on the OEM model, the profitability of Lichen Industry is not strong.
According to the prospectus, from 2018 to 2020, the proportion of raw materials in the production cost of Lichen Industry reached 94.75%, 94.44% and 94.69% respectively. Lichen Industry also mentioned that due to the impact of upstream natural oil and oil price fluctuations, the company's main raw material purchase prices have fluctuated significantly in recent years, which has an important impact on product prices. If the company fails to maintain good product competitiveness and fails to respond reasonably and effectively in terms of product sales pricing, raw material procurement strategy and inventory control, it will have a material adverse impact on the company's operating performance.
"The market buys or not mainly depends on whether the company has growth, Lichen Industry's business is more focused on the B-end, the C-end income contribution is less than 10%, and it is also a highly competitive daily chemical consumer goods, the profit is not high, there is not much imagination for investors." The above-mentioned daily chemical industry insiders said that if there is no bargaining power in raw materials, Lichen Industry will not be able to do too much in profitability. And relatively profitability of the better private brand of washing products, it is still a regional brand. If this industry wants to be a brand, the investment is also large, the cycle is also long, and there are mature giants, and it is not a matter of one or two sentences to have explosive growth. So from the current point of view, it will not give too high a valuation.
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