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Cailianshe News, August 21st (Reporter: Wu Chao) Due to operational pressures facing the blade, fiberglass, and lithium battery separator businesses, Sinoma Science & Technology (002080.SZ) announced in its semi-annual report released tonight a decline in net profit of over 60%. Cailianshe News reporters noted that the revenue and gross margin of the three businesses mentioned above have all declined year-on-year.

The financial report shows that in the first half of the year, Sinoma Science & Technology achieved an operating income of 10.54 billion yuan, a year-on-year decrease of 14.86%; the net profit attributable to shareholders of listed companies was 0.46 billion yuan, a year-on-year decrease of 66.6%; the net profit after deducting non-recurring gains and losses was 0.23 billion yuan, a year-on-year decrease of 81.25%.

In addition, Sinoma Science & Technology also faces a problem of cash outflow. The net cash flow from operating activities in the first half of the year was -20.5335 million yuan, compared to 0.363 billion yuan in the same period last year. The company explained that due to the year-on-year decrease in revenue, the cash flow from operating activities has also decreased.

Currently, Sinoma Science & Technology is focusing on three major tracks: special fibers, composite materials, and new energy materials, proposing the industrial development path of "strengthening blades, optimizing fiberglass, and expanding lithium battery separators." However, from a product perspective, all main business operations are facing different degrees of decline.

In the aspect of wind turbine blades, according to the national energy administration's national electrical industry statistics, there was a 12.4% year-on-year growth in newly added wind power installation at 25.84GW in the first half of the year. However, the short-term price of wind turbines remains low, and the profitability of enterprises in the wind power industry has declined.

In the first half of the year, the holding subsidiary of Sinoma Science & Technology sold a total of 7.52GW of wind turbine blades, a 21.6% year-on-year decrease; achieving wind turbine blade sales revenue of 2.83 billion yuan, a 34.13% year-on-year decrease; with a gross margin decreasing by 1.65% year-on-year. However, the company anticipates that in the second half of the year, wind power projects will be accelerated, and the release of wind turbine blade demand will lead to an improvement in profitability.

Fiberglass is the product that contributes the most to Sinoma Science & Technology's revenue. However, since last year, the industry has also faced problems such as supply and demand imbalance, inventory increase, and price decline. Sinoma Science & Technology proposed that in the first half of the year, the fiberglass industry has undergone multiple rounds of price hikes, ushering in a window period of volume and price recovery, and inventory has decreased. However, prices have not yet recovered to the level of the same period last year, and the industry's profitability has declined year-on-year.

In the first half of the year, the wholly-owned subsidiary, Taishan Fiberglass, achieved a production volume of 0.647 million tons and a sales volume of 0.681 million tons of fiberglass and its products, a year-on-year growth of 7.2%. The production-sales ratio was 105%, and the destocking effect was significant. Sales revenue was 3.855 billion yuan, a year-on-year decrease of 6.54%. The gross margin decreased by 9.69% compared to the same period last year.

The lithium battery separator industry is the key industry that Sinoma Science & Technology focuses on cultivating and developing. However, with the large-scale release of domestic lithium battery separator production capacity, there is a temporary supply-demand imbalance, and there is intense competition in cost and price. Sinoma Science & Technology stated that in the first half of the year, competition within the industry further intensified. Leading companies actively lowered prices to gain market share, and the price war has become intense. In addition, the slowdown in cost reduction has posed a significant challenge to the industry's profitability.

In the first half of the year, the subsidiary, Sinoma Lithium Film, faced a fierce competitive environment and achieved a total sales volume of 0.81 billion square meters of lithium battery separators, a year-on-year growth of 15.1%. Due to the decrease in prices, sales revenue was 0.762 billion yuan, a year-on-year decrease of 24.43%. The gross margin decreased by 28.10% compared to the same period last year.

However, Sinoma Lithium Film still plans to further accelerate the construction of production capacity, form five 1 billion square meter-scale production bases, and carry out overseas investment work. Currently, the construction of each base project is nearing completion, and it is expected that they will all be completed by the end of 2024.