① The asset-liability ratio of Yonghe Corporation is far higher than that of its peers, causing anxiety among some investors; ② The company has stated that the increase in liabilities is due to the company's significant expansion of production capacity after going public, and that it has taken various measures to cope with the debt risk; ③ The various links in the industrial chain have varying degrees of warmth, and the company's Q1 performance recovery is limited.
Since the beginning of this year, there have been frequent news about the fluorine chemical industry chain, attracting increasing market attention. Headquartered company, Yonghe Shares (605020.SH), has raised concerns such as "increase in asset-liability ratio" and "future prospects of the main business", which have aroused a lot of questions from investors attending the performance presentation held this morning.
In response to doubts raised by investors such as "company's asset-liability ratio surpassing 60% in 2024" and "drastic increase in both short-term and long-term borrowing", Jiang Genfa, the Chief Financial Officer of the company, stated that the increase in liabilities was mainly due to project construction. To control risks, management has adopted multiple measures, including setting up debt assessment indicators, temporarily suspending some large-scale project construction, and supplementing working capital through private placements.
Financial data shows that as of the end of the first quarter of this year, Yonghe Shares had an asset-liability ratio of 61.55%, far exceeding comparable companies such as Zhejiang Sanmei Chemical Industry (603379.SH), Zhejiang Juhua (600160.SH), and Zhejiang Zhongxin Fluoride Materials (002915.SZ).
The reporter from CaiLian News noticed that since the company went public in 2021, it has been rapidly expanding its production capacity. The core project, the "Shaowu Yonghe new environmental refrigerant and fluorinated polymer and other fluorine chemical production base project" (hereinafter referred to as Shaowu Yonghe), has a total investment of up to 1.9 billion yuan. The company was financing the construction through self-owned funds and raised funds, and by the end of 2023, the project's progress had exceeded 80% and entered the concentrated production stage.
On the other hand, Yonghe Shares has been continuously pushing forward the "Baotou Yonghe New Material Co., Ltd. new energy material industrial park project" (hereinafter referred to as Baotou Yonghe), with a total investment of nearly 5.5 billion yuan. The company launched a 3.5 billion yuan private placement project in 2023 to raise funds for the project. However, the progress has not been smooth, and after multiple revisions, the private placement plan has been reduced to only 1.736 billion yuan. As of the end of 2023, the Baotou Yonghe project relied on the company's self-raised funds to operate, and the project's progress was less than 5%.
Frequent financing activities have raised some concerns. During the presentation, an investor raised a question: "What is the reason why the Shaowu Yonghe project has not made a significant contribution to the company's performance so far?" In response, Secretary of the Board, Cheng Wenxia, stated that Shaowu Yonghe had adopted some new processes and equipment, and that the debugging time in the early stages was long. Climbing up the production capacity curve needed time. In addition, the weak industry conditions in 2023 also had a negative impact on the project. She also emphasized that the production and operation of Shaowu Yonghe is gradually improving, but did not disclose when the project will become profitable.
The good news is that since the landing of the quota for third-generation refrigerants last year, the refrigerant industry has finally ushered in a "rising price and increased volume" boom, driving the performance of the entire industry chain to rebound in the first quarter. In Q1 of this year, Yonghe Shares achieved a net income of approximately 37 million yuan attributable to the mother, a year-on-year increase of 27.38%. However, there is still a significant gap in profits compared to the first quarters of 2021 and 2022.
In fact, the performance of various links in the fluorine chemical industry chain during this rebound was not balanced, which to some extent affected the overall layout of Yonghe Shares' industry chain.
Since the beginning of this year, due to limited supply, the price of upstream fluorspar has been persistently high, putting some pressure on downstream companies such as Yonghe Shares. Looking at the middle and downstream links where the company is heavily invested, except for the obvious improvement in the refrigerant sector, core businesses such as fluorinated high polymer materials (including PVDF, PTFE, etc.) and hydrogen fluoride are in a slump. Due to sluggish downstream demand, their profits have been continuously eroded by the upstream sector.