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[enterprise Annual report] Yongjin Stock: fierce Competition in Industry High-end customized Cold rolled stainless Steel will become a New demand Point
Apr 21,2020 16:25CST
The content below was translated by Tencent automatically for reference.

SMM4, 21 Jun: recently, Yongjin shares released its 2019 annual report, the company's stable operation in 2019, operating income of 15.8277648 billion yuan, attributable to the shareholders of listed companies net profit of 332.8177 million yuan, operating income and the net profit of shareholders of listed companies are slightly positive growth compared with 2018, of which operating income increased by 1.13%, attributable to the shareholders of listed companies increased by 0.48%. By the end of 2019, the company's net assets and total assets had increased by a large margin, with total assets and net assets increasing by 72.01% and 101.12% respectively over the same period last year, mainly due to the public offering of shares to raise funds.

Business Summary

The company's main business is cold-rolled stainless steel strip research and development, production and sales, products cover precision cold-rolled stainless steel strip and wide cold-rolled stainless steel strip two major areas. The company was established in August 2003, after years of efforts, by the end of 2019, has developed into a well-known professional stainless steel cold rolling enterprise with an annual output of more than 1.2 million tons.

The company's main products are divided into two categories:

Precision cold rolled stainless steel strip: stainless steel strip with high quality hot rolled or cold rolled stainless steel strip as raw material, rolled by high precision and reversible multi-roll cold rolling mill at room temperature, after bright annealing to achieve the required mechanical properties, and then rolled for many times to achieve the target thickness, finally, after cleaning, drawing and straightening or leveling, stainless steel strip with special functional requirements. At present, the thickness of this kind of products produced by the company is mainly 0.08-1.5mm, and the width is mainly below 820mm. Precision cold rolled stainless steel strip has the characteristics of higher performance, higher dimensional accuracy, better shape and higher quality surface, and is widely used in household appliances, environmental protection equipment, electronic information, automotive accessories, kitchen utensils, chemical industry, battery and other downstream industries.

Wide cold rolled stainless steel strip: refers to the cold rolled stainless steel strip which is rolled to the target thickness at room temperature, annealed by bright annealing or pickling to achieve the required mechanical properties, and flat and with a width of more than 1000mm. Wide cold rolled stainless steel strip has the characteristics of more basic product positioning, greater market circulation, more downstream processing and circulation links, wider application range of the industry and so on. It is widely used in building decoration, daily necessities, household appliances, auto parts, machinery and equipment, environmental protection equipment, hardware, instrumentation, elevators and other downstream industries.

Major events in the management of enterprises

Guangdong Yongjin is advancing steadily, and the distribution of domestic production capacity is becoming more and more perfect.

Since the establishment of Guangdong Yongjin in February 2018, the company has continuously promoted the construction of Guangdong Yongjin annual processing 680000 tons of wide precision stainless steel strip project, experienced environmental assessment, engineering construction, equipment installation and commissioning. By April 1, 2020, the first phase of the annual processing of 280000 tons of wide precision stainless steel strip project has been formally put into production. Located in the Port Industrial Park of Yangjiang High-tech Zone, Guangdong Province, the industrial park has initially formed an industrial cluster based on high-end stainless steel, and has Yangjiang Port to provide convenient waterway transportation for enterprises in the park. The steady and orderly progress of Yongjin in Guangdong is in line with the established capacity planning requirements of Yongjin shares, and is of great significance for Yongjin shares to improve the cold rolling capacity layout of stainless steel in China.

Steady compliance of fund-raising projects

The company raised investment project "annual processing 75000 tons of ultra-thin precision stainless steel strip project", using its own funds to start construction in October 2018, steady compliance, has ordered the construction needs of straightening machine, horizontal bright annealing furnace, cleaning machine, slitting machine. By the end of 2019, the equipment purchased by the company's own funds has begun to enter the installation and commissioning stage, and some of the products will produce benefits in the second quarter of 2020. The installation and commissioning of these equipment has laid the foundation for the timely completion of the investment project.

