Strict environment inspection affects Yanggu Huatai Chemical

An investment institute has released a research report on Shandong Yanggu Huatai Chemical Co., Ltd. to analyze its operation status.

Benefit from price lifting

In the first half of this year, Yanggu Huatai Chemical’s operating revenue totaled 733 million yuan, up 38.63% year on year; and the net profit was 80.88 million yuan, up 34.86%.

In the second quarter, the company’s operating revenue grew 21.68% to 376 million yuan; and the net profit reached 46.71 million yuan, up 6.67% year on year, or up 36.70% from the previous quarter.

Statistics show that operating incomes of the company’s mainstream products increased across the board, with most products growing over 30%.

The company’s gross profit margin was 27.56% in Jan.-June, up 6.39% year on year. The gross profit margin of vulcanizing agent surged 335.13%.

Yanggu Huatai Chemical is a renowned domestic rubber additives producer. Continuous price lifting of rubber additives contributed a lot to the company’s business performance.

Impact of environmental protection

Production capacity of rubber additives in China concentrates on Shandong, Tianjin and Henan, the key areas of environment inspection.

As the requests for environmental protections became stricter, many small- and medium-sized producers stopped or limited their production. China’s rubber additive output in the first half was 602,000 tons, down 3.2% year on year.

The tendency of strict environmental protection won’t change before 2020. This year, the special supervision on air quality in Beijing-Tianjin-Hebei is expected to affect rubber additive producers, and the supply may tighten further.

After this, the environmental protection authority is very likely to crack down on water pollution, which is an issue for the rubber additive sector, and the capacity may decrease further.

The upfront investment of Yanggu Huatai Chemical in environmentally friendly equipment has been rewarded, and mainstream products of it are out of supply. Currently, its capacity utilization is over 90%.

In addition, the company has a plan to move as requested by Shandong authority.

It says the move won’t affect much on its production and operation.