Jinhong Gas (688106) Institutional Research and Investor Q&A Selection (20211102)

First, Gong Xiaoling, secretary of the board of directors, introduced the recent situation of the company

Suzhou Jinhong Gas Co., Ltd. was established in 1999, listed on the Science and Technology Innovation Board in 2020, stock code: 688106, specializing in gas research and development, production, sales and service integration solutions of environmentally intensive gas integrated suppliers. At present, the company has established a rich category, reasonable layout, reliable distribution of gas supply and service network, can provide electronic semiconductors, medical health, energy conservation and environmental protection, new materials, new energy, high-end equipment manufacturing and other industries to provide customers with special gases, bulk gas and natural gas three categories of more than 100 kinds of gas products, is an important strategic partner in various industries, sales outlets in East China as the center throughout the country.

In the first three quarters of 2021, in accordance with the strategic planning and business plan formulated by the board of directors, the company's management strengthened its own brand advantages, continuously increased the research and development of new products, optimized the product structure, actively developed the market, improved market share, and strengthened quality and internal control management. During the reporting period, the operating income was 1.234 billion yuan, an increase of 37.17% over the same period of the previous year; the net profit attributable to the shareholders of the listed company was 126 million yuan, down 11.96% from the same period of the previous year, mainly due to the increase in raw material prices and talent reserves to support the rapid development of the company. At the end of the reporting period, the net cash flow from operating activities was 335 million, an increase of 35.32% year-on-year, in tandem with the growth of revenue; total assets were 4.126 billion, an increase of 19.40% over the end of 2020.

During the reporting period, the company successfully trial-produced electronic grade ethyl orthosilicate for integrated circuits, and successfully acquired three companies in Changsha Mande, Shanghai Shennan and Suzhou Qidu on the basis of the first half of the year, and laid out two air separation projects in Siyang, Jiangsu and Suzhou Suzhou Phase Cooperation Zone.

The company's future strategic development plan: increase our vertical development efforts, increase R & D investment, domestic substitution to fill the domestic gap, it can be clearly seen that the proportion of our R & D investment has increased significantly. Firmly promoting horizontal layout and cross-regional expansion, we are undergoing rapid mergers and acquisitions and integration, providing timely and convenient quality services for our customers, and building the Jinhong brand into the industry's first national brand.

2. Q&A session

1. The cash flow of the gas industry is good, why are cooperative companies willing to be acquired?

A: Mainly because the founder of the acquired company is older and the second generation is reluctant to take over.

2. Is the entry threshold for the gas filling station project to build a new land plant high?

A: The threshold is relatively high, because the gas filling station project has the attribute of dangerous chemicals, and the government is more cautious when approving new projects.

3. Why is the company's account period short and the operating cash flow is very good?

A: There are mainly two reasons, one is because the company's channels sink deeper, mainly sold directly to end customers, supplemented by sales to gas companies; second, the company has good quality and excellent service in terms of gas purity and pressure, and has won customer recognition.

4. After the company's merger and acquisition of the new bulk gas company, how long can it integrate to achieve a relatively good profit level?

A: The time required for integration is related to the degree of standardization of the target itself, 2-3 months with a better foundation, 6 months for worse ones, and longer for technical changes on hardware.

5. What are the main areas of the company's planning layout?

A: Focus on the layout of East China, followed by the central region, Sichuan-Chongqing region, Pearl River Delta region, Beijing-Tianjin-Hebei region.

6. How is the company's layout of air separation capacity considered?

A: In order to ensure the safety of the company's upstream supply chain, the company strategically laid out air separations, increased the self-production rate of bulk gases, and focused on locking in long-term stable profits.

7. How well do integrated circuit customers recognize Jinhong?

A: The company's certified integrated circuit customers generally have a relatively high evaluation of Jinhong.

8. Why is the gross profit of the company's special gas products much higher than that of its peers?

A: The company's special gas products mainly occupy the market through direct supply to end customers.

9. Is the gross profit of special gases higher than that of bulk gases?

Answer: Not necessarily, it depends on the advanced nature of specific special gas products, compared with larger gas products, special gas products required for special cylinders and valves with high input and low turnover, and the gross profit margin of bulk gases can be very high.

10. Does the company have any plans to issue bonds or issue additional bonds?

A: In considering the strategic planning, the company currently has abundant funds, healthy cash flow, and a large amount of bank credit available.

11. Is the company's M&A project due diligence entrusted to a third party?

A: At present, the company has a set of strict M&A risk control system, and the project due diligence is mainly based on the company's functional departments, including auditing, production, environmental security, legal affairs, etc., they know more about the industry than third parties, and also save due diligence costs.

12. In which areas of the company's market growth is faster?

A: It has grown rapidly in integrated circuits, pharmaceuticals and food, and new materials.

Attached: Event Information Form

Categories of investor relations activities

■ Target-specific research □ analyst meetings

□ media interviews □ performance briefings

□ press conference □ roadshow event

□ Site Visit □ Other (please specify)

Name of participating unit and

Person name

BOCOM Schroder Fund Sun Jieyan, Shenwan Lingxin Fund Gu Wu, Southern Fund Zhang Yanmin, Industrial Asset Management Chen Yalong, Tianfeng Securities Tang Jie, Anxin Securities Liu Yi, Anxin Securities Wu Haibo, Anxin Securities Gao Hongyu

Time

November 2, 2021, 9:30 a.m.

place

Company 309 conference room

The name of the company receptionist

Jin Xianghua and Gong Xiaoling

List of attachments (if any)

date

November 2, 2021

(This article was completed by the Securities Times e company writing robot "Kuaishou Xiaoe".) ）