Zhejiang Long Sheng (600352): Half Year Net Profit Increased By 670 Million Core Business Global Leading

The core business of the world is leading, and Zhejiang Longsheng's profitability has been substantially released.

In the first half of this year, Zhejiang Longsheng realized 9 billion 649 million yuan, although it grew by only 5.25% last year, but it has hit a new high of half a year since its listing. The corresponding net profit (net profit attributable to shareholders of listed companies) is 2 billion 532 million yuan, an increase of 674 million yuan over the same period last year.

Zhejiang Longsheng's business performance is high, which is related to the rise of its main product prices. Affected by the rectification and rectification of industry companies, prices of dyes and intermediates have risen all the way. As a leading industry, Zhejiang Longsheng has benefited a lot. In the first half of this year, the company consolidated gross margin of 46.98%, up 2.7 percentage points over the same period last year.

From the perspective of operating quality, the company accounts receivable in the first half of this year was 3 billion 589 million yuan, which was basically the same as that of the same period last year. The inventory level of the company was only a slight increase compared with the same period last year. Correspondingly, in the first half of the year, the net cash flow of the company was 3 billion 14 million yuan, an increase of 1022.60% over the same period last year.

As a traditional chemical enterprise, Zhejiang Longsheng's debt paying ability is constantly increasing. By the end of June this year, the company's Monetary Fund was 4 billion 519 million yuan, an increase of 1 billion 19 million yuan over the same period last year. Its asset liability ratio was 55.06%, and it was 59.17% at the end of 2017.

It is worth mentioning that Zhejiang Longsheng has invested more and more in tackling key technical problems. As of now, it has nearly 1900 patents inside and outside the country. Related to this is that the company's main business has been the world's leading.

Net profit for six months is high

As a leading enterprise in the industry, Zhejiang Longsheng has made brilliant achievements in the first half of the year.

Zhejiang Longsheng was founded in 1970 and traded on the Shanghai Stock Exchange in August 2003. In the first year of operation, its operating income was 1 billion 129 million yuan. After 16 years of development, its operating income reached 19 billion 76 million yuan last year, an increase of 15.90 times. The corresponding net profit increased from 125 million yuan to 4 billion 111 million yuan, an increase of 31.90 times.

Semi annual report shows that 1 to June this year, Zhejiang Longsheng has achieved another success. Its operating income was 9 billion 649 million yuan, compared with 9 billion 168 million yuan in the same period last year, an increase of 5.25% over the same period last year. This level of revenue is the most brilliant in the semi annual report of the company listed in the past 16 years. The corresponding net profit was 2 billion 532 million yuan, compared with 1 billion 858 million yuan in the same period last year, an increase of 674 million yuan compared with the same period last year, an increase of 36.23%.

Net profit growth far exceeds operating income, resulting from rising gross margin of products.

In March this year, some large domestic dyestuff companies entered the phase of production stoppage. As Zhejiang Longsheng said, many enterprises in the dyestuff industry limited production and shut down, resulting in fluctuations in the supply of the entire industry, some of the raw material costs are also more volatile than in previous years. Against this background, the company's advantages are displayed. Its main intermediates industry has a high trade barrier, of which the global market concentration of resorcinol products is relatively high, and the price and sales volume of products are relatively stable.

In the first half of this year, the average price of dyestuff sales was 52 thousand and 900 yuan / ton, an increase of 19% over the same period, and the average selling price of intermediates was 42 thousand and 600 yuan / ton, an increase of 36% over the same period last year. The consolidated gross profit margin of the company was 46.98%, up from 44.28% in the same period last year, up 2.7 percentage points over the same period last year. However, the demand for downstream enterprises is decreasing due to the increasingly complex international trade environment. In the first half of the year, global sales of dyestuff and intermediates were 101 thousand and 300 tons and 55 thousand and 800 tons respectively, down 12% and 5% respectively.

Not only is the net profit increasing significantly, but also the quality of Zhejiang Longsheng's business is improving. In the first half of this year, its net operating cash flow was 3 billion 14 million yuan, compared with -3.27 billion yuan in the same period last year, an increase of 3 billion 341 million yuan, an increase of 1022.60%. The corresponding receivables and inventories, although operating income grew year-on-year, but the two basically did not grow.

Contrary to the sharp increase in net profit, Zhejiang Longsheng's solvency is improving. As of the end of 6 this year, the company's Monetary Fund was 4 billion 519 million yuan, an increase of 1 billion 19 million yuan compared with the same period last year, the debt needed to repay in the year was reduced by 48 million yuan, and the long-term debt was reduced by 1 billion 822 million yuan. The pressure of debt relief is significantly reduced. The financial cost can also be verified, which is 180 million yuan in the first half of this year, a decrease of 41 million yuan compared with 221 million yuan in the same period last year.

By the end of 6 this year, the assets and liabilities ratio of Zhejiang Longsheng fell to 55.06%, at the end of 2017, it was 5 billion 917 million yuan, and 4.11 percentage points in one and a half years.

There are nearly 1900 patents inside and outside the country.

With the sharp fluctuations in product prices, Longsheng business performance in Zhejiang has increased significantly, resulting from its industry leading edge.

Zhejiang Longsheng is the 500 largest private enterprise in China. It has been listed for IPO for 16 years. It has been focusing on the main industry for a long time. Currently, the textile chemicals business mainly consists of dyes and auxiliaries, and intermediates are mainly intermediates of two phenylene amine and resorcinol.

The company said in its annual report that the company has the advantages of complete technology, service, brand, channel, capacity, cost and technological innovation capability. Now it has become the world's largest producer of textile chemicals, with more than 300 thousand tons of dye production and an annual capacity of 100 thousand tons of auxiliaries, ranking first in the global market.

In fact, as early as 2010, Zhejiang Longsheng began to control the voice of the dyestuff industry after holding the global company through debt to equity swap. In the global dyestuff market, the company serves 7000 customers, accounting for nearly 21% of the world's market share and leading peers.

In terms of R & D, Zhejiang Longsheng also has strong strength. The company said it has a complete product development, process development, application services, sustainable development solutions technology research and development system. Up to now, the company has nearly 1900 patents inside and outside the country.

Under the support of technology, the implementation of the disperse dye water saving and reducing project has reduced more than 70% of the waste water and more than 90% solid waste emissions, and effectively promoted the market competitiveness of the disperse dye business. A series of key technologies of high salinity and high COD wastewater treatment, and the development of new green cleaning technologies for dye intermediates, can not only relieve environmental concerns, but also greatly reduce production costs.

In recent years, R & D expenditure has been increasing. From 2015 to 2018, R & D expenditures were 525 million yuan, 548 million yuan and 732 million yuan respectively, and 3.68 yuan in the first half of this year. As of the end of last year, the company's R & D staff was 601, accounting for 7.32% of the total number of employees.

It is worth mentioning that Zhejiang Longsheng is a forerunner in energy conservation, emission reduction and environmental protection. The company has built a dye intermediate sulphuric acid water reducing agent circular economy integration industrial park in Shangyu production base in Zhejiang, and built a zero emission high standard target, forming scale effect, synergy effect and environmental protection advantage.