“Science and Technology Innovation Board Daily”, Feb. 20 (Reporter Wu Xuguang) On the evening of February 19, polylactic acid manufacturer Haizheng Raw Materials released its 2023 performance report.

During the reporting period, Haizheng Raw Materials achieved total revenue of 753 million yuan, a year-on-year increase of 24.43%; realized net profit of 43.1129 million yuan, a year-on-year decrease of 8.37%; and realized net profit of 398.413 million yuan after deduction, an increase of 20.23% over the previous year.

Regarding the factors affecting business performance, Haizheng Raw Materials said that in the face of external macroeconomic influence and increased competition in the polylactic acid industry, the company adjusted its marketing strategy in a timely manner during the reporting period, and both sales and revenue grew in 2023; production capacity of the subsidiary Hainor was gradually released, and manufacturing capacity was strengthened. During the reporting period, the company's net profit declined due to a decrease in non-recurring profit and loss such as government subsidies, and net profit to the mother increased after deduction.

Regarding the application of the company's polylactic acid products in the downstream market, the director and secretary of Haizheng Raw Materials told the “Science and Technology Innovation Board Daily” reporter that currently, straws and lunch box products account for a relatively large share of customer applications, and subsequent growth such as 3D printing has considerable potential for growth.

Furthermore, the increase in revenue of Haizheng Raw Materials in 2023 is inseparable from an increase in production capacity. Referring to the production capacity of Haizheng Raw Materials polylactic acid resin, the director said that the company currently has a pure polylactic acid resin production capacity of 40,000 tons/year, and the Hainor Phase II 20,000 ton production line has already been put into use. Furthermore, the company's polylactic acid fund-raising project with an annual output of 150,000 tons is under construction. It is expected to be put into operation in the second half of 2024, further increasing the share of its products in the domestic market.

However, with the release of polylactic acid production capacity from Haizheng Raw Materials on a large scale, the price of polylactic acid products ushered in a downward trend.

Shanxi Securities pointed out in a research report that since 2023, due to increased competition in the polylactic acid industry, foreign manufacturers have adopted a low price strategy to enter the Chinese market. Polylactic acid import prices have dropped 10-15% compared to the same period last year, leading to a downward trend in domestic polylactic acid product market prices.

In order to actively seize the market, Haizheng Raw Materials adjusted product prices by a certain margin, causing the profit level of Haizheng Raw Materials's main business to decline year after year. From 2020 to 2022, the company's gross margins were 25.98%, 15.07%, and 13.38% respectively. As of the latest disclosed data in September 2023, the company's gross margin was 13.38%.

Regarding how to improve profit margins in the future, Haizheng Raw Materials said that the company will maintain stable profitability by reducing costs and increasing efficiency and optimizing the multi-grade polylactic acid product structure. Specifically, in terms of cost control, on the one hand, the polylactic acid production process is continuously optimized, production capacity is continuously expanded, and production costs are gradually reduced; on the other hand, the cost of terminal products is further reduced through composite modification of materials, etc.