China Xuyang Group: the performance continues to improve in 2021, and the high-view demeanor of coking is expected to continue.

On March 25, China Xuyang Group released its annual results for 2021. According to the data, the performance of Xuyang Group continued to improve in 2021, with operating income of 38.43 billion yuan, an increase of about 94.2 percent over the same period last year, and a gross profit of 5.53 billion yuan, an increase of 71.6 percent over the gross profit of 3.223 billion yuan in 2020, with a comprehensive gross profit margin of 14.4 percent. The net profit was 2.613 billion yuan, with a net interest rate of 6.8 percent, an increase of 58.1 percent over the net profit of 1.653 billion yuan in 2020; the basic profit per share was 0.61 yuan, an increase of 52.5 percent over the same period last year; and a final dividend of 6.3 cents per share was proposed.

As of December 31, 2021, the two pillar industries of Xuyang Group, coke and chemical industry, had achieved year-on-year growth, and their income had increased by 82.4% and 115.2% respectively. Among them, the coke business is the largest source of income, accounting for 41.4% of the total income.

As the world's largest independent coke manufacturer and supplier, the number of industrial parks has expanded from four to eight, and actively promote in-depth cooperation and expansion in Jiangxi and Shanxi, and the industrial and sales layout covers most parts of the country. The coke business of Xuyang Group continues to perform strongly in 2021. During the reporting period, the coke sales of Xuyang Group increased by 600000 tons in 2021 compared with the same period last year. In addition, Xuyang Group continues to actively expand its production capacity, of which the coking project with an annual production capacity of 3 million tons is expected to be put into production from July this year to March 2023. In 2021, the Group also launched the implementation of overseas development strategy, actively responding to the national "Belt and Road Initiative" strategic initiative, together with Castle Peak Group, Delong Group, Nanjing Iron and Steel Group and Zhongwei Group to promote the overseas expansion of coke business. At present, the Group is holding and participating in three projects in Sulawesi Park, Indonesia, namely the Xuyang Weishan (Indonesia) new energy coking project with an annual production capacity of 4.8 million tons, which is expected to be put into production from 2023 to 2024. And annual output of 4.7 million tons of Detian Coking (Indonesia) project and 3.9 million tons of Jinxiang (Indonesia) new energy coking project.

Chemical industry is the second pillar industry of Xuyang Group. At present, Xuyang has completed the vertical integration layout from coke coking product production to fine chemical product processing. During the reporting period, the business volume of the company's main chemical products increased steadily, with a gross profit of 1.21 billion yuan for the whole year, an increase of 212.4% over the same period last year, and the price of chemical products rose as a whole. In terms of large chemical industry, China Xuyang Group, relying on the caprolactam product line, carried out the second phase expansion and transformation of the two caprolactam product lines in Cangzhou and Dongming, and increased R & D and industrial support, and the caprolactam production capacity will reach 750000 tons this year. On this basis, high-precision materials products are extended downstream to create the second national first and the world's leading industry leading product line besides the coking product line.

On the basis of steady and steady improvement of traditional coking and chemical business, Xuyang Group is still accelerating the layout of the whole hydrogen energy industry chain. In 2021, Xuyang successively established Xingtai Xuyang hydrogen Energy Co., Ltd., Hohhot Xuyang hydrogen Energy Co., Ltd., Yuncheng Xuyang hydrogen Energy Co., Ltd., and registered Baoding Xuyang hydrogen Energy Co., Ltd. on March 6, 2022, signed a strategic cooperation framework agreement for the development of hydrogen energy industry with the people's Government of Baoding City, and signed a framework agreement for hydrogen energy investment cooperation with the management committee of Baoding Xushui Economic Development Zone. The two sides have established long-term and stable strategic cooperation in hydrogen production, storage and transportation, construction and operation of hydrogen filling stations, and construction of application scenarios.

The year 2021 is the year when the policy of hydrogen energy industry in China has been comprehensively improved, from the subsidy policy of the central government to the planning rules of the local government. As the first batch of enterprises to be selected in the "list of key projects of hydrogen Energy Industry in Hebei Province in 2020", Xuyang Group, based on its own advantages, grasped the opportunity of hydrogen energy explosion growth under the background of carbon peak and carbon neutralization, and issued the hydrogen Energy Development Plan of Xuyang Group in June 2021. This paper makes a systematic plan for the hydrogen energy development of the group from four parts: the hydrogen energy orientation under the double carbon background, the hydrogen energy industry chain and the development path of typical enterprises, the development advantages of Xuyang hydrogen energy and the development planning of Xuyang hydrogen energy. It is estimated that the total external supply of Xuyang hydrogen energy business will exceed 20 million square meters in 2022.

To further supplement liquidity, Xuyang Group completed its first new share placement project after its listing in 2021 at a price of HK $5.90 per placing share, resulting in a net placement proceeds of HK $2.062 billion. 80% of the allotment is used to upgrade existing coke and coking products and fine chemical production equipment and environmental protection facilities to finance potential mergers and acquisitions of local and overseas coke enterprises, and 20% is used to supplement working capital. After the completion of the placement, the group's cash flow and shareholder structure were further optimized.

As business expansion leads to excellent financial performance, Xuyang is also popular in the capital market. The total shareholding and market capitalization of Hong Kong stocks on December 31, 2021 are 41 times and 75 times higher than those on December 31, 2019. At the same time, in March this year, Xuyang Group was adjusted from small stocks to medium-sized stocks in the Hang Seng Composite Index and was included in the Hang Seng large and medium-sized stocks (investable) Index. It means that the market capitalization, stock liquidity, business performance and financial position of Xuyang Group have reached a high level. In addition, since 2021, a number of major shareholders and senior executives have frequently increased their holdings of the company's shares, which undoubtedly demonstrates their confidence in Xuyang Group.

According to the research report of CITIC Securities, under the background of environmental protection and capacity removal in the coke and chemical industry, the company's product prices are expected to be high and profits are expected to remain high. At the same time, the company is actively expanding into the field of hydrogen production, and the cost advantage of hydrogen production is obvious, which is expected to open a new growth point for the development of "double carbon".

In the future, while achieving steady growth, Xuyang Group will gradually increase its overall investment in trade and operation management services, increase the layout of national and global markets, and continue to show Xuyang's growth potential and long-term value to the global capital market.