The past year or so has undoubtedly been an impressive period for the silicone industry. Since July last year, the price of DMC has been soaring. People with money can’t afford it, and those who have it can’t afford it. The quarterly and half-year reports of individual companies are impressive, with profits doubling. Downstream companies are wailing, losing money and closing down, struggling to move forward. By July this year, prices could no longer rise and were even falling. Now, the peak season is no longer busy, and everything seems to be calm. Looking back at the turbulent silicone market for more than a year, we really need to settle the accounts and take a closer look at which silicone companies have made money and who has lost money. Come on, the data speaks for itself.
General Condition
First, let’s take a look at the overall situation of domestic silicone companies in the year and a half from the first quarter of 2017 to the second quarter of 2018 through the three summary tables of revenue, profit, and profit margin:
Cuanhua, Sanyou, Luxi, Xingfa and Dongyue ranked among the top five
Luxi, Sanyou, Dongyue, Hesheng, and Xin’an made the most profits
Hopson leads the way with a profit margin of23.2%! Due to the increase in silicone prices, upstream companies such as Dongyue, Luxi, Sanfu, Sanyou, and Xin’an have all achieved profit margins of more than10%.
Performance details of each company
Let’s take a look at the performance of each company one by one fromthe first quarter of 2017to2018Performance within one and a half years in the second quarter of 2020:
Number one in sales and bottom in profit margin—Transfar Zhilian
In the past year and a half, Chuanhua Zhilian ranked first among the 16 silicone companies counted in this article with a total revenue of 30.3 billion yuan. Throughout 2017, Transfa Zhilian’s sales achieved four consecutive quarters of growth, reaching 7.22 billion yuan in the fourth quarter of 2017.
However, Chuanfa’s profits are not high. In the past six quarters, it achieved a total profit of 740 million yuan, with a profit margin of only 2.6%, ranking fourth from the bottom among the 16 listed organic silicon companies counted in this article.
The most profitable——Luxi Chemical
Although Luxi Chemical is not as good as Transfar and Sanyou in terms of sales, in terms of net profit in the past six quarters, Luxi Chemical has taken the lead with 3.67 billion yuan. One of the important factors is the increase in unit prices.
Thanks to the increase in the price of silicone products, Luxi Chemical achieved significant profit increases for four consecutive quarters in 2017, and the profit margin increased from 6.5% in the first quarter. That surged to 18.7% in the fourth quarter. The total profit for the year reached 1.95 billion yuan, a year-on-year increase of more than 600% compared with 2016. It is undoubtedly the biggest winner in the domestic silicone industry.
Although silicone prices fell slightly in 2018, Luxi’s profit margin remained above 15%, with a profit of 1.72 billion yuan in the first half of the year, close to that of the whole of last year.
The highest profit margin – Halcyon Silicon
From the first quarter of 2017 to the second quarter of 2018, the average profit margin of Hesheng Silicon Industry reached an astonishing 23.2%. Among the 16 organic silicon companies counted in this article listed companyIt dropped to 6 million in the fourth quarter, and the profit margin also dropped from 5.1% to 0.2%. It wasn’t until 2018 that there was some improvement.
Stable – Meside Chemical
On the whole, although Meside’s profit margin has declined, in the past six quarters, Meside’s revenue and profit have not fluctuated much, with revenue basically at About 70 million, the profit is about 10 million, and the average profit rate is 15.6%, which is quite impressive.
“The decline in profits is due to the increase in R&D investment” – Chenhua Shares
Chenhua’s performance was not significantly affected by the increase in prices of organic silicone raw materials. Although profits and profit margins declined from the third quarter of 2017 to the first quarter of 2018, the magnitude was not significant. It is too big, and as stated in Chenhua’s announcement, the main reasons for the decline in net profit are: the increase in R&D expenses compared with the same period last year and the accrual of fixed costs after the trial production of wholly-owned subsidiaries. In the past six quarters, Chenhua achieved revenue of 1.1 billion yuan and profit of 110 million yuan.
The least profitable-Silicon Technology
Looking at the 2017 business data alone, Sibao Technology has achieved four consecutive increases in net profit. However, compared with 2016, we can find that Sibao Technology has faced major difficulties in the past year and a half. In 2017, Sibao achieved total operating income of 730 million yuan, an increase of 11.6% compared with 2016; but its net profit was only 52 million yuan, a year-on-year decrease of 42.63%. In the first quarter of 2018, Silicon Treasure even suffered losses. From the first quarter of 2017 to the second quarter of 2018, Silicon Bao also had the least profit among the 16 companies counted in this article.
Conclusion
A comprehensive analysis of the above multiple silicone companies shows that in the past more than a year when the silicone market was turbulent, the revenue and profits of upstream individual companies have increased significantly, and the downstream companies have experienced substantial growth. Enterprises have experienced sharp declines in profits due to factors such as increased raw material costs, stricter environmental protection, and weak downstream demand. However, as the price changes in 2018 are gradually transmitted to the downstream, the operations of downstream companies have improved to some extent.
At present, the silicone market is not prosperous during the peak season. Although raw material prices are still high, they are basically stable or even falling slightly. It is expected that the upstream and downstream sectors will remain in a state of balance for a certain period of time in the future.
In the long run, a new round of expansion in the silicone industry is in full swing, with upstream concentration increasing and upstream companies gradually extending and expanding downstream. The power of capital is extremely powerful. . It is not impossible that one day, downstream small and medium-sized enterprises will be swallowed up, and a few oligopolies will monopolize the entire industry.