Vietnam Yongjin was set up, and the overseas layout was initially effective.

On April 10, 2019, Yongjin, Vietnam, the first overseas production subsidiary of Yongjin Co., Ltd., was established. At present, the company is making every effort to promote the environmental assessment and plant construction of Yongjin in Vietnam. Construction is expected to start in June 2020, the construction period of 18 months, an additional annual processing capacity of 250000 tons of precision cold rolling production line. After the completion of the project, Vietnam Yongjin will focus on Vietnam's domestic market while actively opening up Southeast Asia, Europe and other international markets, which is of great significance for Yongjin products to break through the international anti-dumping barriers and enter the international market. The establishment of Yongjin in Vietnam marks a step forward in the internationalization of the capacity distribution of Yongjin shares, which is the need of the strategic development of the internationalization of Yongjin shares.

Main business sub-industry, sub-product, sub-regional situation

In 2019, the overall operation is stable, revenue is slightly positive growth, the gross profit margin of the main business of this report is 5.49%, down 0.4 percentage points from the previous year, mainly due to increased market competition, in order to maintain a higher market share, adjust the sales strategy, so that the price difference between purchase and sale has been slightly narrowed.

The company's production and sales increased slightly, production and marketing was basically balanced, the production and marketing rate was 100.35. The company implements the policy of fixed production by sales, and the overall inventory is maintained at a low level.

Analysis table of production and sales volume

Industry pattern and trend

China's economic growth in 2020 is facing greater downward pressure, especially the epidemic has further increased the downward pressure on China's economy, coupled with the global spread of the epidemic has a significant adverse impact on international logistics and trade. However, 2020 is the year of building a well-off society in an all-round way and ending the 13th five-year Plan. In the face of the increasing downward pressure on the economy, the Chinese government is expected to increase investment in infrastructure and reduce the financing costs of enterprises to stimulate economic growth. After the outbreak, China's economy will revive and continue its previous growth. Therefore, although there is a great downward pressure on the macro-economy in 2020, the range can be controlled, and the depth and long-term adverse effects on China's economy can be controlled. As the government is likely to increase investment in infrastructure and take measures such as reducing financing costs to ensure macroeconomic stability at a manageable level, demand for China's stainless steel production in 2020 will continue the high demand of previous years and may fluctuate slightly while overall demand remains high.

From the point of view of the domestic market, as the largest stainless steel producer in the world, the output of stainless steel crude steel in China has accounted for more than 50% of the total output of stainless steel crude steel in the world. At the same time, China is also the world's largest stainless steel consumption market, accounting for more than 40% of the world's total stainless steel consumption (source: ISSF 2018 data).

By the end of 2019, according to the statistics of the National Bureau of Statistics, the urbanization rate in China is 60.60%, which is still far behind the urbanization rate of 80% to 85% in developed countries. China's urbanization level will continue to advance in the next few years. With the improvement of the level of urbanization and the continuous improvement of people's living standards, the demand for stainless steel products such as stainless steel pipes and stainless steel roofs will also be greatly improved in people's daily life. The Green Building Evaluation Standard (GB/T50378-2019), a new national standard implemented on August 1, 2019, requires the indoor use of stainless steel pipe or copper pipe, indicating that stainless steel pipe has become the main choice for indoor water supply pipe, which will further stimulate the demand for stainless steel products such as stainless steel pipe. Therefore, in the future, with the rapid development of the national economy and the continuous improvement of people's living standards, as well as urbanization construction, manufacturing upgrading, consumption level upgrading and stainless steel application field expansion to form a new demand growth point, China's stainless steel demand as a whole to maintain a high and stable growth.

Further Development of Cold rolled stainless Steel towards High end and customization

With the transformation and upgrading of China's industrial structure, the application field of high-end stainless steel continues to expand. According to the published "Iron and Steel Industry Adjustment and upgrading Plan (2016-2020)", the state will focus on supporting the research and development and industrialization of high-end steel products needed for major technical equipment in high-tech ships, marine engineering equipment, nuclear power, advanced rail transit, electric power, aerospace, machinery and other fields, and continue to increase effective supply. Therefore, the cold rolled stainless steel industry will further develop in the direction of higher end and customization.

Development trend of Cold rolled stainless Steel Industry

Throughout the development of the stainless steel industry in recent years, the cold rolled stainless steel industry has shown the following trends in recent years: overall, the competition in the industry is becoming increasingly fierce, originally not engaged in stainless steel cold rolling upstream and downstream enterprises began to dabble in the stainless steel cold rolling field, for example, Delong Iron and Steel Co., Ltd. extended from focusing on hot rolling to cold rolling; In the field of precision cold rolled stainless steel strip, although it is faced with a relatively high technical and capital threshold, stainless steel cold rolling enterprises in the industry actively carry out the research and development of high end precision cold rolled stainless steel strip in order to expand to the high end cold rolling field. For example, Ningbo Baoxin stainless Steel Co., Ltd. has moved from wide width cold rolling of stainless steel to precision cold rolling in recent years. At the same time, the industry leaders with wide width and precision cold rolling industry, such as Shanghai Shida Precision stainless Steel Co., Ltd., Yongjin Stock and Ningbo Qiyi Metal Co., Ltd., continue to strengthen technology and research and development, and further consolidate and expand market share; low-end precision cold rolled stainless steel strip enterprises in the industry have been increasingly unable to meet the upgrading quality needs of downstream customers, and will gradually withdraw from the market competition in the future.

In addition, due to the downstream industries of industrial upgrading and product upgrading faster and faster, for the upstream wide cold rolled stainless steel strip enterprises, will continue to strengthen with its upstream smelting and hot rolling manufacturers and downstream stainless steel application customers research and development cooperation, enhance their own customized processing capacity, actively promote the upgrading of industry production processes and technical equipment, to meet the more and more high-end needs of downstream customers.

The trend of in-depth Cooperation and Industry Integration in the Upper and Lower reaches of the Industry

Under the background of the continuous promotion of supply-side reform in the iron and steel industry, both upstream stainless steel smelting and hot rolling manufacturers and downstream stainless steel cold rolling manufacturers are seeking closer cooperation between upstream and downstream stainless steel cold rolling manufacturers. For the upstream stainless steel smelting and hot rolling enterprises, ensuring the long-term stable smelting and digestion of hot rolling capacity is its long-term market strategy, while for stainless steel cold rolling enterprises, the stable supply of high-quality hot rolling raw materials is an important guarantee for the sustainable and stable operation of enterprises in the industry.

Company 2020 goal

The main work target in 2020 is to strive to achieve the expected operating income of 18.58 billion yuan to 21 billion yuan in 2020, an increase of 17% to 32.68% over the same period last year, and the net profit of listed companies is expected to be 365 million yuan to 425 million yuan, an increase of 9.67% to 27.70% over the same period last year. The company's comprehensive strength and market competitiveness have been further enhanced, and the international influence has initially emerged.

In 2020, the company will continue to actively and steadily promote the construction of the investment project, and properly tilt the project in terms of personnel arrangement, work focus, and so on. In 2020, the company will continue to purchase important equipment such as cold rolling units, bright return units, leveling machines, and so on. We will strive to complete the acceptance of the first production line by the end of the year, so as to lay the foundation for the economic benefits of the project as soon as possible.

The smooth establishment of Vietnam Yongjin is the first step for the company to move towards an international industrial layout. In 2020, the company will continue to respond to the national "Belt and Road" development strategy and continue to promote the existing Vietnam Yongjin project. strive to pass the approval procedures such as environmental assessment of Vietnamese government departments at an early date, and strive to start the construction of the project as soon as possible. In order to implement the company's international development strategy, the company will always pay attention to the global stainless steel cold rolling industry development trend and consumption trend, and strengthen the research on the global stainless steel industry development trend and consumption trend. When the time is ripe and the conditions are available, the company timely distributes stainless steel cold rolling production projects in other overseas areas, and continues to explore the global layout of the company's stainless steel cold rolling industry.

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